Talisman Energy shares slumped badly yesterday to a 3-month low, on continuing very weak volume. And they’re down C$1.50 in today’s morning trading. Sure, the whole oil sector has been kicked around lately; but it’s not hard to see how increasingly high-profile news coverage of Talisman’s irresponsible presence in Sudan has helped to push share price to this extremely distressed level. Talisman was recently featured in a hard-hitting, front-page story from The Washington Post (“Oil Money is Fueling Sudan’s War,” June 11). Talisman again figured prominently in a powerfully critical commentary piece in Friday’s Wall Street Journal (July 6). There it was again in the front section of Sunday’s Los Angeles Times (July 9). And Fox News Television (July 3) offered a brutal “prime-time” image of Sudan oil development and Talisman. Think this is going to get better? Think again.
Eric Reeves [July 10, 2001]
Northampton, MA 01063
Talisman has long been excoriated for its vicious complicity in Sudan’s oil-driven destruction by human rights organizations, assessment missions to Sudan, church groups, and humanitarian organizations working in the oil regions. This in turn has generated highly negative publicity for the company, with accompanying flurries of unflattering print news coverage. But the profile of Sudan has risen so dramatically in recent months that oil development in this torn land (and thus the role of Talisman Energy) was bound to increase dramatically as well.
Thus it was hardly surprising that the hugely influential Washington Post had a front-page story (June 11) focussing mainly on Talisman. Or that the Canadian Broadcasting Company (CBC) had a high-profile series on Talisman in March. Or that the Los Angeles Times published a commentary piece calling for capital market sanctions against Talisman on June 4. Or that there was massive coverage (especially in the financial press) of Talisman in the wake of the June 13th House passage of the Sudan Peace Act, which directly targeted Talisman Energy’s access to US capital markets.
But this unhappy exposure is far from over. The Wall Street Journal put Talisman squarely in the cross-hairs with its publication of a brutally critical commentary piece last week: “The divestment campaign directed against South African apartheid is, to many, a model for the current market activism aimed at the genocide-, slavery-, and terrorist-sponsoring Sudanese government—and the foreign oil companies like Talisman whose investments are providing the Khartoum regime with economic life-support.” [Commentary by Roger W. Robinson in The Wall Street Journal, July 6, 2001]
The Los Angeles Times put the story of Talisman and oil development prominently in its Sunday news section (July 8). Oil development in Sudan was a front-page story in The Baltimore Sudan (also Sunday, July 8). The Guardian and The Observer in the UK, as well as others, have highlighted Talisman recently. The Economist has blasted Talisman, as has a recent editorial in The Globe and Mail (June 20). The highly respected National Journal added its voice in its June 2 edition. Newsweek and US News & World Report have had recent stories on oil-driven destruction in Sudan, as has The Nation (June 4). News magazines from the right and the left, from the Weekly Standard to Mother Jones, all have taken dead-aim at oil development—and Talisman—in Sudan.
This has translated into the worst sort of publicity for Talisman Energy, and has clearly left oil analysts baffled. They keep declaring that the “Sudan discount” is fully factored into Talisman share price, keep touting Talisman’s great financial numbers—even as the stock continues its slide into a range where it is now only about 2.5x the predictions for this year’s cash flow per share. Let’s recall that it was a dismal 3x cash flow per share in December of 1999 that prompted CEO Jim Buckee to inaugurate Talisman’s unprecedented share buy-back—a buy-back which was renewed for the present year, and accompanied by the issuance of a (similarly unprecedented) dividend.
But the share-price ugliness just keeps on happening, and Talisman has not yet made a definitive move to exit Sudan. Pending that departure, what will win? Talisman’s superb bottom-line numbers, or the crushing infamy of its immoral investment in Sudan’s agony? The market is giving an answer.