Talisman CEO Kvisle Hints at Higher Valuation Than Stock Price

As takeover talk swirls around Talisman Energy Inc., the chief executive gave prospective buyers a hint today about what he reckons his company is worth: more than the market thinks.

The Canadian energy producer is trading below the value of its assets, Chief Executive Officer Hal Kvisle said. He reiterated the Calgary-based oil and natural gas producer has been in talks with Repsol about various transactions and declined to comment further. The Madrid-based company is exploring a bid for Talisman, people with knowledge of the matter said earlier this month.

One analyst tested Talisman’s view of its valuation by asking on an earnings conference call what share price would reflect its assets.

“We believe that we’re priced today at the conservative end of the spectrum but it depends on the assumptions that people use,” Kvisle said. Talisman is exposed to strengthening North American gas prices, has boosted volumes of higher priced gas liquids and, while its North Sea business is facing significant costs, profitability is improving, he said.

Talisman first reported that it was in talks with the Spanish company on July 23 and Repsol issued a similar statement in a regulatory filing the same day.

Shares of Talisman are lagging behind domestic and global peers as the turnaround plan under Kvisle takes longer than anticipated. Talisman’s stock has gained less than 1 percent in the past year, compared with a 26 percent average gain for peers on the Standard & Poor’s/TSX Energy Index and a rise of 19 percent among competitors on the S&P Global 1200 Energy Index, according to data compiled by Bloomberg. It rose 1.8 percent to C$11.93 at the close in Toronto today.

Talisman, which was targeted last year by billionaire activist investor Carl Icahn, set a goal in March to sell $2 billion in assets over 18 months. Asset sales and cost-cutting are happening at a slower pace than planned, Kvisle said today on the call.

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