Talisman Energy posts profit, cuts dry gas spending

Tue May 1, 2012 9:56am EDT
 
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(Reuters) - Talisman Energy Inc TLM.TO reported a first-quarter profit on higher production of oil and natural gas liquids from North American shales and Southeast Asia, but cut its full-year budget by 10 percent as gas prices remain weak.

The Canadian oil and gas producer, which reported a loss in the year-earlier quarter, has been adding wells in shale fields in Canada and the United States, particularly in Eagle Ford of Texas, where it has a tie-up with Norway's Statoil (STL.OL: Quote).

Talisman, like Chesapeake Energy Corp (CHK.N: Quote), Encana Corp (ECA.TO: Quote) and Progress Energy Resources Corp (PRQ.TO: Quote), has been cutting back on dry gas drilling as prices for the fuel fell 40 percent in January-March from a year ago.

Talisman lowered its 2012 budget to about $3.6 billion, and said production would be little changed from the prior year. It had earlier forecast a flat to 5 percent growth.

The company will strip out the Yme oilfield in the Norwegian North Sea from its forward production projections and will write down $248 million of the carrying value of the project, which has been facing construction delays.

CEO John Manzoni told Reuters earlier this year that the company-operated Yme field, in which Polish refiner Lotos LTOS.WA holds 20 percent stake, could remain offline throughout 2012.

BACK IN THE BLACK

In the first quarter, Talisman earned $291 million, or 28 cents per share, compared with a net loss of $326 million, or 32 cents per share, a year earlier.

Earnings from operations rose more than 6 percent to $167 million, or 16 cents per share.   Continued...