SBM Surges Most in 20 Years as Talisman Dispute Settled
SBM gained 21 percent, the biggest jump since at least October 1989. It will pay Talisman $470 million and book a $270 million charge on top of the $200 million set aside in December after the Yme platform was evacuated in July because of cracks found in the structure.
The deal with Talisman, operator of the field, cancels current accords, puts in place arbitration and closes the platform, the company said in a statement today. The settlement follows SBM’s decision last month to book a $29 million charge on its Deep Panuke project off Nova Scotia.
“Resolving one of the two legacy issues that plagued the company for some four years is important but certainly comes at a price,” said Andre Mulder, a Kepler Capital Markets analyst.
Talisman threatened to replace the platform should SBM fail to come up with a plan to repair it. The Calgary-based company said in May it would remove the field from its output projections and take a $248 million after-tax writedown.
SBM, based in Schiedam, Netherlands, rose to 12.93 euros at the close in Amsterdam. More than 13 million shares changed hands, six times the three-month daily average.
“Today we have resolved the legacy difficulties of Yme at an agreed cost, bringing an end to a period of significant uncertainty for the company,” Sietze Hepkema, SBM’s chief governance and compliance officer, said in a statement. The facility will be scrapped, while the partners in the project continue to develop options for the field, the company said.
Talisman holds 60 percent of the Yme field, while Wintershall AG and American Energy Development Corp. (AEDC) both have 10 percent. Talisman rose 1 percent to C$12.56 at the close in Toronto.
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