Canada’s resource-based economy quite understandably draws an anxious breath when some energy companies start reporting earnings and future plans. This week, one of the companies in question was Calgary-based Talisman Energy Inc. (T.TLM) who came out with fairly optimistic numbers.
To begin with, Talisman noted its cash flow for the year was $3 billion, down 12% from 2011, mostly due to lower North American natural gas prices and lower North Sea volumes. But these lower figures were partially offset by growing volumes in Asia. Cash flow per share was $2.95, slightly off from $3.36 in 2011.
But the number that stock traders focus on most assiduously is earnings. In this instance, the company turned a bit of a corner, as fourth-quarter net income came in at $376 million, compared to a loss of $117 million the previous year. Net income for the year was $132 million, compared to $776 million in 2011.
The company completed $2.5 billion in asset sales, most notably the sale of a 49% equity interest in Talisman's UK North Sea business to Sinopec for $1.5 billion. Talisman reduced net debt to $3.7 billion at year-end, from $4.5 billion at the end of the third quarter.
Exploration and development spending for the year totaled $4 billion. Over the course of the year, Talisman reduced spending on North American natural gas and increased spending on liquids; the company vows this trend will continue in 2013. Net debt levels were reduced to $3.7 billion, compared to $4.5 billion at the end of the third quarter.
Part of the stronger showing was the result of a shakeup at the top. Hal Kvisle took over the helm at Talisman in September, and immediately set important new strategies for the company; among them, for the energy producer to live within its means, reducing investment to live within cash flow.
Talisman says its 2013 capital budget has been set at approximately $3 billion, a 25% reduction from 2012.
Kvisle also set as a priority investment in fewer high-value projects that come onstream and generate positive cash flows quickly. Yet another priority is to build its competitive position in all core regions.
Talisman is a global upstream oil and gas company, headquartered in Calgary, with three main operating areas: the Americas (North America and Colombia), Southeast Asia and the North Sea, with an active exploration program across all three.
The company’s stock is positioned about midway through its 52-week trading range, peaking at $14.69 soon after Kvisel took office in September, having recovered from a low of $9.72 in late May of last year. The price at the close on February 15 was $12.47 a share, on volume approaching three million, or four cents below the close the day before.
