Talisman Energy Inc.
Talisman Energy Reports $1.2 Billion in Cash Flow
Solid Operational and Financial Results
Talisman Energy Inc. reported its operating and financial results for the first
quarter of 2008.
-- Cash flow(1) during the quarter was $1.2 billion, an increase of 23%
from a year ago. Cash flow from continuing operations(1) 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.
-- Production averaged 419,000 boe/d, 11% below the first quarter of 2007,
and 6% below the previous quarter, mainly due to the sale of non-core
assets, which produced 36,000 boe/d in the first quarter of 2007.
Production from continuing operations averaged 411,000 boe/d, 3% below
the same quarter last year.
-- Netbacks were up 35% from a year earlier, reaching a record $45.66/boe.
-- Net debt(1) at quarter end was $4.2 billion, down from $4.3 billion at
December 31, 2007.
-- Subsequent to the end of the quarter, Talisman entered into agreements
for the sale of non-strategic assets in Denmark and Lac La Biche.
"I am pleased by the strong financial results from our continuing operations,"
said John Manzoni, President & CEO. "We also had solid operational performance
in the quarter. Production was in line with expectations and higher earnings and
cash flow numbers reflect increased prices and netbacks, especially in the North
Sea.
"Production was down from the fourth quarter due mainly to completion of the
Brae non-core asset sale and planned shutdowns in the UK. We remain confident in
our earlier projection of 3-8% growth from continuing operations in 2008. The
second half of the year will benefit from startups of the Northern Fields
(Southeast Asia) and Rev (Norway) development projects, as well as increased
production from Tweedsmuir.
"Strong cash flow in the quarter allowed us to reduce debt, although exchange
rate movements acted against us slightly.
"During the quarter, we continued to build our position in the Outer Foothills
with the acquisition of RSX Energy, which will provide many drilling locations.
In line with our intent to focus our portfolio further on our core areas, we
recently entered into agreements for the sale of our assets in Denmark and Lac
La Biche. Work on the strategy is going smoothly and, as previously indicated,
we will be providing details in the third week of May."
(1) The terms "cash flow", "cash flow from continuing operations", "net debt"
and "earnings from continuing operations" are non-GAAP measures. Please see the
advisories and reconciliations elsewhere in this press release.
Financial Results
Three
Months
Ended
March 31
-----------
2008 2007
-----------
Cash flow ($ million) 1,232 1,004
-----------
Cash flow per share(2) 1.21 0.96
-----------
Net income ($ million) 466 520
-----------
Net income per share 0.46 0.49
-----------
Earnings from continuing operations ($ million) 476 270
-----------
Earnings from continuing operations(2) (per share) 0.47 0.26
-----------
Average shares outstanding (million) 1,019 1,051
-----------
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.
(2) The terms "cash flow per share" and "earnings from continuing operations per
share" are non-GAAP measures. Please see the advisories and reconciliations
elsewhere in this press release.
Production
Three Months
Ended
March 31
---------------
2008 2007
---------------
Oil and liquids (bbls/d) 216,625 251,893
---------------
Natural gas (mmcf/d) 1,216 1,309
---------------
Total (mboe/d) 419 470
---------------
Continuing operations (mboe/d) 411 425
---------------
Production for the quarter averaged 419,000 boe/d, 11% below the same quarter of
2007 and 6% below the previous quarter. The main reason for these lower volumes
were non-core asset sales throughout 2007, including the sale of Talisman's
interests in the Brae area of the UK North Sea, which closed at year end.
Production from continuing operations (excluding production from assets sold and
held for sale) averaged 411,000 boe/d during the quarter, down 3% from both the
previous quarter and a year ago. The major reason for lower production from
continuing operations was maintenance shutdowns in the North Sea.
The Company still expects a production range of 435,000-460,000 boe/d for the
year. This forecast now includes non-core asset sales of approximately 4,100
boe/d (Denmark, Lac La Biche), which will be completed in the first half of the
year and were not contemplated at the time of the original production guidance.
