CALGARY, ALBERTA (NYSE: TLM) reported its operating and
financial results for 2007.
- Cash flow(1) for the year was $4.3 billion, down 9% from a
year ago, with the drop largely due to asset sales. Cash flow from
continuing operations was unchanged at $4.2 billion.
- Net income was a record $2.1 billion, up 4% from a year
earlier, with a significant contribution from gains on asset
sales.
- Production averaged 452,000 boe/d, down 7% from 2006. Talisman
sold non-core assets producing approximately 28,000 boe/d in 2007,
with a total of 57,000 boe/d sold over two years.
- The Company repurchased 46 million shares at a cost of $951
million.
- Net debt(1) at year end was $4.3 billion, down from $4.5
billion a year earlier.
- Talisman replaced 102% of production with proved reserves
(excluding net acquisitions and dispositions).
- At year end, the Company completed the sale of its Brae assets
in the North Sea and acquired a small interest in the Tangguh LNG
project in Indonesia.
"2007 was a year of contrasts for Talisman," said John Manzoni,
President & CEO. "We are very encouraged by two exploration
discoveries late in the year, higher oil prices contributed to very
high North Sea netbacks and we again replaced more than 100% of
proved reserves. On the other hand, we suffered a number of project
delays, mainly in the North Sea, natural gas prices were lower and
the Canadian dollar strength offset most of the oil price increase
for us. As a result of the project delays, production was lower
than our expectations at the start of the year. However, we are
taking steps to strengthen our project management, which I am
confident will improve delivery going forward.
"Our headline numbers were affected by asset sales last year.
However, net of sales, cash flow from continuing operations was
unchanged and production was down by less than 2% despite project
delays. I am encouraged by our exploration success in 2007, which
resulted in discoveries in the North Sea and Vietnam. We will
follow up these discoveries with appraisal and development activity
this year. In addition, our new Outer Foothills play in North
America is working well and we had a number of notable drilling
successes. We also continued our long track record of replacing
over 100% of production with proved reserves, excluding net
acquisitions and dispositions.
"We expect to deliver 3-8% organic production growth from our
streamlined asset base this year and are confident we can deliver
5-10% annual growth through the medium term. Looking to the longer
term, we have initiated a review of our entire portfolio to
determine investment opportunities for growth in 2011 and beyond. I
continue to be encouraged by the early results of this work, which
is showing that our diverse portfolio offers many options to secure
the long-term future of the Company."
(1) The terms "cash flow" and "net debt" are non-GAAP measures.
Please see the advisories and reconciliations elsewhere in this
press release.
Financial Results
On March 7, 2008, Talisman plans to file with Canadian and US
securities authorities, its audited Financial Statements for the
year ended December 31, 2007 and related Management's Discussion
and Analysis, as well as its Annual Information Form and Annual
Report on Form 40-F.
Three Months Ended 12 Months Ended
December 31 December 31
------------------- ------------------
2007 2006 2007 2006
---------------------------------------
Cash flow ($ million) 1,013 1,130 4,327 4,748
---------------------------------------
Cash flow per share(2) 0.99 1.05 4.19 4.35
---------------------------------------
Net income ($ million) 656 598 2,078 2,005
---------------------------------------
Net income per share 0.64 0.55 2.01 1.84
---------------------------------------
Earnings from Continuing Operations
(2) ($ million) 137 322 978 1,501
---------------------------------------
Earnings from Continuing Operations
(per share)(2) 0.13 0.30 0.95 1.37
---------------------------------------
Average shares outstanding (million) 1,019 1,078 1,032 1,092
---------------------------------------
Cash flow for 2007 was $4.3 billion, down 9% from a year
earlier. This was predominantly due to lower volumes (down 7%) and
netbacks (down 1%). However, cash flow from continuing operations
was unchanged at $4.2 billion. Cash flow for the fourth quarter was
$1,013 million, compared to $1,130 million a year earlier, as lower
volumes and higher cash taxes offset higher netbacks.
Net income was a record $2.1 billion, reflecting an $884 million
after-tax gain on asset sales and lower deferred taxes. Fourth
quarter earnings were also up significantly, reflecting Canadian
tax rate reductions. Earnings from continuing operations were down
due to higher DD&A and dry hole costs. DD&A charges
increased $390 million, with $174 million of this in the UK,
reflecting recent acquisitions and new field developments.
Dry hole costs were up in 2007, totalling $684 million. Talisman
has taken a cautious view of previous exploration costs in Alaska.
