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Talisman Energy Inc. president and chief executive officer, Hal Kvisle on Thursday, April 11, 2013.

Chris Bolin

Talisman Energy Inc., in the midst of a reorganization, disappointed investors by losing millions in the first quarter, prompting a sharp drop in its already battered stock.

Talisman lost $213-million (U.S.) or 21 cents per share in the quarter, compared to a profit of $291-million in the same frame last year. Talisman's operating earnings, which exclude unusual items, also swung into the red.

Shares of the energy company closed at $11.50, down 4.8 per cent, on the Toronto Stock Exchange Wednesday.

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The results show any potential turnaround, led by Hal Kvisle, who took over Talisman in September and immediately started revamping the company, will take time – especially as some pieces of the company which produce oil and gas are jettisoned. But the loss also demonstrates how the company's past strategy continues to weigh on results.

"Off to a weak start," Andrew Potter, an analyst at CIBC World Markets, wrote in a note Wednesday. The "results underscore the need for the company to take drastic action to improve profitability and see value recognized in the stock."

Mr. Kvisle, who restructured TransCanada Corp. before retiring two years ago, said the quarter should serve as the baseline for Talisman's new strategy. The company's cash flow, which totalled $517-million, was about $150-million less than expected, Mr. Kvisle said, but about half of that is tied to the company selling part of its stake in the North Sea.

Further, Talisman was able to produce oil at one of its offshore properties in Southeast Asia, but was not able to ship it, putting another dent in cash flow. Royalties and taxes in Southeast Asia also hurt the company.

"We would have liked to have seen a better first quarter, but as we look at the reasons for it, they're not fundamental. They are more circumstances we had to deal with in the quarter," he said on the company's first quarter conference call.

"I would argue in some ways we have turned the corner, but I don't for a minute diminish the amount of work yet to be done," Mr. Kvisle said. Talisman, he said, must fix its woes by unloading property in the north Duvernay, Montney and other assets, reducing costs across the company and focusing on the Americas and Asia-Pacific regions.

"This quarter was the first of the new era at Talisman," the CEO said.

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The Calgary-based energy company, which is now looking to trade growth for flat but more profitable production, said it is looking for a buyer for its 12.15 per cent stake in the Ocensa oil pipeline in Colombia.

Mr. Kvisle told reporters following the company's annual meeting he expects to be able to find a buyer for the stake within six months.

With files from Reuters

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