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Oil and Gas Stock Alert: Talisman Energy (TSX:TLM) (NYSE:TLM) Reports Third Quarter Results

  • New CEO Signals Lower Capital Spending in 2013
  • On Track to Meet 2012 Production Guidance

Category: Investment, Oil, Gas, Energy

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News about Talisman Energy Inc.

CALGARY, ALBERTA - October 30, 2012 (Investorideas.com Energy Stocks Newswire) Talisman Energy Inc. (TSX:TLM) (NYSE:TLM) reported its operating and financial results for the third quarter of 2012. All values in this release are unaudited and in US$ unless otherwise stated.

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"Our third quarter results reflect the strengths and challenges of our portfolio. Underlying production increased 6% as a result of strong performance in Southeast Asia , Colombia and the Eagle Ford, and we expect to achieve our full-year production target," said Hal Kvisle, President and Chief Executive Officer. "However, the financial benefit of these production gains is being offset by low natural gas prices in North America and lower production in the North Sea.

"We are working toward a disciplined capital plan for 2013 in the range of $3 billion, smaller and more focused than we've seen in recent years. Our objective is to fund our most promising and profitable investment opportunities, focusing on near-term cash generation while keeping our balance sheet in good shape. We will provide more details in January after we complete our annual planning process."

2012 Third Quarter Overview

Hal Kvisle appointed President and Chief Executive Officer on September 10, 2012.

Production from ongoing operations increased 6% over last year to 415,000 boe/d, driven by gas volumes in North America and liquids growth in Southeast Asia , Colombia and the Eagle Ford. Full-year production guidance remains unchanged.

Year-to-date cash flow(1) is $2.3 billion, down 10% from last year, as low North American natural gas prices and lower North Sea production were partially offset by higher production in Southeast Asia.

The net loss of $731 million in the quarter is largely the result of $443 million in after-tax impairment charges, reflecting the impact of the company's planned exit from Peru , ongoing uncertainty with the Yme development in Norway , the prohibitions on shale operations in Quebec , and declining reservoir performance at Rev in Norway.

In Malaysia, Talisman is on track to assume operatorship of the new Kinabalu PSC in late December 2012. In Vietnam the HST/HSD development remains on schedule and on budget, with first oil projected for the second half of 2013.

The company continues to make progress toward closing the $1.5 billion UK joint venture agreement with Sinopec by year-end.

Talisman has decided to exit Peru in order to focus on near-term opportunities in its three core regions.

The company declared a quarterly dividend of US$0.0675 per common share.

(1) The term "cash flow" is a non-GAAP measure. Please see advisories and reconciliations elsewhere in this news release.

Corporate Update

With the appointment of Hal Kvisle as CEO in September, Talisman is focusing on total shareholder returns and near-term profitability, in particular, generating reliable cash flow per share growth.

To achieve this, Talisman has set four key priorities:

  • We will live within our means. We will set capital spending budgets that can be funded by operating cash flows. We will pay down debt, strengthen our balance sheet and build financial capacity to act opportunistically when attractive acquisition or development opportunities come our way.
  • We will focus our capital program on projects that come onstream more quickly and deliver sustainable cash flow over the longer term. We will reduce up front capital on high-risk exploration in multiple regions around the world. We will continue to explore, but in regions we know well and in a lower risk part of the exploration spectrum.
  • We intend to build and strengthen our three core regions - the Americas , Southeast Asia and the North Sea - and we will shed non-core assets and focus on our best properties in all three regions.
  • We will improve operational performance and reduce all aspects of our cost structure. We will do things better, faster and at lower cost, maintaining our focus on safe and responsible operating practices.

Full news here

Talisman Energy Inc. is a global, diversified, upstream oil and gas company, headquartered in Canada . Talisman's three main operating areas are North America, the North Sea and Southeast Asia . The company also has a portfolio of international exploration opportunities. Talisman is committed to conducting business safely, in a socially and environmentally responsible manner, and is included in the Dow Jones Sustainability ( North America ) Index. Talisman is listed on the Toronto and New York Stock Exchanges under the symbol TLM. Please visit our website at www.talisman-energy.com.

