Talisman Energy Inc. is reporting a sharp fall in its second-quarter profit and revenue due to weaker commodity prices and higher operating costs.
The Calgary-based company says net income fell to $196-million (U.S.), or 19 cents per share, from $698-million, or 68 cents per share.
Revenue declined to $1.87-billion from $2.23-billion and earnings from operations fell to $71-million or seven cents per share from $168-million or 16 cents per share.
Cash flow fell to $803-million in the three months ending June 30, 2012, from $897-million in the same period last year.
The consensus estimate had been for 13 cents per share of net income, nine cents per share from operations, and revenue of $1.88-billion, according to figures compiled by Thomson Reuters.
The company says exploration and development spending in the quarter was $1-billion.
Like many natural gas producers, Talisman has been coping with stubbornly low natural gas prices in North America by drilling in areas rich in valuable liquids, like the Eagle Ford in Texas.
Natural gas liquids, used to make plastics and petrochemicals, track oil prices more closely than they do ordinary dry natural gas.
Net debt at the end of the second quarter was $4.1-billion, relatively unchanged from $4-billion at the end of the first quarter.
Last week, Talisman agreed to sell a 49 per cent interest in its U.K. division to Chinese firm Sinopec Corp. for $1.5-billion.
The company said it plans to use about $500-million from the proceeds to buy back shares.
Talisman’s other key areas of focus include offshore production in Southeast Asia, as well as operations in South America and the Middle East.
“In addition to repositioning our business in the U.K. North Sea, we delivered a strong operational quarter,” said John A. Manzoni, Talisman’s president and chief executive officer.
“With our recent U.K. North Sea transaction, we continue to focus and strengthen our portfolio while maintaining a strong balance sheet to weather current low natural gas prices in North America.”
He said the deal will reduce Talisman’s decommissioning liability in the U.K., decrease future capital commitments and bring significant cash.Report Typo/Error