Talisman inks Alaska deal

CEO Jim Buckee says Calgary independent will keep focus on Canadian gas

Gary Park

Petroleum News Calgary Correspondent

Canadian independent Talisman Energy, in the process of rebuilding a corporate image tarnished by its venture into Sudan, is also trying to rebuild market confidence among institutional investors.

With Sudan “behind us, we have new vistas,” Talisman Chief Executive Officer Jim Buckee said June 24 on the day Talisman subsidiary Fortuna Exploration signed a farm-in agreement with Total E&P USA to 360 square miles of the National Petroleum Reserve-Alaska.

He said the deal gives Talisman a chance to participate in a league of successful northern producers, although his company won’t deviate from its Canadian gas focus south of the 60th parallel.

During a Calgary investment symposium sponsored by the Canadian Association of Petroleum Producers, Buckee said the NPR-A acreage holds four prospects, each with reserve potential in the range of 300 million to 500 million barrels.

Talisman said Fortuna will participate in an exploration well to earn a 30 percent interest in a selected prospect and hold the right to earn similar interests in the other prospects.

Talisman said evaluation of the prospects, which lie west of the 430-million-barrel Alpine field and the Lookout/Rendezvous discoveries, will continue through 2003 and the first well is expected in 2004.

Looking for nearer-term pay-off

He said the prospect that Mackenzie Delta gas will not reach southern markets before late 2009 is one reason Talisman has remained away from the delta.

“We prefer things with a nearer-term pay-off,” he said. “That boat (the delta) is a long way off.”

That means spending C$1 billion this year to develop gas in northern Alberta and British Columbia, which yields 75 percent of the company’s gas output of 1.1 billion cubic feet per day, including 870 million cubic feet per day in North America.

In the highly prospective Monkman area of northeastern British Columbia, one well has just reached total depth and two more are planned this year in a deep play that “has huge, trillion cubic feet-plus long-term potential,” Buckee said.

Other hopes are pinned on a partnership with Imperial Oil to drill a C$60 million exploration well offshore Nova Scotia in July; C$33 million to drill four exploration wells in Colombia this year, chasing a projected 250 million barrels of oil.

In upstate New York, Talisman has built up a portfolio of gas properties over the last year and given the proximity to the huge New York market, Buckee said some success there could lead to “extremely significant activity.”

Exploration efforts are scheduled to proceed this year on a 3 million acre Vietnam block.

Large war-chest

On May 19, Talisman announced that its Norwegian unit entered an agreement to acquire the operated interest of BP Norge in the Gyda field of the Norwegian North Sea for C$123 million, along with a transportation agreement.

The deal involves 18 million barrels of oil equivalent of net proven assets, which started producing 13 years ago and are currently pumping 8,000 barrels per day of oil equivalent. Talisman is counting on an increase to 20,000 barrels per day by 2006 by adding 24 million barrels to reserves.

As well, Talisman has acquired a block in Qatar, which Buckee credited to his company’s reputation gained in Sudan as “very effective international operators.”

Brian Prokop, an analyst with Peters & Co., agreed Talisman attracted a lot of goodwill in the Middle East by standing firm to unrelenting political and human rights opposition to its Sudan operations.

Buckee said the departure from Sudan has seen the investor base shift from a high percentage of hedge funds to “more traditional, value-growth type of investors,” who have contributed to steady growth in share prices to about C$62 from a 52-week low of C$51.30.