Talisman inks gas deal with Indonesian company
The Globe & Mail, Tuesday, August 10
By DAVE EBNER
CALGARY -- Talisman Energy Inc. has signed a 17-year deal to sell natural gas to Indonesia's transmission and distribution company and will soon make its first move in Peru, further expanding the international oil and gas company's sprawling global operations.
The Calgary-based energy company announced the Indonesian contract yesterday, saying it will help sell 2.3 trillion cubic feet of natural gas from the Corridor project in Indonesia to PT Perusahaan Gas Negara, the country's gas distributor.
Talisman owns 36 per cent of the Corridor business, majority-owned and operated by ConocoPhillips Co. of Houston.
"Over time, this more than doubles sales from Indonesia," said David Mann, a Talisman spokesman.
Talisman sold an average of 137 million cubic feet of natural gas a day in the April-June period, up about a third from a year earlier.
The PT deal starts in early 2007 and Talisman's share will initially add 61 million cubic feet in daily sales, projected to rise to 144 million cubic feet a day in 2012 through to the contract's expiry.
Stock of Talisman jumped $1.09 or 3.77 per cent to $29.99 on the Toronto Stock Exchange, bolstered mostly by rising commodity prices, analysts said.
The shares reached a record high close of $32 last week before losing some ground.
On the Ecuador border in northern Peru, a new country for Talisman, the company has a 25-per-cent stake in an exploration effort to find oil led by Occidental Petroleum Corp. of Los Angeles.
One well is planned for this year and another for 2005.
Peru will complement Talisman's exploration work in Alaska, Trinidad and Qatar, Mr. Mann said. The company is also interested in Libya but he said Talisman is "a long way" from an exploration deal in that country.
Investors and analysts had expected the Indonesian contract with PT -- Talisman said in late July that negotiations were going well -- but analyst Chris Theal of Tristone Capital Inc. said such deals are significant because they demonstrate the strength of the company's overseas business.
"The market doesn't fully value its international business," Mr. Theal said, noting that the risk of operating in countries such as Indonesia worries some investors.
Brian Prokop, an analyst at Peters & Co. Ltd., said the deal is good news but only a small part of a much larger picture for Talisman, whose cornerstone operation for oil is in the North Sea and for natural gas is in North America.
Indonesia in the second quarter accounted for 11 per cent of Talisman's daily gas production.
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