Canada’s Talisman Energy Inc is giving up its eight-year-long effort to produce oil in Peru, the company said on Thursday, as it continues to shed assets in a bid to boost its share price.
The energy producer, which replaced its CEO on Monday after an eight-month review of strategy and operations, said it could not afford to chase expensive long-term prospects in Peru.
The company, with operations in North America, the North Sea and Southeast Asia, has been discussed as the next big takeover target in the Canadian oil patch following Nexen Inc, which has agreed to be acquired by Chinese state-owned CNOOC Ltd in a $15.1 billion deal that is not finalized.
Talisman’s withdrawal from Peru will open its concessions in the Maranon Basin in the north of the country, including the 40,000 barrels of light oil it discovered in block 64, to new operators.
“We haven’t been able to generate a substantial production potential in the blocks we control in Peru, despite our discovery in block 64,” spokeswoman Veronica Bonifaz said. “After reviewing our global portfolio we’ve decided to focus on near-term liquid hydrocarbons.”
Talisman said it will work with government regulator Perupetro on the transition of its holdings as it wraps up commercial transactions.
The company currently operates blocks 64 and 103, and has non-operated interests in blocks 123 and 129 in Peru.
Shares in the firm have lagged its senior Canadian oil and gas producer peers as it struggled with decade-low natural gas prices and some production delays, such as in the Norwegian North Sea where its Yme project is more than a year behind schedule.
The indigenous rights group Amazon Watch celebrated Talisman’s latest announcement and credited persistent local opposition to oil drilling in the biodiverse region.
“Talisman’s exit sends a clear message to the oil industry: trampling indigenous rights in the rush to exploit marginal oil reserves in the Amazon rainforest is not an option,” Peru program coordinator Gregor MacLennan said in press release.
Bonifaz said Talisman’s decision had nothing to do with opposition from indigenous groups.
“We don’t operate in the territory of communities that oppose our activities, we only work in places where we have the support of communities,” she said.
