CALGARY, ALBERTA (NYSE: TLM) will provide details about its new
corporate strategy tomorrow morning in New York, followed by
sessions in Toronto (May 22, 2008) and Calgary (May 23, 2008). The
New York presentation will be available live on Talisman's website
starting at 8:30 am eastern daylight time and a replay will be
posted later in the day.
"With this new strategy I am very excited about Talisman's
future," said John Manzoni, President and Chief Executive Officer.
"When I arrived nine months ago, I saw a Company with talented,
energized people and a large diverse asset base. However, it was
also evident the acquire and exploit strategy which had worked
extremely well for over a decade, needed rethinking.
"We started with four objectives. First, we wanted to lengthen
the stride, creating a portfolio which gave confidence in
longer-term production growth. The second objective was to increase
our focus on fewer, more material assets. Third, was the
requirement to maintain healthy returns through capital discipline,
while delivering sustainable growth. And last, but not least, we
set about to improve our delivery against the targets we set.
"I am confident that we have identified a way forward with an
action plan that will focus the portfolio, grow the existing base,
evaluate and exploit new growth opportunities and optimize our
global exploration program.
"As we reposition the portfolio over the next 18 months, we
expect production to grow at an average annual rate of between
5-8%, based on our continuing operations at the end of 2007. We see
the majority of this growth coming from development projects
nearing completion in Norway and Southeast Asia. This growth range
includes the impact of additional non-core asset disposals planned
for this period. As we complete the majority of the rationalization
program, we expect to increase production 5-10% annually from the
end of 2009 through 2012.
"Between now and the end of 2009 we plan to spend $1.1-1.3
billion evaluating a material part of the natural gas potential
within our 2.5 million net acres of unconventional land in North
America. Of the total, $900 million is budgeted for development
programs in areas where we have seen early success. This includes
drilling approximately 200 wells in the Outer Foothills, Montney
and Bakken areas. Additionally, we expect to spend up to $420
million on pilot programs in other parts of the Outer Foothills and
Montney, as well as in Quebec and Appalachia. By the end of 2009,
we will be able to make informed choices about ongoing levels of
investment into our unconventional resource plays.
"We will continue to invest into our existing operations in
North America and the UK North Sea, giving us a firm base to
underpin production growth elsewhere. Our objective is to
reposition our UK business as a steady, high quality stream of cash
flow, with a sustainable production level of between 80,000-100,000
boe/d through 2013, from existing assets. We will continue to be a
major conventional natural gas producer in North America,
particularly in the high deliverability deep parts of the basin and
multi-zone plays.
"Southeast Asia will also play a major role in the portfolio.
This is a low cost region with built in long-term growth and high
returns. Talisman's production in the region is underpinned by
long-life natural gas contracts. We have doubled our production in
the region over the past five years and see the potential to double
it again in the next five from identified development projects. We
are also excited by recent oil discoveries in Vietnam and the
potential of our offshore acreage in Indonesia.
"In addition to three core asset areas, we see an additional two
areas with significant growth potential. These are North Africa, a
prolific hydrocarbon basin where Talisman has had a presence since
1994, and South America, where we can utilize our world class
expertise in thrust and fold plays.
"Finally, Talisman plans to optimize its global exploration
program, supporting core area growth in the short term while
increasing the emphasis on larger pool sizes. Talisman has had a
successful exploration track record but consistent with the
previous strategy, spending was largely focussed on opportunities
close to existing Talisman infrastructure.
"We expect to make substantial progress on focusing the
portfolio. Although timing will clearly depend on the markets, we
anticipate disposing of 35,000-45,000 boe/d of production, with
expected proceeds of between $1.5-2.0 billion by the end of next
year.
"We plan to increase capital spending by $500 million this year,
to a total of $4.9 billion, with the increment due to
unconventional gas programs in North America. Next year we expect
to spend up to $5.8 billion, but the final amount will depend on
the success and pace of our unconventional natural gas
programs.
"We also expect to generate substantial free cash flow over the
transition period from the combination of asset sales and our
growing production base, depending, of course, on the price
environment. The cash generated will more than fund the additional
capital requirements. If we are successful in our unconventional
program over the next 18 months, we anticipate substantial
investment starting in 2010. Therefore, during this period, we will
use the cash flow to strengthen our balance sheet so that we are
well placed in the success case."
TALISMAN - DELIVERING A NEW STRATEGIC FRAMEWORK (SUMMARY)
Objectives
1. Lengthen the stride to demonstrate longer-term growth.
2. Increase focus on fewer, more material assets.
3. Maintain healthy returns while delivering sustainable
growth.
4. Improve delivery against achievable targets.
A Four Point Action Plan
1. Focus the Portfolio
Exit non strategic areas
- Potential non-core asset sales of 35,000-45,000 boe/d, with
expected proceeds of $1.5-2.0 billion by the end of 2009.
- Exit some countries (i.e., the Netherlands, Denmark, Trinidad
& Tobago).
