Talisman Energy Inc. (TSX: TLM) (NYSE: TLM) reported its operating
and unaudited financial results for 2010. The company was
successful in strategically repositioning its portfolio and
achieving its 2010 operating targets.
- Cash flow(1) was $3.1 billion, down 23% from 2009, due to
higher cash taxes in 2010 and lower cash proceeds from financial
instruments.
- Net income was $648 million, a 48% increase from the previous
year due to higher commodity prices, improved operating performance
and non-cash gains on derivatives.
- Earnings from continuing operations(1) were $347 million
versus $631 million a year ago. Stronger operating performance was
more than offset by the effect of cash proceeds from financial
instruments the previous year and higher cash taxes in 2010.
- Talisman maintained capital discipline, reducing capital
spending by 6% during 2010, to $4 billion.
- Production averaged 417,000 boe/d, significantly above initial
guidance. Excluding asset sales, year on year production increased
7%, with fourth quarter volumes 10% higher than 2009.
- Talisman replaced 164% of production with proved reserves,
excluding price revisions, achieving a 35% reduction in replacement
costs compared to 2009 and a 63% reduction over the past two years.
Proved developed producing replacement costs were 54% lower than
2009.
- Talisman sold over $2 billion of non-core assets in 2010,
predominantly North American natural gas properties.
- Talisman entered into a strategic partnership with Sasol
Limited, selling them a 50% interest in the company's Farrell Creek
shale play in British Columbia.
- The company acquired assets in two liquids areas, establishing
a material position in the heart of the liquids rich window in the
Eagle Ford shale play in Texas; and also acquired producing assets
with significant upside in Colombia.
- Talisman made a number of exploration discoveries in Latin
America, including an oil discovery and several successful
stratigraphic tests in Colombia.
(1) The terms "cash flow" and "earnings from continuing
operations" are non-GAAP measures. Please see the advisories and
reconciliations elsewhere in this press release.
"Talisman had a very successful year in 2010, in terms of
operational delivery and strategic implementation," said John A.
Manzoni, President and CEO. "This was due to the hard work, focus
and dedication of Talisman employees and contractors around the
globe.
"Production averaged 417,000 boe/d both for the year and during
the fourth quarter. We increased production from continuing
operations by 7% year over year and achieved 10% growth in the
fourth quarter compared to a year ago. Part of this was due to
rapidly growing shale volumes and we also set new production
records in Southeast Asia again in 2010, with ongoing optimization
at Corridor in Indonesia and infill drilling offshore
Malaysia/Vietnam. We expect the underlying growth we delivered from
the second half to translate into sustainable absolute production
growth of 5-10% from 2011 into the medium term.
"Talisman replaced 164% of production with proved reserves,
achieving a 35% reduction in replacement costs from 2009 and a 63%
reduction over the past two years. We expect this trend to
continue, albeit at a slower pace, which secures improving
profitability into the future.
"We are now well positioned in three of the leading shale plays
in North America, in different stages of development, and each with
relatively low land retention commitments. This provides tremendous
flexibility in being able to respond to dynamic external
conditions.
"We have proved the low cost, high growth potential of the
Marcellus shale, which was producing 315 mmcf/d at the end of the
year. The company secured a strategic partner in its Farrell Creek
assets in the Montney shale, with Sasol paying approximately $1
billion for a 50% share, which includes funding the majority of
future development capital. We are excited about the strategic
options this partnership brings for the future. We also acquired a
material position in the heart of the liquids rich window of the
Eagle Ford shale play in Texas, forming a joint-venture with
Statoil.
"As part of the move to reposition our portfolio, Talisman sold
over $2 billion of mainly gas producing assets in North America in
2010, bringing total asset sales to over $5 billion during the past
two years.
"Elsewhere, we are building a very exciting international
exploration portfolio. We have added over 16 million net acres of
prospective new exploration acreage over the past two years, and
shot 1,700 square kilometers of 3D seismic and 2,900 kilometers of
2D seismic last year as we move to evaluate and prove up the
potential of these plays.
"We underpinned our exploration program in Colombia with the
acquisition of BP Colombia's assets, conducted jointly with
Ecopetrol. Talisman also acquired interests in two exploration
blocks in Norway.
"We made an oil discovery in Colombia in 2010 and early results
from a stratigraphic drilling program are very exciting. Early
indications from the Beta well in Norway and TR1 in the UK are
encouraging, as are early drilling results in Papua New Guinea.
"Net income was $648 million, up 48% compared to a year ago,
with higher commodity prices. Earnings from continuing operations
were down due to lower cash proceeds from financial instruments
than the previous year and higher 2010 cash taxes, despite improved
operating metrics. Cash flow was $3.1 billion in 2010 compared to
$4 billion in 2009. The company recognized approximately $1 billion
in cash from hedges in 2009 and higher cash taxes in 2010.
"Looking forward, the portfolio is now positioned for
sustainable and profitable growth. We have shifted the emphasis in
2011 in North America to liquids opportunities with a 35% reduction
in spending on dry gas. We will ramp up activity in the Eagle Ford
and in our conventional liquids areas, while scaling back our net
spending in both the Marcellus and Montney. Colombia also adds
12,000-15,000 boe/d of production, half of which will be
liquids.
"I fully expect another exciting year in 2011. We have a stable,
oil leveraged production base from our North Sea assets and our
conventional North American portfolio, and are not being held
hostage by low North American natural gas prices. We are able to
grow while maintaining a disciplined approach to capital spending,
and continue to evaluate our large, and growing, international
exploration portfolio. Our replacement costs will continue to
decline, driving improved profitability into the future."
Financial Results
All values in this press release are in Canadian dollars (C$)
unless otherwise stated. Commencing in the first quarter of 2011,
Talisman will be reporting in US dollars (US$) to reflect the fact
that the majority of the company's transactions occur in US$ and
this is the functional currency of the company.
The financial information contained in this release is
unaudited. The company expects to file its audited Financial
Statements for the year ended December 31, 2010, along with the
related Management's Discussion and Analysis, Annual Information
Form and Annual Report on Form 40-F by February 28, 2011.
The company announced its capital spending plans for 2011 on
January 11, 2011. For additional information, please visit
Talisman's website at www.talisman-energy.com.
Three months ended Year ended
December 31 2010 2009 2010 2009
-----------------------------------------
Cash flow ($ million) 682 921 3,058 3,961
-----------------------------------------
Cash flow per share (2) 0.67 0.91 3.00 3.90
-----------------------------------------
-----------------------------------------
Net income (loss) ($ million) (304) (111) 648 437
-----------------------------------------
Net income (loss) per share (0.30) (0.11) 0.64 0.43
-----------------------------------------
-----------------------------------------
Earnings from continuing
operations ($ million) 84 68 347 631
-----------------------------------------
Earnings from continuing
operations per share (2) 0.08 0.07 0.34 0.62
-----------------------------------------
Average shares outstanding
(million) 1,018 1,015 1,018 1,015
-----------------------------------------
(2) The terms "cash flow per share" and "earnings from continuing
operations per share" are non-GAAP measures. Please see the advisories
and reconciliations elsewhere in this press release.
Net income was $648 million versus $437 million in 2009,
reflecting higher average commodity prices, improved operating
performance and gains on held for trading financial instruments,
partially offset by higher taxes and lower gains on asset
dispositions. The company recorded a net loss of $304 million in
the fourth quarter, compared to a net loss of $111 million in 2009,
reflecting higher commodity prices and lower dry hole expenses,
more than offset by higher stock based compensation and taxes.
Cash flow for 2010 was $3.1 billion versus $4 billion a year
earlier, with higher revenue offset by higher royalties and cash
taxes (as a result of higher prices and lower capital expenditures
in the North Sea). In addition, the company realized cash proceeds
of approximately $1 billion from financial instruments in 2009.
Cash flow for the quarter was $682 million, broadly in line with
the previous quarter, with higher commodity prices offset by higher
stock based compensation and cash taxes in the fourth quarter.
Earnings from continuing operations, which exclude
non-operational items, were $347 million, compared to $631 million
a year earlier, reflecting improved operating performance, lower
dry hole expense and lower DD&A expense, more than offset by
lower cash proceeds from derivatives and higher cash taxes.
The company's DD&A expense decreased by $196 million, or 8%,
to $2.2 billion due to higher reserves and the strengthening of the
C$.
Capital expenditures totaled $4 billion. Talisman spent $3.9
billion on exploration and development during 2010, a slight
increase from $3.8 billion in 2009. North America accounted for 46%
of spending, North Sea development 26%, Southeast Asia development
8% and international exploration 18%. Cash exploration and
development spending in 2011 is expected to be approximately US$4
billion.
Production
Three months ended Year ended
December 31 2010 2009 2010 2009
-----------------------------------------
-----------------------------------------
Oil and liquids (bbls/d) 190,000 203,000 189,000 211,000
-----------------------------------------
Natural gas (mmcf/d) 1,358 1,320 1,367 1,283
-----------------------------------------
Total production (boe/d) 417,000 423,000 417,000 425,000
-----------------------------------------
Discontinued operations (boe/d) 8,000 52,000 27,000 60,000
-----------------------------------------
Continuing operations (boe/d) 409,000 371,000 390,000 365,000
-----------------------------------------
Production from continuing operations averaged 390,000 boe/d, 7%
above 2009 with higher North American shale gas volumes and record
production in Southeast Asia. Production from continuing operations
in the fourth quarter increased 10% compared to the same quarter in
2009. Total production for the year was down 2% to 417,000 boe/d as
a result of asset sales.
Production in North America from continuing operations was
126,000 boe/d, a 14% increase over 2009. North American natural gas
production increased 19%, due principally to successful development
in the Pennsylvania Marcellus shale and Farrell Creek in the
Montney shale play in northeastern BC. Production from the
Pennsylvania Marcellus shale play was 315 mmcf/d at the end of
2010, up from 65 mmcf/d at the end of 2009.
In the North Sea, total volumes were relatively unchanged. Oil
and liquids production in the UK was lower than 2009 as a result of
maintenance and repair work, unplanned shutdowns and natural
declines, partially offset by improved production efficiency at
Claymore and the start-up of production at Auk North and Burghley.
