Investment News: Talisman Energy deal boosts competitive position in LNG market

Talisman Energy Inc. has acquired a 3.06% stake in the Tangguh Liquefied natural gas (LNG) project in West Papua, Indonesia for US$212.5-million through the purchase of CNOOC Wiriagar Overseas Ltd. The project, which is expected to produce LNG sometime in late 2008, consists of offshore gas wells, production facilities, pipelines and LNG plant facilities with operating capacity of 7.6 million tons per year.

Blackmont Capital analyst Menno Hulshof said the acqusition serves two purposes. It settles an existing lawsuit with CNOOC and gives Talisman an advanatage in the LNG market – “a region that it already knowns very well,” he told clients in a note.

However, he considers the deal is very small. Mr. Hulshof continues to rate Talisman shares a “buy” with a $24 price target.

BMO Capital Markets’ Randy Ollenberger agrees that the impact is neutral. He rates Talisman at “market perform” with a $20 price target.