Talisman would gain from forced Sudan sale. Analysts praise project
Carol Howes
Financial Post, November 27
CALGARY - Talisman Energy Inc. stands to gain a hefty profit if it
is forced to sell its Sudanese oil assets should the federal
government impose sanctions against the war-torn African country,
says a leading oil and gas analyst.
Martin Molyneaux, research director of FirstEnergy Capital Corp.,
said in a report released this week that Talisman's project would be
worth between $10.50 and $13.50 a share if put up for sale.
"Not such a bad worst-case scenerio considering Talisman only
invested approximately $5.60 per share," for its 25% stake in the
Greater Nile Oil Project, said Mr. Molyneaux.
Analysts have said that TotalFina SA of France, as well as ENI
SpA of Italy, are interested in the $800-million oil project. Royal
Dutch/ Shell Group is also rumoured to be back in the capital of
Khartoum looking for investment opportunities.
Mr. Molyneaux is one of 20 analysts who recently returned from a
tour of the controversial project that has been criticized for
providing new government revenues that could exacerbate a
16-year civil war.
In his report, Mr. Molyneaux praised the potential of the project,
saying if Talisman is allowed to continue operating, it "could very
well be the most profitable oil production of any publicly traded oil
company in Canada."
The criticism has led Talisman to downplay the importance of the
investment in Sudan in a letter mailed to shareholders this week.
The investment in Sudan represents less that 10% of expected
production volumes for the Calgary-based oil and gas company
next year.
"We are very ethusiastic with regard to the upside potential for this
area," Mr. Molyneaux said in his report. He said it's apparent that
current production of around 155,000 barrels per day is only the
beginning for the oil and pipeline facilities owned by Talisman and its
partners -- Chinese, Malaysian and Sudanese state oil companies.
Like Mr. Molyneaux, a number of other analysts who toured the
facilities at Talisman's invitation have also strongly recommended the
stock, claiming Western reports of human rights abuses are
exaggerated.
Robert Plexman, an analyst for CIBC World Markets Inc. in
Toronto was one of the first off the mark to file a glowing dispatch
from Sudan. He put a target price on Talisman's shares of $69 in 12
months.
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