Netbacks
$/boe Three Months
Ended
March 31
------------
2008 2007
------------
Sales 73.01 55.52
------------
Hedging gain (loss) (0.26) 1.09
------------
Royalty 12.87 9.74
------------
Transportation 1.14 1.40
------------
Operating expenses 13.08 11.70
------------
Netback 45.66 33.77
------------
Oil & liquids netback ($/bbl) 58.76 38.12
------------
Natural gas netback ($/mcf) 5.28 4.79
------------
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.
North America
In North America, Talisman's production averaged 181,547 boe/d over the quarter,
down 10% from the same period in 2007 and 2% from the previous quarter, largely
due to non-core asset sales in 2007. Production from continuing operations was
down 1% from the same period in 2007 primarily due to a non-operated plant
outage and down 1% from the previous quarter, due mainly to the planned facility
maintenance in the Alberta Foothills.
Talisman drilled 112 gross gas wells during the quarter, approximately 13% less
than the number drilled in the same period last year. Of the gas wells drilled
in the quarter, 76 were operated by Talisman.
Canada
New production records were set in Monkman, reaching 142 mmcf/d (net sales gas)
by the end of March with production in the quarter averaging 120 mmcf/d, 4%
above the first quarter of 2007. The previously announced Federal d-28-H/94-B-7
well came on production March 19, at a rate of 19 mmcf/d sales gas (50% working
interest). The recently completed multizone Brazion a-26-E well came on
production April 19 and is forecast to produce at a constrained rate of 24
mmcf/d sales gas (80% working interest).
The Company also saw production increases over the same period in 2007 in
Bigstone/Wild River (9%) and Alberta Foothills (12%). In the Alberta Foothills,
the Findley 11-25-57-06W6/02 well came on production on March 15 at 12 mmcf/d
sales gas (100% working interest). The Cabin Creek 10-21-56-04W6 well (100%
Talisman) was tested at 13.6 mmcf/d (gross raw gas) and is expected to come on
production in the third quarter of 2008.
Talisman drilled five wells in the Outer Foothills in the quarter. With recent
tie-ins, production from the Outer Foothills is expected to be approximately 35
mmcf/d sales gas (Talisman working interest) by mid-year.
In Greater Arch (Montney Core), the Pouce Coupe 7-7-78-10W6M horizontal well
came on production March 13 producing an average of 3.6 mmcf/d sales gas (100%
Talisman).
Talisman is encouraged by early Bakken development drilling results in the
Viewfield area. Three gross horizontal wells have been drilled to date, two of
which are on production at rates averaging 190 bbls/d per well (100% working
interest).
Talisman's Midstream Operations transported and processed 612 mmcf/d in the
quarter, 10% above the first quarter of 2007.
In March 2008, the Company acquired RSX Energy Inc., which has natural gas
assets located in the Outer Foothills (Hinton area) and Peace River Arch areas
of Northern Alberta.
In late April, Talisman entered into an agreement to sell its interest in its
non-strategic Lac La Biche property in northeast Alberta. Production from the
property in 2007 averaged 4,586 boe/d.
United States
In Wyoming, the Bear Canyon well reached total depth of 16,517 feet on March 28.
The rig is being moved off the location due to wildlife considerations and will
be brought back to test later in 2008. The next well in the program, in Utah, is
expected to spud early in May.
United Kingdom
Production in the UK averaged 89,871 boe/d, down 25% from a year ago, primarily
due to non-core asset sales. Production from continuing operations in the UK
averaged 88,210 boe/d over the quarter, down 12% from the same period in 2007
and 13% from the fourth quarter 2007. Production decreased from 2007 primarily
due to major planned annual maintenance shutdowns at Montrose/Arbroath, Buchan
and Claymore, as well as an unplanned shutdown at Ross/Blake due to weather.
The reductions were partially offset by new production from Tweedsmuir and
Enoch, which came onstream in the second quarter 2007 and from Duart and Blane,
which came onstream in the third quarter of 2007.
