Talisman shifts focus to unconventional gas

Talisman shifts focus to unconventional gas
DAVID EBNER
00:00 EDT Wednesday, May 21, 2008

CALGARY -- Talisman Energy Inc. plans to spend $1.3-billion in the next 18 months to evaluate the potential of unconventional natural gas on one million hectares of land it controls in North America.

The spending is part of an overhaul of the company's strategy, a process that started when new chief executive officer John Manzoni took over from long-time leader Jim Buckee last year.
Talisman has spoken about the broad ideas of its shift and late yesterday provided some details ahead of three days of meetings with investors, starting today in New York, moving to Toronto tomorrow and to Calgary on Friday.

Instead of chasing exploration opportunities around the world, Talisman is narrowing its geographic focus. It is also embracing unconventional gas, which Mr. Buckee had dismissed as uninteresting while competitors such as EnCana Corp. successfully pursued it.

Unconventional gas is in fields where the molecules are trapped in tight rock formations that are difficult to access.

With higher spending on unconventional gas, Talisman's budget this year is rising $500-million or 11 per cent to $4.9-billion and will jump a further 18 per cent to $5.8-billion if the work goes well.

"By the end of 2009, we will be able to make informed choices about ongoing levels of investment into our unconventional resource plays," Mr. Manzoni said in a statement.
As Talisman evaluates unconventional gas, it said it aims to increase production by about 6.5 per cent. In 2010, 2011 and 2012, Talisman said it hopes to push the growth to about 7.5 per cent.

Talisman stock has climbed quickly recently after two years of a slow decline. Since March, the shares have soared more than 50 per cent, riding surging oil and gas prices. The Toronto Stock Exchange energy index rose 3.1 per cent to another record close.

The company hopes to raise $2-billion selling assets worth 45,000 barrels a day to further focus the company's holdings. Talisman has been selling assets for several years after criticism from investors that the firm had too many things on the go.

In the first quarter, Talisman's production of oil and gas was 411,000 barrels a day.

TALISMAN (TLM)
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