Talisman Reports First-Quarter Loss on Reduced Production

Talisman Energy Inc., the Canadian oil and natural gas producer seeking to sell as much as $3 billion in assets, reported a first-quarter loss for the first time in two years as production fell 19 percent.

The net loss of $213 million, or 21 cents a share, compared with profit of $291 million, or 24 cents, a year earlier, the Calgary-based company said in a statement today. Excluding losses related to drilling and the restructuring of the company, the loss of 8 cents a share compared with the 1.5-cent average profit of 18 analysts’ estimates compiled by Bloomberg.

Talisman had a “disappointing quarter” after missing estimates for cash flow and earnings and reporting lower-than-expected gas output from North America, Randy Ollenberger, a Calgary-based analyst with BMO Capital Markets Corp., said in a note.

Hal Kvisle, the company’s chief executive officer since September, said the company is making progress on its plan to raise as much as $3 billion from asset sales or joint ventures during the next 12 to 18 months. The company’s “first priority is to live within our means” as it focuses spending on the Americas and Asia-Pacific, he said in the statement.

Production Falls

“They need to rationalize and focus on higher-return projects,” Chris Feltin, a Calgary-based analyst at Macquarie Group Ltd., said in an April 29 phone interview. Talisman’s sale of 49 percent of its U.K. North Sea business to China Petrochemical Corp. in December and the February shutdown of an offshore platform in the region was expected to reduce output last quarter, Feltin said.

Production dropped 19 percent to the equivalent of 372,000 barrels a day. Sales fell 45 percent to $1.13 billion, from $2.06 billion last year.

The company is “coming to the conclusion” of selling its

12.1 percent stake in the Ocensa pipeline in Colombia, which Talisman would still the retain right to use, Scott Thomson, the company’s chief financial officer, said on a call with analysts today. The sale of the oil pipeline is expected to close this year, he said.

Selling Acreage

Talisman continues efforts to partner or sell its acreage in western Canada. It plans to open information about its holdings in the north part of the Duvernay formation to potential buyers this month, Thomson said. The company is talking to “a number of people” about alternatives for the Montney.

“Both of those will be a second half of 2013 situation,” he said.

About 62 percent of the company’s 2012 output was gas and the rest was oil or natural gas liquids. U.S. gas futures traded in New York have recovered after reaching a 10-year low last year, rising 39 percent from a year earlier to average $3.48 per million British thermal units during the quarter as cold weather boosted demand.

The shares fell 4.8 percent to C$11.50 at the close in Toronto. They have eight buy and 18 hold recommendations from analysts, according to data compiled by Bloomberg.

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