Partial Press/Earnings release:
Press Release Source: Talisman Energy Inc.
Talisman Energy Generates $960 Million in Cash Flow During the Quarter
Tuesday May 3, 12:49 pm ET
Record Natural Gas Sales
First Trinidad Production
Daily Production Per Share Up 9%
CALGARY, Alberta--(BUSINESS WIRE)--May 3, 2005--Talisman Energy Inc. (TSX:TLM - News; NYSE:TLM - News) today reported its first quarter operating and financial results.
Cash flow was $960 million, an increase of 25% compared to $770 million a year earlier and $679 million in the fourth quarter of 2004. Cash flow per share was $2.59, an increase of 29% compared to $2.01 in the first quarter of 2004.
Net income was $258 million ($0.70/share) compared to $218 million ($0.57/share) a year ago and $121 million ($0.32/share) in the previous quarter.
Earnings from operations increased 89%, totaling $377 million ($1.02/share) versus $199 million ($0.52/share) a year earlier and $135 million ($0.35/share) in the fourth quarter of 2004. Earnings from operations are calculated to better illustrate Talisman's performance on an internally consistent basis. It adjusts for non-operational impacts on earnings such as the mark-to-market effect of changes in share prices on stock based compensation expense and changes to tax rates.
Production averaged 457,000 boe/d, an increase of 5% over the first quarter of 2004 and 1.5% above the fourth quarter of 2004. Natural gas production averaged 1,332 mmcf/d in the quarter, a new record for the Company and an increase of 8% over the first quarter of 2004. Talisman's North American natural gas production averaged 929 mmcf/d, an increase of 7% over the comparable quarter a year ago. Oil and liquids production averaged 235,492 bbls/d, an increase of 2% compared to a year ago. Production from Trinidad commenced during the quarter, averaging 7,826 bbls/d.
"This was a very good quarter on all fronts," said Dr Jim Buckee, President & Chief Executive Officer. "We posted solid production numbers; with daily production per share up 9% compared to a year ago, we set a new record for North American gas sales and commenced production from the Greater Angostura field in Trinidad and Tobago. We also set a new record average production rate of 482,000 boe/d in March.
"Talisman's drilling program continues to deliver growth. We had a number of sizeable development drilling successes in the North Sea, a new discovery in Malaysia/Vietnam, we drilled a record number of wells in North America and continue to build our opportunity set. The Pertra acquisition doubled the size of our operations in Norway and adds some very attractive exploration acreage. Similarly, the award of Block 15-2/01 in Vietnam will also provide new exploration opportunities.
"We generated a record $1.02/share in earnings from operations, which compares favorably with a consensus number of approximately $0.90/share. Even though this is often quoted as an earnings per share estimate, virtually all of the analysts covering Talisman provide an operating earnings numbers for the 'street' estimate.
"Cash flow was also significantly higher than any other quarter in our history. Commodity prices continue to reflect the tension between growing demand and a lack of spare productive capacity. Talisman is also virtually unhedged this year, so these higher prices significantly benefit our shareholders.
"Talisman's production forecast remains intact at between 455,000-485,000 boe/d for the year, including 10,000 boe/d of added volumes in Norway. We lost five weeks of production from the Ross and Blake fields due to some production chemistry issues. Since the shutdown, production levels have been good and the production chemistry issues are being addressed. This lost production, higher cost Norway production and a stronger than expected pound sterling also led to higher North Sea operating costs in the quarter. We expect to produce between 445,000-460,000 boe/d in the second quarter with anticipated plant turnarounds, returning to higher production levels in the third and fourth quarters.
(For additional guidance please visit Talisman's website.)
"Talisman is on track to deliver over $4 billion in cash flow for the year, or over $11 per share, assuming US$49/bbl WTI prices, US$7.00/mmbtu NYMEX gas prices and an $0.80 Canadian dollar."
Talisman First Quarter Summary
- Record North American natural gas volumes.
- Appalachia production of 120 mmcf/d, more than double the previous year.
- Record North American midstream volumes.
- Production from the Brazion b-60-E (TLM 80%) well at Monkman ranged between 60-70 mmcf/d of sales gas.
- Talisman doubled the size of its business in Norway with the acquisition of Pertra A.S. for US$175 million (including closing costs). The acquisition includes 70% of the Varg oil field and extensive exploration acreage.
- In Malaysia, South Angsi field development continued on schedule for mid-2005 startup.
- A successful exploration well and two sidetracks were drilled in the PM-3 CAA offshore Malaysia/Vietnam.
- Talisman's subsidiary signed a Petroleum Contract with a 60% interest in Block 15-2/01 offshore Vietnam.
- Production from Trinidad averaged 7,826 bbls/d in the quarter and 12,025 bbls/d in March.
Cash flow, captioned as funds from operating activities in the Consolidated Statement of Cash Flows, in addition to earnings from operations (as illustrated in the table below) are non-GAAP measures. Please refer to the section in this press release entitled Advisory Non-GAAP Financial Measures for further explanation and details.
Earnings from operations
To assist in understanding the Company's earnings from operations, the following table adjusts the Company's net income per the financial statements for certain items of a non-operational nature, on an after-tax basis. Talisman's reported results may not be comparable to similarly titled measures by other companies. The Company uses this data to evaluate performance of core operational exploration and production activities on a basis comparable between periods.
($ millions, except per share amounts)
Three months ended
March 31, 2005 2004
---------------------------------------------------------------------
Net income 258 218
Stock-based compensation (1) 116 22
Tax effects of unrealized foreign exchange
gains on foreign denominated debt (2) 3 (9)
Tax rate reductions and other - (32)
---------------------------------------------------------------------
Earnings from operations (3) 377 199
---------------------------------------------------------------------
Amounts per share - basic 1.02 0.52
---------------------------------------------------------------------
Amounts per share - diluted (4) 0.99 0.51
---------------------------------------------------------------------
---------------------------------------------------------------------
Footnotes:
1. Stock-based compensation expense relates to the appreciated value of the Company's outstanding stock options and cash units at March 31, 2005, which was first expensed during the second quarter of 2003. The Company's stock-based compensation expense is based on the difference between the Company's share price and its stock options or cash units exercise price.
2. Future tax effect relating to unrealized foreign exchange gains associated with the impact of a stronger Canadian dollar on foreign denominated debt.
3. This is a non-GAAP measure.
4. Since the introduction in mid-2003 of a cash payment feature attached to the outstanding stock options, approximately 98% of options have been exercised using the cash payment feature.
Management's Discussion and Analysis (MD&A)
|
