In Malaysia, production averaged 42,000 boe/d, up 8% over the previous quarter. This was primarily due to a full quarter of production from Kinabalu, averaging 4,000 boe/d, and is expected to increase significantly during 2013 as initial platform upgrades are completed and a workover program commences. The addition of Kinabalu to the portfolio provides near-term exploration synergies and development upside in the Sabah basin. The company began drilling its first Sabah exploration well in mid-April.
In Indonesia, production for the quarter averaged 77,000 boe/d, up 4% over the previous quarter following the completion of planned maintenance at Corridor and Tangguh. First quarter production year over year is down 6%, due to higher nominations for gas from Corridor in the same period last year, and a working interest repayment in 2012 at Jambi Merang.
The HST/HSD development offshore Vietnam is progressing on schedule and on budget, with both jackets installed and topsides now in place. All drilling and completion activities are finished. First oil is expected around mid-year, and the company aims to deliver near-term peak net production of approximately 12,000 boe/d.
Production in Australia/Timor Leste for the quarter was 8,000 boe/d, down 20% from the previous quarter primarily due to natural declines.
In Papua New Guinea, acquisition of 440 kilometres of 2D seismic data was successfully completed in three exploration licenses. Prospects generated from this data will support a multi-well exploration drilling program, commencing in the second half of this year.
Other Operating Areas
The North Sea
In December 2012, Talisman sold a 49% equity interest in its UK business to Sinopec for $1.5 billion and established the Talisman Sinopec Energy UK Limited (TSEUK) joint venture.
Talisman's share of UK production averaged 21,000 boe/d, essentially flat over the fourth quarter after accounting for the sale. Operational issues at Bleo Holm, Claymore and Auk North were largely offset by the completion of planned turnarounds at Buchan, Monarb and Blane.
In the UK, a drilling rig has been secured, with drilling operations to commence in the second half of 2013. The Montrose Area Redevelopment project is underway, with major contracts now in place.
The company's TP-3 development well at Tweedsmuir was unsuccessful, resulting in a reserves write down and an impairment of $68 million after tax, representing Talisman's share.
In Norway, average daily production was 19,000 boe/d, up 6% over the previous quarter due to a successful Varg drilling campaign. In March, the company, on behalf of its joint venture partners, reached an agreement with SBM Offshore to terminate the existing Yme project, including scrapping the existing above-surface structure and terminating all existing contracts and arbitration. The agreement includes an upfront payment of $470 million ($282 million net) to Talisman and partners, which will be used to pay for decommissioning of the topside unit.
Kurdistan Region of Iraq
In Kurdistan, the company spudded the Kurdamir-3 appraisal well in February, and expects to reach target depth in the third quarter. The 3D seismic acquisition program over the Topkhana and Kurdamir blocks is progressing, and the company plans to drill the Topkhana-2 appraisal well later this year. Talisman is also reviewing options for field development so it can begin to generate cash flow from Kurdistan.
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