TOP TWENTY UPDATE/TALISMAN ENERGY
TALISMAN'S LIQUIDS PRODUCTION EXCEEDS 100,000 BBLS/D - CASH FLOW UP 29%
CALGARY, October 31 /CNW/- Talisman Energy Inc. today announced that its
cash flow for the nine months ending September 30, 1996 totaled $479 million,
an increase of 29% over the same period in 1995. Cash flow per share was
$4.69 up 22% from 1995.
``Talisman is on track to meet its growth targets. We've increased our
Western Canadian budget by $40 million to continue our successful oil drilling
programs and we will continue to strengthen our domestic base,'' said Dr. Jim
Buckee, President and Chief Executive Officer. ``The completion of the
Beatrice, Buchan and Clyde transaction will advance our North Sea strategy and
establish Talisman's operating position in a core area. The Corridor gas
project has passed a number of milestones during the quarter. We continue to
be optimistic about our prospects in Algeria.''
Highlights include:
- Net income of $68 million for the first nine months, an 84% increase
over the level of a year ago.
- Liquids production of 101,429 bbls/d in the quarter, and year-to-date
liquids production of 97,292 bbls/d.
- Agreement to acquire operated interests in the Beatrice, Buchan and
Clyde fields in the North Sea.
- Corridor construction start in Indonesia and extension of the Corridor
Production Sharing Contract.
- Sumpal 2 natural gas discovery in Indonesia.
- MLNE-1 oil discovery in Algeria.
- Two new Saskatchewan oil pool discoveries.
- Approval of West Brae development for late 1997 production.
Financial Highlights
Three Months Ended Nine Months Ended
------------------ -----------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1995 1996 1995
-------------------------------------------------------------------------
Cash flow ($ million) 160 116 479 372
Cash flow per share ($) 1.47 1.21 4.69 3.86
Net income ($ million) 18 4 68 37
Net income per share ($) 0.17 0.04 0.67 0.39
Increased crude oil production and improved prices generated a 38%
increase in third quarter 1996 cash flow compared with the third quarter of
1995. Net income in the quarter increased almost five-fold from the same
period in 1995. Gross sales jumped 45% to $342 million for the three months
ended September 30, 1996, from $236 million in the same period in 1995.
Talisman's realized oil prices for the third quarter averaged $26.47 per
bbl, up 26% from a year earlier as world oil prices continued to increase.
Talisman's Canadian natural gas price averaged $1.57 per mcf in the three
months ended September 30, 1996, up from $1.27 per mcf received in the same
period in 1995. North Sea natural gas prices rebounded to $3.41 per mcf in
the third quarter of 1996 after averaging $3.09 per mcf in the first half of
the year. North Sea gas prices averaged $3.46 per mcf in the third quarter of
1995.
Three Months Ended Nine Months Ended
------------------ -----------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
Averaged realized prices 1996 1995 1996 1995
------------------------------------------------------------------------
Oil and liquids ($/bbl) 26.47 21.07 24.98 22.23
Natural gas ($/mcf) 1.74 1.43 1.82 1.56
In the three months ended September 30, 1996, conventional operating
expenses averaged $4.76 per barrel of oil equivalent (BOE) versus $4.60 per
BOE for the same period in 1995. This increase is primarily attributable to
increased production from the North Sea. Talisman's North Sea production
generates higher product netbacks despite the higher unit operating costs
associated with offshore operations. General and administrative expenses
averaged $0.85 per BOE in the three months ended September 30, 1996, compared
to $0.80 per BOE in 1995. Depreciation, depletion and amortization per BOE in
the third quarter declined to $6.37 per BOE from $6.90 per BOE in 1995. Dry
hole expense in the quarter primarily relates to activity in the North Sea and
Western Canada.
Gains on minor property dispositions, included in other expense,
contributed $16 million to net income ($27 million before income taxes) in the
first nine months of 1996, compared with $22 million ($39 million before
income taxes) in the same period of 1995. No significant minor property gains
or losses were recorded in the third quarter.
Current income taxes primarily relate to the United Kingdom and the Ogan
Komering Block in Indonesia. Petroleum revenue taxes (PRT) of $12 million in
the third quarter include approximately $9 million of current taxes associated
with the Goal properties in the United Kingdom.