In Scandinavia, production increased from 2009 due to successful
development drilling at Varg, as well as improved uptime at
Rev.
In Southeast Asia, volumes averaged 119,000 boe/d, an increase
of 10% over 2009. Natural gas production increased 20%, primarily
due to Indonesia, where production averaged 387 mmcf/d with higher
contract takes and better plant efficiency at Corridor and a full
year of Tangguh production. Natural gas production in Malaysia was
also higher than 2009, averaging 98 mmcf/d due to increased gas
production from the Northern Fields.
Netbacks
Three months ended Year ended
December 31 2010 2009 2010 2009
-----------------------------------------
($/boe)
-----------------------------------------
Sales 58.32 55.51 55.37 49.40
-----------------------------------------
Royalties 9.38 9.13 8.74 7.34
-----------------------------------------
Transportation 1.44 1.64 1.50 1.43
-----------------------------------------
Operating expenses 12.78 12.84 12.80 12.91
-----------------------------------------
Netback 34.72 31.90 32.33 27.72
-----------------------------------------
-----------------------------------------
Oil and liquids netback ($/bbl) 53.24 44.68 46.29 37.49
-----------------------------------------
Natural gas netback ($/mcf) 3.19 3.35 3.47 3.02
-----------------------------------------
Talisman's annual average realized price of $55.37/boe was 12%
higher than 2009. WTI averaged US$79.53/bbl, up 29% from 2009,
reflecting the ongoing global economic recovery. North American gas
prices also increased, with NYMEX and AECO up 8% and 2%,
respectively; however, natural gas prices did not keep pace with
oil prices due to continuing over supply in North America.
The change in the company's reported oil and liquids price is
consistent with the relevant benchmark prices; however, the
company's reported prices also reflect the strengthening of the C$
relative to the US$ in 2010.
In 2010, the company's average netback was $32.33/boe, 17%
higher than 2009, due principally to higher commodity prices in
2010, partially offset by the strengthening C$ relative to the US$.
Fourth quarter netbacks were up 9% from the same quarter in 2009,
averaging $34.72/boe.
Royalty expense was $1.3 billion in 2010, a 20% increase from
2009, reflecting increased commodity prices.
Total operating costs for the company were $1.9 billion during
2010, relatively consistent with 2009. On a per unit basis, costs
decreased 1% from the previous year to average $12.80/boe, helped
by lower unit shale operating costs.
Gross Proved Reserves (1)
Gross Proved Reserves
Average 2010 Pricing
mmboe
December 31, 2009 1,410.7
Discoveries, extensions and additions 225.5
Revisions and transfers 23.5
Price revisions 21.7
Net acquisitions and dispositions (146.9)
Production (152.0)
December 31, 2010 1,382.5
(1) The reserves data and other oil and gas information included herein are
disclosed in accordance with US disclosure standards. Please see the
advisories elsewhere in this news release.
Talisman spent approximately $4 billion to add 249 mmboe of
proved reserves, excluding price revisions, in 2010, replacing 164%
of production. Total proved reserves additions, including price
revisions were 271 mmboe. The company's reserves were reduced by
147 mmboe through acquisitions and dispositions, for a net addition
of 124 mmboe of proved reserves. Proved undeveloped reserves
accounted for 33% of the company total and 34% in North America at
the end of 2010.
Excluding price revisions, replacement costs were down 35%.
Proved, developed producing replacement costs were down 54%.
North America
In North America, production from continuing operations was 756
mmcfe/d (126,000 boe/d) in 2010, an increase of 14% over 2009, due
to ongoing development programs in shale gas. Natural gas
production from continuing operations averaged 636 mmcf/d.
Total production averaged 918 mmcfe/d (153,000 boe/d) for 2010,
down 9% from a year ago, as a result of non-core asset sales.
Production from shale averaged 218 mmcfe/d during the year, up from
34 mmcf/d a year earlier. Shale accounted for 28% of Talisman's
North American natural gas production. Capital spending in North
America was $1.8 billion, including $1.6 billion related to shale
activities.
In the Pennsylvania Marcellus area, the company drilled 152
gross (145.4 net) wells during the year, 139 operated and 13
non-operated. Production averaged 181 mmcf/d in 2010, up from 29
mmcf/d the previous year, with an exit rate of 315 mmcf/d. Talisman
ended the year with 12 operated rigs in the area.
Talisman continued to progress development of its Montney shale
play in 2010. In Farrell Creek, Talisman drilled 21 gross (21 net)
operated wells and, at the end of the year, had four operated rigs
working. In Greater Cypress and Greater Groundbirch, Talisman
continued its piloting program, drilling 16 gross (9.3 net) wells,
nine of which were operated. Average production was 32 mmcf/d in
the Montney play, with an exit rate of 84 mmcf/d.
In December 2010, Talisman reached an agreement to create a
strategic partnership with Sasol Limited to develop the Farrell
Creek assets in Talisman's Montney shale play. Pursuant to this
agreement, Talisman will sell a 50% working interest in its Farrell
Creek assets to Sasol for a total consideration of approximately $1
billion, including $250 million cash and a commitment to fund
future capital in the amount of $800 million. Closing is expected
to occur in the first half of 2011.
Talisman also established a strategic position in the heart of
the liquids rich window of the Eagle Ford shale play through land
acquisitions and the creation of a 50/50 joint venture with Statoil
ASA. Talisman now holds approximately 78,000 net acres as a result
of these transactions. At the end of the year, Talisman had four
rigs operating in the area. Average production in December 2010 was
14 mmcfe/d.
Talisman continued its pilot program in Quebec, drilling four
gross (3.2 net) wells. The company also completed three wells,
including a well drilled in 2009, and is planning to complete the
remaining two wells in 2011.
Production from continuing operations from Talisman's
conventional areas was 421 mmcf/d natural gas and 20,000 bbls/d of
liquids. The company drilled a total of 109 gross conventional
wells (83 net) in the year. In the liquids rich window of the
Cardium play in Alberta, Talisman started a pilot program in the
fourth quarter of 2010.
Talisman successfully completed the sale of conventional,
non-core assets in North America, generating proceeds of
approximately $2 billion. These properties were approximately 90%
gas-weighted, with production of 45,000 boe/d (270 mmcfe/d) at the
end of the 2009.
UK
Production in the UK averaged 77,000 boe/d, a 14% decrease from
2009. This was due to reductions from a number of fields due to
planned and unplanned shutdowns and natural declines, partly offset
by improved production efficiency at Claymore, the startup of
Burghley in October and the Auk North field in November.
The company spent $507 million on development in the UK, with
most of this capital directed at the Auk North and Auk South
projects. As well as completing the Burghley project, the
Montrose/Arbroath area redevelopment was progressed and an Auk
North development well was completed during the year.
The Auk North development achieved first oil ahead of schedule
and under budget, with production commencing November 2010. A
fourth production well on Auk North is planned to be drilled during
2011. The Auk South redevelopment project was progressed during the
year, with commencement of fabrication of the new facilities. First
production from the Auk South redevelopment is expected in
2012.
Scandinavia
Production in Scandinavia averaged 54,000 boe/d, a 24% increase
over 2009, mainly due to infill drilling at Varg and increased
volumes from the Rev Field, due to improved uptime at the host
facility. The company spent $501 million on development in
Scandinavia during 2010, with approximately half directed at the
Yme project. A total of 11 development wells were drilled in
Scandinavia in 2010, and two additional wells were drilling over
year end.
The Yme field redevelopment was progressed during the year, with
construction of the topsides finished and all pre-startup wells
completed. The topsides were shipped from the construction yard in
Abu Dhabi and are currently waiting in Stavanger for an adequate
weather window to allow installation.
Southeast Asia
Production in Southeast Asia averaged 119,000 boe/d, an increase
of 10% over 2009. The main production increases came from
optimization of facilities in Corridor, from both liquefied natural
gas (LNG) trains nearing their design capacity at Tangguh, and from
higher gas sales in Malaysia.
Malaysia volumes were 37,400 boe/d, an increase of 18% over
2009, reflecting additional gas sales coming from Northern Fields.
Talisman spent $128 million on development in Malaysia with one
exploration and one appraisal well and 10 oil and gas development
wells drilled and completed. The Southern Fields Incremental Oil
Recovery phase 1 program was completed in 2010 and contributed
6,300 boe/d gross (2,600 boe/d net TLM) in the year, offsetting
natural declines.
Indonesia production was approximately 76,400 boe/d, an increase
of 15% over last year. Talisman spent $164 million, primarily on
facilities upgrades, development at Jambi Merang and the drilling
of three exploration and 28 development wells.
Production from the Corridor PSC was 61,300 boe/d, a new record,
reflecting facilities optimization.
Talisman acquired a 25% interest in the Jambi Merang Joint
Operating Body (JOB) block in early 2010. The first phase of
development drilling is complete and facilities construction is
underway. Three new gas sales agreements were signed in November
2010. The project is on schedule for mid-2011 startup.
In the Ogan Komering JOB block, the company commenced a 37-well
infill drilling program, which will be completed over the next
three years. Drilling results from the nine wells drilled in 2010
are meeting expectations and are being brought onstream as they are
completed.
Vietnam production averaged 2,200 bbls/d. Four infill wells in
the Song Doc Field began drilling in the third quarter of 2010 and
are expected to be completed in early 2011. Talisman continues to
progress development options for the Hai Su Trang and Hai Su Den
discoveries and has entered into a Heads of Agreement for an oil
tie-back to facilities south of Block 15-2/01.
Production in Australia averaged 3,500 bbls/d from the Laminaria
and Corallina fields, and development of the Kitan field in the
Joint Petroleum Development Area between Timor Leste and Australia
is expected to be onstream around year end. To date, a total of
three development wells have been drilled in Kitan and the fourth
well spudded in early 2011.
International Exploration
The company continued to build its international exploration
portfolio, focused on providing long-term growth in South East Asia
and Latin America, sustaining the North Sea and testing material
growth opportunities in the Kurdistan region of northern Iraq and
Poland.