First quarter unit operating costs of $29.01/boe were up 27% compared to the
first quarter of 2007, due to planned shutdowns and disposal of the Brae assets.
Unit operating costs are expected to decline significantly during the second
half of 2008 as volumes increase, particularly at Tweedsmuir.
Tweedsmuir production increased over the fourth quarter of 2007 as the
commissioning of Tweedsmuir progressed. Since the end of the first quarter,
production rates of up to 30,000 boe/d have been achieved and full production is
anticipated at the end of the second quarter.
Appraisal drilling was completed at Auk North in the quarter and planning for
Auk North and Auk South development is continuing.
Appraisal drilling was completed on the Cayley discovery located in the
Montrose/Arbroath area, west of the Montrose platform. The Company booked 21
mmboe of net probable reserves associated with the discovery at the end of 2007.
Talisman has a 58.97% working interest in the field. Evaluation of development
options and plans has started.
Scandinavia
Production in Scandinavia averaged 36,572 boe/d during the quarter, up 7% over
the first quarter of 2007 and 7% from the previous quarter. Production from
continuing operations averaged 34,429 boe/d, up 10% from the same period in 2007
and 8% from the fourth quarter of 2007. The production increase over 2007 was
due to new production from Blane, which came onstream in the third quarter of
2007, plus good performance from successful development wells drilled at Gyda
and Brage.
Unit operating costs remained relatively unchanged at $22.25/boe compared to
2007, as increases in production were matched by minor increases in costs.
Development of the Rev Field is continuing on schedule, with first production
expected mid-2008. Construction at the Yme field redevelopment project continues
and first oil is scheduled for the second half of 2009.
In late April, Talisman entered into an agreement to sell its interests in the
Siri field in the Danish sector of the North Sea for US$83 million. Talisman's
production from the Siri field for 2007 averaged approximately 2,600 boe/d.
Southeast Asia
In Southeast Asia, production averaged 89,262 boe/d, 5% lower than the same
period last year and slightly above last quarter. Indonesian production averaged
52,888 boe/d, 15% higher than the same period last year, primarily due to
increased West Java natural gas sales and 1% lower than the last quarter,
primarily due to lower sales to Singapore. In Malaysia/Vietnam, production
averaged 34,384 boe/d, lower than the same period last year mainly due to
natural declines and 2% higher than the previous quarter when there was a
planned production shutdown.
Production in Australia was 1,989 bbls/d, 74% lower than the same period last
year primarily due to riser failures and natural declines and 23% higher than
the last quarter with Corallina production being re-instated at restricted rates
in March. Full production is expected in the fourth quarter.
In the PM-3 CAA Southern Fields, the Flash Gas Compressor on the Bunga Raya A
platform has been fully commissioned and is currently adding 17 mmcf/d gross
sales gas. In the Northern Fields, the Company expects to commence drilling gas
wells in late April for the early gas startup currently scheduled to commence
mid-2008. Four wells were drilled in the quarter, with results meeting or
exceeding expectations in each case. In addition, facilities installation and
pipe laying operations continued during the first quarter in preparation of
first oil in the first quarter 2009.
In Indonesia, West Java gas take increased from 50 mmcf/d to an average of 80
mmcf/d gross sales gas. The Suban 10 and 11 wells flowed at a record combined
rate of 311 mmcf/d gross sales gas in early February.
In Vietnam, the Song Doc development pre-drilling program was completed in early
January with five production wells drilled and suspended. Installation of the
jackets and topsides for the Song Doc-A platform were completed at the end of
the first quarter. Phase 2 drilling operations will begin in late May with the
tie back and completion of the five production wells and the drilling and
completion of an additional three production and water injector wells and up to
three appraisal wells. First oil is expected with the arrival of the FPSO
towards the end of the third quarter of 2008.
The reserves assessment report for the Hai Su Trang development has been
approved by the government of Vietnam as a precursor to development. An
appraisal plan for the Hai Su Den discovery is being prepared for government
approval.