Talisman completed the acquisition of the Ross field in the North Sea in
the third quarter. Long-term debt issued to finance the acquisition was
partially offset by repayments from operating cash flow. At September 30,
1996, long-term debt totaled $918 million.
Talisman spent a total of $145 million in the third quarter on
exploration and development activities including $92 million in Western
Canada, $29 million in the North Sea, $13 million in Indonesia, and $11
million in other locations, including Algeria.
Production Highlights
Three Months ended Nine Months ended
------------------- -------------------
Oil & Liquids (bbls/d) Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1995 1996 1995
------------------------------------------------------------------------
Canada 44,553 41,905 43,287 40,015
North Sea 31,639 18,736 32,310 18,736
Indonesia 25,237 18,816 21,695 17,731
------ ------ ------ ------
101,429 79,457 97,292 76,482
During the third quarter, Talisman's liquids production averaged 101,429
bbls/d, an increase of 28% over the same period in 1995. Canadian liquids
production was up 6% from the third quarter of 1995 and 2,261 bbls/d from the
second quarter 1996. Talisman's oil drilling programs continue to be very
successful. Both Chauvin and Carlyle continue to set new production records:
current production is 6,400 bbls/d at Chauvin and 12,700 bbls/d at Carlyle.
North Sea oil and liquids production growth of 69% over the third quarter
1995 reflects the acquisition of Goal Petroleum earlier this year.
Indonesian production was up 34% compared to the third quarter 1995
primarily as a result of OK Block drilling successes and a working interest
redetermination in the Air Serdang field which increased Talisman's interest
from 55% to 64.4%. Indonesian production was up 4,370 bbls/d compared with
the second quarter, including 3,218 bbls/d received to recover past OK Block
production as a consequence of the redetermination.
Three Months Ended Nine Months Ended
------------------ -------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
Natural Gas (mmcf/day) 1996 1995 1996 1995
------------------------------------------------------------------------
Canada 546 575 557 583
North Sea 55 44 84 63
-- -- -- --
601 619 641 646
Talisman's third quarter natural gas production was down 3% over the
previous year. During the current period of weak natural gas prices the
Company's strategy is to keep Canadian gas production relatively flat while
increasing spending on domestic oil.
North Sea gas production averaged 55 mmcf/d over the quarter, up 25% over
the previous year reflecting stronger gas sales and the Goal acquisition.
Third quarter production was down 36 mmcf/d from the second quarter due to
seasonal sales patterns and a planned SAGE pipeline turnaround. Start up of
the Trent and Tyne gas fields in the Southern North Sea is expected in early
November at an annualized production rate of 26 mmcf/d net to Talisman.
Exploration and Operations Review
Canada
In Canada, Talisman has increased its planned 1996 Canadian capital
spending by $40 million, to a total of $305 million. Talisman expects to
participate in 540 domestic exploration and development wells this year and is
currently averaging a success rate of approximately 91%. Talisman's 1996
operated oil drilling success rate is 96%.
The Company has made two oil discoveries at Pheasant and Melrose in
southeast Saskatchewan. The initial wells tested at 880 and 201 bbls/d of oil
respectively. A total of eight wells will be drilled on the prospects with
the potential to book several million barrels of reserves by year end.
Talisman has drilled 71 wells this year in southeast Saskatchewan at a 99%
success rate.
Talisman had a 100% drilling success rate at Warburg in central Alberta
during the third quarter of 1996. Eleven vertical wells were drilled and are
producing, on average, 44 bbls/d of oil. One horizontal well was drilled
which is producing at a rate of 300 bbls/d of oil. Thirteen additional wells,
including one horizontal are planned to be drilled before year end to continue
this very successful drilling program. The Company expects its 1996 exit rate
at Warburg to be approximately 3,400 bbls/d.
In September, Talisman constructed and commissioned a sour oil battery
and 15 km of pipeline in the Teepee Creek area of Alberta. Four Montney oil
wells were tied in and production increased by 600 bbls/d of oil. Teepee
Creek's gas production peaked in September 1996 at 18.4 mmcf/d up from 7.5
mmcf/d in September 1995, resulting from successful drilling, acquisition
efforts and infrastructure expansion including the construction of a new sweet
gas plant. Further drilling and infrastructure expansions are planned for
1997.
