Sector News

Talisman Said in Talks to Sell Marcellus Pipelines

November 18, 2014
News
(Bloomberg) – Talisman Energy Inc. (TLM) is in talks to sell its pipeline operations serving the Marcellus Shale region in New York and Pennsylvania to Regency Energy Partners LP (RGP), people with knowledge of the matter said.
 
A deal valuing the assets at more than $1 billion could be announced within three weeks, said the people, who asked not to be identified because the matter is private. An agreement hasn’t been finalized and Talisman could still select another buyer, the people said. Regency is controlled by billionaire Kelcy Warren’s Energy Transfer Equity LP. (ETE)
 
U.S. pipeline operators have been aggressively making acquisitions to better handle a surge in U.S. oil and gas production. Talisman, under pressure from activist Carl Icahn, has announced plans to sell assets in the U.S., Canada and Norway to cut costs and boost profits.
 
Talisman rose 2.3 percent to C$6.56 today at the close in in Toronto, giving the company a market value of about C$6.8 billion ($6 billion). Regency Energy rose less than one percent to $29.66 in New York.
 
Talisman, which said last year it would sell its Marcellus pipelines, has been “working through the finer details of the potential transaction with a preferred counterparty,” Chief Financial Officer Paul Smith said in a conference call with analysts on Nov. 4.
 
Citigroup Inc. (C) is advising Talisman, according to the people familiar with the matter. A spokesman for Citigroup declined to comment. Representatives for Talisman and Regency didn’t immediately respond to requests for comment.
 
Marcellus Operations
 
Talisman’s Marcellus operations consist of 240 miles of gathering and transmission pipelines served by seven compression and gas dehydration facilities, according to its website.
 
The company has been a perpetual takeover target since Icahn disclosed a stake in the Calgary-based company more than a year ago. Spain’s Repsol SA (REP) has approached Talisman about “various transactions,” Talisman said in July.
 
Regency, based in Dallas, is one of four publicly traded master-limited partnerships controlled by Energy Transfer Equity. The other three are Energy Transfer Partners LP (ETP), Sunoco LP, and Sunoco Logistics Partners LP (SXL), according to company filings.
 
MLPs get special tax breaks in exchange for distributing most of their income to investors.
 
In March, Regency closed the $5.6 billion purchase of PVR Partners LP, a deal that extended Regency’s reach into the Marcellus, the largest U.S. shale gas basin.
 
By Matthew Monks. Edited by Mohammed Hadi and Elizabeth Wollman

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