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CALGARY, ALBERTA -- (Marketwire) -- 03/06/13 -- Talisman Energy Inc. (TSX: TLM) (NYSE: TLM) has announced guidance for this year. The objective of our 2013 capital and operating plan is to increase total shareholder returns by unlocking net asset value and growing cash flow per share. Operationally, the plan focuses on Talisman's two core areas (the Americas and Asia-Pacific), increasing the contribution from liquids volumes, maintaining a strong balance sheet, and driving operational excellence. All values in this release are in US$ unless otherwise stated.
2013 Guidance Summary
Executing a focused and disciplined capital spending program:
-- $3 billion capital budget - a 25% reduction from 2012.-- 90% of capital directed at liquids and international gas.-- The majority of capital will be spent in our two core regions.
Replacing low-margin North American natural gas with higher margin barrels:
-- 375,000-395,000 boe/day production target for 2013.-- Liquids weighting expected to increase from 35 to 40%. -- Liquids momentum carries into 2014.-- High netback international gas expected to account for 25% of production.-- Cash flow expected to be approximately $2.5 billion. (i) -- 2012 asset sales account for the majority of the reduction from last year. -- Six core properties account for 60% of cash flow.
(i)assumes $90/bbl WTI oil, $105/bbl Brent oil, $3.60/mmbtu NYMEX natural gas
Taking steps to unlock net asset value:
-- $2-3 billion of dispositions or joint ventures planned for the next 12- 18 months. -- $1-1.5 billion in North America. -- Actively marketing North Duvernay shale and parts of the Montney. -- $1-1.5 billion of international assets.-- Options for proceeds include debt reduction and increasing cash flow per share through short-term development spending or share repurchases.
"We are quickly moving to strengthen and focus our company by imposing strict capital discipline, increasing the cash margins on the barrels we produce, and unlocking value through asset sales or strategic joint ventures," said Hal Kvisle, President and CEO. "Our focused capital program targets high-margin, near-term opportunities in our two core areas. We will be less reliant on asset sales to fund core capital programs in 2013. As a result, once we execute these planned sales or joint ventures, we will have the option of using proceeds to pay down debt, or increase cash flow per share through short-term development spending or share repurchases.
"Over the past six months, we have stabilized the company. We've reduced debt by about $750 million over the course of 2012. We will maintain a strong balance sheet going forward, with a target debt-to-cash flow ratio of 1.5 times. We are increasingly protecting our capital program through hedging.
"We are now a much more focused company. Talisman has two core areas, Asia-Pacific and the Americas (North America and Colombia), which account for approximately 90% of our production and 85% of our 2P reserves. We will continue to strengthen and high-grade our assets within this core. For other areas, we are examining all options, including harvesting cash flow, ongoing development, joint venture opportunities, or sale.
