Talisman Energy Generates $4.7 Billion in Cash Flow in 2005
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Wednesday March 1, 6:00 am ET
516,000 boe/d Fourth Quarter Production
189% Proved Reserves Replacement
CALGARY, Alberta--(BUSINESS WIRE)--March 1, 2006--Talisman Energy Inc. (TSX:TLM; NYSE:TLM) released its 2005 consolidated financial and operating results today. The Company set new quarterly and annual records for production, cash flow and earnings from operations.
Cash flow(1) increased 60% to $4,672 million ($12.69/share), compared to $2,916 million ($7.61/share) a year ago. The Company generated $1,468 million ($4.01/share) in cash flow during the fourth quarter, more than double the $679 million ($1.78/share) a year earlier.
Net income was $1,561 million ($4.24/share), an increase of 139% over the $654 million ($1.71/share) in 2004. Net income during the fourth quarter was $533 million ($1.45/share), an increase of 340% versus $121 million ($0.32/share) a year ago.
Earnings from operations(1) were $2,058 million ($5.59/share), compared to $764 million ($1.99/share) in 2004. During the fourth quarter of 2005, Talisman generated $621 million ($1.70/share) in earnings from operations. This was a 322% increase over the $147 million ($0.39/share) for the comparable period a year earlier.
Talisman increased its annual production by 7% to 470,000 boe/d. Oil and liquids production was up 9% to 249,984 bbls/d. The 21,550 bbls/d increase came predominantly from the North Sea (up 10,855 bbls/d) and the first year of production from Trinidad and Tobago, which averaged 10,111 bbls/d. Talisman increased natural gas production by 5% to 1.3 bcf/d. The Company grew its North American natural gas volumes by 3% to 915 mmcf/d and natural gas volumes in Southeast Asia by 9% to 284 mmcf/d.
Production in the fourth quarter averaged 516,000 boe/d, an increase of 14% over the same period in 2004. On November 18, 2005, the Company effectively acquired control of Paladin Resources plc. Paladin contributed an average of 5,650 boe/d for the year based on production from that date.
(1) The terms "cash flow" and "earnings from operations" are non-GAAP measures. Please see advisories elsewhere in this news release.
"2005 was a great year," said Dr. Jim Buckee, President and Chief Executive Officer. "We had a very strong fourth quarter, with production growth of 14%, minor hedges and cash flow per share up 125% over 2004. For the full year, we grew production per share by 11% and replaced 189% of production with high quality reserves. This includes replacement of 162% of North Sea liquids production and 117% of North America natural gas production through discoveries, additions and revisions. Talisman's momentum will continue in 2006 and beyond from a number of significant developments already in progress.
"We have continued to grow our North American gas volumes at a time when the industry is struggling to maintain production levels. Gas volumes in the fourth quarter were up 2% over the same period a year ago, averaging 907 mmcf/d. We estimate that we currently have about 100 mmcf/d of gas awaiting tie-in or completion of infrastructure, with a number of projects underway to bring this gas to market.
"North Sea liquids production was 25% above the fourth quarter of 2004. We had successful development programs in the Clyde, Claymore, Tartan, Gyda and Varg areas. In total, we drilled 28 successful oil and gas wells in the North Sea last year. The acquired Paladin assets were producing about 45,000 boe/d (worldwide) in December. I think shareholders will be very pleased with the Paladin acquisition as we continue to develop the opportunity set.
"Production in Southeast Asia was up 18% in the fourth quarter with strong demand for Corridor gas in both Indonesia and Singapore. Production volumes in the quarter also benefited from the South Angsi field in Malaysia, commissioned in August, which was producing over 17,000 bbls/d net to Talisman at year end. Elsewhere, production from the Greater Angostura Project in Trinidad and Tobago started in January 2005 and contributed over 10,000 bbls/d for the year.
"I am feeling very sanguine about the future. Our capital spending program is $4.4 billion this year, of which approximately half is directed at drilling. Talisman has no shortage of economic drilling prospects. North America accounts for approximately 45% of our total capital program. Although there have been industry-wide cost pressures, we continue to take steps to mitigate them. All of our projects are economic and we have the rigs needed to carry out our programs.
"We have a $1.6 billion capital program in the North Sea, with the newly acquired Paladin properties accounting for about one-quarter of our North Sea spending this year. We have completed about 50% of the 45,000 bbls/d Tweedsmuir Project, with first production expected at the end of the first quarter of next year. Expansion of the Corridor gas project is underway in Indonesia, with first sales to West Java also commencing in the first quarter of 2007. In Malaysia/Vietnam, the Northern Fields development is underway, which will add incremental volumes in 2008. We expect to produce between 515,000-545,000 boe/d in 2006 prior to planned asset sales and deliver top line growth of about 10% annually through at least 2008.
"Our international exploration program saw discoveries in the North Sea, Malaysia/Vietnam, Peru and Tunisia in 2005. We have a very exciting program in 2006, with 16 high impact wells planned. In Alaska, the first well of the planned two well program spud in February and is currently drilling ahead. Our first onshore exploration well in Trinidad spud at the end of September 2005 and is expected to be completed in early March, with further drilling planned for 2006. We are evaluating options in Peru, including additional drilling, to follow on from the successful Situche Central well. A further well is also planned in Qatar in the fourth quarter. We also have continuous exploration drilling in both the UK and Norwegian sectors of the North Sea. The Paladin acquisition brought acreage with many additional drilling locations and exploration upside.
"Oil and gas prices were up approximately 40% last year; I continue to believe that we remain in a higher oil price environment. Even with WTI prices averaging US$56.70/bbl, oil demand increased again last year, reaching 83 mmbbls/d. The industry needs to add an estimated 4-6 mmbbls/d of new production capacity every year to offset declines from existing fields and political unrest in many petroleum exporting countries has also kept upward pressure on oil prices. Higher prices are required to ration demand and bring on new supplies. |