Total international exploration spending during the year was
$712 million, invested in continuing to build the portfolio;
extensive seismic programs, which have increased the prospect
inventory; as well as exploration and appraisal drilling, which
resulted in a number of significant discoveries.
In Southeast Asia, Talisman was successful in drilling two
exploration and one appraisal wells in Malaysia on Block PM3-CAA,
and continued to acquire seismic offshore Sabah. In Papua New
Guinea Talisman increased its land holdings and the company now
holds interests in 12 blocks covering in excess of 9 million net
acres. Two onshore exploration wells were spudded in late 2010;
both found gas with associated condensate. Five additional wells
are planned for 2011. In Vietnam, government approval for two new
blocks (133 and 134) was received in March and a PSC for Block
5-2/10 was signed in early 2011. In Indonesia, Talisman
participated in the unsuccessful Bravo well in the Pasangkayu PSC
in the North Makassar Straits. Another exploration well, Romeo,
will be drilled in Pasangkayu this year, in addition to the first
well in the Talisman-operated South Makassar Sageri PSC.
In the Norwegian North Sea, successful appraisal wells were
drilled on the 2009 Grevling discovery and on the recently acquired
2009 Beta discovery. In the UK Sector, Talisman has drilled the TR1
well in the Fulmar area with encouraging results and the well is
being prepared for testing.
Talisman had a successful year in Latin America. The Akacias-1
well in Colombia CPO-9 made a significant oil discovery adjacent to
Ecopetrol's Chichimene field in the Llanos Basin. Five
stratigraphic wells on CPE-6 have indicated the potential for a
considerable hydrocarbon resource, which will be appraised in 2011.
Further appraisal drilling around the Huron discovery is planned
for 2011. In Peru, the Situche Central-3X well proved up additional
resources and the company farmed into Blocks 123 /129 to expand its
land position in the Maranon Basin.
In August 2010, Talisman entered into an agreement to purchase a
49% non-operated interest in BP Exploration Company (Colombia)
Limited. The transaction closed on January 24, 2011 and builds on
Talisman's large acreage position in Colombia, in close proximity
to its Niscota Block, where it has announced a significant
discovery with the Huron well. The acquisition provides an
additional 330,000 net acres in Colombia, along with 12,000 boe/d
of net production and provides Talisman with a strategic holding in
the Ocensa export pipeline.
In the Kurdistan region of northern Iraq, the Kurdamir-1 well in
Block 44 was suspended after finding significant gas resources and
encouraging indications of liquids. Challenging drilling conditions
prevented evaluation of deeper levels of the structure and the well
will be re-drilled in 2011. The conversion of Block K39 to a
Production Sharing Contract was underway at the end of 2010 and the
company will drill its first well on this block in 2011,
Topkhana-1.
In February 2010, Talisman entered into a farm-in arrangement
with San Leon Energy PLC for interests in three Baltic gas licenses
in Poland. The company will be leveraging its North American shale
gas expertise in 2011 when drilling commences on the first two of
three shale gas wells following completion of its seismic
acquisition program.
Talisman Energy Inc. is a global, diversified, upstream oil and
gas company, headquartered in Canada. Talisman's three main
operating areas are North America, the North Sea and Southeast
Asia. The company also has a portfolio of international exploration
opportunities. Talisman is committed to conducting business safely,
in a socially and environmentally responsible manner, and is
included in the Dow Jones Sustainability (North America) Index.
Talisman is listed on the Toronto and New York Stock Exchanges
under the symbol TLM. Please visit our website at
www.talisman-energy.com.
Forward-Looking Information
This news release contains information that constitutes
"forward-looking information" or "forward-looking statements"
(collectively "forward-looking information") within the meaning of
applicable securities legislation. This forward-looking information
includes, among others, statements regarding:
- expected growth and asset quality arising from increasing
amounts of capital in North American shale plays;
- expected onstream dates of North Sea developments;
- potential gas-to-liquids project;
- expected reduction in replacement costs;
- planned exploration and development spending;
- expected medium term growth, and longer-term production growth
from shale;
- anticipated filing dates of financial statements, management
discussion & analysis, the annual information form, and the
annual report;
- planned drilling in Quebec;
- planned drilling in the North Sea;
- expected timing of first production at Jambi Merang and
Kitan;
- planned drilling in the Corridor Block, Ogan Komering JOB
block and Song Doc Field; and
- planned drilling in Papua New Guinea, Colombia, the Kurdistan
region of northern Iraq and Poland.
The forward-looking information listed above is based on
Talisman's 2011 capital program as announced on January 11, 2011.
Talisman set its 2011 capital expenditure plans assuming: (1)
Talisman's production in 2011 will be approximately 5-10% greater
than 2010, excluding the BP Colombia acquisition; (2) a WTI oil
price of US$75/bbl; and (3) a NYMEX natural gas price of
US$4/mmbtu. Information regarding business plans generally assumes
that the extraction of crude oil, natural gas and natural gas
liquids remains economic. Closing of any transactions will be
subject to receipt of all necessary regulatory approvals and
completion of definitive agreements.
Undue reliance should not be placed on forward-looking
information. Forward-looking information is based on current
expectations, estimates and projections that involve a number of
risks, which could cause actual results to vary and in some
instances to differ materially from those anticipated by Talisman
and described in the forward-looking information contained in this
news release. The material risk factors include, but are not
limited to:
- the risks of the oil and gas industry, such as operational
risks in exploring for, developing and producing crude oil and
natural gas, market prices and demand and unpredictable facilities
outages;
- risks and uncertainties involving geology of oil and gas
deposits;
- uncertainty related to securing sufficient egress and markets
to meet shale gas production;
- the uncertainty of reserves and resources estimates, reserves
life and underlying reservoir risk;
- the uncertainty of estimates and projections relating to
production, costs and expenses;
- the impact of the economy on the ability of the counterparties
to the Company's commodity price derivative contracts to meet their
obligations under the contracts;
- potential delays or changes in plans with respect to
exploration or development projects or capital expenditures;
- fluctuations in oil and gas prices, foreign currency exchange
rates and interest rates;
- the outcome and effects of any future acquisitions and
dispositions;
- health, safety and environmental risks, including risks
related to the possibility of major accidents;
- uncertainties as to the availability and cost of credit and
other financing and changes in capital markets;
- risks in conducting foreign operations (for example, political
and fiscal instability or the possibility of civil unrest or
military action);
- changes in general economic and business conditions;
- the possibility that government policies or laws may change or
governmental approvals may be delayed or withheld, including with
respect to shale gas drilling; and
- results of the Company's risk mitigation strategies, including
insurance and any hedging activities.
The foregoing list of risk factors is not exhaustive. Additional
information on these and other factors, which could affect the
Company's operations or financial results, are included in the
Company's most recent Annual Information Form. In addition,
information is available in the Company's other reports on file
with Canadian securities regulatory authorities and the United
States Securities and Exchange Commission (SEC). Forward-looking
information is based on the estimates and opinions of the Company's
management at the time the information is presented. The Company
assumes no obligation to update forward-looking information should
circumstances or management's estimates or opinions change, except
as required by law.
Reserves Information
National Instrument 51-101 ("NI 51-101") of the Canadian
Securities Administrators imposes oil and gas disclosure standards
for Canadian public companies engaged in oil and gas activities.
Talisman has obtained an exemption from Canadian securities
regulatory authorities to permit it to provide certain disclosures
in accordance with the US disclosure standards, in order to provide
for comparability of oil and gas disclosure with that provided by
US and other international issuers. Accordingly, the reserves
information included in this news release is disclosed in
accordance with US disclosure standards.
A separate exemption granted to Talisman also permits it to
disclose internally evaluated reserves data. Any reserves data
contained in this news release reflects Talisman's estimates of its
reserves and resources. While Talisman annually obtains an
independent audit of a portion of its proved and probable reserves,
no independent qualified reserves evaluator or auditor was involved
in the preparation of the reserves data disclosed in this news
release.
Replacement Ratio
The replacement ratios before net acquisitions and dispositions
were calculated by dividing the sum of changes (revisions of
estimates and discoveries) to estimated gross proved oil and gas
reserves during 2010 by the Company's 2010 gross production. The
Company's management uses reserves replacement ratios as an
indicator of the Company's ability to replenish annual production
volumes and grow its reserves. It should be noted that a reserves
replacement ratio is a statistical indicator that has limitations.
As an annual measure, the ratio is limited because it typically
varies widely, based on the extent and timing of new discoveries,
project sanctioning and property acquisitions. Its predictive and
comparative value is also limited for the same reasons. In
addition, since the ratio does not include cost, value or timing of
future production of new reserves, it cannot be used as a measure
of value creation.
Replacement Costs
In this news release, Talisman discloses a reduction in
replacement costs. Replacement costs are used by the Company to
determine the cost of reserves additions in a period. Talisman's
reported replacement costs may not be comparable to similarity
titled measures used by other companies. Replacement costs may not
reflect full cycle replacement costs. Replacement costs' predictive
and comparative value is limited for the aforementioned reasons.
Replacement costs are calculated by dividing exploration and
development capital spending of $4 billion (including discontinued
operations, but excluding midstream) by gross proved reserve
additions of 249 mmboe.
Netbacks
Talisman also discloses its Company netbacks in this news
release. Netbacks per boe are calculated by deducting from sales
price associated royalties, operating and transportation costs.
Gross Production
Throughout this news release, Talisman makes reference to
production volumes. Such production volumes are stated on a gross
basis, which means they are stated prior to the deduction of
royalties and similar payments. In the US, net production volumes
are reported after the deduction of these amounts.
Boe Conversion
Throughout this news release, barrels of oil equivalent (boe)
are calculated at a conversion rate of six thousand cubic feet
(mcf) of natural gas for one barrel of oil (bbl). Oil is converted
to natural gas equivalent (mcfe) at the ratio of one bbl to six mcf
of natural gas. Boes and mcfes may be misleading, particularly if
used in isolation. A boe conversion ratio of 6 mcf:1 bbl and an
mcfe conversion ratio of 1 bbl: 6 mcf are based on an energy
equivalence conversion method primarily applicable at the burner
tip and does not represent a value equivalency at the wellhead.
