NEW YORK (The Deal) -- Spanish oil producer Repsol would be willing to spend its entire $9 billion war chest on Calgary-based Talisman Energy (TLM), though an offer for the Calgary-based company remains only one of several possibilities, a source with knowledge of the situation said Wednesday.

Shares in Talisman climbed almost 14% in after-market trading on the New York Stock Exchange on Tuesday, following a report that Repsol and adviser JPMorgan Chase & Co. had identified Talisman as a top target and were working on an offer.

"Yes, it [Talisman] fits the criteria that Repsol is looking for," said the source, who asked not to be named as Repsol has no firm plans to make a bid. "All possibilities are still being considered including a single large purchase or the acquisition of multiple smaller assets."

Repsol has $9 billion in cash earmarked for acquisitions and has said it will spend the money on growth projects in OECD countries. Spain's biggest oil company wants to replenish reserves and its pipeline of long-term projects following Argentina's May 2012 seizure of Repsol's 51% stake in YPF SA.

Repsol raised about $6.3 billion of the acquisition fund earlier this year when it sold $5 billion of bonds given to it by Argentina as compensation for the repatriation of YPF, and from the sale of its remaining stake in YPF.

Repsol's interest in Talisman has been piqued by its North American shale gas operations. Talisman owns low-risk and, potentially high-growth shale gas projects in Canada, where it operates in Alberta's Edson shale field and has an undeveloped stake in the liquids-rich Duvernay shale field, also in Alberta. Repsol is also interested in expanding its small U.S. shale gas operation, which would be transformed by Talisman's significant assets in the U.S. Marcellus and Eagle Ford shale gas plays.

Talisman expects to produce about 350 million to 365 million barrels of oil equivalent in 2014, about half of which will come from its North American operations, according to a July investor presentation. Most of its remaining production comes from assets in Southeast Asia, which are expected to account for about 35% of output in 2014. Talisman also has operations in the Norwegian North Sea, though mostly in late-stage projects that have been earmarked for divestment.

Talisman lost $1.2 billion in 2013 as capital expenditure outstripped its about $1.8 billion of cash from operations. It had about $5.2 billion of debt at the end of 2013.

Shares in Talisman closed largely unchanged on in New York at $9.85 on Tuesday, before climbing in post-market trading to $11.22, up $1.37, or 13.9%. The company has a market capitalization of about $10.2 billion.