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Talisman Energy Management Discusses Q2 2012 Results - Earnings Call Transcript

In Asia, our realizations continue to be very strong, and we saw gas prices in the second quarter well above $9, reflecting the strong supply and demand fundamentals in that region.

Turning to our second quarter. We had a strong quarter in terms of delivery. The main headline for the quarter is the agreement we've reached with Sinopec to buy 49% of our U.K. business for $1.5 billion, delivering on the promise we made earlier this year. The deal is good for Talisman, good for Sinopec, and good for our U.K. business.

On the perspective of the U.K. business, it'll result in incrementally more capital investment into the assets than we would have invested ourselves. This will be very positive as we continue to improve our operational reliability and concentrate on some big investment projects in the next phase of our U.K. development.

From Talisman's perspective, we will still invest net less than we would have had we kept 100% of the business ourselves. We've accelerated cash delivery from the business, and of course, we've significantly reduced our exposure to abandonment. So overall, I'm delighted that we finalized that part of our repositioning with the U.K. now a smaller part of Talisman's portfolio. I'm looking forward to working with our new partners in the U.K. to develop the business there.

Production was 435,000 barrels a day, up about 4% on the same quarter a year ago and also against the first half last year. North America delivered a strong quarter as the Eagle Ford continued to build, and we saw lower-than-expected base decline in the Marcellus despite the significant reduction in activity there.

Our Asian business delivered 130,000 barrels a day, growing about 12% year-on-year overall with liquids growth about double that rate driven by the new developments at Kitan and Jambi Merang. In terms of activity, we're continuing to drive the Eagle Ford with good results. Our drilling cycle times continue to improve, which prompted Paul Smith to increase the production expectation for the year to between 12,000 and 17,000 barrels a day when he spoke in May.

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