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by Stockwatch Business Reporter

West Texas Intermediate crude for January delivery lost $2.14 to $57.81 on the New York Merc, while Brent for January lost $1.83 to $61.85 (all figures in this para U.S.). Western Canadian Select traded at a discount of $17.40 to WTI ($40.41), down from a discount of $17.05. Natural gas for January added 16.1 cents to $3.79. The TSX energy index lost 2.15 points to close at 193.12.

Talisman Energy Inc. (TLM) shot up past $6 before closing at $5.04, up 78 cents, on 37.8 million shares. The Financial Times has reported that Spain's Repsol is close to making a takeover offer of $6 to $8 a share. Talisman confirmed on Monday that it had been approached by Repsol about "various transactions," the same phrasing it used when the same thing happened in July, sending the stock up to $11.97 from $10.65. Those negotiations apparently fell apart at the end of August because Repsol could not line up posttakeover buyers for Taliman's undesirable assets. That will still be a problem if Repsol makes an offer now, but perhaps Talisman is cheap enough to be worth the risk. Its market cap has fallen to $4.4-billion as of yesterday's close from $12.4-billion in July. Repsol reportedly hopes to have a deal before Christmas. Assuming an offer is laid on the table, the interesting question is whether shareholders will accept it. Talisman's stock, adjusted for 3-for-1 splits in 2004 and 2006, is trading at levels it has not seen since 2000. It is close to one-fifth of its price in early 2011. Oil's recent plunge is part of that, but Talisman has also struggled for years with high costs, inefficient operations and heavy net debt ($4.3-billion as of Sept. 30). Even in good markets, it has had mixed success selling its assets to pay down debt, so its odds are that much worse today. A deal with Repsol would allow investors a quick exit and the chance to get back whatever money they can. It would also crystallize their (fairly steep) losses. One of Talisman's best-known shareholders, for example, is the billionaire activist investor Carl Icahn. He started buying late last year and paid a total of $894.5-million (U.S.) for his 76 million shares. Even if Talisman attracts a bid of $8 a share, he would still be out hundreds of millions of dollars.

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