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Alaska to remain in Talisman’s future
Gary Park For Petroleum News
Alaska has survived the paring knife in Talisman Energy’s reorganization designed to secure more stable longer-term, sustainable growth and improve its record of achieving promised targets by concentrating on “fewer, more material assets.”
When the Canadian independent unveiled its new strategy, developed over the past eight months since John Manzoni assumed leadership, the company’s interest in the National Petroleum Reserve-Alaska was unchanged.
It rated only cursory mention in a May 21 investor open house in New York, when John ‘t Hart, executive vice president of global exploration, reiterated the next step planned for wholly owned subsidiary FEX.
He said that depending on the results of winter seismic, Talisman will decide whether or not to drill in 2010.
To that end, Alaska has escaped a major shake-up that includes plans to exit operations in the Netherlands, Trinidad and Tobago and Denmark that include production of 35,000-45,000 barrels of oil equivalent per day.
Proceeds of C$1.5 billion-$2 billion are anticipated by the end of 2009 as Talisman makes a major move into its large North American unconventional land base, while chasing growth in lower-cost Southeast Asian and South American areas.
In a possible indirect nod toward Alaska, the company said in a statement that its international exploration will sharpen the focus on “larger pool sizes.”
Over the 2008-12 period, Talisman aims to add more than 150 million boe of reserves annually at a finding cost of C$5 per boe.
Alaska one of nine global exploration areas identified Alaska was identified as one of nine global exploration areas the company hopes will offset declining output from mature basins.
Manzoni said Talisman is counting on production to grow at an average annual rate of 5-8 percent as the portfolio is repositioned over the next 18 months, the bulk coming from projects nearing completion in Norway and Southeast Asia.
As the majority of the reorganization program is implemented, the overall goal is to raise production by 5-10 percent annually from the end of 2009 through 2012.
For the next 18 months, Talisman plans to spend C$1.1 billion-$1.3 billion evaluating the natural gas potential within its vast unconventional land holding base in North America, spending C$900 million drilling wells in the Outer Foothills, Montney and Bakken plays of Western Canada, as well as Quebec and Appalachia.
That spending includes a C$500 million hike in the 2008 capital budget to C$4.9 billion, with the program likely to reach C$5.8 billion in 2009, C$2.6 billion of that earmarked for North America.
Despite these spending increases, Talisman said it “expects to generate significant free cash flow over the next 18 months.”
Phil Skolnick, an analyst with Genuity Capital Markets, does not rule out Talisman following EnCana’s lead and creating separate companies to build value.
Terry Peters, an analyst with Canaccord Adams, said Talisman is abandoning its diverse portfolio in favor of putting an emphasis on assets such as resource plays that have the potential for “longer-term, sustainable growth.
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