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Alaska fits Talisman plan Canada independent includes NPR-A in hunt for ‘material reserves’ Gary Park For Petroleum News
Talisman Energy shows no signs of backing away from its view that Alaska is part of its refocused future on an array of global exploration areas — including such potential flashpoints as the Kurdistan region of Iraq, Colombia and offshore Indonesia — to find oil and natural gas reserves on a grand scale.
John ’t Hart, executive vice president of global exploration for the Canadian independent, said Talisman continues to “see lots of opportunity” in Alaska, a view reinforced by Chief Executive Officer John Manzoni.
Speaking to analysts July 29, Manzoni said Talisman, operating through wholly owned unit FEX, “derisked the (National Petroleum Reserve-Alaska) program by basically writing off the wells.
“That didn’t change the nature of our program,” he said.
The intention of a seismic program in NPR-A is to “see if we can find big enough accumulations to justify the next step,” Manzoni said. “We did find hydrocarbons in the earlier wells, but we need bigger accumulations.”
Search for material reserves The prospects in Alaska seem to fit the new Talisman strategy, unveiled in May, of embarking on a global exploration program that Manzoni said gives priority to looking at the “most prolific places for the best chance of finding the material reserves to renew the company.”
He said that is a major shift from the approach taken previously of spending a “high portion of exploration dollars looking for tie-backs in more mature basins, (although) we will still do that.”
Manzoni said that if the approach is successful “we can then high-grade some of our other activities to ensure we don’t get over-stretched.”
Talisman announced a month ago that it had entered into agreements with the Kurdistan Regional Government that it hopes will establish a new core operating area.
The deal involves paying C$220 million to Kurdistan, plus further conditional contributions, representing financial support for infrastructure projects and capacity building projects for local communities.
Talisman also plans to spend C$80 million to gain a 40 percent stake in Block 44, including access to an established production-sharing contract area and a three-well commitment. In addition, it has entered into a two-year seismic services agreement with the Kurdistan Regional Government on Block 39, following which it will have the option to gain 60 percent and commit to one well in the first year.
Manzoni said the company studied the legal, regulatory, security and corporate responsibility implications before the deals were signed, but that hasn’t eased all of the concerns about entering such a volatile region.
He said Talisman believes a “constructive political accommodation (will be reached in Kurdistan) at some stage in the next few years.”
“I believe it will come in time for us to capitalize on our entry should our exploration prove successful,” he said.
Manzoni noted that the U.S. Geological Survey estimates Kurdistan has 40 billion barrels of undiscovered oil “making it one of the most prospective areas in the world.”
Unconventional strategy For now, Talisman reported “significant progress in implementing and executing (the) recently announced unconventional strategy in North America,” building on a 2.5 million net-acre unconventional land base and expanding and accelerating a number of drilling programs.
The push is taking place in the Montney area of northeastern British Columbia, the Foothills region of Alberta, the Bakken light oil play in Saskatchewan, the Utica-Lorraine gas shales in Quebec and the Appalachian shales of New York and Pennsylvania.
Buoyed by initial results so far, Talisman is boosting its 2008 capital budget by up to C$500 million, all of it directed at unconventional gas, targeting North American spending of C$2.5 billion as part of its C$5.5 billion global plan.
The stepped-up program will see the total unconventional well count increased to 160 from 130, with the rig count in the Montney area of British Columbia hiked to nine from six to complete 30 wells in the second half on top of the 18 drilled so far; 56 wells are scheduled for Bakken, with 11 drilled to date; and four wells are scheduled for Quebec.
Talisman has also picked up 26,500 acres in the Hinton area of west-central Alberta, increasing its holdings to 80,000 net acres and expanding its drilling locations to 190 from 150.
But company officials were coy about where the additional money will go beyond saying it will be divided between drilling and land acquisition. They would not say whether Talisman was among the successful bidders in the last British Columbia land sale.
Analysts Andrew Potter of UBS Securities and Stephen Calderwood of Raymond James noted that Talisman has kept the lid on results from its emerging resource plays, but Calderwood gave a vote of confidence to management, while suggesting it could build on that credibility and increase share values by being more forthcoming.
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