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Talisman back in play

Also: who stands to benefit from the $36 billion investment that the Malaysian government has promised to make in liquified natural gas capacity in western Canada?

When he was younger, Max Fawcett wanted to make a mint in the markets. Now as the managing editor of Alberta Venture he gets to write about them. Close enough, right? He can be reached at mfawcett@albertaventure.com

Oct 7, 2013

by Max Fawcett

Talisman Energy’s days may be numbered. That’s the logical speculation, anyways, when it’s revealed that someone like Carl Icahn owns 61 million shares (or nearly six per cent of the total float) of a company. Icahn announced his stake – over Twitter, no less – and said that he “may have conversations” with the company’s management over strategic alternatives and representation on its board of directors. Talisman shares spiked upward in late day trading as a result. Icahn, of course, isn’t the first activist investor to take a position in the company, as Toronto’s West Face Capital and the Ontario Teachers’ Pension Plan accumulated more than 10 million shares each in the second quarter of 2012. Both subsequently liquidated those holdings, and are no longer among the company’s top institutional shareholders. It remains to be seen when, and under what circumstances, Icahn would do the same.

And the Malaysian government made an eye-catching announcement Sunday evening, stating that it intends (through its holdings in Petronas) to invest $36 billion in Canada developing and exporting liquefied natural gas. That’s a whopper of a figure, and one that promises some significant upside for a few companies that could be poised to partner with Petronas. As BNN’s Jameson Berkow reported on Monday, that figure includes $11 billion for the liquefaction plant in Kitimat and $5 billion for the pipeline that it intends to partner with TransCanada on, which leaves roughly $20 billion to be spent on developing the resource. Berkow suggested two companies who could stand to benefit handsomely from that arrangement are Petrowest Energy Services (TSE:PRW) which could scoop up millions of dollars in construction contracts related to Petronas’s plans, and Calfrac Well Services (TSE:CFW), which already enjoys a working relationship with the Malaysian company and which might end up with the lion’s share of its drilling and fracking business in the Montney.

Berkow cautioned, however, that this is far from a done deal. The very fact that it was a government spokesperson rather than an official from Petronas suggests, according to one analyst he spoke with, that the comments were “window dressing, at best.” After all, the terms laid down by the Harper government just last year made the Petronas takeover of Progress Energy contingent on the fact that the company was acting as a commercial entity and not an arm of the Malaysian government. That it was a Malaysian government official announcing the landmark investment, rather than one from the company itself, was, according to Berkow’s anonymous source, “puzzling.”

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