Cash flow (1) was $1,177 million ($1.13/share), an increase of 3%, compared to $1,142 million ($1.04/share) a year earlier and $1,004 million ($0.95/share) in the first quarter of 2007. Cash flow to June 30 was $2,181 million ($2.09/share), compared to $2,486 million ($2.26/share) a year ago.
Net income for the quarter was $550 million ($0.53/share), compared to $686 million ($0.62/share) a year ago. Net income was $520 million ($0.49/share) in the first quarter of 2007. Net income for the first six months was $1,070 million ($1.02/share), compared to $883 million ($0.80/share) a year earlier. The main reason for the decrease in second quarter results was a one time gain of $178 million in 2006 related to Canadian federal and provincial tax rate reductions.
Production averaged approximately 450,000 boe/d, a decrease of 5% from the second quarter of 2006 and down from 470,000 boe/d in the first quarter, principally due to Talisman's ongoing asset rationalization program and planned maintenance. Oil and liquids production averaged 245,349 bbls/d, down 3% compared to a year ago. Natural gas production averaged 1,231 mmcf/d in the quarter, a decrease of 7% from last year.
"Operationally, the quarter met expectations," said Dr. Jim Buckee, President and Chief Executive Officer. "Production was on target and cash flow per share was up 9% compared to a year ago, despite lower oil prices and a stronger Canadian dollar. Year over year comparisons are difficult due to ongoing asset sales, which have reduced production by about 23,000 boe/d, compared with a year ago, including the completion of additional North American sales during the second quarter.
"Agreements are now in place completing the second phase of our non-core asset sales program in Western Canada. In total, we expect to sell an additional 16,000 boe/d of relatively low working interest, mature properties for approximately $815 million. The Brae asset sales package (19,000 boe/d) in the UK is expected to close late in the year. We are also undertaking a review of our midstream assets, looking for ways to surface value by monetizing a portion of the assets while maintaining operational control. We have delivered on our commitment to repurchase shares with proceeds from asset sales, spending approximately $923 million to buy back 44.5 million shares year-to-date, on the heels of $660 million spent to repurchase 35 million shares in 2006.
"In North America, Talisman's natural gas production averaged 860 mmcf/d, down 3% from a year ago. However, 32 mmcf/d of the decrease was due to non-core asset sales and another 37 mmcf/d was due to a planned turnaround at Monkman during the quarter. I am pleased with our continued success in the Foothills where Talisman set a new record of 205 mmcf/d in May.
(1) The terms "cash flow" and "cash flow per share" are non-GAAP measures. Please see advisories elsewhere in this news release.
"North Sea volumes were up year over year despite the loss of some 9,200 boe/d associated with non-core asset sales. This production gain is the result of both successful development drilling and first volumes from the Tweedsmuir project in May.
"UK operating costs have shown signs of moderating and were relatively flat compared to the first quarter, while unit costs in Norway were down 12% from a year ago. Further unit cost reductions in the UK are expected later in the year with full volumes from Tweedsmuir. Tweedsmuir reservoir performance is as expected, however, the topsides modifications at the Piper platform are now expected to be ready for full production volumes in mid-November.
"The Enoch field also came on production in May and is performing well. First production from the Blane and Wood fields is expected in August and startup of production from the Duart field has been brought forward to September. Production from both the Affleck and Galley fields is still expected in the fourth quarter. In Norway, the Rev development is underway with first production scheduled for mid-2008 and first oil from the Yme redevelopment project is expected in mid-2009.
"In Southeast Asia, we are excited by our earlier Vietnam discovery and expect to spud our next prospect in Block 15-02/01 in September. Development of the Northern Fields in the PM-3 CAA block is on schedule with first gas and oil production expected in the second and fourth quarters of 2008, respectively. Development of the Song Doc field is underway in Vietnam with a five-well development program planned to commence in September.
"In Peru, the Company was awarded Block 134 in the 2007 bid round and in Colombia, Talisman was awarded three exploration blocks. This acreage complements Talisman's existing asset base in the foothills regions of both Colombia and Peru. In Trinidad and Tobago, a successful development well came on production in May at rates of 3,000 bbls/d and pre-development work is continuing on the Angostura Phase 2 gas development project.
"We now anticipate that production for the year will average 465,000 boe/d, at the lower end of our guidance range. This is primarily due to tight industry conditions, which have resulted in delays in bringing the Tweedsmuir field up to full production rates and slippage of the West Java pipeline in Indonesia. Cash flow is expected to average $4.7 billion based on expected WTI prices of US$73/bbl, NYMEX gas prices of US$7.15/ mmbtu and a $C/$US exchange rate of $0.94 in the second half of the year. The stronger Canadian dollar and weakening natural gas prices are more than offsetting the strong oil price environment.
"Finally, in my last quarterly report to shareholders, I would like to thank Talisman employees for their hard work, dedication and efforts, which have resulted in Talisman becoming one of the world's leading exploration and production companies. I would also like to thank our shareholders for staying the course with us through both good and turbulent times. I am leaving the Company in excellent shape, positioned for significant growth in both 2008 and 2009, with an exciting exploration portfolio, a superb management team and in the very capable hands of John Manzoni."
Most Popular Articles
From the Career Center
Jobs that may interest you