Production averaged 437,000 boe/d during the quarter, a 20% increase over the second quarter of 2003 and up slightly compared to the first quarter. Year to date, production has averaged 437,000 boe/d, an 18% increase over the same period last year, excluding Sudan.
Cash flow was $767 million ($2.00/share), up 28% from $600 million ($1.55/share) last year and essentially unchanged from the first quarter. Cash flow for the first six months of 2004 was a record $1,546 million ($4.02/share), an increase of 7% compared to 2003. This increase reflects both higher production levels and commodity prices.
Net income for the quarter was $197 million ($0.50/share), compared to $202 million ($0.51/share) a year ago. On a comparable basis, net income in the second quarter was up 186% versus $69 million ($0.17/share) a year ago excluding a one-time gain on income taxes recorded in the second quarter of 2003. Year to date, net income was $420 million ($1.07/share), compared with $776 million ($1.97/share) in 2003. Excluding the gain on the sale of and income from the Sudan properties, as well as one time income tax effects, the comparable net income numbers for the first half of 2004 and 2003 are $371 million and $303 million respectively.
Exploration and development spending was $509 million during the quarter and $1.1 billion year to date.
Talisman's realized prices averaged $42.78/boe in the quarter, compared to $36.56/boe a year ago. The Company's average unit operating costs were $7.10/boe during the quarter, an increase of 7% over the previous quarter, due in part to the impact of a weaker Canadian dollar.
"Operationally and financially, this was another very solid quarter," said Dr. Jim Buckee, President and Chief Executive Officer. "Production is up 20% compared to last year, as we maintained production levels in a quarter which typically sees some declines due to maintenance and turnarounds. Year to date, production per share is up 12% compared to a year ago and I am very comfortable with our earlier guidance of 5-10% production per share growth for 2004.
"All of the major projects which will contribute to continuing growth in 2005 are on, or ahead of schedule. These include the Tartan North field development in the North Sea, the Greater Angostura development in Trinidad and Tobago and the South Angsi field in Malaysia. Our international exploration program is also gearing up for an exciting second half of the year, with key exploration wells either planned or drilling in the North Sea, Malaysia, Vietnam, Colombia and Canada.
"I am pleased with our very successful drilling programs in North America. Gas production averaged 885 mmcf/d during the second quarter, an increase of 1.5% over the first quarter and 2.3% over last year. Virtually all of this growth is through the drill bit and we see the opportunity to do more. Fortuna Energy Inc. has doubled its land base in the northeastern United States and production is currently averaging 112 mmcf/d.
"Our North Sea production is up 21% over the second quarter of last year. We have had early drilling success in Norway, a small exploration discovery near Clyde, added new exploration acreage, increased our working interest in the Flotta Catchment area and are progressing towards development of the Tweedsmuir field (formerly J1/J5).
"Production in Malaysia/Vietnam continued to increase, averaging 41,000 boe/d in the quarter.
"Guidance for the year is unchanged at 420,000-450,000 boe/d. However, we now expect cash flow per share to be in the $7.50-$8.00 range, reflecting higher commodity prices. This assumes US$37.25/bbl WTI oil prices, US$6.20/mcf NYMEX gas prices and a C$/US$ exchange rate of $0.76 in the second half of the year.
"Over the past year we have stepped up our drilling activity and are getting to a point where virtually all of Talisman's growth is the result of internally generated opportunities. Following a comprehensive review, we see the potential to do significantly more drilling both in North America and internationally. As a result, we are planning a significant increase to our 2004 capital spending program, details of which will be announced shortly."
Talisman Second Quarter Summary
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