Canadian Dollars and GAAP
Dollar amounts are presented in Canadian dollars, except where
otherwise indicated. Unless otherwise indicated, the financial
information is set out in accordance with Canadian GAAP which may
differ from U.S. GAAP. See the notes to Talisman's Annual
Consolidated Financial Statements for the significant differences
between Canadian and U.S. GAAP.
Non-GAAP Financial Measures
Included in this news release are references to financial
measures used in the oil and gas industry such as cash flow,
earnings from continuing operations and net debt. These terms are
not defined by GAAP in either Canada or the U.S. Consequently,
these are referred to as non-GAAP measures. Talisman's reported
results of cash flow, earnings from continuing operations and net
debt may not be comparable to similarly titled measures reported by
other companies.
Cash flow represents net income before exploration costs,
DD&A, future taxes and other non-cash expenses. Cash flow is
used by the Company to assess operating results between years and
between peer companies using different accounting policies. Cash
flow should not be considered an alternative to, or more meaningful
than, cash provided by operating, investing and financing
activities or net income as determined in accordance with Canadian
GAAP as an indicator of the Company's performance or liquidity.
Cash flow per share is cash flow divided by the average number of
common shares outstanding during the period. A reconciliation of
cash provided by operating activities to cash flow follows:
Cash Flow
December 31, 2010
$ million, except per share amounts
Three Months ended Year ended
December 31 2010 2009 2010 2009
----------------------------------------------------------------------------
Cash provided by operating
activities 607 624 3,460 3,599
Changes in non-cash working capital 75 297 (402) 362
----------------------------------------------------------------------------
Cash flow 682 921 3,058 3,961
Cash provided by discontinued
operations (1) (6) (62) (190) (385)
----------------------------------------------------------------------------
Cash flow from continuing operations 676 859 2,868 3,576
----------------------------------------------------------------------------
Cash flow per share 0.67 0.91 3.00 3.90
----------------------------------------------------------------------------
Cash flow from continuing
operations per share 0.66 0.85 2.82 3.52
----------------------------------------------------------------------------
(1) Comparatives restated for operations classified as discontinued during
2010.
Earnings from continuing operations are calculated by adjusting
the Company's net income per the financial statements, for certain
items of a non-operational nature, on an after tax basis. The
Company uses this information to evaluate performance of core
operational activities on a comparable basis between periods.
Earnings from continuing operations per share are earnings from
continuing operations divided by the average number of common
shares outstanding during the period. A reconciliation of net
income to earnings from continuing operations follows:
Earnings from Continuing Operations
December 31, 2010
$ million, except per share amounts
Three Months ended Year ended
December 31 2010 2009(4) 2010 2009(4)
----------------------------------------------------------------------------
Income (loss) from continuing
operations (313) (181) 408 (658)
Unrealized (gain) loss on
financial instruments (1)
(tax adjusted) 66 173 (265) 1,056
Stock-based compensation (2)
(tax adjusted) 222 20 187 198
Foreign exchange on net debt
and future income taxes 57 (17) 48 (59)
Restructuring charges
(tax adjusted) - 14 - 14
Future tax rate changes - 21 21
Future tax (recovery) of
unrealized foreign exchange
(losses) on net foreign
denominated debt and other
tax adjustments (3) 52 38 (31) 59
----------------------------------------------------------------------------
Earnings from continuing
operations 84 68 347 631
----------------------------------------------------------------------------
Per share 0.08 0.07 0.34 0.62
----------------------------------------------------------------------------
(1) Unrealized losses on financial instruments relate to the change in the
period of the mark-to-market value of the company's held-for-trading
financial instruments.
(2) Stock-based compensation expense relates to the mark-to-market value of
the company's outstanding stock options and cash units at December 31.
The company's stock-based compensation expense is based on the
difference between the company's share price and its stock options or
cash units exercise price. The three months and year ended December 31,
2010 amounts reflect the legislative change occurring in the fourth
quarter of 2010 whereby the company is unable to obtain a tax benefit.
(3) Tax adjustment includes future taxes relating to unrealized foreign
exchange gains and losses associated with the impact of fluctuations in
the Canadian dollar on net foreign denominated debt.
(4) Comparatives restated for operations classified as discontinued during
2010, and for foreign exchange on net debt and future income taxes in
order to be presented on the same basis as in 2010.
Net debt is calculated by adjusting the Company's long-term debt
per the financial statements for bank indebtedness, cash and cash
equivalents. The Company uses this information to assess its true
debt position and eliminate the impact of timing differences.
Net Debt
December 31, 2010
$ million
December 31, 2010 2009
----------------------------------------------------------------------------
Long-term debt (including current portion) 4,181 3,780
Bank indebtedness 2 36
Cash and cash equivalents (1,646) (1,690)
----------------------------------------------------------------------------
Net debt 2,537 2,126
----------------------------------------------------------------------------
Talisman Energy Inc.
Highlights
(unaudited)
Three months ended Year ended
December 31 December 31
2010 2009 2010 2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Financial
(millions of C$ unless otherwise stated)
Cash flow (1) 682 921 3,058 3,961
Net income (loss) (304) (111) 648 437
Capital expenditures 1,253 1,446 4,052 4,189
Per common share (C$)
Cash flow (1) 0.67 0.91 3.00 3.90
Net income (loss) (0.30) (0.11) 0.64 0.43
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Production
(daily average)
Oil and liquids (bbls/d)
North America 20,773 29,117 23,133 34,477
UK 82,739 78,515 74,074 85,504
Scandinavia 38,201 38,490 38,973 33,649
Southeast Asia 33,681 42,336 38,481 40,755
Other 14,972 14,588 13,983 16,068
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total oil and liquids 190,366 203,046 188,644 210,453
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural gas (mmcf/d)
North America 780 787 778 803
UK 11 13 16 19
Scandinavia 98 100 88 58
Southeast Asia 469 420 485 403
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total natural gas 1,358 1,320 1,367 1,283
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total mboe/d (2) 417 423 417 425
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Prices (3)
Oil and liquids (C$/bbl)
North America 63.73 64.24 64.47 54.96
UK 86.75 78.78 81.71 68.36
Scandinavia 91.25 77.61 83.75 69.73
Southeast Asia 94.09 84.26 82.95 71.17
Other 98.67 100.59 85.17 74.03
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total oil and liquids 87.38 79.18 80.52 67.36
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural gas (C$/mcf)
North America 4.42 4.86 4.93 4.70
UK 5.42 4.41 4.72 4.73
Scandinavia 7.93 4.99 6.86 5.86
Southeast Asia 7.22 7.19 6.92 6.40
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total natural gas 5.65 5.61 5.76 5.29
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total (C$/boe) (2) 58.32 55.51 55.37 49.40
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) Cash flow and cash flow per share are non-GAAP measures.
(2) Barrels of oil equivalent (boe) is calculated at a conversion rate of
six thousand cubic feet (mcf) of natural gas for one barrel of oil.
(3) Prices are before hedging.
Includes the results from continuing and discontinued operations.
Talisman Energy Inc.
Consolidated Balance Sheets
(unaudited)
December 31 (millions of C$) 2010 2009
----------------------------------------------------------------------------
(restated)
Assets
Current
Cash and cash equivalents 1,646 1,690
Accounts receivable 1,399 1,253
Inventories 143 144
Prepaid expenses 20 9
Assets of discontinued operations - 58
----------------------------------------------------------------------------
3,208 3,154
----------------------------------------------------------------------------
Other assets 861 170
Future income taxes 170 120
Goodwill 1,150 1,176
Property, plant and equipment 18,804 16,431
Assets of discontinued operations - 2,567
----------------------------------------------------------------------------
20,985 20,464
----------------------------------------------------------------------------
Total assets 24,193 23,618
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
Current
Bank indebtedness 2 36
Accounts payable and accrued liabilities 2,532 2,121
Income and other taxes payable 510 357
Current portion of long-term debt 357 10
Future income taxes - 68
Liabilities of discontinued operations - 9
----------------------------------------------------------------------------
3,401 2,601
----------------------------------------------------------------------------
Deferred credits 51 59
Asset retirement obligations 2,252 2,116
Other long-term obligations 212 168
Long-term debt 3,824 3,770
Future income taxes 3,974 3,599
Liabilities of discontinued operations - 194
----------------------------------------------------------------------------
10,313 9,906
----------------------------------------------------------------------------
Shareholders' equity
Common shares, no par value
Authorized: unlimited
Issued and outstanding:
2010 - 1,019,290,939 (2009 - 1,014,876,564) 2,457 2,374
Contributed surplus 132 153
Retained earnings 9,568 9,174
Accumulated other comprehensive loss (1,678) (590)
----------------------------------------------------------------------------
10,479 11,111
----------------------------------------------------------------------------
Total liabilities and shareholders' equity 24,193 23,618
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Prior period balances have been restated to reflect the financial position
of discontinued operations.
Talisman Energy Inc.
