Talisman Energy slumped to a heavy loss in the second quarter as it suffered impairments on its North Sea operations, while it was also hit by lower North American gas prices.
The Canadian independent reported a net loss for the period of $237 million, compared with a profit of $97 million a year earlier, despite a 4% year-on-year increase in revenue to $1.24 billion.
Talisman blamed the negative result on a $171 million loss relating to cash settlements as well as losses on commodity derivatives, while it was also dented by after-tax impairments totalling $62 million in the UK and Norway where it faced higher operating costs due to planned maintenance.
The Calgary-based company said it is looking to sell off $2 billion worth of assets within the next 18 months - with its North Sea assets including the ill-fated Yme field off Norway on the block – as part of a divestment drive to focus on its core Americas and Asia-Pacific operating areas.
Chief executive Hal Kvisle has been carrying out a cost-cutting effort to boost profitability at the company, having reduced capital expenditure by 14% compared with the previous year to $724 million in the latest quarter, in line with full-year capex guidance of $3.2 billion.
However, the company's costs were up 47% in the quarter at $1.4 billion compared with the previous year as it was also hit by higher royalty payments on production.
Talisman was left with net debt of around $4.2 billion at the end of the period, up from about $3.8 billion in the previous quarter.
Kvisle said the company had “invested to grow production and cash flow from our best assets, while working to reduce operating and overhead costs”.
Its total production rose 4% over the year to 375,000 barrels of oil equivalent per day, fuelled by increases in its core regions including North America, where liquids output was up 36% at 45,000 bpd on the back of new wells drilled in the Eagle Ford shale play in the US.
However, higher liquids volumes were offset by lower North American natural gas prices compared with the previous quarter as well as the sale of the Montney and Monkman gas assets, leaving Talisman with a $9 million loss from operations compared with a $79 million gain in the first quarter.