Morningstar Rating

Stock Research and Analysis

by Robert Bellinski, CFA

Bulls Say

Talisman's new strategy is focused on improving returns on capital through more selective investment and cutting costs. Higher returns (versus merely expanding production) are much more likely to improve the firm's languishing share price.
Talisman has a large, undeveloped acreage position in Southeast Asia, where high GDP growth and increasing electricity requirements should sustain demand for natural gas and maintain premium pricing.
Talisman's financing strategy relies on internally generated cash flows to fund exploration and development. Read more 

Bears Say

Talisman's stable production strategy can be viewed as a gamble that international oil and gas prices will remain at current levels, as the firm works to improve cash flow through cost cuts. Talisman is emulating the strategy of much larger oil companies, but doesn't have the legacy low-cost production or downstream assets to help support cash flow should oil prices fall.
Production delays and unplanned maintenance have historically plagued Talisman.
Flattening forward price curves in oil and gas markets could diminish the company's ability to effectively hedge future production. Read more 

Management

Management has demonstrated that it is a poor steward of shareholder capital. The company has produced unfavorable returns on invested capital for three of the past four years, despite elevated Brent crude oil prices. Additionally, management has developed   Read more 

Profile

Talisman Energy, based in Calgary, Alberta, explores and develops oil and gas resources around the globe, including unconventional gas in North America and offshore oil   Read more 

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