At Monkman in northeastern British Columbia, two new wells were brought
on production: Burnt River d-69-D (TLM 50%) at a rate of 20 mmcf/d and West
Bullmoose d-77-D (TLM 51%) at a rate of 27 mmcf/d. In the Talisman Sukunka
Facility (TLM 50%), compression was added increasing production by 16 mmcf/d
gross.
North Sea
On August 20, the Company announced its intention to acquire interests in
three producing fields in the Central North Sea: Beatrice, Buchan and Clyde.
This acquisition provides significant long-term production and cash flow,
together with operatorship, infrastructure and additional investment
opportunities to extend field life and create significant value. The
Beatrice, Buchan and Clyde transaction is expected to be complete by the end
of the year and will be reflected in the financial statements at that time.
The transition arrangements for Talisman to assume operatorship are
progressing well. The acquisition will add 19,000 bbls/d of oil and liquids
production from the end of 1996.
The Company also announced that government approval has been given to
develop the West Brae field in the Central North Sea. West Brae will be a
subsea development tied back to the Brae ``A'' platform 8.7 kilometres away.
First oil is planned for late 1997 with the field expected to produce 25,000
bbls/d in 1998, of which Talisman's share would be 3,500 bbls/d.
Following completion of the Ross field acquisition a project team has
been established to progress the Ross development to first oil production in
mid-1998.
Indonesia
Construction has started on the Corridor gas project, with full
construction expected to start in early 1997. Pertamina, the Indonesian
state-owned oil company has extended the Corridor Block production contract to
2023. As a result, Talisman (Corridor) Limited will book approximately 330
bcf of proved natural gas reserves and two million barrels of liquids this
year. Major contractual conditions of the Corridor gas project are now in
place and, accordingly, capitalization of interest expense associated with the
project will commence in the fourth quarter.
Initial testing of the Sumpal 2 well on the Corridor Block indicated a
gross gas column of some 750 metres. Initial testing on the well flowed 10
mmcf/d through a 35 metre interval. Testing and analysis of the more
prospective zones is expected to be completed in November.
Production at Tanjung has started to increase as a result of the
waterflood project. Talisman's share of production is currently 1,500 bbls/d,
up from approximately 1,000 bbls/d in the second quarter 1996.
High Impact Areas
In Algeria, the Company announced its third successive discovery on Block
405. The MLNE-1 well tested at 750 bbls/d from a 51 metre oil column and
confirms the extension of an adjacent oil field onto the block. The
participants are currently appraising the MLN-1 discovery by drilling the
MLN-2 appraisal well two kilometres north of MLN-1. Results from this
appraisal well are expected in November. Additional appraisal wells will be
drilled after MLN-2.
The Company has also started seismic programs in Trinidad and Peru which
will be continued into 1997. First drilling on these prospects is not
expected until 1998.
Talisman is also drilling a well (Maverick Springs) in Nevada with
results expected later this year.
