Talisman Energy Reports Third-Quarter Operating Loss on Hedging

Talisman Energy Inc. (TLM), the Canadian oil and natural-gas company being targeted by activist investor Carl Icahn, reported its fifth consecutive quarterly operating loss after losing money from hedging.

Excluding one-time items, the loss held at 4 cents a share last quarter, missing the average estimate of a 1-cent loss from 14 analysts surveyed by Bloomberg. The net loss was $54 million, or 5 cents a share, compared with a loss of $731 million, or 71 cents, a year earlier, Talisman said in a statement. Last year’s results included costs associated with its exit from Peru.

Chief Executive Officer Hal Kvisle is seeking to sell $2 billion to $3 billion in assets to reduce debt and focus on the Americas and Southeast Asia. Billionaire investor Icahn reported a 7 percent stake in Calgary-based Talisman last month and said he may seek talks with management on “strategic alternatives” and board seats.

Talisman has suffered lower North American gas prices and losses from hedging and foreign exchange. It also reported lower production after it sold assets and North Sea volumes declined.

Output totaled 371,000 barrels of oil equivalent a day in the third quarter, down from 415,000 barrels a day a year earlier, according to today’s statement.

North Sea

“Talisman continues to battle reliability issues in the North Sea, which adds an element of uncertainty to our estimates,” Chris Feltin and Brian Bagnell of Macquarie Capital Markets Canada Ltd. wrote in an Oct. 10 note. Talisman was the worst-performing stock in the quarter among a group of large Canadian energy companies tracked by Macquarie.

Talisman reduced its full-year output target from the North Sea by the equivalent of about 9,000 barrels of oil a day in July and said it continued to experience production issues that would take time and investment to resolve. In December, the company sold 49 percent of its U.K. business to China Petrochemical Corp.

The company reported earnings before the start of regular trading on North American markets. The stock, which has gained 14 percent this year, has seven buy, 16 hold and one sell recommendation from analysts.

To contact the reporter on this story: Rebecca Penty in Calgary at rpenty@bloomberg.net

To contact the editor responsible for this story: Susan Warren at susanwarren@bloomberg.net

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