Canadian energy explorer
Talisman Energy Inc.
) released weak second-quarter 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 earnings per share from continuing
operations (excluding non-operating items) of 7 cents, which missed
the Zacks Consensus Estimate of 12 cents. Compared with the
year-ago period, Talisman's earnings per share dropped 56.3% from
Quarterly total revenue of $1,869.0 million declined 16.3% from
$2,234.0 million in the second quarter of 2011 but was 3.5% ahead
of our projection amid improved production.
Total production during the quarter, at 435 thousand barrels of oil
equivalent per day (MBOE/d), was up 3.6% from the year-ago level,
supported by higher activity in North American shale region and
Southeast Asia. This was partially offset by low North Sea
Oil & liquids production during the quarter was down 8.0% to
160,733 barrels per day (Bbl/d). Volumes were down in the North Sea
region, partially compensated by improved oil and liquids
production from North America and Southeast Asia areas.
Talisman's natural gas volumes in the quarter were up approximately
11.7% to 1,642 million cubic feet per day (MMcf/d), mainly
attributable to increases in North America.
During the quarter, Talisman's realized commodity prices dropped
20.1% from the year-ago quarter to $54.72 per barrel of oil
equivalent (BOE), mainly on account of sharply lower North American
Overall, natural gas prices declined 24.8% year over year to $4.70
per Mcf, while oil and liquids realizations averaged $99.93 per
barrel, down 10.7% from the year-ago level.
Cash Flows and Capital Expenditure
Cash flows from continuing operations during the quarter totaled
$803.0 million, down 10.5% from the second quarter of 2011.
Talisman spent $936.0 million on exploration and development
As of June 30, 2012, Talisman had cash and cash equivalents of
approximately $683.0 million and long-term debt of $4,746.0 million
(including current portion), with a debt-to-capitalization ratio of
We maintain our long-term Neutral recommendation on the stock.
Talisman - which recently entered into an agreement with
China Petroleum & Chemical Corp.
) 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
With core operations in the North Sea, Talisman has been adversely
affected by last year's tax hike in the region, along with
maintenance/production issues that have created investor concerns
about the company's sustainable operational efficiency and
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 2012.