Seeing no increase in natural gas prices, Talisman Energy Inc. is closing in on liquids in 2012.

The Calgary-based company plans to shrink its capital budget by $500 million this year, cutting back on gas while spending more on liquids in its portfolio. That means not only a move from the Marcellus and Montney shales to the Eagle Ford and Duvernay shales, but also to oil opportunities overseas (see Shale Daily, Nov. 7, 2011).

The company also suggested that it hoped to sell some noncore conventional assets in North America.

“We expect to spend approximately $4 billion in cash capital expenditures this year,” CEO John Manzoni said on Tuesday. “We are reducing capital spending in dry gas plays in North America, which accounts for the majority of the decrease over 2011. Underpinning this is a belief that North American gas prices will remain low for some time; we have also assumed a relatively conservative oil price forecast.”

Talisman produced around 425,000 boe/d in 2011, up 9% from 2010. While the company believes it could increase production as much as 10% by maintaining spending on dry gas, it is projecting only 5% growth for the coming year, “focusing on profitability rather than headline production growth.” Talisman expects to increase North American liquids production from 25,000 b/d this year to 60,000 b/d in 2015.

Of the $1.8 billion set aside for North America, Talisman plans to spend 40% on liquids-rich opportunities. The company will spend $500 million in the Eagle Ford this year, up from $350 million in 2011, and it expects to bring four additional rigs into the play this year, increasing its total to 14.

On the flip side, Talisman plans to spend “upwards of $600 million” in the Marcellus this year “with significant investment in infrastructure in new parts of the play.” That means cutting its rig count in half, from 11 in 2011 to between five and seven this year. Because of the productivity of existing wells, Talisman believes it can maintain production at current levels around 500 MMcf/d despite a decrease in drilling. Talisman produced a record 485 MMcf/d from the Marcellus in the fourth quarter of 2011.

In Canada, Talisman plans to shift focus from the Montney Shale to the Duvernay Shale. The company is planning a four-rig program in the Montney of British Columbia because of low gas prices and efforts to study the geology of the play, while planning a six-well program in the liquids-rich Duvernay of Alberta.

Internationally, Talisman expects to spend as much as $700 million on natural gas development in Southeast Asia and $1.2 billion on crude oil in the North Sea. Of the $600 million the company is setting aside for exploration spending this year, half will go to a 10-well oil program in Colombia.