Talisman could make some Sudan changes
Financial Post, June 23
Drew Hasselback
Ah, the magic of oil. Black gold. Texas tea. Sudan Soup.
Alas, it seems Sudanese oil has been leaving a bad taste in the mouth for Talisman Energy Inc.
The Calgary company has taken a public-relations beating for its investments in the war-torn African nation. This week Jim Buckee, chief executive, dropped hints the company might be fixing to leave Sudan.
Mr. Buckee said the company is "taking prudent steps" to keep the company onside with proposed legislation in the United States that would ban companies doing business in Sudan from U.S. stock exchanges.
"Prudent steps" has been interpreted to mean the company might be selling the Sudanese assets, although Mr. Buckee could also have been referring to the guys who walk behind the camels.
Talisman may have taken its first step away from Sudan with a three-way deal announced this week involving Talisman, Lundin Oil AB of Sweden, and Petro-Canada.
The transaction is so complicated many who have tried to read through the documentation have given up and tried to read something easier and lighter, like the new banking law just passed by Parliament.
Here is a summary of the deal. Talisman buys Lundin Oil, a company that is based in Sweden and holds assets around the world, including the North Sea, Malaysia, Vietnam, Papau New Guinea, and Sudan.
Wait a sec. How can Talisman exit Sudan by purchasing a company with assets in Sudan? Because the Lundin family, which owns Lundin Oil, has no qualms about dealing in hot spots. The Lundins are moving the Sudanese assets out of the Talisman deal and folding them into a new company they will run.
Meanwhile, somewhere in the fine print of this deal, Petro-Canada is buying someone's assets in Libya for $112-million.
No one really understands how the transaction works, but that's the idea.
Canada wants the deal nice and complicated so White House staff won't be able to boil it down to cereal box size so it can be read by George W. Bush. Canada doesn't want Mr. Bush to know that we're playing footsie with Muammar Gaddafi.
Back to the point about how the Talisman/Lundin/PetroCan deal sets the stage for Talisman to leave Sudan.
Some analysts speculate that if Talisman does not want Lundin's Sudanese assets, Talisman is not interested in expanding its business in Sudan.
This would suggest the company is looking for an exit strategy. There are many possible purchasers, almost all of them with the requisite 10-foot pole.
Other analysts speculate that, given the geographical complexity of the three-way deal, Talisman is about to abandon the oil business and invest in an atlas publisher.
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dhasselback@van.nationalpost.com
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