Talisman awaits North Sea boost after China sale

Group Business Correspondent

Thursday 2 August 2012

TALISMAN Energy reiterated predictions the $1.5bn (£960m) sale of a 49% stake in its UK North Sea assets to China’s Sinopec would be good for the mature oil and gas province.

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Mark Williamson

Announcing a 72% fall in second quarter profits, the Canadian firm said the deal unveiled last week would lead to increased investment in a region in which Sinopec has provided a large vote of confidence.

"The new joint venture will spend more on a gross basis to improve operating efficiency and extend the life of these fields," said Talisman’s chief executive John Manzoni. The company indicated the agreement with Sinopec makes it more likely to remain a long term investor in the UK North Sea, albeit at reduced levels. It also has operations in North America, Norway and Asia. In addition to bringing in a partner to help shoulder the costs of investing to maximise production from the fields, the deal will reduce Talisman’s liability for decommissioning UK assets in future. Talisman said: "The North Sea is an important part of the company’s portfolio. We will continue to maximize value from our UK assets through the joint venture agreement with Sinopec." The company’s North Sea production fell 29% in the second quarter, to 52,000 barrels oil equivalent daily from 73,000 in the same period last year. Talisman said the decrease related to "planned turnarounds, shut-ins to repair a gas export pipeline, and mechanical issues at several sites". It added: "Production is expected to increase toward the end of the year with the contribution from infill wells, completion of planned maintenance and the resolution of mechanical issues." Group production increased by 4% annually to 435,000 boed in the second quarter driven by growth in southeast Asia and North American shale. Net income fell to $196m from $698m in the second quarter last year, reflecting lower natural gas prices and higher operating costs. Talisman will use around $500m of the proceeds for share buy-backs.

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Talisman awaits North Sea boost after China sale

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