* Repsol to buy Canada's 5th largest oil producer
* Repsol offers 56 pct premium to Talisman market value
* Talisman board recommends shareholders accept offer (Recasts, adds Talisman CEO comments, updates share price)
By Julien Toyer and Jose Elías Rodríguez
MADRID, Dec 16 (Reuters) - Spain's Repsol has agreed to buy Talisman Energy, Canada's fifth-largest independent oil producer, for $8.3 billion as the drop in oil prices pushes energy companies to take the plunge on big M&A deals.
Repsol will also take on $4.7 billion of Talisman's debt.
A near halving in the oil price since June has lowered price tags on producers such as Talisman, spurring renewed interest from Repsol, which had long been searching for oil and gas assets in North America and elsewhere.
But analysts said the Spanish company had paid a hefty price for the embattled Canadian company and in the long term it could have to consider a sale of its 30 percent stake in Gas Natural , a move Repsol said was not in the works.
"We don't need to sell our stake in GasNat (Gas Natural) to do this deal. For us GasNat brings stability, dividends, optionality," Repsol Chairman Antonio Brufau told analysts.
The proposed acquisition will boost Repsol's exploration and production arm and fill a gap left by the seizure of its Argentine business, YPF, in 2012. It will also help to cut a reliance on high-risk oil-producing areas such as Libya and Venezuela.
Chief Executive Josu Jon Imaz said: "It's the right moment because now our valuation of Talisman assets is higher than the price we are paying." He said Talisman had what Repsol was looking for: growth in upstream business, geographical diversification and shale assets.
Repsol shares fell 0.4 percent to 5.64 euros. Shares in Talisman closed up 48 percent at C$8.84 in Toronto.
Weighed down by problem-plagued and unprofitable North Sea operations, Talisman shares had dropped nearly two-thirds in the year before the Repsol offer as its struggled to cope with falling prices.
"Our progress has been limited by our capital obligations in the North Sea and elsewhere, which ... affected our ability to fund growth opportunities," Hal Kvisle, Talisman's chief executive, said.
Kvisle said Talisman's ability to continue as an independent company had been quite a bit better when oil was between $90 and $100 and it was difficult to negotiate with a potential buyer like Repsol in a falling commodity price environment.
"It takes a long-term view at a time like this, it's not easy," he added.
Along with the North Sea assets, most of which are in a joint venture with China's Sinopec, Talisman brings profitable North American shale assets and oil properties in South America, Southeast Asia and elsewhere.
Kvisle said a 300,000 acre (121,410 hectare) position in the hotly-tipped Duvernay shale play in west-central Alberta was one of the first assets Talisman started discussing with Repsol.
Barclays analysts said in a note: "For this price Repsol gets a business that is free cash flow negative with a problematic North Sea business of questionable value, but also what it considers attractive assets in Canada, Latin America and Southeast Asia."
Under the proposed deal, the $8.3 billion in cash Repsol will pay for Talisman shares represents a 56 percent premium to the Calgary-based company's market value of $5.33 billion on Monday.
The Spanish company said the acquisition would boost its oil production by 76 percent to 680,000 barrels per day, while its reserves would increase 55 percent.
Talisman's board has approved the deal unanimously.
Repsol plans to issue about 5 billion euros in hybrid debt to secure its investment grade credit rating after the deal, due to close by mid-2015.
Repsol was advised by JP Morgan. Talisman was advised by Nomura and Goldman Sachs.
$1=$1.16 Canadian Additional reporting by Scott Haggett and Nia Williams in Calgary; Editing by Jane Merriman, Peter Galloway and Tom Brown