Highlights
Three months ended Nine months ended
September 30 September 30
1996 1995 1996 1995
---------------------------------------------------- -----------------
Financial
(thousands of dollars unless otherwise stated)
Net income 18,312 3,664 68,449 37,240
Cash flow 160,406 116,488 479,484 371,990
Exploration and
development expenditures 144,541 77,102 382,381 288,968
Per common share (dollars)
Net income 0.17 0.04 0.67 0.39
Cash flow 1.47 1.21 4.69 3.86
--------------------------------------- -------- -------- ---------
Production
(daily average production - gross volumes)
Crude oil and liquids (bbls/d) 98,823 76,783 94,840 74,042
Synthetic oil 2,606 2,674 2,452 2,440
--------------------------------------- -------- -------- ---------
Total oil and liquids 101,429 79,457 97,292 76,482
--------------------------------------- -------- -------- ---------
Natural gas (mmcf/d) 601 619 641 646
Prices
Crude oil and liquids ($/bbl) 26.38 21.00 24.91 22.17
Synthetic oil 29.74 23.07 27.84 24.07
--------------------------------------- -------- -------- --------
Total oil and liquids 26.47 21.07 24.98 22.23
--------------------------------------- -------- -------- --------
Natural gas ($/mcf) 1.74 1.43 1.82 1.56
--------------------------------------- -------- -------- --------
--------------------------------------- -------- -------- --------
Consolidated Balance Sheets
September 30 December 31
(thousands) 1996 1995
---------------------------------------------------- ----------------
Assets
Current
Cash and short term investments $ 19,121 $ -
Accounts receivable 217,384 201,496
Inventories 40,710 42,812
Prepaid expenses 6,676 11,490
---------------------------------------------------- ----------------
283,891 255,798
---------------------------------------------------- ----------------
Pension plans 36,776 37,719
Other assets 12,664 13,271
Property, plant and equipment 3,283,203 2,733,482
---------------------------------------------------- ----------------
3,332,643 2,784,472
---------------------------------------------------- ----------------
Total assets $ 3,616,534 $ 3,040,270
---------------------------------------------------- ----------------
---------------------------------------------------- ----------------
Liabilities
Current
Bank indebtedness $ - $ 6,021
Accounts payable and
accrued liabilities 231,907 208,453
Income and other taxes payable 27,025 10,422
---------------------------------------------------- ----------------
258,932 224,896
---------------------------------------------------- ----------------
Deferred credits 31,448 34,283
Provision for future site restoration 53,282 44,587
Long term debt 918,256 905,979
Deferred taxes 290,084 204,182
---------------------------------------------------- ----------------
1,293,070 1,189,031
---------------------------------------------------- ----------------
Shareholders' equity
Share capital and contributed surplus 1,860,540 1,490,800
Retained earnings 203,992 135,543
---------------------------------------------------- ----------------
2,064,532 1,626,343
---------------------------------------------------- ----------------
Total liabilities and
shareholders' equity $ 3,616,534 $ 3,040,270
---------------------------------------------------- ----------------
---------------------------------------------------- ----------------
Interim statements are not independently audited.
Consolidated Statements of Income
Three months ended Nine months ended
September 30 September 30
(thousands except
per share data) 1996 1995 1996 1995
--------------------------------------------------- --------------------
Revenue
Gross sales $ 342,224 $ 235,889 $ 986,013 $ 744,393
Less royalties 62,249 35,196 154,698 111,106
--------------------------------------- --------- --------- ----------
Net sales 279,975 200,693 831,315 633,287
Other 8,161 4,435 22,462 24,947
--------------------------------------- --------- --------- ----------
Total revenue 288,136 205,128 853,777 658,234
--------------------------------------- --------- --------- ----------
Expenses
Operating 72,675 61,391 216,178 179,646
General and administrative 12,886 10,627 40,559 40,121
Depreciation, depletion
and amortization 96,781 91,640 302,540 277,637
Dry hole 16,138 3,744 35,421 11,547
Exploration 13,149 14,140 42,682 40,393
Interest on long term debt 16,129 18,099 58,431 67,464
Other (922) (12,682) (29,752) (37,485)
--------------------------------------- --------- --------- ----------
Total expenses 226,836 186,959 666,059 579,323
--------------------------------------- --------- --------- ----------
Income from continuing operations
before taxes 61,300 18,169 187,718 78,911
--------------------------------------- --------- --------- ----------
Taxes
Income tax - current 15,801 1,779 34,233 6,391
- deferred 14,841 12,726 60,918 39,786
Petroleum revenue tax 12,346 - 24,118 -
--------------------------------------- --------- --------- ----------
42,988 14,505 119,269 46,177
