TALISMAN ENERGY SHARE PRICE:
Signs of Distress, Reasons for Pessimism—
Eric Reeves [March 9, 2000]
Smith College 413-585-3326
Northampton, MA 01063
 TLM shares are trading at record low multiples of cash flow per share at the same time as commodity prices and production volumes, and hence cash flow, are at record highs. What’s wrong with this picture???
 Divestment news now comes daily and ever more potently from Canada—home of more than 75% of TLM shares. The American divestment effort has already pressured the sale of at least 2.5 million shares—and very likely a good deal more has been sold behind the scenes, though VERY quietly. There’s a lot represented in TLM’s distressed closing price of today (C$38.75); but at its most basic, a lot more people are selling that buying.
 Divestment will have the effect of creating more and more investors who will not own TLM at any price, fearing either a divestment campaign directed at such holdings, or the logic by which such a campaign will inevitably drive down share-price. And there is no bottoming-out when share price is being determined by divestment pressures: if investors are willing—or forced—to sell without regard to price, share price can fall indefinitely. The present record low cash flow per share can be smashed again and again and again—
 “Optics”! They simply can’t get any worse. But present high-profile anger, political and grass-roots outrage, and news coverage can go on and on and on—and WILL!
“Talisman Energy’s business partner, the Government of Sudan, bombs this hospital, bombs that school, bombs this hospital again, then switches to bomb another NGO compound.” This IS the regime that Talisman is allied with, and must remain allied with as long as it is in the Greater Nile POC.
 Talisman Energy’s other business partner, China National Petroleum Corp., hasn’t helped matters for TLM by putting up an extraordinary lightning rod over the whole project. With its attempt to float a massive IPO in the American capital markets, CNPC makes an American issue out of oil development and the ongoing destruction of Sudan.
Congress is in a fury over Chinese human rights abuses, its bellicose Taiwan talk—and increasingly, quite literally every day, by Chinese complicity in the agony of Sudan. And every time CNPC gets a “jolt,” there is a reflex response in the American investment community against buying shares connected to Sudan’s oil project. The number of public or private investment funds, of any sort, that are presently considering creating or increasing a TLM stake is dwindling to negligibility. Hence TLM’s unprecedented decision to engage in a share buy-back.
 “Radioactivity”! The Canadian press and commentary on the Talisman debacle seem always to recur to the same refrain: “If Talisman leaves, someone else will replace them.” The implications are evidently thought to be twofold: (1) Talisman’s exit won’t make a difference to Sudan; and (2), there is in fact a buyer ready at hand. To put it baldly, neither is true. The possibility of such an exit has already got the very focussed attention of the Khartoum regime; one only has to look at the wire reports out of Khartoum.
And as to another buyer (continuously—and self-interestedly—alluded to, but never confirmed by the putative replacements): ignored here are the close observations being made by the EU oil companies and other potentially interested buyers. But  and  and  and  and  aren’t lost on them, even if Canadians continue to ignore the ever more exigent investment realities.
TLM at $60-70 a share?? While it remains in Sudan?? Dream on—
[to be continued after March 20—]