However, we are continuing the exploration program and currently
shooting the planned seismic program. These increased dry hole
costs also reflect higher spending levels in the Alberta Foothills
where individual wells are expensive to drill, although in general,
the 2007 exploration program was very successful in the Foothills,
with a number of very good wells and reserve replacement well over
100%.
The Company repurchased 46 million shares in 2007 at a cost of
$951 million. At year end, Talisman had 1,019 million shares
outstanding, down 4% from a year earlier.
Year-end long-term debt increased to $4,862 million. However,
the Company had $521 million in net cash on hand, including
proceeds from the Brae sale, which were received close to year end.
On a net basis, debt was $4,341 million, compared to $4,496 million
a year earlier.
Talisman spent $4.4 billion on exploration and development in
2007, down slightly from the previous year. However, spending in
North America was reduced 23%, largely reflecting low natural gas
prices. Spending in Norway increased 85% to $613 million with
ongoing project developments and increased drilling expenditures.
The Company increased capital spending in the UK by 5%, to $1.3
billion, completing the Tweedsmuir Phase 1, Enoch, Blane, Wood and
Duart Phase 1 developments. Spending in Southeast Asia increased
55% with Northern Fields development and exploration drilling in
Vietnam.
(2) The terms "cash flow per share", "earnings from continuing
operations" and "earnings from continuing operations per share" are
non-GAAP measures. Please see the advisories and reconciliations
elsewhere in this press release.
Production
Three Months Ended 12 Months Ended
December 31 December 31
------------------- ------------------
2007 2006 2007 2006
---------------------------------------
Oil and liquids (bbls/d) 235,290 258,508 240,714 261,634
---------------------------------------
Natural gas (mmcf/d) 1,262 1,364 1,265 1,342
---------------------------------------
Total mboe/d 446 486 452 485
---------------------------------------
Continuing operations (mboe/d) 429 441 424 431
---------------------------------------
Production per share (boe) 0.160 0.165 0.160 0.162
---------------------------------------
Production for the year averaged 452,000 boe/d, 7% below 2006,
largely due to non-core asset sales. Production from continuing
operations (excluding the effect of asset sales) averaged 424,000
boe/d, down 2% from 2006. Relative to the third quarter, production
from continuing operations increased 3% to 429,000 boe/d as new
projects came onstream in the North Sea and turnarounds for
maintenance were completed.
Netbacks
$/boe
Three Months Ended 12 Months Ended
December 31 December 31
2007 2006 2007 2006
------------------- ------------------
Sales 64.60 53.07 59.57 57.45
---------------------------------------
Hedging gain 0.08 0.52 0.63 0.37
---------------------------------------
Royalty 11.41 7.99 10.19 9.58
---------------------------------------
Transportation 1.26 1.27 1.37 1.28
---------------------------------------
Opex 12.36 10.39 12.14 9.98
---------------------------------------
Netback 39.65 33.94 36.50 36.98
---------------------------------------
Oil & liquids netback ($/bbl) 51.57 39.20 44.68 43.46
---------------------------------------
Natural gas netback ($/mcf) 4.38 4.67 4.52 4.92
---------------------------------------
Netbacks were down 1% in 2007. The impact of higher WTI oil
prices (up 9% to US$72.31/bbl) were offset by the 6% rise in the
Canadian dollar versus the US dollar, a 6% drop in AECO natural gas
prices and increasing unit operating costs.
Fourth quarter netbacks were up 17% from a year earlier as WTI
oil prices increased 51%, averaging US$90.68/bbl, partially offset
by a 16% increase in the value of the Canadian dollar. AECO natural
gas prices decreased by 3%.
Unit operating and transportation costs increased by 20%,
averaging $13.51/boe in 2007. A significant portion of this
occurred in the UK (unit operating expense up 30%) with a large
component related to the Auk/Fulmar acquisition late in 2006. The
high unit operating costs associated with these fields are expected
to fall significantly with Auk redevelopment.
Average royalty rates for the Company were unchanged at 17% for
the year.
Proved Reserves
Million BOE
-------------
December 31, 2006 1,667
Discoveries, extensions and additions 109
Net acquisitions and dispositions (10)
Net revisions and transfers 58
Production (164)
December 31, 2007 1,660
----------------------------------------------------------------------------
Probable Reserves
December 31, 2007 972
----------------------------------------------------------------------------
The Company replaced 102% of its production with proved reserves
(excluding net acquisitions and dispositions) in 2007, with a three
year average of 113%. Regionally, the Company replaced 148% of
production in Scandinavia, 116% in the UK and 112% of North
American natural gas production. The replacement ratio in Southeast
Asia was only 76%, however, this does not take into account recent
drilling successes offshore Vietnam.
