Skip to main content
The Globe and Mail
Support Quality Journalism.
The Globe and Mail
First Access to Latest
Investment News
Collection of curated
e-books and guides
Inform your decisions via
Globe Investor Tools
Just$1.99
per week
for first 24 weeks

Enjoy unlimited digital access
Cancel Anytime
Enjoy Unlimited Digital Access
Get full access to globeandmail.com
Just $1.99per week for the first 24weeks
Just $1.99per week for the first 24weeks
var select={root:".js-sub-pencil",control:".js-sub-pencil-control",open:"o-sub-pencil--open",closed:"o-sub-pencil--closed"},dom={},allowExpand=!0;function pencilInit(o){var e=arguments.length>1&&void 0!==arguments[1]&&arguments[1];select.root=o,dom.root=document.querySelector(select.root),dom.root&&(dom.control=document.querySelector(select.control),dom.control.addEventListener("click",onToggleClicked),setPanelState(e),window.addEventListener("scroll",onWindowScroll),dom.root.removeAttribute("hidden"))}function isPanelOpen(){return dom.root.classList.contains(select.open)}function setPanelState(o){dom.root.classList[o?"add":"remove"](select.open),dom.root.classList[o?"remove":"add"](select.closed),dom.control.setAttribute("aria-expanded",o)}function onToggleClicked(){var l=!isPanelOpen();setPanelState(l)}function onWindowScroll(){window.requestAnimationFrame(function() {var l=isPanelOpen(),n=0===(document.body.scrollTop||document.documentElement.scrollTop);n||l||!allowExpand?n&&l&&(allowExpand=!0,setPanelState(!1)):(allowExpand=!1,setPanelState(!0))});}pencilInit(".js-sub-pencil",!1); // via darwin-bg var slideIndex = 0; carousel(); function carousel() { var i; var x = document.getElementsByClassName("subs_valueprop"); for (i = 0; i < x.length; i++) { x[i].style.display = "none"; } slideIndex++; if (slideIndex> x.length) { slideIndex = 1; } x[slideIndex - 1].style.display = "block"; setTimeout(carousel, 2500); } //

Hal Kvisle, president and CEO of Talisman Energy, speaks at the Global Business Forum in Banff, Alta., Thursday, Sept. 20, 2012.

Jeff McIntosh/The Canadian Press

Talisman Energy Inc. is putting a lid on any further investment in Quebec's controversial shale gas sector.

The Calgary-based company says in its latest quarterly financial results that it has decided not to commit any more money to shale-gas exploration and assessment activity in the province.

The new Parti Québécois government has signalled that it has serious concerns over the safety and environmental impact of hydraulic fracturing used to extract shale gas.

Story continues below advertisement

A partial moratorium put in place by former Liberal premier Jean Charest in March of 2011 remains in place, and a strategic environmental study is being conducted to evaluate the risks of fracturing – or "fracking" – which injects chemicals and water deep in the ground to release natural gas from rock formations.

The study is not expected to be completed before 2014.

The PQ government has ordered a second study by the independent Bureau d'audiences publiques sur l'environnement (BAPE).

Quebec's new Natural Resources Minister indicated last month she might move to ban fracking outright.

"During the three month period ended September 30, 2012, the company determined that it would not commit capital in the foreseeable future to exploration and evaluation activities in Quebec, where the prohibition regarding hydraulic fracturing for shale gas development has been reaffirmed," Talisman says in its report.

Talisman is booking impairment expenses of $109-million – $82-million after-tax – on its Quebec exploration and evaluation assets, the company said.

The company reported a net loss of $731-million, largely as a result of asset writedowns in various parts of the world including the shale operations in Quebec and its offshore operations in Norway.

Story continues below advertisement

Talisman is a partner with Calgary-based Questerre Energy Corp. in a shale-gas project along the Lowlands of the Saint-Lawrence River.

Questerre spokeswoman Anela Dido said she has no new information regarding the partnership with Talisman.

"What we understand is that we are still in a moratorium in Quebec," she said.

PQ Natural Resources Minister Martine Ouellet said last month that she is highly skeptical of fracking.

"I cannot see the day when the extraction of natural gas by the fracking method can be done in a safe way," she said.

But PQ Premier Pauline Marois later spoke in a more conciliatory manner about the industry's plans.

Story continues below advertisement

Public opposition to gas exploration in Quebec has been fierce over the past few years.

On Tuesday, Talisman said it's determined to return to profitability after the loss, which was worse than analyst estimates, and will reduce capital spending in 2013 to the lowest level in several years.

The biggest individual impairment was $497-million pretax ($125-million after-tax) that completed the writedown of the Yme offshore project in Norway. That's on top of $978-million pre-tax ($248-million after-tax) in the first quarter of 2012.

Talisman's total loss for the third quarter ended Sept. 30 was equal to 71 cents per share and compares with a net income of $521-million, or 51 cents a share, in the same quarter a year ago.

Analysts had been looking for 9 cents per share of net income and 7 cents per share on an adjusted basis, according to estimates compiled by Thomson Reuters.

Hal Kvisle, president and CEO, said in a statement that the results reflect a number of issues.

Story continues below advertisement

"The net loss of $731-million in the quarter is largely the result of $443-million in after-tax impairment charges, reflecting the impact of the company's planned exit from Peru, ongoing uncertainty with the Yme development in Norway, the prohibitions on shale operations in Quebec, and declining reservoir performance at Rev in Norway," he said.

Mr. Kvisle added that the results were also affected by low natural gas prices in North America and lower production in the North Sea.

He said Talisman will take steps to end the red ink.

"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," he said.

"Our objective is to fund our most promising and profitable investment opportunities, focusing on near-term cash generation while keeping our balance sheet in good shape. We will provide more details in January after we complete our annual planning process."

The quarterly results are the first to be announced with Mr. Kvisle at the helm of Talisman.

Story continues below advertisement

The former CEO of pipeline giant TransCanada Corp. cut his retirement short in September to take the top job at the international energy producer.

Mr. Kvisle, a Talisman board member, replaced John Manzoni, who "agreed to" step down after five years as Talisman's CEO.

Shortly after Mr. Manzoni became CEO, he signalled a shift toward a more focused company. He highlighted three key strategic areas: North American shale natural gas, offshore production in the North Sea and development in Southeast Asia.

The CEO switch came as Talisman once again changed its strategy – slowing down development of natural gas in the face of low commodity prices and working to improve operational performance.

Shareholders were frustrated with Talisman's share price performance, but there was no particular push from investors to change leaders, Mr. Kvisle said shortly after his appointment.

Nor was the shake-up a signal that the "for sale" sign is up at Talisman, he added.

Story continues below advertisement

Fellow oil and gas producer Nexen Inc. saw its CEO, Marvin Romanow, leave in January and shortly thereafter began negotiating a deal to be sold to China National Offshore Oil Co. In July, the two announced a $15.1-billion acquisition, which the federal government is expected to decide upon mid-November.

Also in September, Talisman announced plans to wind down its operations in Peru as it wasn't able to build a big enough position there. The third-quarter loss included a $172-million impairment expense related to that decision.

The company's Peruvian subsidiary will stop exploration in the Maranon Basin and plans to exit the country once it completes ongoing commercial transactions.

Talisman drilled a successful well in the area in 2009, but a second one drilled this spring came up dry. A process to sell the Peruvian assets began shortly after that, but no bidder came forward with an adequate offer.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow the author of this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies