Talisman Energy Inc. is putting more assets on the auction block, hoping to find another $2-billion to buffer its balance sheet.
The company wants to strike the deals within the next 12 to 18 months. The additional sales target, which was announced Wednesday, comes as the company posted a large fourth-quarter loss and faces difficulty selling its assets in the North Sea.
Talisman’s past leaders tried to turn the company into a global empire with enormous potential for growth. That strategy failed and now Talisman, like some of its competitors, wants to shrink itself. Companies such as Talisman and natural gas producer Encana Corp. are pulling back in some areas because they cannot afford to fully develop all the property they collected over the years.
Hal Kvisle, Talisman’s chief executive, on a conference call said the company’s assets in Kurdistan, the Duvernay in Alberta, and midstream assets in the Marcellus shale in the eastern United States are among those the company has targeted for sale. Talisman would “love” to sell all or much of its North Sea assets, Mr. Kvisle said, but contractual obligations with its Chinese partner have made this more difficult than anticipated. “I didn’t think an exit from the North Sea would be quite as difficult,” he said in an interview. It is not counting on cash coming from selling its North Sea assets.
But even if the asset sales bring in cash, investors will have to remain patient.
“It is a two or three year process to really turn Talisman around,” Mr. Kvisle said. Activist investor Carl Icahn has amassed a 7.37 per cent stake in Talisman, and his firm now has two board seats. Mr. Kvisle said he is still unsure what the New Yorkers want, but they were not behind Talisman’s decision to put up another $2-billion in assets.
Talisman posted an unexpected $1.01-billion loss in the fourth quarter. This translates to 98 cents per share, compared with a profit of $376-million or 37 cents in the year-earlier period. The company booked $826-million in asset and goodwill impairment charges in the quarter.
The loss from operations, which excludes most extraordinary items, was $116-million or 11 cents per share, compared with a loss of $107-million or 10 cents per share a year earlier. Analysts had been expecting a break-even result.
The company said production at its North Sea operations fell 33 per cent to 14,000 barrels of oil equivalent per day from the previous quarter.
Capital spending in 2014 is expected to be about $3.2-billion, unchanged from 2013 and down about 20 per cent from 2012, the company said. Asset sales totalled $2.2-billion for 2013 and the first quarter of 2014, the company said.