Approximately 36% of Talisman's proved reserves are in North
America, 29% in the North Sea and 29% in Southeast Asia. Total
proved reserves were down slightly from year-end 2006, reflecting
non-core asset sales. At year end, the Company had 2.6 billion boe
of proved and probable reserves with a reserve life index of 16
years.
North America
Despite significant reductions in spending in North America over
the course of 2007, the Company had a successful year, replacing
112% of its natural gas production (excluding net acquisitions and
dispositions) and growing production in a number of key areas.
Talisman drilled 99 gross gas wells during the quarter,
approximately 15% less than the number drilled in the same period
last year, reflecting a 14% reduction in capital spending compared
to a year earlier.
Natural gas production averaged 855 mmcf/d, down 9% (87 mmcf/d),
compared to the fourth quarter of last year as sales of non-core
assets reduced volumes in the quarter by 68 mmcf/d and third party
shutdowns reduced volumes by another 11 mmcf/d. However, new
production records were set in the Alberta Foothills (reaching 229
mmcf/d in December), with production from the area 18% above the
fourth quarter of 2006.
The Company also saw production increases over the same period
in 2006 at Monkman (12%) and Bigstone/Wild River (8%). Bigstone set
a production record of 69 mmcf/d in December.
In the Outer Foothills, a number of promising discoveries were
made in the southern part of the play area.
Talisman's Midstream operations transported and processed 605
mmcf/d in the quarter. The expansion of the Cutbank Complex was
completed and onstream by the end of the fourth quarter, resulting
in a new record of 650 mmcf/d in the last week of December.
North Sea
Production from continuing operations in the North Sea increased
by 2% in 2007, the result of new projects coming onstream at
Tweedsmuir, Enoch, Blane, Duart and Wood. In addition, the region
continued to generate very high returns with netbacks averaging
approximately $47/boe for the year.
Talisman's UK production averaged 118,000 boe/d in the quarter,
down 3% from the same period in 2006. However, excluding asset
sales, production from continuing operations increased 3%, to
101,000 boe/d.
Late in 2007, the Company announced a significant gas condensate
discovery at Cayley in the Montrose Arbroath area. Appraisal
drilling has been completed and the Company booked 21 mmboe of
probable reserves associated with the discovery at year end.
Talisman has a 58.97% working interest in the field.
During the quarter, Talisman drilled a successful appraisal well
at Auk North. The Auk field was acquired in the fourth quarter of
2006 and Talisman intends to redevelop the field, which should
significantly increase production.
At Tweedsmuir the gas plant was commissioned recently and
production has increased to 20,000 boe/d at present. Further plant
modifications are being implemented to enable greater flow rates as
commissioning activities continue.
The Wood field started production on December 19.
Talisman entered into an agreement to sell the Beatrice oil
field with the transaction expected to close mid-2008. Near the
Beatrice platform, the second wind farm demonstrator turbine was
fully commissioned.
Production in Scandinavia averaged 34,000 boe/d during the
quarter, down 3% over the fourth quarter of 2006. Talisman drilled
two successful Gyda development wells during the quarter.
Development work is continuing on the Rev field with first
production expected in mid-2008 and at Yme with first production
expected in 2009.
Southeast Asia
In the Commercial Arrangement Area between Malaysia and Vietnam
(PM-3 CAA), the Company has a major development project underway in
the Northern Fields, with first gas sales expected by mid-2008 and
oil production early in 2009. Development drilling commenced on
schedule in late 2007 and a number of platforms and other major
pieces of equipment were installed during the fourth quarter.
In Vietnam, the Hai Su Den exploration well in Block 15-02/01
was successful and tested at combined rates of over 21,000 boe/d,
limited by test equipment. Two new exploration wells at Hai Su Bac
and Hai Su Nau will start drilling shortly.
Production during the quarter averaged 89,000 boe/d, 11% lower
than the fourth quarter of 2006, as lower liquids volumes (due to a
planned shut-down at PM-3 CAA, as well as natural declines) more
than offset an increase in natural gas sales.
The five-well development drilling program in the Song Doc Field
in Block 46/02 is complete and first oil is expected in the third
quarter of 2008.
