Talisman Energy is Now Outperform - Analyst Blog
17 Agosto 2011 - 6:30PM
Zacks
Despite a cut in its production guidance, we have upgraded
Canadian energy explorer Talisman Energy Inc.
(TLM) to Outperform from Neutral, reflecting the company’s high
quality asset portfolio and attractive valuation.
Calgary, Alberta-based Talisman Energy is a major independent
oil and gas exploration and production company, with operations in
North America (primarily Canada) and several international
regions.
The company conducts its operations in five principal geographic
segments: North America (Canada/U.S.), the U.K. (U.K. and the
Netherlands), Scandinavia (Norway and Denmark), Southeast Asia
(Indonesia, Malaysia, Vietnam and Australia), and Other (North
Africa and Trinidad and Tobago).
We like Talisman Energy for its solid base business in Western
Canada and in the U.K. North Sea, while offering exposure to some
of the most prospective unconventional plays in North America and
high-impact exploration prospects worldwide.
The company’s major position in the prolific Marcellus Shale
play in western Pennsylvania and the nascent Montney formation in
northeastern British Columbia and northwestern Alberta provides a
highly visible and cost-effective production-growth profile.
As indicated by Talisman’s capital program for 2011, it is
looking to move away from dry gas development in North America and
concentrate on more oily shale plays.
Additionally, Talisman – which has recently signed two
transactions with South African petrochemicals group Sasol
Ltd. (SSL) to sell its interests in North American natural
gas shale assets – has allocated considerable resources to develop
projects in the North Sea and Southeast Asia. We believe the
company’s policy shift will lead to a highly visible and
cost-effective production-growth profile starting from 2012.
Talisman’s financial flexibility and strong balance sheet are
real assets in this highly uncertain period for the economy. At the
end of the second quarter of 2011, the company had a cash balance
of approximately $860 million. Additionally, with no near-term debt
maturities and an undrawn $2.8 billion of credit available through
2012, the company is well equipped to face this environment.
As such, we believe Talisman Energy is favorably positioned to
continue accelerating revenue and earnings growth over the next few
quarters. Additionally, at current multiples – significantly lower
than peers – we see Talisman shares offering significant upside and
are confident of its total return potential.
SASOL LTD -ADR (SSL): Free Stock Analysis Report
TALISMAN ENERGY (TLM): Free Stock Analysis Report
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