OTTAWA (dpa-AFX) - Canadian oil and gas producer Talisman Energy Inc. (TLM, TLM.TO) said Monday it has agreed to sell a 49 percent stake in its UK North Sea business to China Petroleum & Chemical Corp. (SNP), also known as Sinopec, for $1.5 billion.
Talisman noted that the sale brings its total divestment proceeds this year to about $2.5 billion. The company intends to utilize about $500 million of the total sale proceeds to repurchase shares.
Under the structure of a corporate joint venture, Sinopec International Petroleum Exploration and Production Corp. will buy 49 percent of the shares of the Talisman Energy UK Ltd. or TEUK, with adjustments for working capital. According to Talisman, this will proportionately reduce its share of capital spending, production and abandonment liabilities for its UK business.
TEUK will operate the assets, while Sinopec will appoint select personnel into key positions within the organization.
Aberdeen, Scotland-based TEUK has 564 full-time employees and about 1,950 core contractors. Talisman said it does not expect any reductions to TEUK personnel as a result of the transaction.
Talisman said that the joint venture plans to invest to improve ongoing operating performance, as well as exploration opportunities and major projects, thereby extending field life and deferring decommissioning.
The sale has an effective date of January 1, 2012, and the transaction is expected to close by the end of 2012.
John Manzoni, President and CEO of Talisman Energy said, 'We are very pleased to reach this agreement with Sinopec for the next phase of development of our UK North Sea assets. This will provide additional resources and energy to the talented team on the ground, creating an exciting future for this portfolio.'
Manzoni added that Talisman was reducing its working interest and capital spend in the UK business by approximately half, enabling it to fund growth areas within its portfolio.
Talisman plans to implement a normal course issuer bid, to repurchase about $500 million of its common shares, on both the Toronto Stock Exchange and the New York Stock Exchange.
J.P. Morgan acted as exclusive financial advisor to Talisman on the transaction.
Earlier on Monday, another Chinese oil and gas company CNOOC Ltd. (CEO) said it has agreed to acquire Canadian energy company Nexen Inc. (NXY, NXY.TO) for $27.50 per share in cash, or a total of about $15.1 billion.
In Monday's regular trading session on the NYSE, TLM is trading at $11.84, up $0.94 or 8.62 percent on a volume of 588,003 shares. SNP is trading at $87.80, down $1.98 or 2.21 percent on a volume of 3,400 shares.
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© 2012 AFX News
