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Talisman Energy Inc (TLM-T), the Canadian oil company that recently replaced its chief executive amid takeover speculation, reported a quarterly loss due to its planned exit from Peru and delays affecting its oil platform in Norway.
Under Hal Kvisle, who took the helm from John Manzoni in September, Talisman plans to focus on near-term cash generation and on projects that come into production more quickly.
"We are working toward a disciplined capital plan for 2013 in the range of $3 billion, smaller and more focused than we've seen in recent years," Kvisle, the former chief at Canada's largest pipeline company TransCanada Corp.(TRP-T), said in a statement.
Talisman, which had been shifting to liquids-rich gas prospects as dry gas prices languished near 10-year lows, plans to strengthen its core regions of the Americas, Southeast Asia and the North Sea, while shedding its non-core assets.
"We will live within our means. We will set capital spending budgets that can be funded by operating cash flows," Kvisle said. The company will reduce up front capital on high-risk exploration in multiple regions around the world, he said.
Talisman said last month it was giving up its eight-year-long effort to produce oil in Peru.
The company has shifted its efforts to oil-rich fields such as Eagle Ford in Texas as well as early stage Duvernay liquids-rich gas acreage in Alberta.
Shares of the company, which has a market value of about $13 billion, closed at $12.05 on the Toronto Stock Exchange on Monday. They have fallen 7 percent since the start of the year.
YME, SHALE CURBS HURT
The net loss in the quarter was $731 million, or 71 cents per share, compared with a net profit of $521 million, or 51 cents per share, a year earlier.
Talisman said $443 million in after-tax impairment charges due to its planned exit from Peru, restrictions on shale operations in Quebec and uncertainties with the Yme oil platform in Norway hurt results.
The company said last week it would fix faulty legs on its Yme oil and gas platform, which was evacuated in July.
The project, for which Talisman is the operator, is well over a year behind schedule and the company has removed future production from its corporate forecasts until start-up looks more secure. Former CEO Manzoni had complained frequently about the poor workmanship by the platform's Dutch contractor, SBM Offshore.
Talisman said loss from operations in the quarter was $36 million, or 4 cents per share, compared with earnings of $165 million, or 16 cents per share, a year earlier.
Low natural gas prices in North America and lower production in the North Sea hurt, the company said.
Natural gas prices fell 29 percent in the September quarter to average $2.85 per million British thermal unit.
Production rose 4 percent to 415,000 barrels of oil equivalent per day (boe/d). Total revenue and other income fell 12 percent to $1.72 billion.
Cash flow, a glimpse into a company's ability to fund development, decreased to $693 million, or 68 cents per share, from $902 million, or 88 cents per share, a year earlier.