Consolidated Statements of Income
(unaudited)
Three months ended Year ended
December 31 December 31
(millions of C$) 2010 2009 2010 2009
----------------------------------------------------------------------------
(restated) (restated)
Revenue
Gross sales 2,194 2,056 8,076 7,011
Less royalties 348 359 1,274 1,065
----------------------------------------------------------------------------
Net sales 1,846 1,697 6,802 5,946
Other 28 26 110 115
----------------------------------------------------------------------------
Total revenue 1,874 1,723 6,912 6,061
----------------------------------------------------------------------------
Expenses
Operating 474 465 1,867 1,861
Transportation 55 64 227 222
General and administrative 106 88 392 334
Depreciation, depletion and
amortization 546 598 2,164 2,360
Dry hole 45 204 123 539
Exploration 143 99 384 301
Interest on long-term debt 44 49 163 192
Stock-based compensation 224 42 201 290
(Gain) loss on held-for-trading
financial instruments 125 142 (102) 412
Other, net 59 22 194 47
----------------------------------------------------------------------------
Total expenses 1,821 1,773 5,613 6,558
----------------------------------------------------------------------------
Income (loss) from continuing
operations before taxes 53 (50) 1,299 (497)
----------------------------------------------------------------------------
Taxes
Current income tax 401 254 1,032 731
Future income tax recovery (86) (173) (272) (678)
Petroleum revenue tax 51 50 131 108
----------------------------------------------------------------------------
366 131 891 161
----------------------------------------------------------------------------
Income (loss) from continuing
operations (313) (181) 408 (658)
----------------------------------------------------------------------------
Income from discontinued operations 9 70 240 1,095
----------------------------------------------------------------------------
Net income (loss) (304) (111) 648 437
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Per common share (C$):
Income (loss) from continuing
operations (0.31) (0.18) 0.40 (0.65)
Diluted income (loss) from continuing
operations (0.31) (0.18) 0.39 (0.65)
Income from discontinued operations 0.01 0.07 0.24 1.08
Diluted income from discontinued
operations 0.01 0.07 0.23 1.08
Net income (loss) (0.30) (0.11) 0.64 0.43
Diluted net income (loss) (0.30) (0.11) 0.62 0.43
----------------------------------------------------------------------------
Average number of common shares
outstanding (millions) 1,018 1,015 1,018 1,015
Diluted number of common shares
outstanding (millions) 1,018 1,015 1,037 1,015
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Prior period balances have been restated to reflect the results of
discontinued operations.
Talisman Energy Inc.
Consolidated Statements of Cash Flows
(unaudited)
Three months ended Year ended
December 31 December 31
(millions of C$) 2010 2009 2010 2009
----------------------------------------------------------------------------
(restated) (restated)
Operating
Income (loss) from continuing
operations (313) (181) 408 (658)
Items not involving cash 846 941 2,076 3,933
Exploration 143 99 384 301
----------------------------------------------------------------------------
676 859 2,868 3,576
Changes in non-cash working capital (75) (297) 402 (362)
----------------------------------------------------------------------------
Cash provided by continuing
operations 601 562 3,270 3,214
Cash provided by discontinued
operations 6 62 190 385
----------------------------------------------------------------------------
Cash provided by operating activities 607 624 3,460 3,599
----------------------------------------------------------------------------
Investing
Capital expenditures
Exploration, development and other (1,250) (1,393) (4,034) (3,729)
Corporate acquisitions - - (189) -
Property acquisitions (913) (32) (1,364) (310)
Proceeds of resource property
dispositions 188 96 308 200
Acquisition deposit (18) - (656) -
Changes in non-cash working capital 167 139 265 (18)
Discontinued operations, net of
capital expenditures 350 449 1,936 1,990
----------------------------------------------------------------------------
Cash used in investing activities (1,476) (741) (3,734) (1,867)
----------------------------------------------------------------------------
Financing
Long-term debt repaid - - (11) (970)
Long-term debt issued 600 12 600 1,261
Common shares issued 48 1 57 2
Common shares purchased (32) - (78) (1)
Common share dividends (127) (114) (254) (229)
Deferred credits and other 9 (24) (3) (10)
Changes in non-cash working capital - 3 (2) 4
----------------------------------------------------------------------------
Cash provided by (used in) financing
activities 498 (122) 309 57
----------------------------------------------------------------------------
Effect of translation on foreign
currency cash and cash equivalents (57) (41) (59) (133)
----------------------------------------------------------------------------
Net increase (decrease) in cash and
cash equivalents (428) (280) (24) 1,656
Cash and cash equivalents net of bank
indebtedness, beginning of year 2,072 1,948 1,668 12
----------------------------------------------------------------------------
Cash and cash equivalents net of bank
indebtedness, end of year 1,644 1,668 1,644 1,668
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash and cash equivalents 1,646 1,690 1,646 1,690
Cash and cash equivalents reclassified
to discontinued operations - 14 - 14
Bank indebtedness (2) (36) (2) (36)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash and cash equivalents net of bank
indebtedness, end of year 1,644 1,668 1,644 1,668
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Prior period balances have been restated to reflect the cash flows of
discontinued operations.
Supplemental financial information
The following supplemental financial information has been
prepared to assist readers of the unaudited consolidated financial
information as at and for the three month period and year ended
December 31, 2010. This financial information does not constitute
interim financial statements as defined by Generally Accepted
Accounting Principles in that certain statements and disclosures
normally required to be included in interim financial statements
and the notes thereto have not been provided. This unaudited
consolidated financial information should be read in conjunction
with the audited annual Consolidated Financial Statements as at and
for the year ended December 31, 2009 and the most recently
completed unaudited interim Consolidated Financial Statements as at
and for the three and nine month periods ended September 30,
2010.
Commodity derivatives
The Company had the following commodity price derivative
contracts outstanding at December 31, 2010:
Fair value
Fixed price swaps Term mcf/d C$/mcf (millions of C$)
----------------------------------------------------------------------------
ICE index Jan-Mar 2011 17,824 6.45 (6)
ICE index Apr-Jun 2011 16,886 5.89 (5)
------------------
(11)
------------------
Fair value
Fixed price swaps Term mcf/d US$/mcf (millions of C$)
----------------------------------------------------------------------------
NYMEX index Jan-Dec 2011 23,734 6.12 11
------------------
Floor/ceiling Fair value
Two-way collars Term bbls/d US$/bbl (millions of C$)
----------------------------------------------------------------------------
Dated Brent oil index Jan-Jun 2011 20,000 80.00/92.41 (18)
Dated Brent oil index Jan-Dec 2011 21,000 80.00/91.27 (49)
Dated Brent oil index Jan-Dec 2011 20,000 84.00/97.57 (20)
WTI Jan-Dec 2011 9,000 80.00/92.00 (18)
------------------
(105)
------------------
Floor/ceiling Fair value
Two-way collars Term mcf/d C$/mcf (millions of C$)
----------------------------------------------------------------------------
NYMEX index Jan-Jun 2011 95,000 5.27/6.66 12
NYMEX index Jan-Dec 2011 71,200 6.14/6.59 36
------------------
48
------------------
The Company had the following physical commodity contracts
outstanding at December 31, 2010:
Term mcf/d C$/mcf
----------------------------------------------------------------------------
AECO natural gas swaps Jan-Dec 2011 3,671 2.98
----------------------------------------------------------------------------
Supplemental cash flow information
Items not involving cash are as follows:
Three months ended Year ended
December 31 December 31
(millions of C$) 2010 2009 2010 2009
----------------------------------------------------------------------------
Depreciation, depletion & amortization 546 598 2,164 2,360
Dry hole 45 204 123 539
Net gain on asset disposals (6) (22) (59) (37)
Stock-based compensation expense 195 30 146 238
Future taxes and deferred PRT
(recovery) (76) (156) (268) (635)
Unrealized (gains) losses on held for
trading financial instruments 73 218 (278) 1,401
Other 69 69 248 67
----------------------------------------------------------------------------
846 941 2,076 3,933
----------------------------------------------------------------------------
Talisman Energy Inc.
Segmented Information
(unaudited)
North America (1) UK
------------------------------------------------------------
Three Three
months ended Year ended months ended Year ended
December 31 December 31 December 31 December 31
------------------------------------------------------------
(millions of C$) 2010 2009 2010 2009 2010 2009 2010 2009
----------------------------------------------------------------------------
Revenue
Gross sales 427 378 1,650 1,394 649 582 2,239 2,188
Royalties 48 41 188 156 2 1 7 5
----------------------------------------------------------------------------
Net sales 379 337 1,462 1,238 647 581 2,232 2,183
Other 22 24 88 93 3 2 18 19
----------------------------------------------------------------------------
Total revenue 401 361 1,550 1,331 650 583 2,250 2,202
----------------------------------------------------------------------------
Segmented expenses
Operating 115 91 424 403 186 223 824 878
Transportation 15 15 61 59 9 13 34 46
DD&A 202 184 764 748 162 163 582 781
Dry hole 10 14 (4) 134 (1) - 62 30
Exploration 5 19 40 84 3 5 16 18
Other - 8 (5) (21) (15) 66 (14) 72
----------------------------------------------------------------------------
Total segmented
expenses 347 331 1,280 1,407 344 470 1,504 1,825
----------------------------------------------------------------------------
Segmented income
(loss) before
taxes 54 30 270 (76) 306 113 746 377
----------------------------------------------------------------------------
Non-segmented
expenses
General and
administrative
Interest on
long-term debt
Stock-based
compensation
Currency
translation
(Gain) loss on
held-for-trading
financial
instruments
----------------------------------------------------------------------------
Total
non-segmented
expenses
----------------------------------------------------------------------------
Income (loss)
from continuing
operations before
taxes
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital
expenditures
Exploration 64 750 285 1,189 22 19 96 149
Development 547 125 1,506 264 110 106 507 531
Midstream 2 (2) 3 26 - - - -
----------------------------------------------------------------------------
Exploration and
development 613 873 1,794 1,479 132 125 603 680
Property
acquisitions
Proceeds on
dispositions
Other
non-segmented
----------------------------------------------------------------------------
Net capital
expenditures
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Property, plant
and equipment 7,721 6,155 4,347 4,549
Goodwill 140 149 265 289
Other 1,546 594 540 386
Discontinued
operations - 2,585 - -
----------------------------------------------------------------------------
Segmented assets 9,407 9,483 5,152 5,224
Non-segmented
assets
----------------------------------------------------------------------------
Total assets
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Scandinavia
----------------------------
Three
months ended Year ended
December 31 December 31
----------------------------
(millions of C$) 2010 2009 2010 2009
----------------------------------------------------------------------------
Revenue
Gross sales 379 308 1,393 986
Royalties - - - -
----------------------------------------------------------------------------
Net sales 379 308 1,393 986
Other 3 1 3 3
----------------------------------------------------------------------------
Total revenue 382 309 1,396 989
----------------------------------------------------------------------------
Segmented expenses
Operating 77 70 304 285
Transportation 15 18 64 54
DD&A 96 140 471 406
Dry hole 6 8 11 69
Exploration 11 6 32 22
Other 37 (10) 105 (5)
----------------------------------------------------------------------------
Total segmented expenses 242 232 987 831
----------------------------------------------------------------------------
Segmented income (loss) before taxes 140 77 409 158
----------------------------------------------------------------------------
Non-segmented expenses
General and administrative
Interest on long-term debt
Stock-based compensation
Currency translation
(Gain) loss on held-for-trading financial
instruments
----------------------------------------------------------------------------
Total non-segmented expenses
----------------------------------------------------------------------------
Income (loss) from continuing
operations before taxes
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditures
Exploration 13 18 89 157
Development 93 144 501 528
Midstream - - - -
----------------------------------------------------------------------------
Exploration and development 106 162 590 685
Property acquisitions
Proceeds on dispositions
Other non-segmented
----------------------------------------------------------------------------
Net capital expenditures
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Property, plant and equipment 2,668 2,040
Goodwill 597 628
Other 376 226
Discontinued operations - -
----------------------------------------------------------------------------
Segmented assets 3,641 2,894
Non-segmented assets
----------------------------------------------------------------------------
Total assets
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) North America 2010 2009 2010 2009
----------------------------------------------------------------------------
Canada 306 328 1,231 1,210
US 95 33 319 121
----------------------------------------------------------------------------
Total revenue 401 361 1,550 1,331
----------------------------------------------------------------------------
Canada 4,991 4,993
US 2,730 1,162
----------------------------------------------------------------------------
Property, plant and equipment 7,721 6,155
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Talisman Energy Inc.
