On December 26, 2014 7:41 pm
By: Rick Stouffer, Senior Energy Editor, Shale Energy Business Briefing
Repsol Deal Helps Steady Talisman; Execution Risk Remains: Fitch
Repsol SPA’s $8.3 billion deal for Talisman Energy is anticipated to reinforce the Calgary-based acquisition’s near-term, standalone capitalization and liquidity position, according to Fitch Ratings.
However, a weak oil price environment and the proposed consolidated capital structure could limit Repsol’s ability to implement its financial and operational strategy, heightening execution risk, and maintaining some uncertainty in Talisman’s longer term credit profile, Shale Energy Business Briefing understands.
On Dec 16, Spain’s Repsol announced the Talisman acquisition in an all-cash, partially debt-funded transaction. An investment-grade capital structure is being targeted that includes the divestment of $1 billion in non-oil linked assets and realization of $1 billion in synergies over several years.
Existing Talisman debt is anticipated to remain outstanding and assumed by Repsol post-closing, according to Fitch. The consolidated entity will have an estimated 2.4 billion barrels of oil equivalent (BBOE) in proved reserves, 680,000 BOE per day (/d) in production, and more than 1 million BOE/d of refining capacity.