The Hai Su Nau and Hai Su Bac exploration wells spud in the first quarter. The
Hai Su Bac well has now reached target depth and encountered oil and gas,
however the accumulation is believed to be small.
In Australia, the Kitan-1 exploration well was drilled and the new discovery
flowed 6,100 bbls/d on drill stem test. A subsequent appraisal well was
successfully drilled and subsequently suspended. This discovery is currently
being evaluated for commercial development.
North Africa and South America
In North Africa, production averaged 16,342 boe/d, a 2% increase over the same
period in 2007. Production in Algeria increased over 2007 due to the tie-in of
new production and injection wells as part of the Greater MLN Phase 2 project.
The Phase 2 expanded gas injection facilities are being commissioned.
In Trinidad and Tobago, production averaged 5,690 bbls/d, a 6% increase over the
same period a year earlier, as increases from 2007 development drilling were
partly offset by natural declines. Pre-development activities continue for the
Angostura Phase 2 gas development project.
In Peru, preparations continue towards drilling an appraisal well at the Situche
discovery, which is expected to spud at the end of 2008.
Talisman Energy Inc. is an independent upstream oil and gas company
headquartered in Calgary, Alberta, Canada. The Company and its subsidiaries have
operations in North America, the North Sea, Southeast Asia and North Africa.
Talisman's subsidiaries are also active in a number of other international
areas. Talisman is committed to conducting its business in an ethically,
socially and environmentally responsible manner. The Company is a participant in
the United Nations Global Compact and included in the Dow Jones Sustainability
(North America) Index. Talisman's shares are listed on the Toronto Stock
Exchange in Canada and the New York Stock Exchange in the United States under
the symbol TLM.
For further information, please contact:
Media and General Inquiries: Shareholder and Investor Inquiries:
David Mann, Senior Manager, Corporate Christopher J. LeGallais
& Investor Communications Senior Manager, Investor Relations
Phone: 403-237-1196 Fax: 403-237-1210 Phone: 403-237-1957 Fax: 403-237-1210
E-mail: tlm@talisman-energy.com Email: tlm@talisman-energy.com
11-08
Earnings from Continuing Operations
Earnings from operations adjusts for significant one-time events as well as
other non-operational impacts on earnings, such as the mark-to-market effect of
changes in share prices on stock based compensation expense, unrealized
mark-to-market gains and losses on commodity derivatives and changes to tax
rates. This calculation does not reflect differing accounting policies and
conventions between companies. All amounts are reported on an after-tax basis.
($ million, except per share amounts)
Three
months
ended
March 31, 2008 2007
----------------------------------------------------------------------
Net income 466 520
----------------------------------------------------------------------
Operating income from discontinued operations 10 38
Gain on disposition of discontinued operations (3) 277
----------------------------------------------------------------------
Net income from discontinued operations 6 315
----------------------------------------------------------------------
Net income from continuing operations 459 205
Unrealized loss on commodity derivatives(1) (tax adjusted) 51 17
Unrealized loss on Canadian Oil Sands Trust units (tax
adjusted) - 10
Stock-based compensation (2) (tax adjusted) (7) 29
Future tax charge (recovery) of unrealized foreign exchange
gains (losses) on foreign denominated debt (3) (27) 9
----------------------------------------------------------------------
Earnings from continuing operations (4) 476 270
----------------------------------------------------------------------
Per share (4) 0.47 0.26
----------------------------------------------------------------------
1. Unrealized losses on commodity derivatives relate to the change in the period
of the mark-to-market value of the Company's outstanding commodity derivatives.
2. Stock-based compensation expense relates to the mark-to-market value of the
Company's outstanding stock options and cash units at March 31. The Company's
stock-based compensation expense is based on the difference between the
Company's share price and its stock options or cash units exercise price.
3. Tax adjustments reflect future taxes relating to unrealized foreign exchange
gains and losses associated with the impact of fluctuations in the Canadian
dollar on foreign denominated debt.
