Talisman Energy Inc. announced that it has reached an agreement in the North Sea with Sinopec International Petroleum Exploration and Production Corporation, whereby Sinopec will acquire a 49% equity interest in Talisman’s UK North Sea business, Talisman Energy (UK) Limited (TEUK), for $1.5 billion.
“We are very pleased to reach this agreement with Sinopec for the next phase of development of our UK North Sea assets,” said John A. Manzoni, President and CEO. “This will provide additional resources and energy to the talented team on the ground, creating an exciting future for this portfolio. Collectively, we will invest more in the UK than Talisman would have on its own, leading to a stronger, more sustainable business.
“At the same time, Talisman has delivered on two key promises for the year. We are reducing our working interest and capital spend in the UK business by approximately half, allowing us to focus on and fund growth areas within our portfolio. This brings our total divestment proceeds to approximately $2.5 billion so far this year. We plan to utilize approximately $500 million of the proceeds from this sale to repurchase shares.”
Transaction Details
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. Talisman and Sinopec share a philosophy of safe operations, which will continue to be the number one priority of the joint venture.
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.
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.
[mappress] Press Release, July 23, 2012