NGI The Weekly Gas Market Report
With the cry for increased natural gas production being heardacross the North America, it’s no wonder that exploration andproduction companies such as Calgary-based Talisman Energy areupping their capital expenditure programs to try and meet demand.The company announced yesterday that it will boost its explorationand development ÿbudget by 44% over year 2000 levels to C$1.7billion.
The company expects to produce on average between 430,000 and450,000 boe/d, up from 2000’s output of approximately 410,000boe/d. Talisman forecasts that domestic gas production will bealmost 800 MMcf/d due to production increases from the AlbertaFoothills, Central Alberta and West Whitecourt. The producer warnsthere will be a decrease from in output from the North Sea due toasset sales completed in late 2000.
“Over the past five years, we have grown production per share byabout 10% annually and expect a comparable number in 2001,” saidDr. Jim Buckee, CEO of Talisman. “Cash flow in 2000 was overC$17/share and we could see in excess of C$18/share this yearassuming US$4.50 NYMEX gas, $24 WTI oil prices and a continuationof our share buyback program throughout the year. I see no shortageof opportunities for Talisman, but we will not let the glitter ofhigh prices distract our emphasis on value at mid-cycle.”
Talisman said it expects production to rise by 5-10% in 2001,based only on existing projects. Of the company’s 2000 production,about 47% was in Canada, 32% in the North Sea and 21% split betweenIndonesia and Sudan.
With 32% of the 2001 budget focused on development, and 16%dedicated to exploration, almost half of the spending will gotowards drilling endeavors. Talisman said it expects to participatein 850 wells worldwide this year, 650 of those in Canada. The Northcountry producer says three quarters of the allotted budget forCanadian projects will be used for natural gas interests, with theremaining quarter going to oil.
Tailsman said it uses both physical contracts and financialinstruments to mitigate oil and gas commodity risk. Almost 19% of2001 Canadian gas volumes are fixed at an average price of aboutC$2.76 per Mcf, falling to approximately 12% in 2002 at an averageprice of C$3.10 per Mcf.
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