4. This is a non-GAAP measure. Please refer to the section in this press release
entitled Non-GAAP Measures for further explanation and details.
Cash Flow
Below is a reconciliation of cash provided by operating activities calculated in
accordance with generally accepted accounting principles (GAAP) to cash flow and
cash flow from continuing operations (which are non-GAAP measures of financial
performance).
Three
months
($ million) ended
-----------
March 31, 2008 2007
----------------------------------------------------------------------
Cash provided by operating activities 1,312 1,089
Changes in non-cash working capital (80) (85)
----------------------------------------------------------------------
Cash flow 1,232 1,004
Cash provided by discontinued operations (23) (31)
----------------------------------------------------------------------
Cash flow from continuing operations 1,209 973
----------------------------------------------------------------------
Forward-Looking Information
This press release contains information that constitutes "forward-looking
information" or "forward-looking statements" (collectively "forward-looking
information") within the meaning of applicable securities legislation. This
forward-looking information includes, among others, statements regarding:
-- estimates of future sales, production, production growth and operations
performance;
-- business plans for drilling, exploration, development, redevelopment and
estimated timing;
-- business strategy, business strategy review and plans;
-- estimated timing and results of new projects, including the timing of
new production;
-- expected movements in unit operating costs;
-- expected dispositions and timing; and
-- other expectations, beliefs, plans, goals, objectives, assumptions,
information and statements about possible future events, conditions,
results of operations or performance.
Often, but not always, forward-looking information uses words or phrases such
as: "expects", "does not expect" or "is expected", "anticipates" or "does not
anticipate", "plans" or "planned", "estimates" or "estimated", "projects" or
"projected", "forecasts" or "forecasted", "believes", "intends", "likely",
"possible", "probable", "scheduled", "positioned", "goal", "objective" or states
that certain actions, events or results "may", "could", "would", "might" or
"will" be taken, occur or be achieved.
Various assumptions were used in drawing the conclusions or making the forecasts
and projections contained in the forward-looking information contained in this
press release. Information regarding oil and gas reserves, business plans for
drilling, exploration, development and appraisal assumes that the extraction of
crude oil, natural gas and natural gas liquids remains economic.
Undue reliance should not be placed on forward-looking information.
Forward-looking information is based on current expectations, estimates and
projections that involve a number of risks which could cause actual results to
vary and in some instances to differ materially from those anticipated by
Talisman and described in the forward-looking information contained in this
press release. The material risk factors include, but are not limited to:
-- the risks of the oil and gas industry, such as operational risks in
exploring for, developing and producing crude oil and natural gas,
market demand and unpredictable facilities outages;
-- risks and uncertainties involving geology of oil and gas deposits;
-- the uncertainty of reserves and resources estimates, reserves life and
underlying reservoir risk;
-- the uncertainty of estimates and projections relating to production,
costs and expenses;
-- potential delays or changes in plans with respect to exploration or
development projects or capital expenditures;
-- the risk that adequate pipeline capacity to transport gas to market may
not be available;
-- fluctuations in oil and gas prices, foreign currency exchange rates and
interest rates;
-- the outcome and effects of any future acquisitions and dispositions;
-- health, safety and environmental risks;
-- uncertainties as to the availability and cost of financing and changes
in capital markets;
-- risks in conducting foreign operations (for example, political and
fiscal instability or the possibility of civil unrest or military
action);
-- competitive actions of other companies, including increased competition
from other oil and gas companies;
-- changes in general economic and business conditions;
-- the effect of acts of, or actions against, international terrorism;
-- the possibility that government policies or laws may change or
governmental approvals may be delayed or withheld;
-- results of the Company's risk mitigation strategies, including insurance
and any hedging activities; and
-- the Company's ability to implement its business strategy.
The foregoing list of risk factors is not exhaustive. Additional information on
these and other factors which could affect the Company's operations or financial
results are included in the Company's most recent Annual Information Form. In
addition, information is available in the Company's other reports on file with
Canadian securities regulatory authorities and the United States Securities and
Exchange Commission (SEC).
