Canadian Manufacturing

Calgary’s Talisman Energy posts unexpected US$1B loss in Q4

Oil and gas producer plans to sell an additional $2.2-billion of assets over next 12 to 18 months



CALGARY—Talisman Energy had an unexpected US$1-billion net loss in the fourth quarter as it recognized the impaired value of some of its assets and a bigger loss from operations.

Its fourth-quarter net loss, reported in U.S. currency before the Toronto market opened, amounted to 98 cents per share, with asset impairments totalling $826-million after taxes.

The Calgary-based oil and gas producer also reported a loss from operations of $116-million, or 11 cents a share, up from a loss of $107-million, or 10 cents a share, in the fourth quarter of 2013.

Analysts had expected Talisman to break even on an operating basis and have a small net profit equal to four cents per share, according to estimates compiled by Thomson Reuters.

On another key measure for energy companies, Talisman reported $580-million or 56 cents per share of cash flow in the fourth quarter, down from $675-million or 66 cents per share a year earlier.

For the full year, Talisman’s cash flow dropped to $2.196-billion or $2.13 per share from $3.022-billion or $2.95 per share in 2012.

Talisman’s 12-month net loss was $1.175-billion and its operating loss was $248-million last year, compared with a 2012 net profit of $132-million and $95-million of operating earnings.

The company also issued guidance this week for what it expects to do in future.

Among other things, it plans to sell an additional $2.2-billion of assets over the next 12 to 18 months on top of what has been announced in the first quarter of this year and in 2013.

Regarding oil and gas production, Talisman says it expects to produce the equivalent of 350,000 to 365,000 barrels per day (bpd) on average in 2014—up from 345,000 bpd from continuing operations last year.

Talisman’s 2013 production also included 28,000 barrels per day from assets that are held for sale.

It’s also planning a capital budget of $3.2-billion, about the same as last year but down 20 per cent from 2012.

About 70 per cent of this year’s budget will be in the Americas and Asia-Pacific region.

“In 2014, we expect more improvements in performance, with continued growth in high-margin liquids production generating increased cash flow,” Hal Kvisle, Talisman’s president and CEO, said in a statement.

He said production will be lower due to asset sales, but production from ongoing operations in Talisman’s two remaining core regions will grow four to seven per cent, with liquids volumes up 14 to 19 per cent.

“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.

“Our goal as we move into 2014 and beyond is to deliver annual cash flow per share growth and maintain a strong balance sheet.”

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