Talisman Energy Inc. (TSX:T.TLM, Stock Forum) said that it has reached an agreement in the North Sea with Sinopec International Petroleum Exploration and Production Corporation (Sinopec), whereby Sinopec will acquire a 49% equity interest in Talisman's UK North Sea business, Talisman Energy (UK) Limited (TEUK), for $1.5 billion.
Talisman entered the North Sea in 1994 and today holds operated and non-operated interests in 46 fields, and operates 11 offshore installations and an onshore terminal. The portfolio includes opportunities for infill wells, project developments and exploration.
According to the press release, the deal structure will be a corporate joint venture whereby Sinopec will buy 49% of the shares of TEUK for $1.5 billion, with adjustments for working capital. This will proportionately reduce Talisman's share of capital spending, production and abandonment liabilities for its UK business.
The effective date of the sale is January 1, 2012, and the transaction is expected to close by the end of this year, subject to government and regulatory approval.
The joint venture plans to invest to improve ongoing operating performance, as well as infill drilling, exploration opportunities and major projects, thereby extending field life and deferring decommissioning.
TEUK will operate the assets, and Sinopec will appoint select personnel into key positions within the organization. TEUK is based in Aberdeen, Scotland and employs 564 full-time employees, with approximately 1,950 core contractors. No reductions to TEUK personnel are expected as a result of this transaction.
Sinopec is a 100% subsidiary of Sinopec Group, which is China's largest and one of the world's largest integrated energy and petrochemical companies, with business scope across the entire oil & gas value chain. The operations cover exploration and development of resources, storage and transportation of oil and gas, refining and petrochemical production, and sales of refined products.
Talisman is a global, diversified, upstream oil and gas company, headquartered in Canada. Talisman's three main operating areas are North America, the North Sea and Southeast Asia. The company also has a portfolio of international exploration opportunities.
On early morning Monday, Talisman’s stock was up 6.61% and was trading for $11.78 a share. The company has a market cap of $12.2 billion, based on 1 billion shares outstanding. The 52-week high and low was $19.57 and $9.72 respectively.