Faced with shareholder unrest and a still to-be-determined permanent CEO, Talisman Energy Inc. on Friday agreed to sell a slice of its natural gas-rich Montney formation acreage in British Columbia (BC) for C$1.5 billion.

The transaction with Progress Energy Canada Ltd. comes just two days after the first formal assessment of Montney indicated that it held an estimated 449 Tcf of natural gas, 14.9 billion bbl of natural gas liquids and 1.1 billion bbl of oil (see Shale Daily,Nov. 7).

Progress, a subsidiary of Malaysia’s state-run Petroliam Nasional Berhad (Petronas), already has a Montney position, including some that extend into land held by Talisman. The latest transaction would add 127,000 net acres, or 75%, of Talisman’s position in the Farrell Creek and Cypress areas; 65 MMcfe/d of Farrell Creek production, which is set to increase by the end of the year; and C$800 million of a remaining third-party capital carry. Talisman has had the Montney assets for about five years; it would retain the region’s gassy Groundbirch and Saturn assets, which include about 48,000 net acres of prospects.

“The sale of this long-dated position represents a strong return on our Montney investment and brings us closer to achieving the C$2-3 billion asset disposition target we set out in March this year,” said Talisman interim CEO Hal Kvisle, who formerly ran TransCanada Corp. “It is priced in line with recent major Montney transactions, further simplifies the company, and enables us to strengthen our focus on our Edson-Duvernay producing and development assets.”

Approvals are expected before the end of March, with proceeds to be used to pay down debt, Kvisle said.

Just last month, Canadian Prime Minister Stephen Harper said Petronas was looking at “further investments” in Canada after paying C$5.2 billion in 2012 to buy Progress Energy Resources (see Daily GPI,Oct. 8;Dec. 11, 2012).

Progress CEO Michael Culbert called the natural gas interests “an attractive complement to our existing North Montney asset base in northeastern British Columbia and are among the largest remaining North Montney lands not dedicated to a potential liquefied natural gas (LNG) project.”

The proposed Pacific Northwest LNG export facility, if it moves forward, would be sited on Lelu Island, BC; Japan Petroleum Exploration also has a 10% stake (see Daily GPI,March 5). Progress now produces more than 350 MMcfe/d in northeastern BC and in northwestern Alberta.

“The location, resource potential and operational synergies of these assets make this an ideal fit that expands our British Columbia resource base and increases our land position to 1.2 million acres,” said Culbert.

One thing the sale does is give Talisman some breathing room — and perhaps a bit of distance from disgruntled shareholders. During a conference call on Wednesday to discuss third quarter results, Kvisle said Talisman had four priorities. The first is to “live within our means. We were spending too much capital, particularly on long-term projects…”

The second priority, to focus capital investment programs, involves redefining Talisman in two core regions: the Americas and Asia Pacific.

“In North America, we’ve grown our liquids production by 11,000 b/d to 37,000 b/d, up 42% compared to a year ago,” said the CEO. “Despite low gas prices, many parts of our North American business are free cash flow positive to date, and we expect the North American business as a whole to be free cash flow positive in the years ahead.”

No. 3 is to improve operational performance and improve cash margins. Fourth is to “unlock the value of our portfolio,” said Kvisle, which includes selling up to C$3 billion in assets by the middle of 2014. The Progress sale achieves half of that goal.

“Over the past two months, I and my Talisman colleagues have spent a lot of time meeting with shareholders…Based on the feedback received, we think we’re on the right track. We need to deliver against our our strategic priorities, strengthen our positions in Asia Pacific and the Americas and unlock value with a real sense of urgency…

“Key takeaways were that our turnaround is taking too long, particularly around asset sales,” Kvisle said 48 hours before announcing the sale. “We continue to hear that our current portfolio is too dispersed, not sufficiently focused and we’ve been asked if we’re being bold enough in considering other alternatives.”

Another suggestion is to split Talisman into two separate companies, with North America in one and Asia businesses in another.

“While we do see the benefit of two highly focused companies, splitting the company is only valid if the two companies that arise from the split are strong and viable stand-alone entities. A split, or a variation like a spinout of one part of our businesses, would be challenging to execute today, given a number of constraints associated with our debt, our credit ratings, North Sea obligations and other tax, legal and cost considerations. We will continue to evaluate all these options on an ongoing basis.”

Kvisle said the search for a CEO continues. He said the board of directors has been considering the issue for several months but has not established a timeline.

“In my view, we still have some work to do on the other priorities, and I’ll be here until the board is satisfied that we’re in a good spot,” he said. “And I think, it’s obviously clear now, that I’ll be here at the end of 2013 and my old plans would have me not here at the end of 2014, so you can place the transition date somewhere during the year 2014.”