Segmented Information
(unaudited)
Southeast Asia (2) Other (3)
------------------------------------------------------------
Three Three
months ended Year ended months ended Year ended
December 31 December 31 December 31 December 31
------------------------------------------------------------
(millions of C$) 2010 2009 2010 2009 2010 2009 2010 2009
----------------------------------------------------------------------------
Revenue
Gross sales 606 620 2,379 1,995 133 168 415 448
Royalties 226 209 858 675 72 108 221 229
----------------------------------------------------------------------------
Net sales 380 411 1,521 1,320 61 60 194 219
Other - - 1 - - (1) - -
----------------------------------------------------------------------------
Total revenue 380 411 1,522 1,320 61 59 194 219
----------------------------------------------------------------------------
Segmented expenses
Operating 89 70 288 255 7 11 27 40
Transportation 15 16 61 55 1 2 7 8
DD&A 78 97 318 382 8 14 29 43
Dry hole 27 163 31 253 3 19 23 53
Exploration 53 31 118 75 71 38 178 102
Other (8) 6 21 9 (6) (3) (5) 7
----------------------------------------------------------------------------
Total segmented
expenses 254 383 837 1,029 84 81 259 253
----------------------------------------------------------------------------
Segmented income
(loss) before
taxes 126 28 685 291 (23) (22) (65) (34)
----------------------------------------------------------------------------
Non-segmented
expenses
General and
administrative
Interest on
long-term debt
Stock-based
compensation
Currency
translation
(Gain) loss on
held-for-trading
financial
instruments
----------------------------------------------------------------------------
Total
non-segmented
expenses
----------------------------------------------------------------------------
Income (loss) from
continuing operations
before taxes
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital
expenditures
Exploration 107 54 242 233 129 61 285 217
Development 102 80 324 444 21 22 97 46
Midstream - - - - - - - -
----------------------------------------------------------------------------
Exploration and
development 209 134 566 677 150 83 382 263
Property
acquisitions
Proceeds on
dispositions
Other
non-segmented
----------------------------------------------------------------------------
Net capital
expenditures
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Property, plant
and equipment 3,076 2,864 992 823
Goodwill 148 110 - -
Other 622 427 163 156
Discontinued
operations - - - 40
----------------------------------------------------------------------------
Segmented assets 3,846 3,401 1,155 1,019
Non-segmented assets
----------------------------------------------------------------------------
Total assets
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total
-----------------------------
Three
months ended Year ended
December 31 December 31
-----------------------------
(millions of C$) 2010 2009 2010 2009
----------------------------------------------------------------------------
Revenue
Gross sales 2,194 2,056 8,076 7,011
Royalties 348 359 1,274 1,065
----------------------------------------------------------------------------
Net sales 1,846 1,697 6,802 5,946
Other 28 26 110 115
----------------------------------------------------------------------------
Total revenue 1,874 1,723 6,912 6,061
----------------------------------------------------------------------------
Segmented expenses
Operating 474 465 1,867 1,861
Transportation 55 64 227 222
DD&A 546 598 2,164 2,360
Dry hole 45 204 123 539
Exploration 143 99 384 301
Other 8 67 102 62
----------------------------------------------------------------------------
Total segmented expenses 1,271 1,497 4,867 5,345
----------------------------------------------------------------------------
Segmented income (loss) before taxes 603 226 2,045 716
----------------------------------------------------------------------------
Non-segmented expenses
General and administrative 106 88 392 334
Interest on long-term debt 44 49 163 192
Stock-based compensation 224 42 201 290
Currency translation 51 (45) 92 (15)
(Gain) loss on held-for-trading financial
instruments 125 142 (102) 412
----------------------------------------------------------------------------
Total non-segmented expenses 550 276 746 1,213
----------------------------------------------------------------------------
Income (loss) from continuing
operations before taxes 53 (50) 1,299 (497)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditures
Exploration 335 902 997 1,945
Development 873 477 2,935 1,813
Midstream 2 (2) 3 26
----------------------------------------------------------------------------
Exploration and development 1,210 1,377 3,935 3,784
Property acquisitions 907 116 1,562 438
Proceeds on dispositions (192) (177) (393) (323)
Other non-segmented 32 14 80 47
----------------------------------------------------------------------------
Net capital expenditures 1,957 1,330 5,184 3,946
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Property, plant and equipment 18,804 16,431
Goodwill 1,150 1,176
Other 3,247 1,789
Discontinued operations - 2,625
----------------------------------------------------------------------------
Segmented assets 23,201 22,021
Non-segmented assets 992 1,597
----------------------------------------------------------------------------
Total assets 24,193 23,618
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(2) Southeast Asia 2010 2009 2010 2009
----------------------------------------------------------------------------
Indonesia 204 202 865 693
Malaysia 125 134 496 400
Vietnam 11 23 53 101
Australia 40 52 108 126
----------------------------------------------------------------------------
Total revenue 380 411 1,522 1,320
----------------------------------------------------------------------------
Indonesia 1,081 906
Malaysia 1,067 1,171
Vietnam 278 241
Papua New Guinea 426 337
Australia 224 209
----------------------------------------------------------------------------
Property, plant and equipment 3,076 2,864
----------------------------------------------------------------------------
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(3) Other 2010 2009 2010 2009
----------------------------------------------------------------------------
Algeria 61 59 194 219
----------------------------------------------------------------------------
Total revenue 61 59 194 219
----------------------------------------------------------------------------
Algeria 249 193
Kurdistan 595 512
Other 148 118
----------------------------------------------------------------------------
Property, plant and equipment 992 823
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Continuity of Gross Proved Reserves
Canada US UK Scandinavia
----------------------------------------------------------------------------
Oil and Liquids (mmbbls)
Total Proved
----------------------------------------------------------------------------
Proved reserves at December 31, 2007 152.8 - 387.2 67.3
Discoveries, additions and extensions 13.7 - 15.0 8.3
Purchase of reserves 0.3 - - -
Sale of reserves (0.3) - (17.5) (1.7)
Net revisions and transfers 2.6 - (133.7) (5.3)
2008 Production (14.8) - (34.3) (12.0)
----------------------------------------------------------------------------
Proved reserves at December 31, 2008 154.3 - 216.7 56.6
----------------------------------------------------------------------------
Discoveries, additions and extensions 4.8 - 5.2 1.1
Purchase of reserves 0.2 - - -
Sale of reserves (45.7) - (0.2) (4.0)
Net revisions and transfers - - 77.0 14.5
2009 Production (12.6) - (31.2) (12.3)
----------------------------------------------------------------------------
Proved reserves at December 31, 2009 101.0 - 267.5 55.9
----------------------------------------------------------------------------
Discoveries, additions and extensions 5.0 3.4 6.8 9.7
Purchase of reserves - 1.2 - -
Sale of reserves (18.5) (0.2) - -
Net revisions and transfers 0.2 - 18.0 1.8
2010 Production (8.4) (0.1) (27.0) (14.2)
----------------------------------------------------------------------------
Proved reserves at December 31, 2010 79.3 4.3 265.3 53.2
----------------------------------------------------------------------------
Proved developed
December 31, 2007 146.2 - 344.5 25.6
December 31, 2008 143.4 - 173.3 24.8
December 31, 2009 92.6 - 197.1 26.1
December 31, 2010 74.6 0.9 211.9 21.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Other
Southeast
Indonesia Asia Other Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil and Liquids (mmbbls)
Total Proved
----------------------------------------------------------------------------
Proved reserves at December 31, 2007 35.7 53.5 52.8 749.3
Discoveries, additions and
extensions 0.4 0.2 (0.7) 36.9
Purchase of reserves - - - 0.3
Sale of reserves - - - (19.5)
Net revisions and transfers 0.6 (5.6) 0.6 (140.8)
2008 Production (4.3) (8.7) (7.6) (81.7)
----------------------------------------------------------------------------
Proved reserves at December 31, 2008 32.4 39.4 45.1 544.5
----------------------------------------------------------------------------
Discoveries, additions and
extensions (1.7) 7.4 12.2 29.0
Purchase of reserves 1.0 - - 1.2
Sale of reserves - - (3.8) (53.7)
Net revisions and transfers 1.1 3.8 (8.6) 87.8
2009 Production (4.2) (10.7) (5.9) (76.9)
----------------------------------------------------------------------------
Proved reserves at December 31, 2009 28.6 39.9 39.0 531.9
----------------------------------------------------------------------------
Discoveries, additions and
extensions 3.4 3.0 2.2 33.5
Purchase of reserves 3.5 - - 4.7
Sale of reserves - - (0.7) (19.4)
Net revisions and transfers 0.9 6.7 0.2 27.8
2010 Production (4.3) (9.7) (5.1) (68.8)
----------------------------------------------------------------------------
Proved reserves at December 31, 2010 32.1 39.9 35.6 509.7
----------------------------------------------------------------------------
Proved developed
December 31, 2007 28.2 31.3 48.2 624.0
December 31, 2008 26.0 24.9 35.2 427.6
December 31, 2009 23.2 31.2 23.7 393.9
December 31, 2010 21.4 30.8 19.6 380.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Canada US UK Scandinavia
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural Gas (bcf)
Total Proved
----------------------------------------------------------------------------
Proved reserves at December 31, 2007 2,565.7 126.5 100.2 78.9
Discoveries, additions and extensions 308.2 33.9 12.4 12.1
Purchase of reserves 15.3 2.8 - -
Sale of reserves (65.3) - - -
Net revisions and transfers (30.3) 1.4 (3.2) 17.8
