(Adds comments and details, updates share price)
By Scott Haggett
CALGARY, Alberta, Jan 13 (Reuters) - Talisman Energy Inc TLM.TO, Canada’s No. 3 independent oil exploration firm, said on Tuesday it was looking to weather a lean year and cut at least C$1 billion ($810 million) from its 2009 capital budget to cope with low oil prices.
The company said it plans to shave its 2009 spending program to about C$4 billion from the C$5 billion to $5.3 billion in expected outlays for 2008, keeping production flat from last year at about 430,000 barrels of oil equivalent per day and backing away from growth plans of between 5 and 8 percent annually announced last year.
“Largely because we’ve made significant reductions to our investment in conventional drilling in North America, we will not deliver the growth we projected in May,” John Manzoni, Talisman’s chief executive, said on a conference call.
Talisman joins almost every other Canadian oil company in reducing capital budgets to weather oil prices that have dropped by more than two-thirds since peaking in July at more than $147 a barrel. Indeed, the company said it is basing its spending program on benchmark oil prices of just $40 per barrel.
Oil prices averaged nearly $100 a barrel in 2008.
Under Manzoni, the company is widening its focus from international operations to include unconventional fields such as the Marcellus shales in Pennsylvania and the Montney gas region in British Columbia.
The company had also been acquiring lands in the prolific but technically difficult Bakken oil field in Saskatchewan. However, it has decided to sell its holdings in the area because it no longer thinks the returns there will be big enough.
However with the downturn in oil prices, the company is putting off plans to sell of some its North Sea assets until prices recover.
Talisman plans to spend about a third of its capital budget in North America, with $1 billion earmarked to expand its push into unconventional gas. Still, that’s down from about C$2.5 billion it spent in North America last year.
Its North Sea operations will account for 27 percent of its capital spending, while its Southeast Asia holdings will take 19 percent of its budget and the rest will go to exploration programs.
Talisman also warned it may have to write down the value of some of its reserves, mostly from its North Sea operations, because of low yearend commodity prices.
Reserves are judged to be economic based on prices at the end of the year though new rules are planned that would see companies use an annual average price for oil and gas.
Talisman’s shares were up 24 Canadian cents at C$12.19 late on Tuesday afternoon on the Toronto Stock Exchange. The stock has fallen 37 percent over the past 12 months. ($1=$1.23 Canadian) (Additional reporting by Scott Anderson; editing by Peter Galloway)