The increasing cost of dry wells has made Talisman Energy cautious about exploration activities in Alaska, but the company will wait for the results of a 2008 seismic survey to determine the future of its Alaska operations, according to President and CEO John Manzoni, who spoke during a conference call for investors on Feb. 28.
“We’ve decided to write off our Alaskan exploration activity,” Manzoni said.
The Calgary-based oil company, which operates in Alaska through its subsidiary FEX L.P., reported dry hole costs more than doubled in 2007 to C$684 million ($704 million) up from C$296 million ($305 million) in 2006.
Of the write offs, C$322 million came during the fourth quarter of 2007.
“I believe this is a prudent action with regard to how we treat the exploration costs, but it does not change our stance on the activity, which we will pursue this year,” Manzoni said. “We’ll be shooting seismic during this winter season to follow up on the play concepts derived from last year’s drilling program and we will determine the next steps based on that seismic activity.”
In addition to Alaska exploration work, the write off included the J-2 discovery in the United Kingdom and several higher-risk and higher-cost wells in Canada. Companies often write off frontier wells because of high costs.
Manzoni said Talisman plans to unveil a long-term company-wide strategic plan in May.