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Gold/Mining/Energy : Lundin Oil (LOILY, LOILB Sweden) -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (2570)	6/23/2001 4:50:57 PM
From: Tomas	Read Replies (1) \| Respond to of 2742

Talisman snaps up oil firm - $529-million deal snares Malaysian assets The Globe & Mail, June 22 LILY NGUYEN CALGARY -- Talisman Energy Inc. has snapped up Lundin Oil AB of Sweden for $529-million, opening up a new area of growth and perhaps setting the stage for a graceful exit from its controversial Sudan operations. The complicated offer announced yesterday would see Lundin spinning out its own politically sensitive operations in Sudan and Russia into a separate company, selling off an oil interest in Libya to Petro-Canada, and handing over the remainder of itself to Talisman for $3.43 (U.S.) a share. Talisman will gain a property in Malaysia that it plans to develop into a new core area, as well as interests in the North Sea where the company already operates, and Papua New Guinea. In a conference call yesterday, Talisman chief executive officer Jim Buckee said the company's main interest is in the exploration potential of Malaysia. Although net production from the Malaysian property amounts to about 7,000 barrels of oil a day -- a drop in the bucket compared with Talisman's production of roughly half a million barrels -- it is expected to yield 50,000 barrels by 2004, roughly how much Talisman's Sudan property is producing now. "The key strategic driver for us is the very large upside in Malaysia," he said. "It provides another long-term growth vehicle for Talisman, and we can achieve this at reasonable cost." He also hinted, however, that Talisman's acquisition in Malaysia could clear the way for the company to get out of Sudan, which has turned into an albatross around the company's stock. Human rights and church groups have targeted the company over Sudan. The groups charge that oil revenue from a joint venture that Talisman is involved in is being used by the Khartoum-based government to prolong a bloody civil war. "One thing we've always said is having a new area of entry, provided not the least by Malaysia, is one of the necessary preconditions" to selling its Sudan assets, he said. The deal -- as well as Mr. Buckee's comments earlier in the week that the company would sell its Sudan assets if U.S. sanctions are enacted -- set off a flurry of speculation as to how the company could extricate itself from Sudan. Analysts, who applauded the deal, said Talisman's new foothold in Malaysia could set the stage for a trade with Malaysia's state-owned Petronas. Petronas is already involved with Talisman in the Sudan oil consortium, Greater National Petroleum Operating Co. (GNPOC), and will become Talisman's partner in the Malaysia project. Talisman would hand over its Sudan oil production in exchange for similar production in Malaysia. "Petronas has the wherewithal to take over Talisman's position [in Sudan] and they have assets in the same property that Talisman now operates. "You can envision an asset swap between Talisman and Petronas," said Steve Calderwood, an analyst with Salman Partners in Calgary. Mr. Calderwood said the sticking point on Talisman's exit from Sudan has always been the problem of replacing the production that would be lost. Like most big petroleum companies, Talisman is awash in cash, but good development prospects, such as those provided by Sudan's burgeoning oil fields, are few and far between. Brian Prokop, an analyst with Calgary-based Peters & Co., agreed that would be a good option. "A swap is probably the most elegant solution for Talisman." Analysts have also raised a number of other possibilities, including Talisman selling its stake to other oil companies in Sudan, such as French heavyweight TotalFinaElf SA or China state oil company China National Petroleum Co. However, analysts and Mr. Buckee dismissed a notion that Lundin's spinoff of its Sudan and Russian properties into a new company called Lundin Petroleum AB eventually could be a vehicle for Talisman to get rid of its Sudan stake. "I don't think so," Mr. Buckee said in the conference call when an analyst raised the possibility of such a move. Martin Molyneaux, research director of FirstEnergy Capital Corp. of Calgary, said Lundin isn't big enough to buy Talisman's Sudan interests and it would make no sense for Talisman to trade its Sudan oil assets for shares in Lundin. "They'd be the dominant shareholder in [Lundin Petroleum] and that doesn't solve the problem." Last week, the U.S. House of Representatives passed a bill that would bar oil companies active in Sudan from U.S. capital markets. The bill, if passed by the Senate and approved by President George W. Bush, would strip Talisman of its valuable New York Stock Exchange listing if it is still in Sudan. Lundin, although it is traded on the Nasdaq Stock Market, is less sensitive to the political pressure, analysts said. The new company, which will be run by current Lundin management, would give up its U.S. listing and be traded in Stockholm. Talisman shares slipped $2 (Canadian) yesterday to $58.70 on the Toronto Stock Exchange.