Talisman Energy Stocks Climb with Icahn TweetBy: Brian Powell - October 8, 2013
The Canadian global oil and gas production company, Talisman Energy, has seen its value slide over the past several years due to poor business planning. However, stocks of Talisman Energy grew over 10% Tuesday morning following this Tweet by Carl Icahn Monday afternoon:
Through his 61 million share purchase, Icahn now owns 5.97% stake in Talisman Energy.
Icahn is the head of Icahn Enterprises, which is a diversified holding company. Icahn is known for his corporate raiding and for being an activist investor. In August, Icahn, who holds some stock in Apple, tweeted about his meeting with CEO of Apple Tim Cook. In the meeting, Icahn suggested that Cook should invest in a larger stock buy-back program. After his tweet, stocks of Apple rose more than 5%. Thus, it’s apparent that Icahn, who has over 300k Twitter followers, holds much sway with the stock market.
Icahn is hoping to use this influence and his vast experience as a businessman and stockholder to capitalize on the current restructuring of Talisman Energy. Icahn stated, in a filing with the US Securities and Exchange Commission, that he bought the stock because he believed the company was undervalued, and that he may seek a seat on the board of directors.
CEO of Talisman Energy, Hal Kvisle, has spent the past year attempting to restructure the global-sprawl of Talisman Energy and focus their efforts in more beneficial areas. Instead of allowing the company to spread too far out of his control and succumbing to the same fate as Alexander the Great, Kvisle has decided to concentrate the efforts of the company into its 2 most profitable areas – North America and Southeast Asia.
Kvisle first decided to downsize the scope of the company and decrease its debts by selling its stakes in companies in Canada and the North Sea for a profit of $3 billion. The next executive decision of Icahn was to use this money to invest in short-term projects that would give the company immediate returns, instead of focusing on long-term projects which could return larger amounts, but held no guarantee.
While Icahn may have found enough promise in these business moves to jump on-board, the more enticing aspect may have been Talisman’s latest purchase into an oil company in the Kurdish region of Iraq. Recently, the company discovered an oil reserve which could give Talisman Energy 200 million net barrels of oil.
If the Middle Eastern investment pays off, Talisman Energy could see itself reach the $27.2 billion top-end value as estimated by Berstein Research oil analyst Bob Brackett. A $9 billion increase from its low-end current evaluation of $18 billion could leave Icahn with a $500 million profit on his investment.
Hell, with Icahn’s sway and economic success, perhaps he should be the one assisting US Congressmen in their battle to end the government shutdown?
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