Profits up but Talisman trims production estimates

TALISMAN Energy reported increased profits but revised down its annual production estimate yesterday as it revealed the UK North Sea tax rise would cost it £25million.

The Canadian firm said revenue rose to £482million in the second quarter, from £426million a year earlier, while earnings increased by 14% to £102million.

Chief executive John Manzoni revised down production for the year because of a combination of factors. He said a new estimate of 430,000-440,000 barrels of oil equivalent per day was “below our minimum expectation of 5% absolute growth for the year”.

Production slumped 9% at Talisman’s North Sea operations due to natural declines and the timing of shutdowns on its Rev, Varg and Brage fields in Norway and an annual turnaround on Tweeds-muir in the UK, offset partially by increased output at Auk North, which came on stream in the fourth quarter of 2010.

Mr Manzoni said the output decline would continue into the third quarter amid planned maintenance but volume would return in the fourth quarter.

Talisman said it would incur an additional £25million in tax as a result of the UK Government’s March tax grab on oil and gas operators. It also said a proposed restriction on the tax relief for decommissioning costs, which may come in force in 2012, could result in a deferred tax expense estimated at £134million.

The firm invested £187million on projects, including Auk South, Auk North and Claymore, in the UK during the second quarter.