Talisman looking to sell Alaska assets

The Canadian company notes in annual filings that NPR-A and Foothills leases up for sale; company drilled five wells in Alaska

Eric Lidji

For Petroleum News

Talisman Energy appears to be looking to leave Alaska.

The Calgary-based independent, which operates in Alaska through its subsidiary FEX, wants to sell its interest in leases in northern Alaska, according to a financial filing posted by Canadian securities regulators March 8. In the filing, Talisman listed its holdings in the National Petroleum Reserve-Alaska and the foothills of the Brooks Ranges as being more than 1 million net acres and said it “has announced that these assets are for sale.”

Talisman, through FEX, owns a stake in 122 leases in the NPR-A and another 61 leases on state lands and waters, for a total of 1.7 million gross acres. While FEX owns one NPR-A lease outright, it owns the remaining 121 in a partnership with Petro-Canada.

Fellow Canadian company Suncor Energy took over Petro-Canada last year.

In its filings, Talisman also noted that it incurred a $42 million dry hole expense in Alaska in 2008, but earned $34 million in income tax credits for its Alaska exploration.

A half-busy tenure in Alaska

In May 2007, FEX said two of those wells encountered more than 225 net feet of hydrocarbon-bearing sandstones, putting the “initial estimate of contingent resources present” at 300 million to 400 million barrels net to FEX. But FEX immediately tempered any excitement by saying it needed to focus on seismic before drilling again.

Talisman sanctioned a $25 million onshore 3-D seismic program in the Smith Bay region of northern NPR-A the largest seismic program ever undertaken by the company.

In the summer of 2007, former BP executive John Manzoni took over as chief executive officer of Talisman and quickly launched a companywide strategic review aimed at getting long-term production growth from fewer fields, meaning a move toward developing a few big fields rather than numerous small satellites in maturing basins.

That didn’t bode well for the aging, satellite-strewn North Slope, but in May 2008 Talisman listed Alaska as one of nine exploration areas it would continue to explore.

With its seismic shoot completed, though, Talisman took a half-step back from Alaska in early 2009 by announcing that it wouldn’t begin drilling wells in Alaska any sooner than early 2011, saying it “takes quite a while” to process and interpret new seismic data.

“The Alaska North Slope has a lot of oil and gas to be found. The only problem is it’s hard to find commercial quality reservoirs,” John ‘t Hart, then executive vice president of global exploration for Talisman told the Alaska Support Industry Alliance, adding, “It’s a super charged system, and if you can find the right reservoir, this is a great place to be.”

Unveiling its near-term strategy in January 2010, Talisman did not detail its intentions for Alaska, but showed increasing interest in its major shale plays across North America.

FEX also holds state leases in the central North Slope. It’s unclear how many of those leases are also up for sale, or if the company plans to eventually explore on state land.