Talisman stays mum on North Slope well

Gary Park

Petroleum News Calgary correspondent

Talisman Energy is not succumbing to loose lips when it comes to releasing data from its initial exploration well on the North Slope.

Jim Buckee, chief executive officer of the Canadian independent, told a conference call March 3 that testing is under way on the Total E&P USA farm-in acreage now that the rig has been released.

But he said that because so few wells have been drilled in the National Petroleum Reserve-Alaska land, the Talisman well remains a tight hole.

Buckee said that “any information we give out, positive or negative, will help our competitors in an area where data is scarce, well costs are high and the prize is big.”

Through its Fortuna Exploration subsidiary Talisman signed an agreement last June to farm-in to 360 square miles.

Fortuna was committed to drill an exploration well on a selected prospect to earn a 30 percent interest, with the right to earn a similar interest in the remaining prospects.

Immediately prior to the Total deal, Buckee, whose stops during his days with BP included Alaska, said his company hoped to target at least four 300 million to 500 million barrel prospects on the North Slope.

Despite a 40 percent drop in fourth quarter earnings last year, Talisman exited 2003 with profits of C$1.01 billion, almost double 2002, and cash flow for the year of C$2.729 billion compared with C$2.645 billion.

Production for the year averaged 398,000 barrels of oil equivalent per day, down from 445,000 boe per day in 2002, reflecting the sale of Talisman’s Sudan holding. The 2004 target is 415,000 to 445,000 boe per day.

Buckee said the exploration and development budget for 2004 could reach C$2.4 billion, slightly down from 2003, with a heavy focus on natural gas and activities covering the Americas, Southeast Asia, the Caribbean and the North Sea.

Fortuna is expected to drill 11 wells in the Appalachian Basin of New York state this year and expects U.S. production to average 80 million cubic feet per day, up 30 percent from 2003.

Talisman expects organic growth of its North American gas assets to range from 3 to 5 percent over the next five years.