Time To Consider These 3 Energy Companies: Talisman Energy Inc. (USA) (TLM), BP plc (ADR) (BP), Transocean LTD (RIG)

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Talisman Energy Inc. (USA) (NYSE:TLM) held an investor day open house in Toronto. Its valuation does not suggest the company is a value play at first. The company lost money last year, and is valued at 53 times its forward P/E. Shares pay a dividend yielding 2.2%. Talisman Energy Inc. (USA) (NYSE:TLM) once rolled with the good times, when it had interests in the Sudan. Since them, the company lost its way. The company is an Exploration & Production (or E&P) play, but has been doing something quite different: selling down assets. Talisman Energy Inc. (USA) (NYSE:TLM) said at the open house that it aims to sell between $2 billion and $3 billion over the next few months in 2013. Divestitures include projects in Duvernay, in the North Sea, and in the Montney.

Talisman Energy Inc. (USA) (NYSE:TLM) had explorations of up to 25% allocated for large capital programs. The company now wants to bring it down to 10% to 15%. In addition, the company is focusing on low to medium risk prospects.

Shares traded at around $11 in late-2013, and closed above $12 recently. Shares are 30% above a 52-week low, but are 20% below a 52-week high.

Talisman Energy Inc. (USA) (NYSE:TLM) could be a company for investors to consider buying. A reduction in aggressively taking on E&P activities will improve the balance sheet, reduce debt, and increase cash flow per share.

Foolish Bottom Line

Many energy companies appear to be of value, when looking strictly at their depressed share price. Investors taking a closer examination in the companies will realize that cash flows are not so solid. The companies aiming to boost cash flows and pay down debt will likely see their share values rise. Energy demand could weaken, but a healthier balance sheet limits downside in the companies mentioned.

The article Time To Consider These 3 Energy Companies originally appeared on Fool.com and is written by Chris Lau.

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