Talisman Share Price Drop a Short-Term Situation, Analysts Say
Calgary, Alberta, Oct. 29 (Bloomberg) -- The Canadian government probably
won't impose sanctions on Talisman Energy Inc. for its involvement in an
oil project in war-torn Sudan, a company spokesman and analysts said.
U.S. Secretary of State Madeleine Albright and Canada's Foreign Affairs
Minister Lloyd Axworthy said revenue from the Calgary, Alberta-based
company's 25-percent stake in Sudan's Greater Nile Oil Project might be
used by the military government to support its role in a civil war,
recently suspended by a truce.
Axworthy said Canada is sending an envoy to Sudan to see if oil money
generated by Talisman might be used to wage war against southern Sudanese
rebels. If that's the case, the government could suspend Talisman's export
licenses on equipment it uses in the country, or impose sanctions against
Sudan, making it illegal for Canadian companies to do business there.
``The market doesn't like uncertainty and the Sudan situation has some
investors bothered,' said Terry Peters, an analyst with Griffiths
McBurney & Partners in Calgary. ``This is a knee-jerk reaction and it will
fade.'
Shares of Talisman, Canada's largest independent petroleum company, fell
C$0.10 (US$0.7) to C$38.85 in Toronto. The shares fell 12 percent, or
C$6.15, this week.
Talisman spokesman David Mann said the 33,750 barrels a day of oil the
Sudan project contributes to the company's overall production represents
10 percent of the company's cash flow.
Mann said the company supported the Canadian government's interest in
Sudan and that Chief Executive Jim Buckee will meet Axworthy Tuesday to
discuss the situation.
``They're focusing on a fact-finding and peace initiative; sanctions are a
last resort,' Mann said.
Talisman acquired its interest in the project when it bought Arakis Energy
Inc. for C$267 million in October 1998. The oil concession was originally
held by Chevron Corp., which gave up its interest in 1992 because of the
war.
The Sudanese government receives 60 percent of the profits from the
projects, while Talisman and its partners share the remaining 40 percent. |