2008 Production (286.6) (26.7) (13.8) (6.9)
----------------------------------------------------------------------------
Proved reserves at December 31, 2008 2,507.0 137.9 95.6 101.9
----------------------------------------------------------------------------
Discoveries, additions and extensions 201.2 544.5 - (0.5)
Purchase of reserves 15.9 - - -
Sale of reserves (137.6) (1.5) (67.0) -
Net revisions and transfers (75.3) 0.1 2.9 12.7
2009 Production (262.7) (30.3) (7.0) (21.1)
----------------------------------------------------------------------------
Proved reserves at December 31, 2009 2,248.5 650.7 24.5 93.0
----------------------------------------------------------------------------
Discoveries, additions and extensions 286.4 874.7 0.1 6.7
Purchase of reserves - 23.0 - -
Sale of reserves (867.3) (7.3) - -
Net revisions and transfers 33.2 12.5 4.9 12.1
2010 Production (203.6) (80.5) (5.7) (32.2)
----------------------------------------------------------------------------
Proved reserves at December 31, 2010 1,497.2 1,473.1 23.8 79.6
----------------------------------------------------------------------------
Proved developed
December 31, 2007 2,125.6 111.4 86.7 7.0
December 31, 2008 2,066.8 117.9 65.5 99.0
December 31, 2009 1,840.9 197.9 22.4 91.2
December 31, 2010 1,134.7 687.5 22.0 73.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Other
Southeast
Indonesia Asia Other Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural Gas (bcf)
Total Proved
Proved reserves at December 31, 2007 1,981.9 387.0 224.0 5,464.2
Discoveries, additions and
extensions 1.3 27.0 0.4 395.3
Purchase of reserves - - - 18.1
Sale of reserves - - - (65.3)
Net revisions and transfers - (2.5) (0.8) (17.6)
2008 Production (97.2) (24.9) (0.2) (456.3)
----------------------------------------------------------------------------
Proved reserves at December 31, 2008 1,886.0 386.6 223.4 5,338.4
----------------------------------------------------------------------------
Discoveries, additions and
extensions 88.6 27.9 - 861.7
Purchase of reserves 8.7 - - 24.6
Sale of reserves - - (220.5) (426.6)
Net revisions and transfers 14.8 (11.1) (1.0) (56.9)
2009 Production (120.6) (26.7) (0.1) (468.5)
----------------------------------------------------------------------------
Proved reserves at December 31, 2009 1,877.5 376.7 1.8 5,272.7
----------------------------------------------------------------------------
Discoveries, additions and
extensions 21.2 (37.4) - 1,151.7
Purchase of reserves 60.7 - - 83.7
Sale of reserves - - (1.8) (876.4)
Net revisions and transfers (3.0) 44.6 - 104.3
2010 Production (141.2) (35.9) - (499.1)
----------------------------------------------------------------------------
Proved reserves at December 31, 2010 1,815.2 348.0 - 5,236.9
----------------------------------------------------------------------------
Proved developed
December 31, 2007 1,197.6 58.2 1.1 3,587.6
December 31, 2008 1,348.9 199.0 1.2 3,898.3
December 31, 2009 1,231.6 320.8 0.8 3,705.6
December 31, 2010 1,083.1 281.3 - 3,281.9
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Continuity of Net Proved Reserves
Canada US UK Scandinavia
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil and Liquids (mmbbls)
Total Proved
Proved reserves at December 31, 2007 123.9 - 385.3 67.2
Discoveries, additions and extensions 12.1 - 15.0 8.3
Purchase of reserves 0.3 - - -
Sale of reserves (0.3) - (17.5) (1.6)
Net revisions and transfers 7.4 - (133.2) (5.3)
2008 Production (11.9) - (34.2) (12.0)
----------------------------------------------------------------------------
Proved reserves at December 31, 2008 131.5 - 215.4 56.6
----------------------------------------------------------------------------
Discoveries, additions and extensions 4.0 - 5.2 1.1
Purchase of reserves 0.1 - - -
Sale of reserves (39.0) - (0.2) (4.0)
Net revisions and transfers 2.7 - 76.8 14.5
2009 Production (9.9) - (31.1) (12.3)
----------------------------------------------------------------------------
Proved reserves at December 31, 2009 89.4 - 266.1 55.9
----------------------------------------------------------------------------
Discoveries, additions and extensions 4.7 2.5 6.8 9.7
Purchase of reserves - 0.9 - -
Sale of reserves (15.1) (0.2) - -
Net revisions and transfers (2.4) 0.1 18.0 1.8
2010 Production (6.6) (0.1) (27.0) (14.2)
----------------------------------------------------------------------------
Proved reserves at December 31, 2010 70.0 3.2 263.9 53.2
----------------------------------------------------------------------------
Proved developed
December 31, 2007 118.9 - 342.6 25.6
December 31, 2008 122.0 - 172.0 24.8
December 31, 2009 82.1 - 196.0 26.1
December 31, 2010 65.6 0.7 210.6 21.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Other
Southeast
Indonesia Asia Other Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil and Liquids (mmbbls)
Total Proved
Proved reserves at December 31, 2007 13.6 30.1 27.6 647.7
Discoveries, additions and
extensions - (0.3) (0.3) 34.8
Purchase of reserves - - - 0.3
Sale of reserves - - - (19.4)
Net revisions and transfers 4.2 2.0 3.1 (121.8)
2008 Production (1.7) (4.7) (4.1) (68.6)
----------------------------------------------------------------------------
Proved reserves at December 31, 2008 16.1 27.1 26.3 473.0
----------------------------------------------------------------------------
Discoveries, additions and
extensions (0.5) 5.3 6.5 21.6
Purchase of reserves 0.7 - - 0.8
Sale of reserves - - (3.7) (46.9)
Net revisions and transfers (1.8) 3.8 (4.7) 91.3
2009 Production (1.8) (7.6) (3.4) (66.1)
----------------------------------------------------------------------------
Proved reserves at December 31, 2009 12.7 28.6 21.0 473.7
----------------------------------------------------------------------------
Discoveries, additions and
extensions 1.4 2.5 1.0 28.6
Purchase of reserves 1.5 - - 2.4
Sale of reserves - - (0.5) (15.8)
Net revisions and transfers (0.8) 0.6 (0.2) 17.1
2010 Production (2.0) (6.1) (2.4) (58.4)
----------------------------------------------------------------------------
Proved reserves at December 31, 2010 12.8 25.6 18.9 447.6
----------------------------------------------------------------------------
Proved developed
December 31, 2007 10.7 18.9 25.4 542.1
December 31, 2008 13.5 17.7 20.2 370.2
December 31, 2009 11.0 21.2 13.0 349.4
December 31, 2010 8.6 18.6 9.8 335.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Canada US UK Scandinavia
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural Gas (bcf)
Total Proved
Proved reserves at December 31, 2007 2,087.1 109.0 100.2 78.9
Discoveries, additions and extensions 249.7 29.4 12.4 12.1
Purchase of reserves 11.9 2.4 - -
Sale of reserves (55.2) - - -
Net revisions and transfers 113.3 1.3 (3.2) 17.8
2008 Production (237.6) (22.9) (13.8) (6.9)
----------------------------------------------------------------------------
Proved reserves at December 31, 2008 2,169.2 119.2 95.6 101.9
----------------------------------------------------------------------------
Discoveries, additions and extensions 185.6 474.6 - (0.5)
Purchase of reserves 14.2 - - -
Sale of reserves (115.8) (1.4) (67.0) -
Net revisions and transfers 28.2 - 2.9 12.7
2009 Production (238.4) (26.2) (7.0) (21.1)
----------------------------------------------------------------------------
Proved reserves at December 31, 2009 2,043.0 566.2 24.5 93.0
----------------------------------------------------------------------------
Discoveries, additions and extensions 263.7 738.6 0.1 6.7
Purchase of reserves - 17.5 - -
Sale of reserves (772.5) (5.8) - -
Net revisions and transfers 11.2 10.3 4.9 12.1
2010 Production (190.9) (68.9) (5.7) (32.2)
----------------------------------------------------------------------------
Proved reserves at December 31, 2010 1,354.5 1,257.9 23.8 79.6
----------------------------------------------------------------------------
Proved developed
December 31, 2007 1,725.0 95.7 86.7 7.0
December 31, 2008 1,785.8 101.8 65.5 99.0
December 31, 2009 1,663.5 171.1 22.4 91.2
December 31, 2010 1,011.4 584.9 22.0 73.3
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Other
Southeast
Indonesia Asia Other Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural Gas (bcf)
Total Proved
Proved reserves at December 31, 2007 1,359.0 245.5 223.3 4,203.0
Discoveries, additions and
extensions (30.3) 20.2 0.4 293.9
Purchase of reserves - - - 14.3
Sale of reserves - - - (55.2)
Net revisions and transfers 143.0 42.8 (0.7) 314.3
2008 Production (64.0) (18.8) (0.2) (364.2)
----------------------------------------------------------------------------
Proved reserves at December 31, 2008 1,407.7 289.7 222.8 4,406.1
----------------------------------------------------------------------------
Discoveries, additions and
extensions 62.8 25.3 - 747.8
Purchase of reserves 7.5 - - 21.7
Sale of reserves - - (220.0) (404.2)
Net revisions and transfers (19.5) (33.3) (1.0) (10.0)
2009 Production (84.4) (20.3) (0.1) (397.5)
----------------------------------------------------------------------------
Proved reserves at December 31, 2009 1,374.1 261.4 1.7 4,363.9
----------------------------------------------------------------------------
Discoveries, additions and
extensions 8.1 (22.6) - 994.6
Purchase of reserves 42.4 - - 59.9
Sale of reserves - - (1.6) (779.9)
Net revisions and transfers (57.2) 14.3 (0.1) (4.5)
2010 Production (98.2) (27.3) - (423.2)
----------------------------------------------------------------------------
Proved reserves at December 31, 2010 1,269.2 225.8 - 4,210.8
----------------------------------------------------------------------------
Proved developed
December 31, 2007 811.1 44.4 1.0 2,770.9
December 31, 2008 1,022.2 149.0 1.2 3,224.5
December 31, 2009 915.2 225.5 0.8 3,089.7
December 31, 2010 763.7 187.2 - 2,642.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
RESERVES ESTIMATES
Summary of Oil and Gas Reserves as of Fiscal Year-End Based on
Average Fiscal Year Prices
The following table sets forth Talisman's estimates of its
proved developed, proved undeveloped, total proved, probable
developed, probable undeveloped and total probable reserves as at
December 31, 2010. The reserves estimates included in this table
were prepared using the standards of the US Securities and Exchange
Commission ("SEC"), which requires that proved reserves be
estimated using existing economic conditions. The price used for
calculating reserves is an unweighted arithmetic average of the
first-day-of-the-month price for each month within the period
unless the prices are defined by contractual obligations (excluding
escalations based on future conditions).