Forward-Looking Information

This news release contains information that constitutes "forward-looking information" or "forward-looking statements" (collectively "forward-looking information") within the meaning of applicable securities legislation. This forward-looking information includes, among others, statements regarding: business strategy, priorities and plans; expected 2012 and 2013 capital spending; expected 2012 production, company-wide and regionally; planned company priorities, including setting capital spending budgets to be funded by operating cash flows, paying down debt, focussing the capital program on near-term projects with sustainable cash flow, reducing spending on high-risk exploration, strengthening core areas, disposing of non-core assets, improving operational performance and reducing the company's cost structure; expected timing of transferring of operatorship of the eastern Eagle Ford to Statoil; expected transfer of operatorship to Talisman at Kinabalu; expected drilling and first production at HST/HSD; planned closing of the Sinopec joint venture; and expected investment in the UK North Sea for improved performance, infill drilling and major projects, and related expected extension in field life and deferred decommissioning; planned cost, tie-backs, drilling, production and timing of the Montrose Area redevelopment; expected advancement of the development project at Piedemonte following agreement with local labour groups; planned drilling depth at the Huron-2 appraisal well; planned drilling and 3D-seismic program in Kurdistan; and other business strategy, plans and priorities.

The factors or assumptions on which the forward-looking information is based include: assumptions inherent in current guidance; projected capital investment levels; the flexibility of capital spending plans and the associated sources of funding; the successful and timely implementation of capital projects; the continuation of tax, royalty and regulatory regimes; ability to obtain regulatory and partner approval; commodity price and cost assumptions; and other risks and uncertainties described in the filings made by the company with securities regulatory authorities. The company believes the material factors, expectations and assumptions reflected in the forward-looking information are reasonable, but no assurance can be given that these factors, expectations and assumptions will prove to be correct. Forward-looking information for periods past 2012 assumes escalating commodity prices.

Undue reliance should not be placed on forward-looking information. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks which could cause actual results to vary and in some instances to differ materially from those anticipated by Talisman and described in the forward-looking information contained in this news release. The material risk factors include, but are not limited to: the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas, market demand and unpredictable facilities outages; risks and uncertainties involving geology of oil and gas deposits; uncertainty related to securing sufficient egress and markets to meet shale gas production; the uncertainty of reserves and resources estimates, reserves life and underlying reservoir risk; the uncertainty of estimates and projections relating to production, costs and expenses; the impact of the economy on the ability of the counterparties to the company's commodity price derivative contracts to meet their obligations under the contracts; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; fluctuations in oil and gas prices, foreign currency exchange rates and interest rates; the outcome and effects of any future acquisitions and dispositions; health, safety and environmental risks; uncertainties as to the availability and cost of financing and changes in capital markets; risks in conducting foreign operations (for example, political and fiscal instability or the possibility of civil unrest or military action); changes in general economic and business conditions; the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; and results of the company's risk mitigation strategies, including insurance and any hedging activities.

The foregoing list of risk factors is not exhaustive. Additional information on these and other factors, which could affect the company's operations or financial results, are included in the company's most recent Annual Information Form. In addition, information is available in the company's other reports on file with Canadian securities regulatory authorities and the United States Securities and Exchange Commission (SEC). Forward-looking information is based on the estimates and opinions of the company's management at the time the information is presented. The company assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change, except as required by law.

Unless the context indicates otherwise, references in this news release to "Talisman" or the "company" include, for reporting purposes only, the direct or indirect subsidiaries of Talisman Energy Inc. and the partnership interests held by Talisman Energy Inc. and its subsidiaries. Such use of "Talisman" or the "company" to refer to these other legal entities and partnership interests does not constitute waiver by Talisman Energy Inc. or such entities or partnerships of their separate legal status, for any purpose.

The completion of any contemplated disposition or acquisition is contingent on various factors, including favourable market conditions, the ability of the company to negotiate acceptable terms of sale and receipt of any required approvals for such disposition. Completion of the Sinopec joint venture transaction is subject to specified conditions precedent, including regulatory approvals and government approvals from the United Kingdom, the European Union, and the People's Republic of China

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