In Indonesia, natural gas production averaged a record 228
mmcf/d, up 11% over 2006. Gas sales to West Java began in October
at 50 mmcf/d and are expected to ramp up over the course of the
year. Talisman also acquired a 3.06% interest in the Tangguh LNG
Project, located in West Papua, Indonesia. The project will have a
nameplate capacity of 7.6 million tons per year with first LNG
production expected at the end of 2008.
North Africa & South America
In other areas, production averaged 22,091 bbls/d during the
quarter, an increase of 7% from the same period a year ago.
Production in Algeria increased over 2006, reflecting the tie-in of
the expanded gas injection facilities at Greater MLN.
In Trinidad and Tobago, successful offshore exploration and
development wells were completed during the quarter and
pre-development activities continue for the Angostura Phase 2 gas
development project.
In South America, the Company continues to evaluate exploration
opportunities, with 3-D seismic programs completed on Blocks 64 and
101 in Peru and acquisition of 2-D seismic in the Niscota and
Tangara blocks in Colombia.
Talisman Energy Inc.
Highlights
(unaudited)
Three months ended Years ended
December 31 December 31
2007 2006 2007 2006
----------------------------------------------------------------------------
Financial
(millions of C$ unless otherwise
stated)
Cash flow (1) 1,013 1,130 4,327 4,748
Net income 656 598 2,078 2,005
Exploration and development
expenditures 1,125 1,315 4,445 4,578
Per common share (C$)
Cash flow (1) 0.99 1.05 4.19 4.35
Net income 0.64 0.55 2.01 1.84
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Production
(daily average)
Oil and liquids (bbls/d)
North America 39,884 47,054 43,299 49,846
UK 104,351 102,064 101,993 102,742
Scandinavia 31,424 32,677 30,602 32,474
Southeast Asia 37,540 51,953 44,167 51,582
Other 22,091 20,733 20,653 21,559
Synthetic oil - 4,027 - 3,431
----------------------------------------------------------------------------
Total oil and liquids 235,290 258,508 240,714 261,634
----------------------------------------------------------------------------
Natural gas (mmcf/d)
North America 855 942 876 910
UK 82 118 88 126
Scandinavia 17 16 14 14
Southeast Asia 308 288 287 292
----------------------------------------------------------------------------
Total natural gas 1,262 1,364 1,265 1,342
----------------------------------------------------------------------------
Total mboe/d (2) 446 486 452 485
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Prices (3)
Oil and liquids (C$/bbl)
North America 66.38 50.90 59.53 56.73
UK 87.95 67.40 76.47 72.11
Scandinavia 90.31 69.14 78.16 73.79
Southeast Asia 93.17 67.21 82.03 74.62
Other 91.98 66.78 80.37 71.65
----------------------------------------------------------------------------
Crude oil and natural gas liquids 85.82 64.48 75.00 69.82
Synthetic oil - 66.93 - 68.52
----------------------------------------------------------------------------
Total oil and liquids 85.82 64.52 75.00 69.80
----------------------------------------------------------------------------
Natural gas (C$/mcf)
North America 6.48 6.94 6.90 7.12
UK 8.25 7.52 7.19 8.50
Scandinavia 5.11 4.60 4.78 4.92
Southeast Asia 7.47 5.75 7.33 6.95
----------------------------------------------------------------------------
Total natural gas 6.81 6.72 6.99 7.20
----------------------------------------------------------------------------
Total (C$/boe) (includes
synthetic) (2) 64.60 53.18 59.57 57.53
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Cash flow and cash flow per share are non-GAAP measures.
(2) Barrels of oil equivalent (boe) is calculated at a conversion rate of
six thousand cubic feet (mcf) of natural gas for one barrel of oil.
(3) Prices are before hedging.
Includes the results from continuing and discontinued operations.
Talisman Energy Inc.
