Talisman Energy Downgraded - Analyst Blog
31 Ottobre 2011 - 7:30PM
Zacks
We have downgraded Canadian energy explorer Talisman
Energy Inc. (TLM) to Underperform from Outperform
following the cut in its annual production target for the second
time in about two months.
Calgary, Alberta-based Talisman is a major independent oil and
gas exploration and production (E&P) company, with operations
in North America (primarily Canada) and several international
regions.
The company conducts 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).
Last year, daily oil and gas production (before deduction of
royalties) averaged 417 thousand barrels of oil equivalent per day
(MBOE/d), of which 45% were liquids and 55% natural gas. As of
year-end 2010, Talisman had approximately 1.38 billion
oil-equivalent barrels in proved reserves, 37% of which were oil
and liquids and 63% were natural gas.
Talisman recently cut its annual production target for 2011; the
second such reduction in little over two months. The company
expects repair work in the North Sea and weather-related issues in
Canada to hurt operations and lower average output for the year.
This has renewed investor concerns about the energy outfit’s
sustainable operational efficiency and execution abilities.
Concerned by the continuing weakness in gas prices, Talisman has
lately signed two transactions with South African petrochemicals
group Sasol Ltd. (SSL) to sell its natural gas
interests in North American shale assets, as the company looks to
reposition its portfolio by moving away from dry gas development in
North America and concentrate on more oily shale plays. While
subscribing to management’s outlook, we believe the realignment of
Talisman will take some time to bear results.
Given these headwinds, we expect Talisman to perform below its
peers and industry levels in the coming months. As such, we see
little reason for investors to own the stock. Our long-term
Underperform recommendation is supported by a Zacks #5 Rank
(short-term Strong Sell rating).
Partially offsetting these negatives are the company’s high
quality asset portfolio and attractive valuation.
SASOL LTD -ADR (SSL): Free Stock Analysis Report
TALISMAN ENERGY (TLM): Free Stock Analysis Report
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