Higher natural gas prices in the third quarter continue to tell the tale for most of North American-based producers. However, asset sales, natural field declines and storm shut-ins also are playing a major role in quarterly financial reports.

At Calgary-based Talisman Energy Inc., the sale of its operations in Sudan sent net income spiraling down more than 16% in the quarter, with net income of C$126 million (C94 cents/share), compared with C$151 million (C$1.08/share) a year ago.

Production averaged 379,000 Boe/d during the quarter, in line with Talisman’s guidance and up 4% sequentially from the second quarter. However, compared with the third quarter of 2002, overall production levels were down, which Talisman attributed to the Sudan sale, natural declines and North Sea turnarounds. Unit operating costs were up during the quarter, averaging C$7.31/boe, but those costs are expected to fall with production increases in the fourth quarter.

CEO Jim Buckee explained the changing production mix at Talisman, which is moving away from North America. Buckee said the Canadian company’s “strategic positioning in new exploration and development areas is beginning to pay off,” with increased production from operations in Malaysia, Vietnam and Algeria. “We have had exploration success in a number of areas and have a significant inventory of high-impact exploration opportunities, some of which are currently drilling or about to spud.”

Meanwhile, Talisman’s North America natural gas production was up 5% over last year in the quarter to 853 MMcf/d, up 5% because of acquired properties in Appalachia, which averaged 64 MMcf/d. However, production was affected by development delays and turnarounds. North American liquids production averaged 59,612 bbl/d, a decrease of 3% over the same period last year. Talisman also participated in 161 wells (gross) in North America, which had an average success rate of 90%.

At Magnum Hunter Resources, based in Irving, TX, daily oil and gas production also was down from a year ago, averaging 203.6 MMcf/d (18.7 Bcfe), compared with 214.8 MMcfe/d in the third quarter of 2002. Gas production averaged 140.9 MMcf/d, compared with 143.1 MMcf/d. Gas production accounted for 69% of Magnum Hunter’s daily production in the quarter, up from 67% for the same period of 2002.

Net income was $6.7 million (10 cents/share), a 143% increase over 3Q02’s $2.7 million (4 cents/share). Total revenues were $82.6 million, an increase of 13% over revenues of $72.8 million a year earlier. And operating profit was $21.2 million for the period, a 13% bump over the same period last year.

A 5% decline in actual production was attributable to asset sales, including 4.2 MMcfe/d of South Louisiana daily production that was sold in June. Quarterly production also was impacted by tropical storm shut-ins during July that cut 2.7 MMcf/d. Magnum Hunter participated in drilling 39 new wells during the quarter, including 32 onshore. Of the new wells, 38 were deemed a commercial success.

Dallas-based Denbury Natural Resources posted a 7% decline in average production, to 33,116 boe/d compared with 35,506 boe/d for the same period of 2002. Denbury also blamed normal depletion, lower-than-expected production increases from first half exploration and development results, unexpected delays offshore and a one-week temporary CO2 curtailment. The CO2 curtailment, used to upgrade operations, will benefit future production, the company said.

Property sales have also contributed to the production decrease. During the first nine months of 2003, Denbury sold more than $29 million of properties, principally the Laurel Field sold in February, with estimated aggregate production from these properties of 2,000 boe/d.

Denbury’s earnings were up, standing at $15.1 million (28 cents/share), compared with $13.5 million (25 cents) for the same period last year. Adjusted cash flow from operations was $45.6 million, compared with $44.2 million, and net cash flow totaled $49.8 million compared with $44.4 million.

For junior independent Ultra Petroleum, based in Houston, the success continues on both the earnings side and production-wise. Ultra reported a 974% increase to earnings in the quarter, to $10.327 million (13 cents/share), compared with $961,286 (1 cent/share) a year earlier. Cash flow increased 384% to $20.9 million (27 cents/share), compared with $4.3 million (6 cents/share) a year ago.

Gas-focused production jumped 66% during the quarter to 6.9 Bcfe, averaging 75 MMcfe/d, compared with 4.2 Bcfe, or 45 MMcfe/d, for the same quarter in 2002. Average natural gas prices increased to $4.17 per Mcf, compared with $1.91.

“This third quarter is another in a string of record quarters for Ultra Petroleum and further demonstrates the quality of our assets and execution,” said CEO Michael D. Watford, who added that the company continues “to enjoy the benefits of the Kern River Pipeline expansion shrinking the differential in Wyoming and delivering significantly higher price realizations for us.” Watford said that “without a doubt, our operational and financial successes so far this year will deliver the best year yet in Ultra’s history.”

©Copyright 2003 Intelligence Press Inc. All rights reserved. The preceding news report may not be republished or redistributed, in whole or in part, in any form, without prior written consent of Intelligence Press, Inc.