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Another spin of the wheel Talisman joins EnCana, Canadian Natural in crosshairs of takeover speculation Gary Park Petroleum News Canadian Contributing Writer
The dice are rolling and the only question seems to be whose number will come up.
Talisman Energy, EnCana, Canadian Natural Resources, Nexen?
The more frenzied the speculation becomes the more likely it seems one of Canada’s big independents will ultimately fall into the hands of one of many international energy giants currently grasping for reserves.
Talisman is the latest to occupy center stage as a takeover target, in a reversal of its own recent deal-making, which included a US$2.15 billion takeover of Paladin Resources, the United Kingdom’s fourth-largest E&P company.
Chief Executive Officer Jim Buckee told financial analysts on Nov. 15 that a bid from a “major” oil company was spurned on grounds that it did not offer a “fat premium” to Talisman’s current trading levels.
It was the continuation of about six months of rumors that Talisman was in the crosshairs of several global hunters.
In May, Total topped the rumor list, boosting Talisman shares by 10 percent until a company spokesman said the speculation was “unsubstantiated.”
The biggest flaw in the Total scenario was the French giant’s declared ambition to produce 500,000 barrels per day from Alberta’s oil sands — the sector where Talisman is the only notable absentee among Canada’s major oil producers. Spotlight on CNOOC and ConocoPhillips Now the spotlight is on China National Offshore Oil Corp. — still smarting from its losing fight for Unocal and no less hungry for worldwide reserves — and ConocoPhillips, which has a strong fit with Talisman’s interests in Canada, Alaska and Southeast Asia.
There’s no shortage of analysts ready to explain why a Talisman takeover makes sense, notably the company’s struggle to shake off the hangover of its profitable, but politically costly venture in Sudan.
Philip Skolnick of Genuity Capital Markets said in a research note that it would not be difficult for a bidder to make an “accretive acquisition,” although he sidestepped naming any candidates.
Greg Pardy of Scotia Capital said Talisman was not getting proper recognition for its array of exploration prospects in places such as Southeast Asia and the Canadian Foothills.
Buckee is untroubled by the thought of a takeover, though he has cautioned that Talisman, with a market capitalization of close to C$20 billion, represents “quite a big bite.”
Although the company told analysts it is open to offers for specific assets, Buckee would sooner keep the company whole. EnCana, Canadian Natural rumors Over the past month both EnCana and Canadian Natural Resources have been caught in a swirl of rumors.
In EnCana’s case, the suitor was said to be Royal Dutch Shell, but EnCana scuttled that talk by declaring it was “not aware of any intention by any party to make an offer” and was not involved in discussions to sell the company.
It also made clear that offers would be unwelcome saying “continued independence is the best way to create long-term value.”
Canadian Natural was dragged into the mix earlier this month when speculation was fueled by analysts at Merrill Lynch and Canaccord.
Company President John Langille gave a cool response to the rumors, noting that many of the independent’s assets were acquired over the past 10 to 15 years from majors.
He said those firms would be unlikely to now pay a premium to buy back the properties.
Langille said merger and acquisition activity in Canada has “advanced quite a ways in the last five to eight years.”
He said the Canadian industry is “pretty consolidated compared to U.S. independents. I wouldn’t be surprised to see some of the U.S. independents get together and make bigger companies, but I think in Canada we’ve got a pretty good mix right now.”
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