Talisman Drills Onshore as Angostura Results Disappoint

Canadian oil company Talisman Energy (NYSE: TLM) invested Cdn$21mn (US$17.8mn) in Trinidad during the third quarter to spud its first onshore exploration well on the Eastern block, president and CEO Jim Buckee said.

The Zaboca well is the first of three planned exploration wells, Buckee said in a conference call on Wednesday to discuss Q3 results.

Moreover Talisman also began drilling a development well in Q3 and the target depth is nearly reached, he said. Investment in this well was Cdn$2mn during the quarter. Operating expenses during Q3 in Talisman's Trinidad operations were Cdn$2.83 per barrel of oil equivalent, the company said in its Q3 earning statement.


Talisman has a 25% stake in the offshore Angostura project. Anglo-Australian resources company BHP Billiton (NYSE: BHP) is the operator and owns 45%, while France's Total has 30%. "Broadly speaking, it's about half our initial expectation," Buckee said, referring to both volume and production at Angostura.

Buckee described the reservoir as having "unusual characteristics." Referring to the first six wells drilled at Angostura, Talisman had "really excellent results and then it fell away after that, which was somewhat misleading," he said.

Talisman is focusing on finding buyers for the gas, Buckee said. "We are in discussions to sell the gas to [Trinidad's national gas company] NGC."

Conversations deal with the timing of when gas would be available for delivery to the Trinidadian market. Prices would be based on liquefied natural gas (LNG) exports as well as the domestic market, Talisman's executive VP of marketing Joe Horler said in the call.

"That dialogue is going on with our partners right now," he said. Despite the disappointing results, "happily high prices have made it a perfectly good investment" because the investment required to produce the gas is "relatively small" and is "a booster add-on to the underlying economics of oil," Buckee said.

Talisman's net production in Trinidad averaged 10,539 barrels a day of oil and liquids before royalties during the quarter.

Talisman pays 16% royalties in Trinidad, which over Q3 amounted to Cdn$11mn, the company said in the earnings statement. Production in Trinidad was valued at an average of Cdn$71.86/b over the quarter, the statement said.


Talisman is drilling the Tangara 1 well, classified as a tight hole, in Colombia. Target depth is scheduled to be reached in Q4, Buckee said. In Peru, the company is drilling the Situche Centrale well, which is also classified as tight hole, he said.

Companywide, Talisman posted net income during the quarter of Cdn$430mn compared to Cdn$122mn a year ago and Cdn$340mn in the previous quarter.

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