Consolidated Balance Sheets
(unaudited)
December 31 (millions of C$) 2007 2006
----------------------------------------------------------------------------
(restated)
Assets
Current
Cash and cash equivalents 536 103
Accounts receivable 1,159 1,068
Inventories 109 186
Prepaid expenses 12 25
Assets of discontinued operations 59 918
----------------------------------------------------------------------------
1,875 2,300
----------------------------------------------------------------------------
Other assets 387 354
Goodwill 1,418 1,522
Property, plant and equipment 17,763 17,278
Assets of discontinued operations - 27
----------------------------------------------------------------------------
19,568 19,181
----------------------------------------------------------------------------
Total assets 21,443 21,481
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
Current
Bank indebtedness 15 39
Accounts payable and accrued liabilities 1,907 2,449
Income and other taxes payable 388 412
Liabilities of discontinued operations 19 282
----------------------------------------------------------------------------
2,329 3,182
----------------------------------------------------------------------------
Deferred credits 21 59
Asset retirement obligations 1,981 1,848
Other long-term obligations 140 155
Long-term debt 4,862 4,560
Future income taxes 4,147 4,361
Liabilities of discontinued operations - 9
----------------------------------------------------------------------------
11,151 10,992
----------------------------------------------------------------------------
Contingencies and commitments
Shareholders' equity
Common shares 2,437 2,533
Contributed surplus 64 67
Cumulative foreign currency translation (2,447) (1,205)
Retained earnings 5,651 4,585
Accumulated other comprehensive income 2,258 1,327
----------------------------------------------------------------------------
7,963 7,307
----------------------------------------------------------------------------
Total liabilities and shareholders' equity 21,443 21,481
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Prior year balances have been restated to reflect the financial position of
discontinued operations, the adoption of new accounting standards and the
reclassification of certain amounts to conform to current year presentation.
Talisman Energy Inc.
Consolidated Statements of Income
(unaudited)
Three months ended Years ended
(millions of C$ December 31 December 31
except per share amounts) 2007 2006 2007 2006
-------------------------------------------------------- ------------------
(restated) (restated)
Revenue
Gross sales 2,495 2,120 9,265 8,991
Hedging gains 3 23 104 66
----------------------------------------------------------------------------
Gross sales, net of hedging 2,498 2,143 9,369 9,057
Less royalties 450 337 1,598 1,522
----------------------------------------------------------------------------
Net sales 2,048 1,806 7,771 7,535
Other 37 34 148 111
----------------------------------------------------------------------------
Total revenue 2,085 1,840 7,919 7,646
----------------------------------------------------------------------------
Expenses
Operating 509 395 1,895 1,550
Transportation 49 53 210 207
General and administrative 57 70 223 233
Depreciation, depletion and
amortization 574 499 2,316 1,926
Dry hole 322 176 684 296
Exploration 92 111 318 318
Interest on long-term debt 54 44 205 166
Stock-based compensation (53) 98 (15) 51
Loss on held-for-trading financial
instruments 41 - 25 -
Other 56 (96) 41 (29)
----------------------------------------------------------------------------
Total expenses 1,701 1,350 5,902 4,718
----------------------------------------------------------------------------
Income from continuing operations
before taxes 384 490 2,017 2,928
----------------------------------------------------------------------------
Taxes
Current income tax 258 110 782 770
Future income tax (244) (18) (67) 498
Petroleum revenue tax 59 59 256 290
----------------------------------------------------------------------------
73 151 971 1,558
----------------------------------------------------------------------------
Net income from continuing operations 311 339 1,046 1,370
----------------------------------------------------------------------------
Net income from discontinued
operations 345 259 1,032 635
----------------------------------------------------------------------------
Net income 656 598 2,078 2,005
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Per common share (C$)
Net income from continuing operations 0.31 0.31 1.01 1.25
Diluted net income from continuing
operations 0.30 0.31 0.99 1.22
Net income from discontinued
operations 0.33 0.25 1.00 0.59
Diluted net income from discontinued
operations 0.33 0.23 0.98 0.57
Net income 0.64 0.56 2.01 1.84
Diluted net income 0.63 0.54 1.97 1.79
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average number of common shares
outstanding (millions) 1,019 1,078 1,032 1,092
Diluted number of common shares
outstanding (millions) 1,039 1,106 1,056 1,122
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Prior year balances have been restated to reflect the results of
discontinued operations.
Talisman Energy Inc.
