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President and CEO of Talisman Energy, John Manzoni, addresses the media following the company's annual meeting in Calgary, Wednesday, May 5, 2010. THE CANADIAN PRESS/Jeff McIntoshJeff McIntosh/The Canadian Press

Talisman Energy Inc. has agreed to sell a B.C. coal deposit to Xstrata PLC for $500-million (U.S.) in cash to raise money and shed operations that are unrelated to its core business, oil and gas.

The Canadian energy producer is selling the 20,000-acre Sukunka property in the northeast part of the province, Calgary-based Talisman said on Thursday. It expects the sale to Switzerland-based Xstrata to close this month.

Talisman and other natural-gas producers in North America are selling units or scaling back investments to cover a cash shortage as gas prices trade at a 10-year low. The company has said previously that it planned to sell between $1-billion and $2-billion in assets this year in what it called "non-core" businesses.

"The proceeds were at the higher end of our expected range of $300-million to $500-million, putting the company well on its way to its target," Andrew Potter, an analyst at CIBC World Markets Inc. in Calgary, said in a note to clients. "Talisman Energy monetized its coal lease for approximately 4 per cent of its market cap – a meaningful contribution for an asset that nobody had placed value on."

Sukunka is in the Peace River Coalfield and adjacent to Xstrata's First Coal Corp. and Lossan reserves. Xstrata is the world's biggest exporter of thermal coal used in power stations, and the deposits at Sukunka are hard-coking coal used in steel-making.

"This is in keeping with our strategic objective to focus Talisman's portfolio on material, core assets," Paul Smith, Talisman's executive vice-president of North American operations, said in a statement. "Unlocking the value from the divestment of this coal property will provide funds to support the objectives announced in our 2012 guidance."

Bank of America Merrill Lynch advised Talisman on the disposal.

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