A flare in the Montney shale gas formation of British Columbia
Talisman Energy Inc., a big name in North American shale natural gas plays, is eyeing opportunities to develop similar types of reservoirs overseas, an executive vice-president said Wednesday.
The Calgary-based oil and gas explorer has substantial holdings in promising shale formations like the Montney in northeastern British Columbia and the Marcellus in Pennsylvania, but has been starting to look at international basins lately as well.
"Just in the last six months we've started to sort of focus some of our efforts on to looking at international unconventional plays," said Richard Herbert, Talisman's executive vice-president of exploration, on a conference call with analysts and reporters.
"We recognize Talisman is a big player in North American shale gas now but it's also a company with international reach so it's a very good fit for us."
Talisman has been one of Canada's biggest players in shale gas, a resource that was too difficult and costly to develop until the advent of technologies like horizontal drilling and multi-stage rock fracturing.
Mr. Herbert said Europe presents an attractive market for natural gas. Plays in Hungary, Germany, Ukraine and other central European countries have already attracted some big energy names.
"We haven't done any deals yet, but we are looking hard and depending on how things go, we could see an entry into an international opportunity," Mr. Herbert said.
Earlier Wednesday, Talisman reported a $111-million loss for the last three months of 2009, due largely to the recession dragging down oil and natural gas prices.
The loss is a stark contrast to the $1.2-billion in profit booked in the fourth quarter of 2008, when Talisman recorded significant gains on financial instruments.
The loss in the quarter ended Dec. 31 amounted to 11 cents per share, compared with share profit of $1.17 a year earlier.
The negative swing came despite a slight gain in revenues to $1.82-billion from $1.77-billion the previous year.
"With lower oil and natural gas prices brought on by the economic downturn, we saw netbacks fall by over 40 per cent in 2009, and these lower commodity prices had a substantial impact on our financial results," chief executive officer John Manzoni said in a statement Wednesday.
Production from continuing operations averaged 418,000 barrels of oil equivalent per day - just slightly below what UBS Investment Research had been expecting, analyst Andrew Potter wrote in a note to clients Wednesday.
"Volumes were up 3 per cent year over year and 6 per cent quarter over quarter on increasing shale gas production and the completion of maintenance turnarounds," he wrote.
"Talisman set a new production record in Southeast Asia, as volumes increased 18 per cent year over year with completion of the Northern Fields development."
For the past year and a half, Talisman has been refocusing its business around a few key strategic areas: North American shale natural gas, Southeast Asia and the North Sea.
Sales of non-core assets have generated $2.7-billion in proceeds, Talisman said.
In November, Talisman announced it would be reorganizing its North American operations into two businesses - shale and unconventional - each with its own business model and strategic roles. That restructuring led to about 200 jobs being cut.
Talisman's main shale gas holdings are in northeastern British Columbia and in the Marcellus formation, which stretches over parts of New York, Pennsylvania, Ohio and West Virginia.
In the Marcellus formation, Talisman is mostly active in Pennsylvania, and plans to open an office soon in Pittsburgh to handle the increased activity in the region.
"This is a critical transition year," Mr. Manzoni said on the conference call.
"We're building a powerful growth engine as we invest into the shale developments."
For all of 2009, Talisman said it earned $437-million, or 43 cents per share, compared with $3.5-billion, or $3.46 per share, in 2008. Annual revenues were $6.5-billion, down from $9.4-billion a year ago.