- Additional non-core asset sales in the UK and North
America.
Size the UK for sustainable delivery
- Continue to invest circa $1 billion per year on development
drilling and new projects.
- The UK will continue to generate significant free cash
flow.
2. Grow Existing Base
NAO, UK assets as firm base
- Size the UK to produce 80,000-100,000 boe/d through at least
2013 from existing assets.
- Continue to invest in core conventional North America natural
gas areas with a view to keeping conventional production relatively
flat.
Grow Southeast Asia, Norway
- Southeast Asia production has doubled in the past five years
and has the potential to double again in the next five (e.g.
increasing Corridor volumes, Northern Fields development, Song
Doc).
- Norway volumes will increase significantly with completion of
the Rev (2008) and Yme (2009) developments.
3. New Growth Opportunities
Determine unconventional potential in NAO
- Talisman has built a large (2.5 million net acre)
unconventional land base.
- Focus areas are: Outer Foothills, Montney, Bakken, Appalachia
and Quebec.
- The Company plans to spend $800-900 million on unconventional
development projects over the next 18 months.
- An additional $300-400 million is planned for unconventional
pilots over the same period.
- A total of 240-290 wells could be drilled as part of these
programs.
Potential Future Growth in North Africa, South America
- Talisman has been active in Algeria since 1994. This is a very
prolific hydrocarbon basin.
- The Company plans to drill up to eight exploration wells in
Colombia and Peru through the end of 2009.
4. Optimize Global Exploration
Support core area growth in the short term
- The Company will maintain active exploration programs in its
core areas.
- Exploration spending is expected to average $700 million per
year through 2010.
Increase focus toward larger pool sizes
- Future focus areas include the Barents Sea (Norway), the
central North Sea (UK), Colombia and Peru.
- The Company plans to drill up to 28 key exploration wells over
the next 18 months.
Production and Capital Spending
- Base production through 2009, including the effect of planned
asset sales, is expected to increase by an average of 5-8% per
annum.
- International development projects are expected to add over
100,000 boe/d of new production by the end of 2009.
- Production growth from the end of 2009 through 2012 is
expected to average 5-10% per annum.
- Capital spending for 2008 will be increased. It is expected
that an additional $500 million will be allocated for
unconventional gas programs, bringing the total to $4.9
billion.
- Depending on the success and pace of these unconventional
natural gas programs, capital spending in 2009 could be as much as
$5.8 billion. ($2.6 billion North America, $1.2 billion Norway,
$1.0 billion UK, $1.0 billion Southeast Asia & other)
- Despite increased spending, the Company expects to generate
significant free cash flow over the next 18 months.
A media advisory session will be held in Toronto in the
Conservatory on Sixteen (room C2) at the St. Andrew's Club &
Conference Centre at 1:15 pm on May 22, 2008.
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:
- business plans for drilling, exploration, development and
estimated timing and estimated cost;
- estimates of production, production growth, production per
share and operations or financial performance;
- business strategy and plans;
- estimated amounts and timing of capital expenditures;
- expected asset dispositions, associated timing, and
anticipated proceeds; 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 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 ability of the Company to retain current employees and to
attract new employees with the necessary skills to implement the
Company's strategy;
- potential delays or changes in plans with respect to
exploration or development projects or capital expenditures;
- fluctuations in oil and gas prices, foreign currency exchange
rates and interest rates;
- uncertainties as to the availability and cost of financing and
changes in capital markets;
- competitive actions of other companies, including increased
competition from other oil and gas companies;
- changes in general economic and business conditions; and
- results of the Company's hedging programs.
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 and Annual Financial
Report. 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.
Forward-looking information is based on the estimates and
opinions of the Company's management at the time the statements are
made. The Company assumes no obligation to update forward-looking
statements should circumstances or management's estimates or
opinions change, except as required by law.
Gross Production
Throughout this press release, Talisman makes reference to
production volumes. 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 U.S., net production volumes
are reported after the deduction of these amounts. U.S. readers may
refer to the table headed "Continuity of Proved Net Reserves" in
Talisman's most recent Annual Information Form for a statement of
Talisman's net production volumes by reporting segment that are
comparable to those made by U.S. companies subject to SEC reporting
and disclosure requirements.
Boe conversion
Throughout this press release, the calculation of 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 and is based
on an energy equivalence conversion method. Boes 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.
Non-GAAP Financial Measures
Included in this press release are references to a financial
measure referred to as free cash flow. This term is not defined by
GAAP in either Canada or the U.S. Consequently, it is referred to
as a non-GAAP measure. Talisman's reported results of free cash
flow may not be comparable to similarly titled measures reported by
other companies. Free cash flow is used by management to assess the
amount of funds available for reinvestment or to reduce debt levels
or return to shareholders. Free cash flow is the net of cash
provided by operating, investing and financing activities before
the repayment or issuance of long-term debt. Cash flow represents
net income before exploration costs, DD&A, future taxes and
other non-cash expenses.
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
Website: www.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
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