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Talisman answers imminent Revealing new strategy soon; no clues on Alaska, but strongly points to unconventional shift Gary Park For Petroleum News
Talisman Energy may answer the pressing question about its subsidiary FEX’s future in Alaska in the third week of May when it completes the biggest shake-up in its history.
Under new Chief Executive Officer John Manzoni, who ended the 16-year reign at the top by Jim Buckee last September, the once globally minded independent seems headed for a more narrowly focused role.
“What has been successful for the last decade may not prove to be successful for the future,” Manzoni told Talisman’s annual meeting.
Then and in a conference call May 1 he laid out some broad perspectives on where the company is headed — with a heavy emphasis on unconventional gas in North America, the Norwegian North Sea, North Africa, South America and Indonesia, with the British North Sea facing a lower profile.
But Manzoni offered nothing more specific on where FEX and its National Petroleum Reserve-Alaska prospects will fit into the grand scheme of things beyond his promise in March to tie future operations to this year’s seismic survey results.
Other than writing off the costs of an NPR-A dry hole, he said then that Talisman always intended to shoot seismic in an attempt to pinpoint “bigger anchor fields” and the exploration write-off did not alter its plans for 2008 activity.
Portfolio balance a goal But the latest remarks reinforce his determination to bring Talisman’s guidance numbers under tighter control and fix a portfolio imbalance that he said means 70 percent of Talisman assets are “relatively short life,” despite forecasts for production of 435,000-460,000 barrels of oil equivalent per day in 2008 and reserves of 2.6 billion boe.
He noted that Talisman’s past wildcatting has been “characterized by exploring very close to our existing infrastructure. … That limits the size of the pools that you can go and look for.”
“We are running faster and faster and faster on a treadmill — so the bigger we get the tougher it gets,” he said. “We’re looking for more running room.”
Manzoni said the strategy that brought Talisman to its current position is not capable of generating meaningful growth in production and reserves.
Although the company will continue to invest in the British North Sea, he indicated the region is no longer viewed as a growth area, but did not approve of one analyst’s suggestion that the North Sea will become a “cash cow” to feed other plays.
“This is a company that can move fast when pointed in the right direction,” he told reporters.
Tight gas acreage He noted that Talisman has the acreage in tight gas regions of North America and has already positioned the infrastructure because of the work it has been doing in deeper gas horizons.”
“The bit that we don’t have is that we haven’t been at it for two, three, four or five years in the way that others have,” he said, with an indirect nod toward peer companies such as EnCana, Devon Energy, Chesapeake, Apache and EOG Resources.
Manzoni said Talisman’s place as the leading deep-gas driller in the conventional plays of Western Canada is headed for change as the company seeks to “lengthen its stride” as it chases shallow gas deposits trapped in shales and sand that EnCana describes as requiring large-scale repeatable programs — in effect a manufacturing operation.
Talisman starts out from a position of strength, with 2.5 million net acres of prospects in the Outer Foothills and Montney areas of Alberta and British Columbia, Saskatchewan’s Bakken formation, Quebec’s Utica and Lorraine shales and the Marcellus shales in the U.S. Appalachian basin, and will look “to some degree” for new acreage.
Manzoni said “those are the big names and we’ve got them. … We have the technical skills at least, I believe, as good as others who are doing it (and) we’re looking at ways to get ourselves up the learning curve quickly. We’re hiring new people, partnering with people.”
He said the “most immediately visible and possibly the most material” of Talisman’s new growth pursuits will be the “testing and development of our North American resources.”
Bolstered by success in the Outer Foothills tight gas play and the sudden emergence of the Quebec shale play, where Talisman is the largest landholder, the company will start pilot-testing programs this year to weigh the potential of all areas for future investment.
But Manzoni echoed one refrain from the Buckee era, suggesting a move into the Alberta oil sands is not in the cards.
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