New Talisman Well Producing at 66 MMcf/d; Record Drilling Budget Planned
Talisman Energy said its massive 60E Brazion deep natural gas well in the Monkman area of northeastern British Columbia commenced production last month at a restricted rate of 66 MMcf/d, making it one if the largest gas wells in production in North America. Raw gas flows from the well reached 80 MMcf/d. Seneca Energy Canada has a 30% stake in the well.
"The 60E well is a boomer," said CEO Jim Buckee. "Early production data puts it as one of the better exploration wells in the history of the Western Canada Basin. Our recent discoveries in the Canadian Foothills and Appalachia have demonstrated the success of our deep gas strategy, targeting larger, highly productive natural gas pools. Talisman has set natural gas production growth targets of 4-7% annually over the next three years."
Talisman also announced Tuesday a record $3.1 billion exploration and development program for 2005, representing an increase of 15% over 2004. North America and the North Sea account for 80% of expected spending. The budget includes $1.5 billion for drilling as the company continues to add significant new production volumes through the drill bit.
"We made a number of large domestic natural gas discoveries last year, which show signs of continuing in 2005, reinforcing our position as the leading deep gas explorer in Western Canada," Buckee said. "In addition, we will continue our successful drilling program in the northeastern United States. We plan to spend over $1.4 billion in North America, with almost 90% directed at natural gas projects."
Talisman expects to participate in over 500 gross wells including 10-12 high impact exploration wells, increasing its North American gas production by 4-5% this year.
On Tuesday, Talisman also announced that it drilled two successful Triassic natural gas wells in British Columbia that are expected to be on production in the second quarter. It plans to drill four more deep wells in BC in 2005. One of those will be a follow-up well on the successful 60E structure with a spud date planned for the second quarter of 2005. Drilling is already underway at two other Paleozoic prospects. The company believes that over time the deep play at Monkman could be as prolific as the Triassic play where 2 Tcf has been produced to date.
Talisman expects its total production to grow 5% in 2005, with a mid-point estimate of 460,000 boe/d. With continued share repurchases, the company intends to increase production per share by 10% in 2005. Production in 2004 is estimated at 437,000 boe/d with production per share up 10% over the previous year.
"[Last year] was a stellar year for Talisman and the momentum is continuing into 2005," Buckee added. "We expect to generate a record $10 in cash flow per share this year, an increase of 25% over 2004. Unit operating costs could fall by more than 5% this year with new low cost production in Trinidad and the stronger Canadian dollar. The company continues to layer in growth in each of its core operating areas with a view to increasing our production by 100,000 boe/d between now and the end of 2007."
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