Proved Proved Total
Developed(1,2) Undeveloped(1,3) Proved(1)
Gross(7) Net(8) Gross(7) Net(8) Gross(7) Net(8)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil and Liquids (mmbbls)
North America
-------------------------------------------------
Canada 74.6 65.6 4.7 4.4 79.3 70.0
-------------------------------------------------
United States 0.9 0.7 3.4 2.5 4.3 3.2
-------------------------------------------------
-------------------------------------------------
UK
-------------------------------------------------
United Kingdom 211.9 210.6 53.4 53.3 265.3 263.9
-------------------------------------------------
-------------------------------------------------
Scandinavia
-------------------------------------------------
Norway 21.6 21.6 31.6 31.6 53.2 53.2
-------------------------------------------------
Southeast Asia
-------------------------------------------------
Indonesia(9) 21.4 8.6 10.7 4.2 32.1 12.8
-------------------------------------------------
Malaysia 25.1 13.2 3.4 1.6 28.5 14.8
-------------------------------------------------
Australia 4.5 4.4 5.5 5.2 10.0 9.6
-------------------------------------------------
Vietnam 1.2 1.0 0.2 0.2 1.4 1.2
-------------------------------------------------
Other
-------------------------------------------------
Algeria 19.6 9.8 16.0 9.1 35.6 18.9
-------------------------------------------------
Peru - - - - - -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total 380.8 335.5 128.9 112.1 509.7 447.6
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural Gas (bcf)
---------------------------------------------------
North America
Canada 1,134.7 1,011.4 362.5 343.1 1,497.2 1,354.5
---------------------------------------------------
United States 687.5 584.9 785.6 673.0 1,473.1 1,257.9
---------------------------------------------------
UK
---------------------------------------------------
United Kingdom 22.0 22.0 1.8 1.8 23.8 23.8
---------------------------------------------------
Scandinavia
---------------------------------------------------
Norway 73.3 73.3 6.3 6.3 79.6 79.6
---------------------------------------------------
Southeast Asia
Indonesia 1,083.1 763.7 732.1 505.5 1,815.2 1,269.2
---------------------------------------------------
Malaysia 281.3 187.2 66.7 38.6 348.0 225.8
---------------------------------------------------
Australia - - - - - -
---------------------------------------------------
Vietnam - - - - - -
---------------------------------------------------
Other
Algeria - - - - - -
---------------------------------------------------
Peru - - - - - -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total 3,281.9 2,642.5 1,955.0 1,568.3 5,236.9 4,210.8
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Probable Probable Total
Developed(4,5) Undeveloped(4,6) Probable(4)
Gross(7) Net(8) Gross(7) Net(8) Gross(7) Net(8)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Oil and Liquids (mmbbls)
North America
---------------------------------------------------
Canada 15.8 13.2 3.3 3.0 19.1 16.2
---------------------------------------------------
United States 0.2 0.1 0.6 0.5 0.8 0.6
---------------------------------------------------
---------------------------------------------------
UK
---------------------------------------------------
United Kingdom 59.9 59.8 90.4 89.8 150.3 149.6
---------------------------------------------------
---------------------------------------------------
Scandinavia
---------------------------------------------------
Norway 13.2 13.2 34.6 34.6 47.8 47.8
---------------------------------------------------
Southeast Asia
Indonesia 1.1 0.4 10.1 4.9 11.2 5.3
---------------------------------------------------
Malaysia 18.1 9.6 13.8 5.7 31.9 15.3
---------------------------------------------------
Australia 2.3 2.2 4.0 2.8 6.3 5.0
---------------------------------------------------
Vietnam 0.4 0.3 21.6 17.8 22.0 18.1
Other
---------------------------------------------------
Algeria 7.7 3.5 4.7 1.6 12.4 5.1
---------------------------------------------------
Peru - - 17.5 16.5 17.5 16.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total 118.7 102.3 200.6 177.2 319.3 279.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Natural Gas (bcf)
North America
---------------------------------------------------
Canada 349.4 310.8 201.0 187.2 550.4 498.0
---------------------------------------------------
United States 154.5 131.6 751.8 645.8 906.3 777.4
---------------------------------------------------
UK
United Kingdom 6.8 6.8 167.3 167.3 174.1 174.1
---------------------------------------------------
Scandinavia
Norway 28.1 28.1 45.8 45.8 73.9 73.9
---------------------------------------------------
Southeast Asia
Indonesia 5.3 3.4 626.6 422.8 631.9 426.2
---------------------------------------------------
Malaysia 104.8 68.5 171.7 97.0 276.5 165.5
---------------------------------------------------
Australia - - - - - -
---------------------------------------------------
Vietnam - - 12.0 12.0 12.0 12.0
---------------------------------------------------
Other
Algeria - - - - - -
---------------------------------------------------
Peru - - - - - -
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total 648.9 549.2 1,976.2 1,577.9 2,625.1 2,127.1
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Notes:
1. "Proved" reserves are those quantities of oil and gas, which, by analysis
of geoscience and engineering data, can be estimated with reasonable
certainty to be economically producible - from a given date forward, from
known reservoirs and under existing economic conditions, operating
methods and government regulations, prior to the time at which contracts
providing the right to operate expire, unless evidence indicates that
renewal is reasonably certain, regardless of whether deterministic or
probabilistic methods are used for estimation.
2. "Proved Developed" reserves are those reserves that can be expected to be
recovered through existing wells with existing equipment and operating
methods or in which the cost of the required equipment is relatively
minor compared to the cost of a new well. Additional oil and gas expected
to be obtained through installed extraction equipment and infrastructure
operational at the time of the reserves estimate are included as proved
developed reserves.
3. "Proved Undeveloped" reserves are those reserves that are expected to be
recovered from new wells on undrilled acreage, or from existing wells for
which a relatively major expenditure is required for recompletion.
Inclusion of reserves on undrilled acreage is limited to those directly
offsetting development spacing areas that are reasonably certain of
production when drilled, unless evidence using reliable technology exists
that establishes reasonable certainty of economic producibility at
greater distances.
4. "Probable" reserves are those additional reserves that are less certain
to be recovered than proved reserves but which, together with proved
reserves, are as likely as not to be recovered. Probable reserves can be
assigned to areas that are structurally higher than the proved area if
these areas are in communication with the proved reservoir. Includes
reserves assigned to areas of a reservoir adjacent to proved reserves
where data control or interpretations of available data are less certain,
even if interpreted reservoir continuity of structure or productivity
does not meet the reasonable certainty criterion.
5. "Probable Developed" reserves are those reserves that are less certain to
be recovered through existing wells with existing equipment and operating
methods or in which the cost of the required equipment is relatively
minor compared to the cost of a new well. Additional oil and gas expected
to be obtained through installed extraction equipment and infrastructure
operational at the time of the reserves estimate are included as probable
developed reserves.
6. "Probable Undeveloped" reserves are those reserves that are less certain
to be recovered from new wells on undrilled acreage, or from existing
wells for which a relatively major expenditure is required for
recompletion.
7. "Gross" reserves refer to the sum of (i) working interest reserves before
deduction of royalty burdens payable, and (ii) royalty interest reserves.
The Canadian Oil and Gas Evaluation Handbook ("COGEH") refers to this sum
of reserves as "Company interest reserves". Royalty interest reserves for
Canada were approximately 0.7 mmboe (proved) and 0.2 mmboe (probable) as
at December 31, 2010. The inclusion of royalty interest volumes in gross
reserves does not conform to COGEH standards applicable under NI 51-101.
8. "Net" reserves are the remaining reserves of Talisman, after deduction of
estimated royalty burdens and including royalty interests in the amount
set out in note 7 above.
9. Interests of various governments, other than working interests or income
taxes, are accounted for as royalties. Royalties are reflected in "net"
reserves using effective rates over the life of the contract.
Contacts: Talisman Energy Inc. - Media and General Inquiries:
David Mann Vice President, Corporate & Investor Communications
403-237-1196 403-237-1210 (FAX) tlm@talisman-energy.com Talisman
Energy Inc. - Shareholder and Investor Inquiries: Christopher J.
LeGallais Vice President, Investor Relations 403-237-1957
403-237-1210 (FAX) tlm@talisman-energy.com
www.talisman-energy.com
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