Talisman Energy Begins Search for New Acquisitions

An acquisition or two could be in the cards for Talisman Energy Inc. (TLM) now that the company has moved into growth mode, according to Canaccord Adams analyst Terry Peters.

Mr. Peters told clients in a note that Talisman is expected to complete the last in a series of non-core asset dispositions, which over the past 18 months have included the sale – or pending sale – of approximately 55,000 barrels of oil equivalent per day totaling C$1.6-billion. The company has also completed share repurchases in the amount of 80 million shares to date.

“Recently completed and new major projects over the next two years should drive a return to top-line growth,” the analyst said in a research note.

He also said Talisman is positioning itself to augment internal growth with potential acquisitions, telling clients that Talisman’s new CEO John Manzoni has indicated that share repurchases will stop, and surplus cash flow will be directed towards the balance sheet.

Mr. Peters said the impact of potential acquisition scenarios he has analyzed so far have been impressive, adding the market is yet to recognize this latent growth potential.

That said, he left his C$23 price target and “buy” rating unchanged, choosing to leave his current valuation intact despite the significant impact a potential acquisition would have on it.