Forward-looking information is based on the estimates and opinions of the
Company's management at the time the information is presented. The Company
assumes no obligation to update forward-looking information should circumstances
or management's estimates or opinions change, except as required by law.
Reserves Data and Other Oil and Gas Information
Talisman's disclosure of reserves data and other oil and gas information is made
in reliance on an exemption granted to Talisman by Canadian securities
regulatory authorities, which permits Talisman to provide disclosure in
accordance with US disclosure requirements. The information provided by Talisman
may differ from the corresponding information prepared in accordance with
Canadian disclosure standards under National Instrument 51-101 (NI 51-101).
Probable reserves, which Talisman discloses voluntarily, have been calculated
using the definition of probable reserves set out by the society of Petroleum
Engineers/World Petroleum Congress ('SPE/WPC'). Further information on the
differences between the US requirements and the NI 51-101 requirements is set
forth under the heading 'Note Regarding Reserves Data and Other Oil and Gas
Information' in Talisman's Annual Information Form.
In this press release, Talisman makes reference to probable reserves in the
Montrose Arbroath area. At year end 2007, Talisman had 166 mmboe probable
reserves in the UK. The estimates of reserves and future net revenue for
individual properties may not reflect the same confidence level as estimates of
reserves and future net revenue for all properties, due to the effects of
aggregation. The exemption granted to Talisman also permits it to disclose
internally evaluated reserves data. Any reserves data in this press release
reflects Talisman's estimates of its reserves. While Talisman annually obtains
an independent audit of a portion of its reserves, no independent qualified
reserves evaluator or auditor was involved in the preparation of the reserves
data disclosed in this press release.
Oil and Gas Information
Throughout this press release, the calculation of barrels of oil equivalent
(boe) is at a conversion rate of six thousand cubic feet (mcf) of natural gas
for one barrel of oil and is based on an energy equivalence conversion method.
Boe may be misleading, particularly if used in isolation. A boe conversion ratio
of 6 mcf:1 bbl is based on an energy equivalence conversion method primarily
applicable at the burner tip and does not represent a value equivalence at the
wellhead.
Talisman makes reference to production volumes throughout this press release.
Where not otherwise indicated, such production volumes are stated on a gross
basis, which means they are stated prior to the deduction of royalties and
similar payments. In the US, net production volumes are reported after the
deduction of these amounts.
Canadian Dollars and GAAP
Dollar amounts are presented in Canadian dollars unless otherwise indicated.
Unless otherwise indicated, financial information is presented in accordance
with Canadian generally accepted accounting principles that may differ from
generally accepted accounting principles in the US. Talisman's Consolidated
Financial Statements as at and for the year ended December 31, 2007, which were
filed with Canadian and US securities authorities on March 7, 2008, contain
information concerning differences between Canadian and US generally accepted
accounting principles.
Non-GAAP Financial Measures
Included in this press release are references to financial measures commonly
used in the oil and gas industry, such as cash flow, cash flow per share, cash
flow from continuing operations, earnings from continuing operations, earnings
from continuing operations per share and net debt. These terms are not defined
by GAAP in either Canada or the US. Consequently, these are referred to as
non-GAAP measures. Talisman's reported results of cash flow, cash flow from
continuing operations, earnings from continuing operations and net debt may not
be comparable to similarly titled measures by other companies.
Cash flow, as commonly used in the oil and gas industry, represents net income
before exploration costs, DD&A, future taxes and other non-cash expenses. Cash
flow is used by the Company to assess operating results between years and
between peer companies that use different accounting policies. Cash flow should
not be considered an alternative to, or more meaningful than, cash provided by
operating, investing and financing activities or net income as determined in
accordance with Canadian GAAP as an indicator of the Company's performance or
liquidity.
Earnings from continuing operations is calculated by adjusting the Company's net
income per the financial statements, for certain items of a non-operational
nature, on an after-tax basis. The Company uses this information to evaluate
performance of core operational activities on a comparable basis between
periods.
