CEO John Manzoni's move makes Talisman sale unlikely
The chief executive's resignation makes the sale less likely for Talisman
A sale of Canada’s Talisman Energy, rumoured to be a takeover target for Chinese interests, looks less likely after chief executive John Manzoni’s resignation.
Manzoni, formerly BP’s chief executive of refining and marketing, has left Calgary-based Talisman, Canada’s fifth-largest oil company, effective immediately.
He will be replaced by board member Hal Kvisle. Kvisle was formerly the chief executive of pipeline operator TransCanada Corporation and prior to that was the Canadian president of New Zealand’s Fletcher Challenge.
Manzoni was head of BP’s refining division, but was sacked following the 2005 Texas City refinery explosion, in which 15 were killed and 170 injured. He took the helm of Talisman in 2007, but struggled to reposition the company in North America’s unconventional shale basins.
Globally, a series of problems plagued the Yme oil development, offshore Norway. Persistent delays at the platform prompted it to take a C$248 million ($253m) write-down on the project and reduce full-year production forecasts.
The operational difficulties weighed on the company’s share price, which has lost almost 40% in the past year.
Consequently, Talisman has been rumoured to be a takeover target, following the C$15 billion sale of rival Nexen to Chinese National Offshore Oil Corporation (CNOOC) on 23 July.
But Kvisle’s appointment to the top spot all but assures that Talisman is not for sale. The company took pains to assure investors that the move is not a temporary solution while it looks for a buyer, but a permanent long-term solution to address its operational woes.
The company’s shares rallied on the news, gaining almost 5% on North American stock markets. On 11 September they closed at $14.33 in New York, up from a 52-week low of $9.72 set in May.
Though Kvisle’s appointment has been interpreted as a sign that the company will carry on as a going concern, financial analysts expect Talisman to continue with a strategy of shedding non-core assets and shoring up its balance sheet.
In the past year it has raised C$2.73bn from property sales, including C$1.5bn from a joint venture with CNOOC in the North Sea.
Company officials suggested Talisman’s operations in Peru could be the next to go.
“Overall we believe, regardless of whether Talisman is open to a corporate sale, they will likely still first continue the short-term focus on rationalising assets,” said Canadian Imperial Bank of Commerce analyst Andrew Potter. “While we believed Manzoni's job was at risk given the poor share price performance, we believed the board was taking a 'wait and see' approach to see what value could be repaired through further asset sales etc before making any big changes.”
Talisman produced 435,000 barrels of oil equivalent per day in the second quarter, from a set of assets in North America, Colombia, Southeast Asia and the North Sea.