Two of Canada’s largest oil and natural gas companies reported gas production higher in the third quarter from a year earlier. Canadian Natural Resources Ltd. (CNR) and Talisman Energy Inc., which both had solid earnings, each reported a 9% growth in North American gas production over 3Q2003.

Calgary-based CNR reported its total 3Q production, which includes gas, crude oil and natural gas liquids (NGLs), was up 15% over a year ago, and up 2% sequentially over the second quarter. Total gas production increased 8% over the previous year.

CNR’s North American averaged 1,336 MMcf/d, or 107 MMcf/d higher than a year ago, and as expected, 4% lower than 2Q2004. Approximately half of the increase from the prior year reflects organic growth with the remainder representing accretive property acquisitions.

“This strong growth is comprised of approximately 5% organic growth with the remainder being comprised of property acquisitions,” the company said. “As expected, 3Q production decreases from 2Q2004 reflect seasonality caused by a first quarter emphasis on drilling natural gas in winter-access only areas compared with significantly smaller spring and summer drilling programs.”

CNR achieved a net profit of C$311 million (C75 cents/share), compared with C$201 million (C97 cents) a year ago. It also achieved record cash flow of C$1 billion.

Talisman, also headquartered in Calgary, posted slightly lower earnings in the quarter and slightly higher cash flow compared with a year ago. However, production averaged 429,000 boe, up 13% over a year ago, but down 2% sequentially from the second quarter. The sequential drop was blamed on planned plant turnarounds for maintenance in Western Canada and the North Sea.

Talisman’s North American gas production increased for the fourth consecutive quarter, averaging 892 MMcf/d, compared with 853 MMcf/d in 3Q2003. Total gas production averaged 1,263 MMcf/d, up from 1,064 MMcf/d a year ago. The company said it still expects production for the full year to be near the midpoint of its guidance range of 420,000-450,000 boe/d.

Net income of C$122 million (C31 cents/share) was down from C$128 million (C31 cents). Cash flow rose to C$706 million (C$1.84) from C$640 million (C$1.66).

“Although the net income number was affected by a number of non-operational factors during the quarter, our underlying performance remains strong and we achieved a number of strategic milestones,” said CEO Jim Buckee. “The company grew its North American gas volumes for the fourth consecutive quarter, driven by a very successful drilling program and highlighted by a number of high impact wells.”

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