CALGARY, Alberta (Reuters) - Talisman Energy Inc TLM.TO, Canada's No. 3 independent oil explorer, reported a higher fourth-quarter profit on Thursday, largely reflecting Canadian tax rate reductions as operating earnings sagged on lower oil and gas production.
Talisman, whose chief executive, John Manzoni, has been reviewing which assets the company aims to keep for the long term, earned C$656 million ($671 million), or 64 Canadian cents a share, up from C$598 million, or 55 Canadian cents a share, in the year-before quarter.
Earnings from continuing operations were C$137 million, or 13 Canadian cents a share, down from C$322 million, or 30 Canadian cents, in the year-earlier quarter.
The operating results were well below the average forecast of 33 Canadian cents among analysts polled by Reuters Estimates.
In a note to clients, Andrew Potter, an analyst at UBS Securities, called the results "a big miss." He said the company's earnings, cash flow and production all fell shy of his targets.
Cash flow, a glimpse into an oil company's ability to fund development projects, slipped to C$1.01 billion, or 99 Canadian cents a share, from C$1.13 billion, or C$1.05 a share, due in part to lower volumes.
Production for the year averaged 452,000 barrels of oil equivalent per day, down 7 percent from the year before, as the company said that project delays, particularly in the North Sea, kept output shy of its targets.
"As a result of project delays production was lower than our expectations at the start of the year," CEO John Manzoni, said in a statement. "We are taking steps to strengthen or project management, which I am confident will improve delivery going forward."
Talisman's quarterly oil and gas production from continuing operations averaged 429,000 barrels of oil equivalent a day, down 2.7 percent from 441,000 boed in the fourth quarter of 2006.
Revenue was C$2.09 billion, up 14 percent from C$1.84 billion in the fourth quarter of 2006.
Talisman shares rose 6 Canadian cents to C$17.43 on Thursday on the Toronto Stock Exchange. The stock has dropped 14 percent in the past year against the backdrop of a 13 percent gain by the TSX energy group.
Reporting by Scott Haggett and John McCrank; Editing by Peter Galloway