UPDATE: Talisman Energy 2012 Capital Plan, Shares Up Almost 4%
Talisman Energy Inc. (TLM.TO) shares are up 39 cents, and are currently trading at $12.79. The shares hit a high of $13.02 at 9.32 this morning.
More than 3 million shares have changed hands.
Talisman announced its capital spending plans for 2012 today. The company expects to spend slightly over US$4 billion this year, a decrease of approximately US$500 million over 2011, although it will increase spending on liquids opportunities within the portfolio. Talisman will release its year-end 2011 results on February 15.
"Our plans for 2012 have been shaped by low North American natural gas prices and a cautious view of the economic landscape in general," said John A. Manzoni, President & Chief Executive Officer. "Fortunately, our portfolio provides lots of optionality. At the same time as we trim short-term capital spending, we are investing more into profitable liquids projects, and strengthening and focusing our portfolio.
"We expect to spend approximately US$4 billion in cash capital expenditures this year. We are reducing capital spending in dry gas plays in North America, which accounts for the majority of the decrease over 2011. Underpinning this is a belief that North American gas prices will remain low for some time; we have also assumed a relatively conservative oil price forecast.
"Production from ongoing operations averaged approximately 425,000 boe/d in 2011, an increase of 9%. We expect production growth of up to 5% in 2012. Had we maintained spending into dry gas, we could have achieved our medium-term target of 5-10% growth in 2012. However, given the current gas price environment, we believe value will be maximized by focusing on profitability rather than headline production growth.
"Strategic repositioning of the portfolio will continue in 2012, through high grading the North American portfolio, seeking to reduce our interest in some North Sea assets over time, and focusing the exploration portfolio. To that end, Talisman is looking to sell between US$1 billion-$2 billion of non-core assets this year.
"We will reduce our exploration spending in 2012, with greater emphasis on oil and oil linked opportunities, with shorter term monetization options. As an example, exploration and follow-up development spending in Colombia will almost double this year to US$300 million.
"The diversity of our portfolio gives us the ability to redirect capital towards higher-return opportunities. Our three-year reserve replacement cost continues to show an improving trend as the underlying efficiency of our capital spending improves over time. We are continuing to invest to maintain our 5-10% medium-term growth target, and as a result of the shift in capital, we expect to see liquids volumes grow at more than double the rate of natural gas volumes over the next few years.
"Over the course of the past few years, we have transitioned our portfolio to secure long-term growth potential. In 2012 we are continuing to invest into this potential."
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