Talisman Energy Generates $1.1 Billion in Cash Flow and a Record $686 Million in Net Income During the Second Quarter
biz.yahoo.com
Thursday July 27, 8:00 am ET
CALGARY, ALBERTA--(MARKET WIRE)--Jul 27, 2006 -- Talisman Energy Inc. (TSX:TLM.TO) (NYSE:TLM) today reported its second quarter operating and financial results.
Cash flow(1) was $1,142 million ($1.04/share), an increase of 15% compared to $993 million ($0.90/share) a year earlier and $1,344 million ($1.22/share) in the first quarter of 2006. Cash flow to June 30 was $2,486 million ($2.26/share) compared to $1,953 million ($1.76/share) a year ago, an increase of 27%.
Earnings from operations(1) totalled $414 million ($0.38/share) unchanged from a year ago and down from $539 million ($0.49/share) in the first quarter of 2006. Earnings from operations to June 30 were $953 million ($0.87/share) an increase of 22% compared to $778 million in the corresponding period last year.
Net income for the quarter doubled to $686 million ($0.62/share), a new quarterly record, and compares to $340 million ($0.31/share) a year ago. Net income was $197 million ($0.18/share) in the first quarter of 2006. Net income for the first six months was $883 million ($0.80/share) compared to $598 million ($0.54/share) a year earlier.
Production averaged approximately 473,000 boe/d, an increase of 6% over the second quarter of 2005, but down from 523,000 boe/d in the first quarter, largely the result of plant turnarounds and mechanical issues. Oil and liquids production averaged 252,437 bbls/d, an increase of 10% compared to a year ago. Natural gas production averaged 1,321 mmcf/d in the quarter, an increase of 2% over last year.
"This was a very strong quarter financially, " said Dr. Jim Buckee, President and Chief Executive Officer. "Cash flow was up 15% over a year ago and we set a quarterly record for net income.
"Our major projects are proceeding smoothly. We are progressing 10 subsea tiebacks in the North Sea. The largest of these, Tweedsmuir, is 69% complete and should be on-stream towards the end of the first quarter of 2007. Tweedsmuir is expected to produce over 50,000 bbls/d net to Talisman from startup. The Wood and Enoch tiebacks are on schedule for first quarter 2007 startup and the Blane tieback is expected in the second quarter of 2007. In North America, we completed the Lynx pipeline in the third week of June and the Palliser pipeline will be operational in September. We drilled another very successful Monkman Triassic well in the quarter which tested at 27 mmcf/d.
"In Indonesia, natural gas production exceeded 200 mmcf/d during the quarter and we expect these volumes to ramp up to approximately 300 mmcf/d with the expansion of the Corridor gas plant at Suban and the new pipeline to West Java. Initial gas deliveries are expected in the first quarter of 2007. We drilled two successful development wells in Malaysia which flowed at combined rates of 6,500 bbls/day. Development of the Northern Fields is continuing with first oil on schedule for the third quarter of 2008.
"Operationally it was a difficult quarter. Compressor failures in Algeria, the North Sea and Canada collectively shut-in over 20,000 boe/d of production for varying periods. Repairs have been completed in Canada and the other repairs are expected to be completed in 4-6 weeks. These production outages, coupled with turnarounds, also contributed to the increase in unit operating costs during the quarter.
"All of this, combined with the completion of our non-core asset sales, plus previously disclosed short-term production issues in Norway and Malaysia now lead us to believe that production will average approximately 500,000 boe/d for the year. This is still expected to result in $5.0 -5.2 billion in cash flow(2) despite the weakness in North American natural gas prices and a stronger Canadian dollar.
"We are also considering significant additional non-core asset sales over the next 6-12 months. Given the appetite in the marketplace, I believe this is an opportune time to monetize some assets which may not be getting full credit in our share price, as well as allowing us to streamline, focus and simplify our operations. We are looking at selling additional non-core assets in Canada and the North Sea, as well as exiting a select number of countries where we do not see strategic value. The value of these sales could be well over a billion dollars and we intend to use the proceeds to buy back Talisman shares." |