Consolidated Statements of Cash Flows
(unaudited)
Three months ended Years ended
December 31 December 31
(millions of C$) 2007 2006 2007 2006
----------------------------------------------------------------------------
(restated) (restated)
Operating
Net income from continuing operations 311 339 1,046 1,370
Items not involving cash 652 644 2,861 2,557
Exploration 92 111 318 318
----------------------------------------------------------------------------
1,055 1,094 4,225 4,245
Changes in non-cash working capital (149) (158) (257) (374)
----------------------------------------------------------------------------
Cash provided by continuing operations 906 936 3,968 3,871
Cash provided by discontinued
operations (42) 36 102 503
----------------------------------------------------------------------------
Cash provided by operating activities 864 972 4,070 4,374
----------------------------------------------------------------------------
Investing
Corporate acquisitions, net of cash
acquired (209) - (209) (66)
Capital expenditures
Exploration, development and other (1,140) (1,303) (4,430) (4,482)
Property acquisitions (12) (195) (54) (201)
Proceeds of resource property
dispositions 4 110 41 112
Investments - - 243 -
Changes in non-cash working capital 66 206 (206) 246
Discontinued operations, net of
capital expenditures 470 365 1,376 621
----------------------------------------------------------------------------
Cash used in investing activities (821) (817) (3,239) (3,770)
----------------------------------------------------------------------------
Financing
Long-term debt repaid (335) (1,020) (2,051) (4,570)
Long-term debt issued 765 1,399 2,837 4,786
Common shares purchased - (500) (946) (656)
Common share dividends (89) (81) (180) (163)
Deferred credits and other (23) (23) (42) (77)
Changes in non-cash working capital 13 - 13 -
----------------------------------------------------------------------------
Cash used in financing activities 331 (225) (369) (680)
----------------------------------------------------------------------------
Effect of translation on foreign
currency cash and cash equivalents - - (5) 10
----------------------------------------------------------------------------
Net increase in cash and cash
equivalents 374 (70) 457 (66)
Cash and cash equivalents, net,
beginning of period 147 134 64 130
----------------------------------------------------------------------------
Cash and cash equivalents, net, end of
period 521 64 521 64
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Prior year balances have been restated to reflect the results of
discontinued operations.
Earnings from operations
(millions of C$, except per share amounts)
Three months ended Year ended
---------------------------------------
December 31, 2007 2006 2007 2006
----------------------------------------------------------------------------
Net Income 656 598 2,078 2,005
----------------------------------------------------------------------------
Operating income from discontinued
operations 33 50 148 279
Gain on disposition of discontinued
operations 312 209 884 356
----------------------------------------------------------------------------
Net income from discontinued
operations 345 259 1,032 635
----------------------------------------------------------------------------
Net income from continuing operations 311 339 1,046 1,370
Unrealized loss on held-for-trading
instruments 36 - 49 -
Realized gain on Canadian Oil Sands
Trust units - - (19) -
Stock-based compensation (tax
adjusted) (37) 65 (10) 32
Future tax charge/(recovery) of
unrealized foreign exchange
gains/(losses) on
foreign denominated debt (11) (51) 100 (27)
Future tax rate reductions and other (162) (31) (188) 126
----------------------------------------------------------------------------
Earnings from continuing operations (1) 137 322 978 1,501
----------------------------------------------------------------------------
Per share 0.13 0.30 0.95 1.37
----------------------------------------------------------------------------
Cash flow
(millions of C$)
Three months ended Year ended
---------------------------------------
December 31, 2007 2006 2007 2006
----------------------------------------------------------------------------
Cash flow provided by operating
activities 864 972 4,070 4,374
Changes in non-cash working capital 149 158 257 374
----------------------------------------------------------------------------
Cash flow (1) 1,013 1,130 4,327 4,748
----------------------------------------------------------------------------
Net debt
(millions of C$)
Year ended
---------------------------------------
December 31, 2007 2006
----------------------------------------------------------------------------
Long-term debt 4,862 4,560
Bank indebtedness 15 39
Cash and cash equivalents (536) (103)
----------------------------------------------------------------------------
Net debt (1) 4,341 4,496
----------------------------------------------------------------------------
(1) "Cash flow", "earnings from continuing operations", "earnings from
continuing operations per share" and "net debt" are non-GAAP measures.
Talisman Energy Inc. is an independent upstream oil and gas
company headquartered in Calgary, Alberta, Canada. The Company and
its subsidiaries have operations in North America, the North Sea,
Southeast Asia, and North Africa. Talisman's subsidiaries are also
active in a number of other international areas. Talisman is
committed to conducting its business in an ethically, socially and
environmentally responsible manner. The Company is a participant in
the United Nations Global Compact and included in the Dow Jones
Sustainability (North America) Index. Talisman's shares are listed
on the Toronto Stock Exchange in Canada and the New York Stock
Exchange in the United States under the symbol TLM.
Forward-Looking Information
This press release contains information that constitutes
"forward-looking information" or "forward-looking statements"
(collectively "forward-looking information") within the meaning of
applicable securities legislation. This forward-looking information
includes, among others, statements regarding:
- estimates of future sales, production, production growth and
operations performance;
- business plans for drilling, exploration, development,
redevelopment and estimated timing;
- business strategy, business strategy review and plans;
- estimated timing and results of new projects, including the
timing of new production and LNG;
- expected asset sales and timing; and
- other expectations, beliefs, plans, goals, objectives,
assumptions, information and statements about possible future
events, conditions, results of operations or performance.
