In a brilliant piece on Forbes earlier this week, it’s discovered that a Bernstein Research report from August points to a lot of hidden value in the oil and gas producer’s assets. Christopher Helman writes, “On a “base” case, they [Bernstein] calculate Talisman’s enterprise value as $18.9 billion,” adding that a more bullish scenario signifies a value “as high as $27.2 billion.” Both figures represent a premium of 4% on the low side and 50% on the high side.
Talisman’s assets include wells in the Marcellus and Eagle Ford shales, and outside the U.S. it has operations in Canada, Columbia, North Africa, the U.K., Norway, the Kurdistan region of Iraq, Vietnam, Malaysia, Indonesia, Papua New Guinea and Australia. According to the Wall Street Journal, the company was already attempting to sell part or all of its Kurdistan play, which it places a value of $750 million to $1.25 billion on.
Assets in Asia are also reportedly on the table, and Talisman CEO Hal Kvisle went as far as to tell the WSJ, “We are not actively seeking a buyer for the company, but if people were to express interest we would not reject it out of hand.” This statement was delivered approximately two weeks ago, so appears Mr. Icahn may have been listening.
If the activist can initiate meaningful buyout talks or asset sales, it’s not out of the realm of possibility that Bernstein’s high enterprise value estimates can be reached. Even a value in the middle range of $18.9 billion and $27.2 billion would represent an appreciation of more than 25% from Talisman’s current stock price. Regardless of where your personal valuation falls, there’s clear upside for investors who choose to follow Icahn’s newest bet.
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