Canadian energy explorer
Talisman Energy Inc.
) reported weak third-quarter 2012 results due to lower price
CHINA PETRO&CHM (SNP): Free Stock Analysis
TALISMAN ENERGY (TLM): Free Stock Analysis
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Alberta-based Talisman announced loss per share from continuing
operations (excluding non-operating items) of 4 cents, as against
the Zacks Consensus Estimate of earnings of 6 cents. In the
year-ago period, Talisman earned 16 cents per share. The company
decided to reduce its capital expenditure in 2013 and will keep
it within $3.0 billion.
Quarterly total revenue of $1,722.0 million declined 12.0% from
$1,956.0 million in the third quarter of 2011 but was ahead of
the Zacks Consensus Estimate of $1,707.0 million owing to
Total production during the quarter, at 415 thousand barrels of
oil equivalent per day (MBOE/d), was up 3.7% from the year-ago
level, supported by higher activity in Southeast Asia, Colombia
and the Eagle Ford shale. This was partially offset by low North
Sea production and low natural gas prices in North America.
Oil & liquids production during the quarter was down 1.0% to
159,048 barrels per day (Bbl/d). Volumes were down due to
maintenance activity in the North Sea and in Southeast Asia.
Talisman's natural gas volumes in the quarter were up 6.8% to
1,533 million cubic feet per day (MMcf/d), mainly attributable to
increases in North America.
During the quarter, Talisman's realized commodity prices dropped
12.50% from the year-ago quarter to $57.19 per barrel of oil
equivalent (BOE) mainly on account of sharply lower North
Overall, natural gas prices declined 19.2% year over year to
$4.89 per Mcf, while oil and liquids realizations averaged
$101.89 per barrel, down 6.3% from the year-ago level.
Cash Flow and Capital Expenditure
Cash flow from continuing operations during the quarter totaled
$693.0 million, down 23.2% from the third quarter of 2011.
Talisman spent $812.0 million on exploration and development
As of September 30, 2012, Talisman had cash and cash equivalents
of approximately $496.0 million and long-term debt of $5,012.0
million (including current portion) with a debt-to-capitalization
ratio of 34.40%.
We maintain our long-term Neutral recommendation on the stock.
Talisman - which entered into an agreement with
China Petroleum & Chemical Corp.
) in July to sell off its 49% equity stake in UK North Sea assets
for $1.5 billion - currently has a Zacks #3 Rank (Hold rating) in
the short run.
Over the last few years, Talisman has been disposing off its
non-core oil and gas properties around the world, thereby freeing
up capital to concentrate on longer-term oil and gas prospects in
prolific regions across the globe such as Canada, the U.S. and
the Southeast Asian belt.
Additionally, concerned by the continuing weakness in gas prices,
Talisman's capital program - since last year - specifically
focuses on the promising North American oil and liquids rich
areas in a major shift away from dry natural gas development. We
believe the company's strategic realignment will lead to a highly
visible and cost-effective production-growth profile in fiscal
While subscribing to management's outlook, we believe the
realignment of Talisman will take some time to bear results.
Questions about the company's sustainable operational efficiency
and execution abilities also remain key areas of concern, in our
As such, we see the stock performing in line with the broader