Talisman share price falling out of bed - Could impact Lessors

Landowners leased to TEUSA (Talisman) might find of interest recent developments with their Lessee's share price.  As you can see, the price has roughly halved in the past three months:

Click here then click on "3 month"

Long-time President John Manzoni is no longer in charge up in Calgary.  He has not been in charge since 2012.  Hal Kvisle is "the man" now, though with the stock price in free fall one must wonder for how much longer.  And of course having Carl Icahn in the mix is always a concern:

About Carl and important Talisman stuff related to the Marcellus

In-the-shale landowners leased to Talisman will find interesting the portion of that article following the heading "Shale Plays".  It's toward the end of the piece.

As you can read for yourself, the declining share price might be prompting CEO Kvisle to sell certain of Talisman's existing Marcellus holdings.  Note carefully, when your lease changes hands things can change significantly for the Lessor.  This is because treatment of Lessors can vary considerably from one gas company to another.

   

Views: 1004

▶ Reply to This

Replies to This Discussion

Permalink Reply by Frank Walker on November 20, 2014 at 3:43am

OK, an update:

It appears I might have misread that article.  Talisman is apparently wanting to sell their Marcellus pipelines.  Here is more on that:

Pipelines not leases

Sorry, I do not know what impact on Lessors a sale by Talisman of their pipeline assets might have. I hope this is not akin to the move taken by Chesapeake, where they commenced selling gas at the wellhead.

Here is what I can tell you:

Natural gas traditionally has been sold in "pipeline ready" form.  Gas at the the wellhead is most often not pipeline ready.  If you have a "no deductions" lease, you have until now been receiving a sale price which reflects value added to make your gas pipeline ready.  If Talisman begins selling gas at the wellhead, your sale price will reflect only the value of "unfinished" gas.  And "unfinished" gas is worth less than pipeline ready gas.

Most participants here already know.  But finishing of natural gas involves things like dehydration, compression, transportation, "adjustment" of the gas's BTU content to meet pipeline standards, etc., etc..

Permalink Reply by Barbara on November 20, 2014 at 3:07pm

Hi Frank,

 Is there a way to post this to the Bradford County PA group?  I think this would be of interest for people in that area, I am not sure everyone checks on General Shale discussions. 

Thank you.

Barbara

Permalink Reply by Frank Walker on November 21, 2014 at 12:48am

Sure.  No problemo.

Permalink Reply by Frank Walker on November 21, 2014 at 1:25am

After further reflection, it might have been inappropriate for me yesterday to suggest Talisman would engage in the kind of sleazy behavior customary at Chesapeake.  I did state that I didn't know the impact on Lessors of a Talisman sale of its pipelines.  Probably should have added to that:  "if any".

I live in Bradford County, PA.  Chesapeake operates here, and stories of their misbehavior, court challenges, investigations of their practices . . all that stuff . . are legion here.  Then there is this thread provided us only a short while ago by Ron Hale:

Chesapeake "business practices"

But Talisman, at least up until now, is not Chesapeake.  And to suggest otherwise in the absence of any evidence was most likely a mistake.  Also, the Chesapeake thing involves what is, in effect, self dealing.  There is nothing to suggest Talisman is attempting to do a straw sale of its pipelines.  And an arms-length sale to a genuine third party, absent any "side agreements",  would be legitimate.  So while this Talisman pipeline deal is something Talisman Lessors should know about and watch, it is not cause for alarm yet.

One other thing:

Very, very few Lessors have "no sale at the wellhead" leases.  I do not have such a lease.  The danger to Lessors of wellhead sales became known, at least to me, only circa 2011 or 2012.  Prior nobody gave it much thought because industry practice was universally to sell gas in finished "pipeline ready" form.

Thus, unleased landowners should make every effort at lease time to include a "no wellhead sales" provision in their lease.  Of course this only applies to landowners trying for a "no deductions" situation.  Wellhead sale of natural gas allows the gas company to circumvent "no deductions" provisions in a lease.  This includes even such provisions which were customary in leases from four and five years ago and thought at the time (by landowners) to be really good and tight and protective of our interests. 

Permalink Reply by Frank Walker on November 21, 2014 at 7:41am

Here is another article relating to Talisman's possible sale of their Marcellus pipeline assets:

More on possible pipeline sale

Seems to me there are two ways this could go down:

1.  Talisman sells their Marcellus pipelines, compressors, etc., to raise capital.  Then Talisman (in effect) pays rent to the new owner of these assets which, after all, Talisman still needs to enable them to process and transport the natural gas from their Marcellus wells.

OR

2.  Talisman sells their Marcellus pipelines, compressors, etc., to raise capital.  At time of sale Talisman enters into an agreement with the new owner of these assets to purchase natural gas at all the wellheads connected to the new owner's pipelines.  The new owner of the pipelines would then transport and process the natural gas they have bought from Talisman at the various wellheads.

In the event of 1., above, I see no impact on Lessors.

In the event of 2., above, I can see a possibility of impact.

RSS

© 2024   Created by Keith Mauck (Site Publisher).   Powered by

Badges  |  Report an Issue  |  Terms of Service