Talisman 2009 Output Will Be Little Changed; Spending to Fall

By Jim Polson

Jan. 13 (Bloomberg) -- Talisman Energy Inc., the Canadian oil and natural-gas producer with reserves in the North Sea and North America, said 2009 production will be little changed and spending will be lower because of decreased prices.

Daily output should be “broadly similar” to an estimate of 430,000 barrels of oil equivalent for 2008, Chief Executive Officer John Manzoni said today in a statement. The Calgary- based company raised C$1 billion last year by selling reserves that produced the equivalent of 12,000 barrels of oil per day.

Spending for exploration and development will be C$3.6 billion ($2.93 billion) funded from operating cash and the asset sales, Talisman said. The 2008 exploration and development budget was set at C$4.38 billion a year ago, the company has said.

“Our objective this year is to preserve financial flexibility by living within our means,” Manzoni said in today’s statement. “We have assumed what we hope to be a conservative scenario for oil and gas prices in 2009.”

The spending forecast is based on a benchmark oil price of $40 per barrel and gas at $5 per million British thermal units, Talisman said. Crude oil for February delivery fell as much as $1.49, or 4 percent, to $36.10 per barrel in electronic trading on the New York Mercantile Exchange. Gas dropped 9.5 cents to $5.447.

Talisman expects to spend C$1 billion to develop Marcellus Shale gas production in the eastern U.S. and other so-called unconventional deposits. The North Sea budget is C$1.4 billion, aimed at increasing Norway output and maintaining U.K. production levels. The company also said some planned U.K. asset sales will be delayed, without elaborating.

The statement was issued before the start of regular trading on North American markets. Talisman fell 52 cents, or 4.2 percent, to C$11.95 yesterday on the Toronto Stock Exchange. The stock has dropped 37 percent in the past year. Fourth- quarter financial results are scheduled to be released March 5, Talisman said.

(Talisman will conduct a conference call beginning at 1 p.m. New York time, accessible on the company’s Web site at http://www.talisman-energy.com.)

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net.