Talisman Lags EPS, Beats Rev - Analyst Blog
21 Febbraio 2012 - 10:45AM
Zacks
Canadian energy explorer
Talisman Energy Inc. (TLM) came out with
better-than-expected fourth quarter and full year 2011 results,
reflecting higher oil prices and successful drilling, partially
offset by lower gains on asset sales coupled with steeper operating
costs.
Alberta-based Talisman, which
recently changed its reporting currency to U.S. dollars, announced
earnings per share from continuing operations (excluding
non-operating items) of 11 cents, below the Zacks Consensus
Estimate of 19 cents. Compared with the year-ago period, Talisman’s
earnings per share also declined 15.4% from 13 cents.
For the full year, earnings per
share were 59 cents, up 9.2% from 54 cents in the prior year.
Quarterly total revenue of $2,082.0
million improved 11.8% from $1,863.0 million in the fourth quarter
of 2010 and was 4.3% above our projection.
Talisman generated revenues of
$8,272.0 million in fiscal 2011, compared with $6,982.0 million in
2010.
Volume
Analysis
Total production during the quarter
was up 6.0% from the year-ago level at 442,000 barrels of oil
equivalent per day (MBOE/d), supported by two new projects in
Southeast Asia and strong contributions from Colombia.
Oil & liquids production during
the quarter was down 5.7% at 179,548 barrels per day (Bbl/d), or
41% of total volumes. Volumes were down in the North Sea region,
but were partially compensated by improved oil & liquids
production from North America and Southeast Asia areas.
Talisman’s natural gas volumes in
the quarter were up approximately 15.8% at 1,572 million cubic feet
per day (MMcf/d), mainly attributable to increases in North America
and Southeast Asia.
Realized
Prices
During the quarter, Talisman’s
realized commodity prices increased 7.6% from the year-ago quarter
to $62.00 per barrel of oil equivalent (BOE), mainly on the back of
healthy increases in commodity prices in North Sea and Southeast
Asia.
Overall, natural gas prices
declined 1.1% year over year to $5.52 per Mcf, while oil &
liquids realizations averaged $104.09 per barrel, up 20.7% from the
year-ago level.
Proved Reserve
As of year-end 2011, Talisman had
approximately 1.49 billion oil-equivalent barrels in proved
reserves, up 7.6% from the 2010 level.
Cash Flows and Capital
Expenditure
Cash flows from continuing
operations during the quarter totaled $824 million, 25.0% above
that of the fourth quarter of 2010. Talisman spent $1,287.0 million
on exploration and development activities.
Balance Sheet
As of December 31, 2011, Talisman
had cash and cash equivalents of approximately $474.0 million and
long-term debt of $4,895.0 million (including current portion),
with a debt-to-capitalization ratio of 32.8%.
Outlook
Talisman expects to witness average
production growth in the range of 5–10% per year in the medium
term.
Our
Recommendation
We like Talisman Energy for its
solid base business in Western Canada and in the U.K. North Sea,
while offering exposure to some of the most prospective
unconventional plays in North America and high-impact exploration
prospects worldwide.
Taking a cautious view of gas
prices, Talisman’s 2012 capital program specifically focuses on the
promising North American liquids-rich areas, which is a major shift
away from dry natural gas development. The company plans to trim
its current year capital expenditure by 11% from 2011 levels, while
still managing up to 5% improvement in its production.
As such, we expect Talisman’s
growth potential to be restrained and maintain our long-term
Neutral recommendation. Talisman, which operates in the industry
along with Canadian Natural Resources Ltd. (CNQ)
and EnCana Corp. (ECA), currently, has a Zacks #3
Rank, which is equivalent to a Hold rating for a period of one to
three months.
CDN NTRL RSRCS (CNQ): Free Stock Analysis Report
ENCANA CORP (ECA): Free Stock Analysis Report
TALISMAN ENERGY (TLM): Free Stock Analysis Report
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