Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : TLM.TSE Talisman Energy -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (1194)	4/11/2001 6:28:47 PM
From: Tomas	Read Replies (3) \| Respond to of 1713

'It's a steal' Talisman CEO says after Petromet buy. Pays $806M cash: Buckee says $2 gas will fetch him $8 Financial Post, April 11 Claudia Cattaneo, Calgary Bureau Chief CALGARY - Talisman Energy Inc. beat fierce competitition from U.S. and Canadian rivals to purchase natural gas producer Petromet Resources Ltd. for $806-million in cash yesterday, in one of the richest prices paid so far for Canadian natural gas assets. But Jim Buckee, chief executive of Talisman, Canada' largest independent oil and gas producer, said the deal is "a steal" considering it values Petromet's natural gas in the ground at just under $2 per thousand cubic feet. He said his company plans to sell in the futures market at $8 per thousand cubic feet. "It's a lot of dollars," said Brian Prokop, analyst at Peters & Co. However, "It's gas, it's incredibly focused, and it's incredibly low cost." To ensure the acquisition is profitable even if natural prices decline, Talisman is locking it in the company's entire natural gas production for three years, or until the acquisition pays for itself, Mr. Prokop said. The friendly transaction marks Talisman's first corporate acquisition since its purchase of Rigel Energy Corp. in August, 1999, for $1.2-billion. The company's ability to make major acquisitions using its stock has been constrained by its low share price compared to its peers, in part due to a divestment campaign related to its controversial holdings in Sudan, analysts said. The purchase continues unprecedented acquisition activity in the Canadian sector, fuelled by U.S. companies looking for natural gas reserves for electric generation and by strong Canadian companies searching for places to invest record cash flows. "The consolidation will continue, but at the pace we are going now, by virtue of numbers, it has to stop somewhere toward the fall, because there will be very few companies left," said Tom Budd, president of Griffiths McBurney & Partners, which advised Petromet in the transaction. Mr. Budd said there was "lots of interest in the company, both U.S. and Canadian." The company decided to investigate options to maximize shareholder value because of a gap in valuations between what producers like Talisman were willing to pay for its natural gas reserves, and its low price in the stock market, said Jim Nieuwenburg, president and chief executive of Petromet. At $13.20 a share, or a 26% premium over Petromet's closing price on Monday, "it does represent a full price ... and we are pleased to offer it to our shareholders," Mr. Nieuwenburg said. The price includes the assumption of $45-million in debt. The acquisition is "a spectacular fit with one of Talisman's emerging core areas," Mr. Buckee said in a conference call. Petromet produces daily 110 million cubic feet of natural gas and 2,000 barrels of liquids, concentrated in two properties in west central Alberta with about 291 billion cubic feet of proven natural gas reserves. Talisman said the acquisition increases its natural gas production to 850 million cubic feet a day this year, and to 975 million cubic feet a day next year. Earlier yesterday, Talisman announced it is linking the compensations of Mr. Buckee and other key senior managers to aggressive corporate social responsibility targets in Sudan, where its operations have come under fire for their role in a complex civil war. "Public concern has clearly been in evidence over the company's investment in Sudan, particularly because of the widespread reports of human rights violations in that country," Peter Widdrington, chairman of the board of Canada's largest oil and gas producer, acknowledges in a social responsibility report. The pay of three vice-presidents and of Talisman's general manager for Sudan are also being linked to compliance to the targets, developed with the help of experts in business ethics and social auditing and based on the International Code of Ethics for Canadian Business. ccattaneo@nationalpost.com