Talisman Energy Inc. reported its financial results for the first quarter of 2008.
Cash flow during the quarter was $1.2 billion, an increase of 23% from a year ago. Cash flow from continuing operations was also $1.2 billion, up 24% from the same period a year ago and up 17% from the fourth quarter of 2007.
Net income was $466 million, down 10% from a year earlier, mainly due to gains on asset sales in the prior year.
Earnings from continuing operations(1) were $476 million, up 76% compared to the first quarter in 2007.
Netbacks were up 35% from a year earlier, reaching a record $45.66/boe.
Net debt at quarter end was $4.2 billion, down from $4.3 billion at December 31, 2007.
Subsequent to the end of the quarter, Talisman entered into agreements for the sale of non-strategic assets in Denmark and Lac La Biche.
"I am pleased by the strong financial results from our continuing operations," said John Manzoni, President & CEO. "We also had solid operational performance in the quarter. Production was in line with expectations and higher earnings and cash flow numbers reflect increased prices and netbacks, especially in the North Sea.
"Strong cash flow in the quarter allowed us to reduce debt, although exchange rate movements acted against us slightly.
"During the quarter, we continued to build our position in the Outer Foothills with the acquisition of RSX Energy, which will provide many drilling locations. In line with our intent to focus our portfolio further on our core areas, we recently entered into agreements for the sale of our assets in Denmark and Lac La Biche. Work on the strategy is going smoothly and, as previously indicated, we will be providing details in the third week of May."
Cash flow for the quarter was $1.2 billion, an increase of 23% from a year earlier. Substantial increases in world oil prices more than offset the stronger Canadian dollar and Talisman's lower production volumes. Cash flow per share increased 26%, reflecting the impact of share repurchases in 2007.
Cash flow from continuing operations was also $1.2 billion, up 24% from 2007.
Net income was $466 million, down from $520 million a year ago, due principally to a $277 million gain on asset sales in the prior year.
Earnings from continuing operations totalled $476 million, an increase from $270 million a year earlier and $137 million in the fourth quarter. The increase in earnings relative to last year is largely due to higher prices, lower DD&A and dry hole costs.
The average number of shares outstanding was down 3%, reflecting share repurchases in 2007. The Company did not buy back shares in the first quarter of 2008.
At March 31, Talisman's long-term debt was $4.4 billion ($4.2 billion net of cash), down from $4.9 billion ($4.3 billion net of cash) at December 31, 2007.
The Company spent $1,013 million on exploration and development during the quarter, down from the $1,125 million spent in the previous quarter and $1,297 million in the same quarter of the previous year. In March, the Company acquired 100% of the common shares of RSX Energy Inc. for $101 million.
Netbacks increased to a record $45.66/boe, up 35% or $11.89/boe from the first quarter of 2007. The main reason was a 68% increase in the benchmark WTI oil price, which averaged US$97.90/bbl in the quarter. A stronger Canadian dollar versus the US$ (up 18%) mitigated this somewhat. NYMEX and AECO natural gas prices were slightly higher than a year ago.
Talisman's average royalty rate was relatively unchanged at approximately 15% during the quarter.
Unit operating costs increased 12% compared to the previous year. UK unit operating costs were up 27% year over year primarily reflecting planned maintenance turnarounds (resulting in lower volumes and higher costs) and an unplanned shutdown due to weather. However, netbacks in the UK increased 67%, averaging $62.77/boe during the quarter.
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