Upstream oil and gas company Talisman Energy Inc. (TLM,TLM.TO) Wednesday reported a plunge in its second-quarter profit, reflecting significantly lower oil and gas prices. On a continuing operations basis, the company reported a loss for the quarter compared with a profit a year ago.
The company's second-quarter net income was C$63 million or C$0.06 per share, down from C$426 million or C$0.41 per share, a year earlier.
The company also reported a loss of continuing operations of C$433 million or C$0.43 per share, compared with a net income from continuing operations of C$249 million or C$0.24 per share, in the prior-year quarter.
On a non-GAAP basis, the company's earnings from continuing operations declined to C$135 million or C$0.13 per share, from $790 million or C$0.78 per share in the second quarter of 2008.
The company said that prior period results have been restated to reflect the results of discontinued operations. The company earned C$496 million, or C$0.49 per share, from discontinued operations, compared with C$177 million, or C$0.17 per share, a year ago.
Talisman Energy also reported quarterly revenues of C$1.60 billion, down significantly from C$3.02 billion in the prior year quarter.
The Calgary, Canada-based company had reported net income of C$455 million and revenues of C$1.576 billion for the preceding first quarter.
The company's cash flow was C$900 million in the second quarter, a decrease from C$1.7 billion a year ago, primarily due to lower prices.
During the second quarter, the company's total production averaged 424 mboe/d, down 2% from 432 mboe/d last year. Oil and liquids production was 212.15 bbls/d, down from 219.31 bbls/d last year, while natural gas production totaled 1,271 mmcf/d compared to 1,275 mmcf/d a year ago.
Netbacks averaged C$27.41 per boe, a decline of 55% from a year earlier, reflecting sharply lower oil and gas prices. WTI oil prices averaged US$60/bbl during the quarter, well below US$124/bbl a year ago. North American natural gas prices continued to weaken, with NYMEX averaging US$3.60/mmbtu compared to US$10.80/mmbtu a year ago, the company said.
North American revenue was C$451 million, lower than C$998 million in the prior-year quarter. Production in North America averaged about 171 mboe/d in the quarter, down 9% from the same period in 2008.
UK generated revenues of C$594 million, down from C$975 million the second quarter of 2008. Production from continuing operations averaged approximately 93 mboe/d during the quarter, unchanged from last year.
The company also recorded revenues of C$213 million in Scandinavia, compared with C$443 million in the previous year. Average production from continuing operations rose 18% to 39 mboe/d during the quarter.
In Southeast Asia, revenue totaled C$298 million, sharply lower than C$454 million a year ago. Production averaged approximately 105 mboe/d, 15% higher than the same period last year.
Revenue from others plunged to C$47 million from C$152 million in the previous year. In North Africa, the company's production from continuing operations averaged 13 mboe/d, down 13% from the prior-year quarter, mainly due to continued OPEC production restrictions and natural declines. The company expects these restrictions to continue at this level for the remainder of 2009.
For the first half of fiscal 2009, the company earned C$518 million or C$51 per share, compared with C$892 million or C$86 per share, a year ago. Total revenue was C$3.18 billion, lower than C$5.03 billion in the same period last year.
Talisman Energy said that it is in negotiations for the sale of its assets in Tunisia. The sale of the company's interests in Trinidad and Tobago was completed on May 27.
The company also said that it is increasing capital spending in the Marcellus play as a result of recent results and its proximity to premium natural gas markets. The company now expects to drill around 50 wells during the year versus the original plan of 36 wells.
Further, Talisman said that Ron Eckhardt, Executive Vice President of North American Operations, has decided to retire after 23 years with the company. Paul Smith, Executive Vice President, International Operations West, will succeed Eckhardt. Nick Walker, who heads the company's UK operations, will take over from Smith.
Among peers, British oil major BP Plc (BP,BP.L) has reported a sharp decline in its second-quarter profit, as revenues and other income nearly halved due primarily to a decline in oil and gas prices. The company's profit attributable to shareholders plunged to US$4.39 billion or 23.16 US cents per share, from US$9.36 billion or 49.23 US cents per share, in the previous year. Total revenues and other income was US$56.56 billion, down from US$110.98 billion a year ago.
TLM closed Tuesday's trading at US$15.83 on the NYSE. On the TSX, TLM.TO ended Tuesday's trading at C$17.09.
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