Often, but not always, forward-looking information uses words or
phrases such as: "expects", "does not expect" or "is expected",
"anticipates" or "does not anticipate", "plans" or "planned",
"estimates" or "estimated", "projects" or "projected", "forecasts"
or "forecasted", "believes", "intends", "likely", "possible",
"probable", "scheduled", "positioned", "goal", "objective" or
states that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Various assumptions were used in drawing the conclusions or
making the forecasts and projections contained in the
forward-looking information contained in this press release.
Information regarding oil and gas reserves, business plans for
drilling, exploration, development, and appraisal assumes that the
extraction of crude oil, natural gas and natural gas liquids
remains economic.
Undue reliance should not be placed on forward-looking
information. Forward-looking information is based on current
expectations, estimates and projections that involve a number of
risks which could cause actual results to vary and in some
instances to differ materially from those anticipated by Talisman
and described in the forward-looking information contained in this
press release. The material risk factors include, but are not
limited to:
- the risks of the oil and gas industry, such as operational
risks in exploring for, developing and producing crude oil and
natural gas, market demand and unpredictable facilities
outages;
- risks and uncertainties involving geology of oil and gas
deposits;
- the uncertainty of reserves and resources estimates, reserves
life and underlying reservoir risk;
- the uncertainty of estimates and projections relating to
production, costs and expenses;
- potential delays or changes in plans with respect to
exploration or development projects or capital expenditures;
- the risk that adequate pipeline capacity to transport gas to
market may not be available;
- fluctuations in oil and gas prices, foreign currency exchange
rates and interest rates;
- the outcome and effects of any future acquisitions and
dispositions;
- health, safety and environmental risks;
- uncertainties as to the availability and cost of financing and
changes in capital markets;
- risks in conducting foreign operations (for example, political
and fiscal instability or the possibility of civil unrest or
military action);
- competitive actions of other companies, including increased
competition from other oil and gas companies;
- changes in general economic and business conditions;
- the effect of acts of, or actions against, international
terrorism;
- the possibility that government policies or laws may change or
governmental approvals may be delayed or withheld;
- results of the Company's risk mitigation strategies, including
insurance and any hedging activities; and
- the Company's ability to implement its business strategy.
The foregoing list of risk factors is not exhaustive. Additional
information on these and other factors which could affect the
Company's operations or financial results are included in the
Company's most recent Annual Information Form. In addition,
information is available in the Company's other reports on file
with Canadian securities regulatory authorities and the United
States Securities and Exchange Commission (SEC).
Forward-looking information is based on the estimates and
opinions of the Company's management at the time the information is
presented. The Company assumes no obligation to update
forward-looking information should circumstances or management's
estimates or opinions change, except as required by law.
Reserves Data and Other Oil and Gas Information
Talisman's disclosure of reserves data and other oil and gas
information is made in reliance on an exemption granted to Talisman
by Canadian securities regulatory authorities, which permits
Talisman to provide disclosure in accordance with US disclosure
requirements. The information provided by Talisman may differ from
the corresponding information prepared in accordance with Canadian
disclosure standards under National Instrument 51-101 (NI 51-101).
Talisman's proved reserves have been calculated using the standards
contained in Regulation S-X of the SEC. US practice is to disclose
net proved reserves after deduction of estimated royalty burdens,
including net profits interests. Talisman makes additional
voluntary disclosure of gross proved reserves. Probable reserves,
which Talisman also discloses voluntarily, have been calculated
using the definition of probable reserves set out by the Society of
Petroleum Engineers/World Petroleum Congress ('SPE/WPC').
Talisman's estimates of proved reserves and probable reserves are
based on the same price assumptions. Further information on the
differences between the US requirements and the NI 51-101
requirements is set forth under the heading 'Note Regarding
Reserves Data and Other Oil and Gas Information' in Talisman's
Annual Information Form.
The exemption granted to Talisman also permits it to disclose
internally evaluated reserves data. Any reserves data in this press
release reflects Talisman's estimates of its reserves. While
Talisman annually obtains an independent audit of a portion of its
reserves, no independent qualified reserves evaluator or auditor
was involved in the preparation of the reserves data disclosed in
this press release.
Throughout this press release, the calculation of barrels of oil
equivalent (boe) is at a conversion rate of six thousand cubic feet
(mcf) of natural gas for one barrel of oil and is based on an
energy equivalence conversion method. Boe may be misleading,
particularly if used in isolation. A boe conversion ratio of 6
mcf:1 bbl is based on an energy equivalence conversion method
primarily applicable at the burner tip and does not represent a
value equivalence at the wellhead.