Net debt is calculated by adjusting the Company's long-term debt per the
financial statements for bank indebtedness, cash and cash equivalents. The
Company uses this information to assess its true debt position since cash could
potentially be used to pay down long-term debt.
Talisman Energy Inc.
Highlights
(unaudited)
Three months ended
March 31
2008 2007
----------------------------------------------------------------------
Financial
(millions of C$ unless otherwise stated)
Cash flow (1) 1,232 1,004
Net income 466 520
Exploration and development expenditures 1,013 1,297
Per common share (C$)
Cash flow (1) 1.21 0.96
Net income 0.46 0.49
----------------------------------------------------------------------
Production
(daily average)
Oil and liquids (bbls/d)
North America 40,089 47,270
UK 84,013 101,748
Scandinavia 33,335 31,912
Southeast Asia 37,226 49,549
Other 21,962 21,308
Synthetic oil - 106
----------------------------------------------------------------------
Total oil and liquids 216,625 251,893
----------------------------------------------------------------------
Natural gas (mmcf/d)
North America 850 923
UK 35 105
Scandinavia 19 14
Southeast Asia 312 267
----------------------------------------------------------------------
Total natural gas 1,216 1,309
----------------------------------------------------------------------
Total mboe/d (2) 419 470
----------------------------------------------------------------------
Prices (3)
Oil and liquids (C$/bbl)
North America 80.79 53.55
UK 97.33 64.73
Scandinavia 99.30 64.64
Southeast Asia 99.66 77.10
Other 102.48 69.41
----------------------------------------------------------------------
Total oil and liquids 95.49 65.46
----------------------------------------------------------------------
Natural gas (C$/mcf)
North America 7.86 7.66
UK 8.52 7.72
Scandinavia 5.78 4.44
Southeast Asia 9.07 6.29
----------------------------------------------------------------------
Total natural gas 8.16 7.35
----------------------------------------------------------------------
Total (C$/boe) (includes synthetic) (2) 73.01 55.52
----------------------------------------------------------------------
(1) Cash flow and cash flow per share are non-GAAP measures.
(2) Barrels of oil equivalent (boe) is calculated at a conversion rate
of six thousand cubic feet (mcf) of natural gas for one barrel of
oil.
(3) Prices are before hedging.
Includes the results from continuing and discontinued
operations.
Talisman Energy Inc.
Consolidated Balance Sheets
(unaudited)
March December
31 31
(millions of C$) 2008 2007
----------------------------------------------------------------------
(restated)
Assets
Current
Cash and cash equivalents 217 536
Accounts receivable 1,147 1,143
Inventories 208 107
Prepaid expenses 28 12
Assets of discontinued operations 393 358
----------------------------------------------------------------------
1,993 2,156
----------------------------------------------------------------------
Other assets 159 171
Goodwill 1,501 1,406
Property, plant and equipment 18,655 17,710
Assets of discontinued operations - -
----------------------------------------------------------------------
20,315 19,287
----------------------------------------------------------------------
Total assets 22,308 21,443
----------------------------------------------------------------------
Liabilities
Current
Bank indebtedness 15 15
Accounts payable and accrued liabilities 2,079 1,889
Income and other taxes payable 479 388
Liabilities of discontinued operations 122 128
----------------------------------------------------------------------
2,695 2,420
----------------------------------------------------------------------
Deferred credits 32 21
Asset retirement obligations 2,024 1,915
Other long-term obligations 179 140
Long-term debt 4,389 4,862
Future income taxes 4,339 4,122
Liabilities of discontinued operations - -
----------------------------------------------------------------------
10,963 11,060
----------------------------------------------------------------------
Contingencies
Shareholders' equity
Common shares 2,437 2,437
Contributed surplus 64 64
Retained earnings 6,117 5,651
Accumulated other comprehensive income (loss) 32 (189)
----------------------------------------------------------------------
8,650 7,963
----------------------------------------------------------------------
Total liabilities and shareholders' equity 22,308 21,443
----------------------------------------------------------------------
Talisman Energy Inc.
