Talisman Says Approached by Repsol about Deal

July 23, 2014

World Energy Reports LLC.

Talisman Energy Inc said on Wednesday it has been approached by Repsol , a day after a report that the Spanish oil producer was considering a bid for Canada's No. 5 oil company.

Talisman, which has a market capitalization of nearly C$11 billion ($10.2 billion), did not provide details, saying only it had been contacted by the Spanish firm "with regards to various transactions."

Talisman, which operates in North America, southeast Asia and the North Sea, has long been considered a takeover target as its stock slumped on weak natural gas prices and a poor performance from its North Sea operations.

Talisman has been restructuring its businesses in an effort to boost its stock price and assuage disgruntled investors such as Carl Icahn.

Shares in Calgary-based Talisman rose 10.5 percent to C$10.88 on the Toronto Stock Exchange.

Repsol said on Wednesday it was considering possible acquisitions to boost its upstream business but had not made a firm decision on the matter.

"As the company has said in recent months, it is studying different deals in exploration and production ... including possible deals with Talisman," Repsol said in a regulatory filing in Spain.

Repsol is to report second-quarter results on Thursday in Madrid, followed by a conference call that could provide details on a deal.

Aside from the $6.3 billion raised from exiting its Argentine business, Repsol has also said it could sell its 30 percent stake in Spanish utility Gas Natural SDG SA, worth about $9 billion, to spend on acquisitions.

If Talisman is acquired, it would be the largest deal in Canada's energy sector since 2013, when CNOOC Ltd acquired Nexen Inc.

Analysts said a potential purchase of Talisman would diversify Repsol's geographical mix but expect Repsol to buy assets rather than a company and something more focused on oil than gas.

"(Talisman's) current output is still dominated by gas, which breaches one of Repsol's criteria to favor oil-rich companies in a deal," Espirito Santo analysts said in a note to clients.

Spanish oil company Repsol was considering a bid for Talisman, Bloomberg reported on Tuesday, citing sources.

($1 = 1.0742 Canadian dollars)

(Reporting by Scott Haggett in Calgary, Julie Gordon in Vancouver and Tracy Rucinski and Carlos Ruano in Madrid; Editing by Franklin Paul, Amran Abocar and Jeffrey Benkoe)

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Related company: » Talisman Energy Inc