Talisman makes reference to production volumes throughout this
press release. Where not otherwise indicated, such production
volumes are stated on a gross basis, which means they are stated
prior to the deduction of royalties and similar payments. In the
US, net production volumes are reported after the deduction of
these amounts.
In this press release, Talisman makes reference to probable
reserves in the Montrose Arbroath area. At year end 2007, Talisman
had 404 mmboe of total proved reserves and 670 mmboe of proved and
probable reserves in the UK. The estimates of reserves and future
net revenue for individual properties may not reflect the same
confidence level as estimates of reserves and future net revenue
for all properties, due to the effects of aggregation.
The reserves replacement ratio of 102% (excluding net
acquisitions and dispositions) was calculated by dividing the sum
of changes (revisions of estimates and discoveries) to estimated
proved oil and gas reserves during 2007 by the Company's 2007
conventional production.
The Company's management uses reserve replacement ratios, as
described above, as an indicator of the Company's ability to
replenish annual production volumes and grow its reserves. It
should be noted that a reserve replacement ratio is a statistical
indicator that has limitations. As an annual measure, the ratio is
limited because it typically varies widely based on the extent and
timing of new discoveries, project sanctioning and property
acquisitions. Its predictive and comparative value is also limited
for the same reasons. In addition, since the ratio does not include
the cost, value or timing of future production of new reserves, it
cannot be used as a measure of value creation.
The reserves life index of 16 years for proved and probable
reserves was calculated by dividing year-end proved and probable
reserves by the Company's 2007 conventional production.
The SEC normally permits oil and gas companies to disclose in
their filings with the SEC only proved reserves that have been
demonstrated by actual production or conclusive formation tests to
be economically and legally producible under existing economic and
operating conditions. Any probable reserves and the calculations
with respect thereto included in this press release do not meet the
SEC's standards for inclusion in documents filed with the SEC.
Canadian Dollars and GAAP
Dollar amounts are presented in Canadian dollars unless
otherwise indicated. Unless otherwise indicated, financial
information is presented in accordance with Canadian generally
accepted accounting principles that may differ from generally
accepted accounting principles in the US. Talisman's Consolidated
Financial Statements, which will be filed with Canadian and US
securities authorities on March 7, 2008, contain information
concerning differences between Canadian and US generally accepted
accounting principles.
Non-GAAP Financial Measures
Included in this press release are references to financial
measures commonly used in the oil and gas industry, such as cash
flow, cash flow per share, earnings from continuing operations,
earnings from continuing operations per share and net debt. These
terms are not defined by GAAP in either Canada or the US.
Consequently, these are referred to as non-GAAP measures.
Talisman's reported results of cash flow, earnings from continuing
operations and net debt may not be comparable to similarly titled
measures by other companies.
Cash flow, as commonly used in the oil and gas industry,
represents net income before exploration costs, DD&A, future
taxes and other non-cash expenses. Cash flow is used by the Company
to assess operating results between years and between peer
companies that use different accounting policies. Cash flow should
not be considered an alternative to, or more meaningful than, cash
provided by operating, investing and financing activities or net
income as determined in accordance with Canadian GAAP as an
indicator of the Company's performance or liquidity.
Earnings from continuing operations is calculated by adjusting
the Company's net income per the financial statements, for certain
items of a non-operational nature, on an after-tax basis. The
Company uses this information to evaluate performance of core
operational activities on a comparable basis between periods.
Net debt is calculated by adjusting the Company's long-term debt
per the financial statements for bank indebtedness, cash and cash
equivalents. The Company uses this information to assess its true
debt position and eliminate the impact of timing differences.
Contacts: Talisman Energy Inc. - Media and General Inquiries
David Mann, Senior Manager, Corporate & Investor Communications
(403) 237-1196 (403) 237-1210 (FAX) Email: tlm@talisman-energy.com
Talisman Energy Inc. - Shareholder and Investor Inquiries
Christopher J. LeGallais, Senior Manager, Investor Relations (403)
237-1957 (403) 237-1210 (FAX) Email: tlm@talisman-energy.com
Website: www.talisman-energy.com
Talisman (NYSE:TLM)
Historical Stock Chart
From Jun 2024 to Jul 2024
Talisman (NYSE:TLM)
Historical Stock Chart
From Jul 2023 to Jul 2024
