By OGJ editors
HOUSTON, Nov. 5 -- ONGC Videsh Ltd. (OVL), a unit of Indian state oil firm Oil & Natural Gas Corp. Ltd., entered into a definitive agreement Oct. 30 to acquire Talisman Energy Inc.'s indirectly held interest in the Greater Nile Petroleum Operating Co. (GNPOC) in Sudan for $1.2 billion (Can.). GNPOC consists of four blocks in the Muglad basin and a 1,500 km oil pipeline from the producing fields to Port Sudan on the Red Sea.
"We have consistently said that we liked our position in Sudan, the people, and the project," said Talisman's president and CEO Jim Buckee, "But, we have also always said that we would sell at the right price."
Talisman acquired a 25% interest in GNPOC in October 1998 through the acquisition of Calgary-based Arakis Energy Inc. (OGJ, Aug. 24, 1998, Newsletter). Other consortium members in GNPOC are CNPC International (Nile) Ltd. 40%, Petronas Carigali Nile Ltd. 30%, and Sudapet Ltd. 5%. GNPOC's current gross production is 240,000 b/d of oil, Talisman said.
"Talisman's shares have continued to be discounted based on perceived political risk in-country and in North America to a degree that was unacceptable for 12% of our production," Buckee said. "Shareholders have told me they were tired of continually having to monitor and analyze events relating to Sudan. We are encouraged by recent developments in Sudan, but had to weigh all possible outcomes against having a firm and fair offer, in hand, right now," he said, adding, "Selling our interest in the project resolves uncertainty about the future of this asset."
Buckee said that the company had received other proposals, but that it considered OVL's offer "to be the most attractive opportunity." On completion of the transaction, which is expected by yearend, Talisman expects to book an after-tax accounting gain of about $340 million (Can.), it said.
"Talisman intends to repurchase sufficient shares, to ensure at least 5% production per share growth on a comparable basis, with or without Sudan, for 2003 over 2002," Buckee noted.
