* Q4 continuing ops profit C$0.08/shr vs C$0.17 expected
* Cash flow down 24 pct
* Shares drop 1.1 pct (Adds details and updates share price)
CALGARY, Alberta, Feb 16 (Reuters) - Talisman Energy Inc TLM.TO shares fell on Wednesday after the company posted a lower-than-expected profit from continuing operations even though production rose.
Shares in the company, Canada’s third-largest independent oil producer and explorer, dropped 25 Canadian cents, or 1.1 percent, to C$22.60 after it said profit from continuing operations in the fourth quarter was C$84 million ($85 million), or 8 Canadian cents per share.
That was up 24 percent from C$68 million, or 7 Canadian cents, in the fourth quarter of 2009, but below the 17 Canadian cents per share profit expected on average by analysts, according to a survey by Thomson Reuters I/B/E/S.
“The large variance was half due to higher cash taxes and half from higher-than-expected exploration expenses,” Andrew Potter, an analyst at CIBC World Markets, wrote in a research note.
Talisman’s quarterly net loss was bigger than in the year-before quarter as higher stock-based compensation and taxes outweighed the benefits of rising commodity prices.
The company, whose North American operations are focused on shale gas properties in Pennsylvania, Texas and British Columbia, lost C$304 million, or 30 Canadian cents a share, compared with a loss of C$111 million, or 11 Canadian cents a share, a year earlier.
Cash flow was C$682 million, or 67 Canadian cents per share, down from C$921 million, or 91 Canadian cents, a year earlier.
Production from continuing operations at Talisman, which also operates in the North Sea and Southeast Asia, averaged 409,000 barrels of oil equivalent a day, up 10 percent from 371,000 boe/d in the year-earlier quarter on higher output from its shale gas properties.
$1=$0.99 Canadian Reporting by Scott Haggett and Isheeta Sanghi; editing by Peter Galloway