Talisman Reports Q2 Loss
Canadian energy explorer, Talisman Energy Inc. (TLM), reported weak second-quarter 2013 results due to decreased production along with lower oil and liquids price realizations. The company announced a loss per share from continuing operations (excluding non-operating items) of 3 cents against the Zacks Consensus Estimate of 4 cents. In the year-ago quarter, Talisman reported earnings of 7 cents per share.
Quarterly total revenue of $1,185.0 million deceased 34.2% from $1,800 .0 million in the second quarter of 2012. Revenues also missed the Zacks Consensus Estimate of $1,422.0 million.
Volume Analysis
The quarter’s total production of 361 thousand barrels of oil equivalent per day (MBOE/d) was down 17.0% from the year-ago level, mainly due to North Sea area’s turnaround and downtime activities along with Algeria’s constrained output.
Oil & liquids production was down 34.6% at 98,959 barrels per day (Bbl/d). Volumes were affected by significantly lower production in the North Sea.
Talisman’s natural gas volumes were down 14.4% at 1,369 million cubic feet per day (MMcf/d), mainly due to the decrease in production in North America and North Sea.
Realized Prices
During the quarter, Talisman’s realized commodity prices dropped slightly by 0.9% from the year-ago quarter to $52.68 per barrel of oil equivalent (BOE) mainly on account of lower oil and liquids realizations from North America and Southeast Asia. This was partially offset by higher gas prices in North America and North Sea.
Overall, natural gas prices increased 29.7% year over year to $6.12 per Mcf, while oil and liquids realizations averaged $89.51 per barrel, down 7.6% from the year-ago level.
Cash Flow and Capital Expenditure
Cash flow from continuing operations totaled $526.0 million, down 34.5% year over year. Talisman spent $843.0 million on exploration and development activities.
Balance Sheet
As of Jun 30, 2013, Talisman had cash and cash equivalents of approximately $270.0 million and long-term debt of $4,923.0 million (including current portion), with a debt-to-capitalization ratio of 33.6%.
Guidance
Talisman expects its 2013 full-year production to be 375 MBOE/d, which is at the lower end of the previously projected range of 375-395 MBOE/d. Oil & liquids production is anticipated to be roughly 132,000 Bbl/d while natural gas volumes will be 1,457 MMcf/d for 2013.
Zacks Rating
Talisman currently carries a Zacks Rank #3 (Hold), which implies that it is expected to perform in line with the broader U.S. equity market over the next one to three months.
Meanwhile, one can look at exploration and production firms like Enerplus Corporation (ERF), ARC Resources Ltd. (AETUF) and Canadian Oil Sands Limited (COSWF) which offer value. Enerplus carries a Zacks Rank #1 (Strong Buy) while ARC Resources and Canadian Oil Sands have a Zacks Rank #2 (Buy).
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