Talisman boosts drilling budget

Talisman boosts drilling budget TheStar.com -

Business - Talisman boosts drilling budget

`Very promising start' to its North American unconventional natural gas exploration program
July 30, 2008

CALGARY–Talisman Energy Inc.'s second-quarter profit fell 23 per cent from a year earlier due to higher charges on stock-based compensation and losses on derivative contracts, Canada's third-largest independent oil explorer said yesterday.

Talisman, which is restructuring its assets and selling up to $3 billion of oil and gas properties, earned $426 million, or 42 cents a share, in the quarter ended June 30.
That compares with $550 million, or 53 cents a share, a year earlier when results were boosted by gains.

Stripped of hedging and stock compensation costs, Talisman's earnings from continuing operations increased 167 per cent to $846 million, or 83 cents per share, from $317 million, or 30 cents per share, in 2007.

The operating result surpassed the average forecast of analysts for a profit of 73 cents a share, as the company's oil and gas production grew more than expected.

Talisman has embarked on a strategy to jettison assets in regions where long-term production increases are in question to concentrate on such prospects as unconventional natural gas in North America, where spending is being boosted by half to $1.5 billion this year – and exploration in southeast Asia.

The additional cash for its unconventional program, to boost Talisman's capital spending budget this year to $5.5 billion from its previous $5 billion target, follows what the firm called a "very promising start" to its North American unconventional natural gas program.
Talisman said $2.5 billion of the total has been earmarked for North America, with the bulk of the cash to be spent on unconventional plays.

"We're accelerating our activities in the unconventional business partly in response to actions others are taking and partly on our own accord," CEO John Manzoni said during a conference call yesterday. "The final outcome will depend on how much we accelerate our drilling."
Cash flow, a measure of an oil company's ability to finance its projects, was $1.69 billion, or $1.66 a share, up 43 per cent from $1.18 billion, or $1.13 a share. Revenue grew to $3.16 billion from $1.92 billion.

In the second quarter, the company produced 432,000 barrels of oil equivalent a day, down 4 per cent from the same period in 2007 due to the sale of non-core assets.
From the Star's wire services