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Talisman, Ecopetrol buy BP exploration assets

CALGARY - Talisman Energy (TSX:TLM) is teaming up with Colombia's national oil company to buy US$1.9 billion worth of Colombian oil and gas exploration assets from BP, the oil giant struggling to contain a massive oil spill in the Gulf of Mexico.

CALGARY - Talisman Energy (TSX:TLM) is teaming up with Colombia's national oil company to buy US$1.9 billion worth of Colombian oil and gas exploration assets from BP, the oil giant struggling to contain a massive oil spill in the Gulf of Mexico.

Calgary-based Talisman said Tuesday it will pay US$858 million for a 49 per cent interest in the Colombian properties, while Ecopetrol SA will hold the other 51 per cent.

Talisman said the BP properties are "tremendous assets" that it knows well and it's getting them at a good price.

"This is an exciting opportunity and an excellent fit with Talisman's strategy of long-term profitable growth," John Manzoni, Talisman's president and CEO, said in a release.

"These are tremendous assets that our team knows well. They are attractively priced, with excellent running room and we are partnering with the pre-eminent oil and gas company in Colombia."

Talisman and Ecopetrol are already partners in several oil and gas exploration blocks in Colombia and Peru.

BP has said it will divest up to $30 billion of assets to help it pay the huge price tag for the cleanup of the area affected by the spill that dumped between 356 million litres and 697 million litres of oil into the Gulf.

Last month, the British energy giant agreed to sell assets in the U.S., Canada and Egypt to Apache Corp. for US$7 billion, including natural gas properties in Western Canada. It also plans to sell assets in Pakistan and Vietnam.

BP last week revealed it has set aside $32.2 billion to cover spill costs as it posted a $17 billion second quarter loss.

The Colombian asset sale is slated to close by the end of the year and will add about 12,000 oil equivalent daily barrels of production to the Calgary company, which has operated in Colombia for a decade.

"This acquisition builds on Talisman's large acreage position in Colombia, in close proximity to our Niscota Block, where we have announced a significant discovery with the Huron well," added Manzoni. "he acquisition also adds an ownership position in strategic infrastructure which provides a key competitive advantage. The size of the deal is very manageable for Talisman and allows us to preserve a strong balance sheet and maintain spending flexibility."

BP's Colombian properties contain about 94 million barrels of proved and probable reserves and the British company's current production is about 24,000 equivalent daily barrels.

Ecopetrol's CEO Javier Gutiérrez said the transaction will give his company strong growth prospects.

"It fits into our strategic plan perfectly, bringing new reserves, production and potential areas for our exploratory portfolio," he said.

"It also strengthens our transportation and natural gas business and increases our share in a group of fields in which we have experience and knowledge."

Talisman, which had nearly 3,000 employees at the end of 2008, is one of Canada's most international energy companies, with operations across North America, the North Sea, the Gulf of Mexico and Southeast Asia.

The company was originally part of British Petroleum, now BP plc (NYSE:BP), and was set up as a publicly traded independent Canadian oil and gas producer in 1992.

Ecopetrol is Colombia's largest integrated oil company and produces about 60 per cent of its output from the South American country. The company also operates in Brazil, Peru and the U.S. part of the Gulf of Mexico.

In Tuesday trading on the TSX. Talisman shares rose eight cents to close at $17.63 on a volume of more than 2.8 million shares.

 
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