By Ben Dummett and Judy McKinnon
Talisman Energy Inc. lost $1 billion in the fourth quarter after
recording impairment charges totaling more than $800 million on its
underperforming, high-cost assets in the U.K. and Norway, and the
company said it would continue to sell operations to shore up its
balance sheet.
Calgary, Alberta-based Talisman and other resource producers,
under pressure from shareholders, are shedding less-profitable
assets and focusing on higher-quality assets to boost earnings and
stock prices.
"Our objective is to create sustainable value for our
shareholders, and we will continue to position the company to
achieve this by generating near-term steady cash flow from our best
assets in our two core regions" of North America and the Asia
Pacific, Talisman Chief Executive Hal Kvisle said in a
statement.
In December, Talisman named two nominees of U.S. activist
investor Carl Icahn to its board. That came less than two months
after Mr. Icahn disclosed taking a stake in the oil and gas company
and indicated he might push management to consider strategic
alternatives and add new directors.
Talisman has posted a string of disappointing financial results,
hurt in part by an extended gas-price slump. In an effort to turn
around its operations, it has announced deals to sell more than
$2.2 billion of noncore energy and pipeline operations. That is
more than two-thirds of the $3 billion of total asset sales the
company had targeted.
The company said Wednesday the target rose to $4.2 billion in
noncore assets sales over the next 12 to 18 months. Assets now on
the block include its Norwegian oil and gas business in the North
Sea and its Duvernay oil and gas exploration play in Alberta, a
company spokesman said.
Talisman lost $1.01 billion, or 98 cents a share, in the fourth
quarter, compared with a profit of $376 million, or 37 cents, a
year earlier. Adjusted to exclude items, it said it lost 11 cents a
share, or well below the break-even results analysts polled by
Thomson Reuters expected.
One of the biggest items that contributed to the latest results
was a $277 million charge for lower reserve estimates and higher
operating costs at its joint-venture U.K. North Sea oil and gas
operation. The company now also anticipates higher costs when it
decommissions the U.K. drilling platform. It also took a charge on
lower reserve revisions and higher costs at its Norwegian North Sea
operation.
Cash flow also dipped to $580 million from $675 million.
Production fell to 387,000 barrels of oil equivalent a day from
392,000 barrels a day a year earlier, hurt by a 33% drop in output
from the North Sea due to planned and unplanned outages.
Talisman said its net debt at the end of 2013 was about $4.8
billion, up from about $3.7 billion a year earlier.
Talisman, which relies on natural gas for the bulk of its
earnings, said it expects the Americas and Asia Pacific to
contribute more than 90% of its production this year.
Write to Judy McKinnon at judy.mckinnon@wsj.com
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