Talisman Energy share price continues to suffer, sinking steadily back to its pre-divestment campaign high of $49.10 (September 4, 1999). A variety of Sudan-related forces will continue to weigh on share price, especially as it becomes clearer that Talisman has no buyer for its 25% stake in Sudan’s Greater Nile project. No one can seriously believe that Talisman would not have already consummated a deal if it were possible on terms even remotely acceptable. Moreover, as analyst Tom Ebbern of TD Newcrest observed last week, following Talisman’s 15% plunge: “one reason for the drop in Talisman shares could [be] because some investors bought the stock expecting the company’s interests in Sudan were about to be sold. They liquidated in the belief the drop in crude prices has taken away potential buyers” (Calgary Herald, Sept 16, 2001).
Eric Reeves [November 19, 2001]
Northampton, MA 01063
Sudan looms as an ever greater burden on Talisman share price, and this would seem only fitting, given their ongoing mendacity concerning Sudan’s terrible realities and their own vicious complicity in those realities. The market now must consider a variety of factors that will weigh on share price going forward as Talisman stubbornly holds out for an unattainable offer on its Sudan stake.
The ongoing divestment campaign, which has already produced the sale of millions of shares of Talisman stock, continues to strip away investors—most recently the Episcopal Church in the United States and the Anglican and Lutheran Churches in Canada. In the US, every major public institutional shareholder has now divested. So has TIAA-CREF, the retirement investment vehicle for American higher education, and the largest private pension plan in the world. Additional divestments are impending. The simple fact is that there are fewer and fewer buyers for Talisman—especially public institutional buyers.
The lawsuit in US Federal District Court against Talisman, brought under the Alien Tort Claims Act, continues to gather new plaintiffs—a process that will be ongoing through the life of the suit. There have also been significant offers of additional legal assistance. Moreover, the first moves are now being taken in yet another suit against Talisman, this one on behalf of shareholders alleging disclosure failures on Talisman’s part relating to the risks of its Sudan investment.
Most consequentially, the Sudan Peace Act has been fully brought to legislative life in the US Congress, with a slate of House conferees already named—one highly committed to retaining the capital market sanctions provision that would delist Talisman from the New York Stock Exchange. The Senate conferees have not been named, but will certainly include Senator Russ Feingold (Chair of the Africa Subcommittee of the Senate Foreign Relations Committee). Senator Feingold is the only potential conferee who has declared his views on capital market sanctions, and he is solidly in support.
Other possible Senate conferees are harder to assess, but the odds are looking increasingly favorable for a version of the Sudan Peace Act that will retain capital market sanctions, though perhaps giving President Bush three to six months discretion before the delisting of oil companies operating in Sudan becomes mandatory. This particular possibility is discussed quite perspicuously in the November issue of Institutional Investor (by Jenny Anderson, “Capital Punishment,” pp. 29-32). The legislative and political issues are covered in considerable detail in this lengthy and authoritative article.
In any event, we can be sure that whatever version of the Sudan Peace Act emerges from the House/Senate conference committee will be passed overwhelmingly by both chambers—certainly by margins that will easily enable overriding a presidential veto. And such a veto seems highly unlikely: President Bush has been told in no uncertain terms by senior advisor Karl Rove and others what extraordinary political costs would attend any such veto. Notably, there has never been an explicit veto threat from the President, though his administration is known not to favor capital market sanctions.
And of course oil prices continue to slump badly, which justifies rehearsing the assessment of analyst Tom Ebbern of TD Newcrest: “one reason for the [15%] drop in Talisman shares could [be] because some investors bought the stock expecting the company’s interests in Sudan were about to be sold. They liquidated in the belief the drop in crude prices has taken away potential buyers.” So far, of course, these “potential buyers” have been the wisps of rumors emanating from Calgary; the realistic assessment of whether or not they exist should await evidence that there is cold, hard cash on the table. And so far there is no such evidence.
It remains the case that investing in Talisman Energy—investing in massive human rights abuses, investing in the exacerbating of Sudan’s ongoing human destruction and suffering—comes with higher and higher risk, whatever moral indifference marks the investment. Those working to force Talisman from Sudan don’t care if the company can’t get favorable terms for its stake; the concern is to end immediately Talisman’s extremely important technical and engineering assistance to Khartoum, and to strip away the use of Canada as moral cover for the genocidal National Islamic Front. The intention is to make an example of Talisman, one that will serve as a sober reminder in the future whenever rapacious instincts get the better of corporate obligations to behave in ethically responsible fashion in the developing world.
Talisman’s clear inability to sell its increasingly burdensome stake in Sudan’s agony suggests that this lesson has already been learned by many.