Talisman Energy Inc. isn't restructuring at breakneck speed, but it would be a stretch to accuse the oil producer's brass of being resistant to badly needed change.
The Calgary company has put assets for sale around the world, added three new directors and promised to concentrate its efforts in fewer, though higher-return, places.
That's the hope Talisman shareholders are holding on to after Carl Icahn's revelation that he controls 6 per cent of the company's stock. Arguably, that's all the famed investor has to do, given his ability to create a buzz by his presence.
His next move, though, is anything but clear.
Via Twitter, Mr. Icahn said he may talk to management about "strategic alternatives, board seats, etc." The disclosure initially pushed up the shares, but they've settled back down as investors struggle to connect dots. So far, he's not saying anything beyond that one 140-character message. Neither are Talisman executives.
It's no secret Mr. Icahn relishes a good corporate scrap. He's battled for big changes in strategy and control at Dell Inc., Chesapeake Energy Corp., Transocean Ltd. and numerous others.
If he's girding for a battle at Talisman, it's tough to see on what hill he wants to wage it – though recent talk about splitting up assets could provide a clue.
Talisman's stock has been in the doldrums for years as it has struggled with operational problems and a lack of focus. The stock is 30 per cent lower today than it was three years ago.
But the situation bears little resemblance to that of Canadian Pacific Railway Ltd. in 2012. There, Bill Ackman, an activist investor who is famously no friend of Mr. Icahn, waged a months-long proxy fight against an executive team that refused to depart from its own plan to boost efficiency. He won and installed Hunter Harrison, the ex-boss at Canadian National Railway Co., as CEO, who imposed deeper cost cuts.
At Talisman, CEO change has already happened. The board replaced John Manzoni at the helm more than a year ago and persuaded oil patch veteran Hal Kvisle, himself a director, to take the job. He rewrote the playbook to focus on opportunities in North and South America and Southeast Asia that can generate cash in the short term.
Long-held interests in the Norwegian North Sea, Colombia and long-term Canadian shale gas development plays are on the block. The latter are proving a tough sell, though Mr. Kvisle had predicted that, given the cool market for energy properties. He has also launched a cost-cutting drive that has included job cuts.
Despite all the moves, by some accounts Talisman still trades at a discount to what it could be worth if it was stripped and sold for parts. Mr. Kvisle has shown he's open to discussing new ideas, even as he pushes ahead with his own strategy. An analyst's recent note that followed a dinner with the CEO in late September is telling.
Greg Pardy of Royal Bank's capital markets unit wrote that Mr. Kvisle may be softening on the idea of splitting Talisman in two, perhaps between the Americas and Southeast Asia. One snag was how to deal with the North Sea. The Norwegian properties are already for sale, but under an agreement with its joint-venture partner, Sinopec, the British business can't be unloaded without the Chinese state oil company's consent before 2016.
Indeed, Talisman's executives themselves do not believe the market is ascribing nearly enough value in the stock to profitable oil and gas fields in countries such as Malaysia and Vietnam, or the exploration potential. Last week, chief financial officer Paul Smith and other three other vice-presidents held meetings with U.S. East Coast investors to explain the region's potential.
Mr. Kvisle's reported willingness to talk about alternative ideas for the company, though, may well have been what piqued Mr. Icahn's interest. The question now is whether the 77-year-old investor will seek a much bigger revamp at Talisman, or, following some sound and little fury, try to cash in on a restructuring that's already under way.
Jeffrey Jones