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Calgary, Alberta-based Talisman Energy (TLM - Analyst Report) entered into a sales agreement with Russian oil behemoth Lukoil Holdings.

Per the deal, Lukoil will acquire 25% interest in an offshore exploration and development block – SL-4B-10 – in the Gulf of Guinea from Talisman. However, none of the firms disclosed the financial aspects of the transaction.

Spanning over an area of nearly 850 square miles, the SL-4B-10 concession lies off the coast of Sierra Leone at a water depth of about 330 feet to 9850 feet. Talisman acts as the operator of the block, while Malaysia-based Petronas and U.K.'s Prontinal Ltd. co-partners the project with 25% and 20% stakes, respectively.

While, in 2003, the framework agreement for the SL-4B-10 block was signed, first phase of the project – comprising 2D and 3D seismic surveys – were completed in 2009. The evaluation showed the possible presence of a number of pay zones.

The offshore region of African nation – Sierra Leone is attracting many foreign companies in recent times. In late September, an affiliate of Chevron Corporation (CVX - Analyst Report) announced its plan to explore two deepwater blocks – SL-08A and SL-08B, in the region.

We maintain our long-term Neutral recommendation on Talisman – a major independent oil and gas company that conducts operations in North America (primarily Canada) and several other international regions. Talisman currently holds a Zacks #3 Rank (Hold rating) in the short run.

Recently, the company reported weak third-quarter 2012 results due to lower price realizations. Talisman announced loss per share from continuing operations (excluding non-operating items) of 4 cents, as against the Zacks Consensus Estimate for earnings of 6 cents.

However, we expect Talisman to reap benefits from its solid base business in Western Canada and in the U.K. North Sea in the coming days. The company’s major position in the prolific Marcellus Shale play in western Pennsylvania and the nascent Montney formation in northeastern British Columbia and northwestern Alberta also provides a highly visible and cost-effective production-growth profile.

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