CALGARY – There are a lot of items on Hal Kvisle’s to-do list now that he’s cut short his retirement to take the reins of Talisman Energy Ltd. — but putting the company up for sale isn’t one of them.
“We are really focused on what has to be done to make Talisman a sustainable long-term, successful Canadian company,” he said in an interview with The Canadian Press from Talisman’s downtown Calgary headquarters.
“We don’t want it to be sold. We don’t want it to be relocated. We don’t want it to be broken up. We don’t want any of those things.”
Talisman announced on Monday that John Manzoni had “agreed to” step down following a five-year tenure and that Kvisle, the retired CEO of pipeline giant TransCanada Corp. (TSX:TRP) who served on Talisman’s board, would take over.
For several months leading up to the announcement, Talisman had been shifting its strategy — slowing down development of natural gas in the face of low commodity prices and working to improve operational performance.
Kvisle said the change wasn’t spurred by a conflict with shareholders, like there had been at Canadian Pacific Railway Ltd. (TSX:CP). A bitter proxy fight between the railway’s biggest shareholder, Pershing Square Capital Management, culminated in Fred Green’s ouster as CEO in May.
Nor has there been any pressure to put the “for sale” sign up at Talisman, he added.
Fellow oil and gas producer Nexen Inc. saw its CEO, Marvin Romanow, leave in January and shortly thereafter began negotiating a deal to be sold to China National Offshore Oil Co. In July, the two announced a $15.1-billion acquisition, which the federal government is in the process of reviewing.
Rather, what prompted the changes at Talisman was “nothing more than a share price collapse from somewhere north of $20 to somewhere at the $10 level,” said Kvisle.
“You don’t have to listen too hard to know that shareholders are pretty frustrated when they see the share value of the company fall in half,” he said.
“The shareholder demand has just been one that is very legitimate, which is ‘you people need to improve your performance and you need to pursue a business model that has less risk and that has more certainty of return for shareholders.’
“I think every member of the board agrees with that.”
That’s not to say a sale is completely out of the question.
“There’s always a price at which everything is for sale,” said Kvisle.
“But the point that I’m trying to make is this is not a board that’s looking for that. This is a board that’s looking to put the company on the right path and make it succeed long-term.”
Kvisle credited Manzoni for transforming Talisman into a formidable North American shale gas player, and for building the company’s exploration presence in Colombia, Papua-New Guinea and the Iraqi region of Kurdistan.
“I think different leaders are good at different things,” he said.
“My own strategy is one of real attention to detail, real focus on operational excellence, tight-ship management, keeping everything in a predictable cost-controlled way and I think the board saw some merit in that particular approach.
“My obsession with those kinds of things is well-known to people.”
In retrospect, Talisman may have fared better had it not dived into shale gas development to the extent that it did.
“This shale gas revolution has hit us all by surprise. We were all elated when we discovered that we could get a lot of gas out of these different shales with advanced technologies and then we were somewhat dismayed when we learned that everyone else could, too,” he said.
“And so we’ve ended up with just a huge amount of gas around and this creates and oversupply and a very weak commodity price.”
He added: “It’s not a question of blaming people for what happened. It’s a question of what do you learn from things that didn’t work out?”