--------------------------------------- --------- --------- ----------
Net income from
continuing operations 18,312 3,664 68,449 32,734
Discontinued mining operations - - - 4,506
--------------------------------------- --------- --------- ----------
Net income $ 18,312 $ 3,664 $ 68,449 $ 37,240
--------------------------------------- --------- --------- ----------
--------------------------------------- --------- --------- ----------
Earnings per share (dollars)
Net income from
continuing operations 0.17 0.04 0.67 0.34
Net income 0.17 0.04 0.67 0.39
--------------------------------------- --------- --------- ----------
Average number of common shares
outstanding (thousands) 108,896 96,494 102,205 96,374
--------------------------------------- --------- --------- ----------
Consolidated Statements of Cash Flows
Three months ended Nine months ended
September 30 September 30
(thousands) 1996 1995 1996 1995
--------------------------------------------------- --------------------
Operating
Net income $ 18,312 $ 3,664 $ 68,449 $ 37,240
Items not involving a
current cash flow 128,945 98,684 368,353 294,357
Exploration 13,149 14,140 42,682 40,393
--------------------------------------- --------- --------- ----------
Cash flow 160,406 116,488 479,484 371,990
Changes in non-cash
working capital 23,241 (35,046) 46,501 (7,998)
--------------------------------------- --------- --------- ----------
Cash provided by operating
activities 183,647 81,442 525,985 363,992
--------------------------------------- --------- --------- ----------
Investing
Corporate acquisitions - - (344,945) -
Capital expenditures
Exploration, development
and corporate (145,700) (77,887) (388,009) (290,908)
Acquisitions (143,940) (34,001) (170,136) (101,261)
Proceeds of disposition
Resource properties 4,158 35,119 45,613 97,295
Investments and other 1,549 - 1,549 2,701
Changes in non-cash
working capital (4,208) (476) (18,459) 124,677
--------------------------------------- --------- --------- ----------
Cash used in investing
activities (288,141) (77,245) (874,387) (167,496)
--------------------------------------- --------- --------- ----------
Financing
Increase in long term debt
on corporate acquisitions - - 332,969 -
Long term debt repaid (50,246) (27,193) (620,010) (671,728)
Long term debt issued 164,547 7,645 299,318 434,251
Common shares issued 2,644 2,805 362,962 4,925
Deferred credits and other 256 (1,864) (1,589) (907)
Changes in non-cash working capital (61) (648) (106) (43)
--------------------------------------- --------- --------- ----------
Cash provided by (used in)
financing activities 117,140 (19,255) 373,544 (233,502)
--------------------------------------- --------- --------- ----------
Net increase (decrease) in cash 12,646 (15,058) 25,142 (37,006)
Cash and short term investments,
(bank indebtedness),
beginning of period 6,475 12,355 (6,021) 34,303
--------------------------------------- --------- --------- ----------
Cash and short term investments,
(bank indebtedness),
end of period $ 19,121 $ (2,703) $ 19,121 $ (2,703)
--------------------------------------- --------- --------- ----------
--------------------------------------- --------- --------- ----------
The 1995 figures reflect reclassifications to conform to the presentation
adopted in 1996.
Daily Production Volumes and Netbacks
Three months ended Nine months ended
September 30 September 30
1996 1995 1996 1995
--------------------------------------------------- --------------------
Daily Production Volumes
Oil and liquids (bbls/d)
Canada 44,553 41,905 43,287 40,015
North Sea 31,639 18,736 32,310 18,736
Indonesia 25,237 18,816 21,695 17,731
---------------------------------------- --------- --------- ---------
101,429 79,457 97,292 76,482
---------------------------------------- --------- --------- ---------
Natural gas (mmcf/d)
Canada 546 575 557 583
North Sea 55 44 84 63
---------------------------------------- --------- --------- ---------
601 619 641 646
---------------------------------------- --------- --------- ---------
Netbacks (1)
Canada
Oil and liquids ($/bbl)
Sales price 25.32 20.08 23.09 20.83
Royalties (6.32) (4.35) (5.67) (4.68)
Operating costs (2.71) (3.27) (2.94) (3.01)
---------------------------------------- --------- --------- ---------
16.29 12.46 14.48 13.14
---------------------------------------- --------- --------- ---------
Natural gas ($/mcf)
Sales price 1.57 1.27 1.62 1.31
Royalties (0.20) (0.17) (0.22) (0.20)
Operating costs (0.36) (0.36) (0.40) (0.36)
---------------------------------------- --------- --------- ---------
1.01 0.74 1.00 0.75
---------------------------------------- --------- --------- ---------
North Sea
Oil and liquids ($/bbl)
Sales price 27.27 21.51 26.36 23.14
Royalties (1.63) (0.15) (1.09) (0.08)
Operating costs (7.47) (6.98) (6.66) (6.68)
---------------------------------------- --------- --------- ---------
18.17 14.38 18.61 16.38
---------------------------------------- --------- --------- ---------
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