Consolidated Statements of Income
(unaudited)
Three months ended March 31
(millions of C$) 2008 2007
----------------------------------------------------------------------
(restated)
Revenue
Gross sales 2,468 2,146
Hedging gain/(loss) (10) 46
----------------------------------------------------------------------
Gross sales, net of hedging 2,458 2,192
Less royalties 377 340
----------------------------------------------------------------------
Net sales 2,081 1,852
Other 35 30
----------------------------------------------------------------------
Total revenue 2,116 1,882
----------------------------------------------------------------------
Expenses
Operating 442 479
Transportation 43 56
General and administrative 64 60
Depreciation, depletion and amortization 532 569
Dry hole 70 100
Exploration 57 70
Interest on long-term debt 44 46
Stock-based compensation (10) 42
Loss on held-for-trading financial instruments 68 37
Other, net (13) (14)
----------------------------------------------------------------------
Total expenses 1,297 1,445
----------------------------------------------------------------------
Income from continuing operations before taxes 819 437
----------------------------------------------------------------------
Taxes
Current income tax 266 170
Future income tax (recovery) 47 (6)
Petroleum revenue tax 47 68
----------------------------------------------------------------------
360 232
----------------------------------------------------------------------
Net income from continuing operations 459 205
----------------------------------------------------------------------
Net income from discontinued operations 7 315
----------------------------------------------------------------------
Net income 466 520
----------------------------------------------------------------------
Per common share (C$)
Net income from continuing operations 0.45 0.19
Diluted net income from continuing operations 0.44 0.19
Net income from discontinued operations 0.01 0.30
Diluted net income from discontinued operations 0.01 0.29
Net income 0.46 0.49
Diluted net income 0.45 0.48
----------------------------------------------------------------------
Average number of common shares outstanding (millions)
- basic 1,019 1,051
Average number of common shares outstanding (millions)
- diluted 1,036 1,084
----------------------------------------------------------------------
Talisman Energy Inc.
Consolidated Statements of Cash Flows
(unaudited)
Three months ended March 31
(millions of C$) 2008 2007
----------------------------------------------------------------------
(restated)
Operating
Net income from continuing operations 459 205
Items not involving cash 693 698
Exploration 57 70
----------------------------------------------------------------------
1,209 973
Changes in non-cash working capital 80 85
----------------------------------------------------------------------
Cash provided by continuing operations 1,289 1,058
Cash provided by discontinued operations 23 31
----------------------------------------------------------------------
Cash provided by operating activities 1,312 1,089
----------------------------------------------------------------------
Investing
Corporate acquisitions, net of cash acquired - -
Capital expenditures
Exploration, development and other (1,012) (1,267)
Property acquisitions (97) (4)
Proceeds of resource property dispositions - -
Proceeds from investment disposition - -
Changes in non-cash working capital 98 39
Discontinued operations, net of capital expenditures (10) 188
----------------------------------------------------------------------
Cash used in investing activities (1,021) (1,044)
----------------------------------------------------------------------
Financing
Long-term debt repaid (1,167) (576)
Long-term debt issued 538 956
Common shares purchased, net - (297)
Common share dividends - -
Deferred credits and other 9 (18)
Changes in non-cash working capital 1 -
----------------------------------------------------------------------
Cash provided by (used in) financing activities (619) 65
----------------------------------------------------------------------
Effect of translation on foreign currency cash and
cash equivalents 9 (1)
----------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents (319) 109
Cash and cash equivalents net of bank indebtedness,
beginning of period 521 64
----------------------------------------------------------------------
Cash and cash equivalents net of bank indebtedness,
end of period 202 173
----------------------------------------------------------------------
Cash and cash equivalents 217 195
Bank indebtedness 15 22
----------------------------------------------------------------------
202 173
----------------------------------------------------------------------
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