After retreating from war-torn Sudan earlier in the week by selling its stake in Sudan’s major oil project to India’s national oil company for C$1.2 billion ($760 million), Canada’s No. 2 producer, Talisman Energy, said Friday it is buying the assets of Fairman Drilling Co., FDC Venture 15 LP, East Resources Inc. and ABARTA Oil & Gas Co. Inc. for US$58.6 million. The purchase is being made through Talisman subsidiary Fortuna Energy Inc.

The deal includes about 23 Bcf of proved gas reserves (at a cost of about US$1.25/Mcf) and 10 MMcf/d of production. About half of the purchase price will be allocated towards land, seismic and other assets, including tax pools. Talisman will acquire 268,000 acres of land in New York State (most of which is 100% working interest), augmenting its position on the underexplored deep Trenton-Black River gas play fairway. The company has identified more than 30 development locations on the lands and plans to drill two exploration and four development wells in 2003.

“We are excited by the addition of this acreage, which will provide us with high netback, low cost, gas production and prospects close to infrastructure and markets,” said CEO Jim Buckee. “We are developing a highly prospective acreage position in the region, with the potential to develop a new core area over the next few years.”

The Trenton-Black River play in New York is similar to the Trenton oil play in Ontario, where Talisman is the largest oil and gas producer. Talisman’s Trenton expertise in seismic interpretation, drilling and completions provides a solid base to broaden its exploration and development program in the region.

Talisman exited the Sudan earlier in the week after years of criticism from human rights groups and the U.S. Congress, which accused it of helping Sudan’s Islamic government wage civil war against southern rebels. Talisman argued its presence only helped conditions in the impoverished African country.

The Sudan sale will remove about 60,000 b/d of oil from its 2003 production, which Talisman warned three weeks ago will be flat with this year’s output due to project delays. The lower projection led investors to lop more than C$1 billion off Talisman’s stock market value in early October. However, on Friday, the company’s shares were on the rise, gaining more than 2% by mid day to $58.40 but still well short of summer highs near $70/share.

Talisman’s third-quarter earnings jumped 25% because of higher oil prices and strong oil-and-gas production. The producer posted a profit of C$151 million ($97 million), or C$1.06 per diluted share, compared to C$121 million, or 85 cents per diluted share. Cash flow rose to C$657 million from $587 million.

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