In Malaysia, production averaged 35,000 boe/d, an increase of 9% over the previous period and 31% higher than the first quarter of 2009 when PM-3 CAA was shutdown to commission the Northern Fields oil development.
During the quarter, drilling continued on the Southern Fields improved oil recovery program. Seven of 11 planned wells have been drilled to date with the two most recent wells producing 2,500 bbls/d. Three development wells were also drilled and completed in the Northern Fields, with two wells on production.
In Indonesia, production averaged 76,200 boe/d, an increase of 21% over a year ago and 8% higher than the previous quarter. Sales from Corridor were up 16% with increased contract takes. Talisman’s share of production from the Tangguh LNG facility averaged approximately 3,000 boe/d, with Trains 1 and 2 running at around 75% capacity.
Talisman acquired a 25% interest in the Jambi Merang Joint Operating Body (JOB) property in January. Plans are to drill three new wells and complete five existing wells by year end, with first production expected in mid-2011.
In Vietnam, production averaged 2,800 boe/d. A three-well infill program has been sanctioned for Song Doc, with drilling expected to start in the third quarter. On Block 15-2/01, the company is reviewing development options for the HST field and the HSD discovery.
In Australia, production averaged 4,200 boe/d. Regulatory approval of the Kitan field development was received in late April and first production is expected in the second half of 2011.
International Exploration
International exploration spending during the first quarter was $123 million. The capital program was largely directed at exploration and appraisal drilling in the North Sea, Latin America, Southeast Asia and the Kurdistan region of northern Iraq. A number of seismic acquisitions were also ongoing during the quarter.
In Colombia, the company drilled a well in the El Eden Block of the Colombian Foreland Trend. The company also completed a farm-down of its interests in Block CPO-9 during the quarter.
In Peru, the testing of the Lower Vivian reservoir in the Situche Central 3X well in Block 64 was completed during the quarter. The well flowed at 5,200 bbls of oil per day of 37 degree API crude. The rig will now move to Block 101 to drill the Runtasapa exploration well.
In Malaysia, the Sliver-2 appraisal well was drilled during the quarter, confirming the extent of the pool. A one-year license extension has been granted and commercialization options are being evaluated.
In Norway, the company has recently spudded an appraisal to the 2009 Grevling discovery. In the UK, the company is drilling the TP2 well in the Tweedsmuir area.
In the Kurdistan region of northern Iraq, the Kurdamir-1 well, where significant amounts of gas condensate have been discovered, encountered high-formation pressures in a deeper section of the well. A sidetrack has commenced to evaluate oil and gas shows in the deeper Tertiary and Cretaceous section.
In February, Talisman entered into a farm-in agreement to acquire a 60% interest in two Baltic shale gas concessions in Poland. Subsequent to quarter end, Talisman was awarded a third concession that was pending governmental approval. This is Talisman’s first international shale play and allows the company to leverage its North American shale gas expertise in a highly prospective area. In 2010, Talisman expects to complete a seismic acquisition to prepare for a drilling program of up to six wells in 2011 and 2012.
Talisman Energy Inc. is a global, diversified, upstream oil and gas company, headquartered in Canada. Talisman’s three main operating areas are North America, the North Sea and Southeast Asia. The company also has a portfolio of international exploration opportunities. Talisman is committed to conducting business safely, in a socially and environmentally responsible manner, and is included in the Dow Jones Sustainability (North America) Index. Talisman is listed on the Toronto and New York Stock Exchanges under the symbol TLM. Please visit our website at www.talisman-energy.com.
Forward-Looking Information
This news release contains information that constitutes “forward-looking information” or “forward-looking statements” (collectively “forward-looking information”) within the meaning of applicable securities legislation. This forward-looking information includes, among others, statements regarding:
- business strategy, plans and priorities;
- expected onstream dates of North Sea developments;
- expected timing of closing of non-core asset sales;
- expected exit volumes in the Marcellus Shale play;
- planned drilling in the Eagle Ford Shale play;
- expected first oil and completion of drilling operations in the Yme Field and schedule regarding the Yme platform;
- expected first oil from Auk North, Auk South and Burghley;
- planned drilling and expected first production from Jambi Merang;
- planned drilling in the Song Doc field; and
- expected completion of seismic acquisition; and
- planned drilling in Poland.
The following material assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking information contained in this news release. Talisman has set its 2010 capital expenditure plans assuming: (1) Talisman’s production in 2010 will be approximately 400,000 boe/d, assuming that most of the North American asset sales close by mid-year; (2) a US$60/bbl WTI oil price, and (3) a US$3.50/mmbtu NYMEX natural gas price. Information regarding business plans generally assumes that the extraction of crude oil, natural gas and natural gas liquids remains economic.
Undue reliance should not be placed on forward-looking information. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Talisman and described in the forward-looking information contained in this news release. The material risk factors include, but are not limited to:
- the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas, market demand and unpredictable facilities outages;
- risks and uncertainties involving geology of oil and gas deposits;
- uncertainty related to securing sufficient egress and markets to meet shale gas production;
- the uncertainty of reserves and resources estimates, reserves life and underlying reservoir risk;
- the uncertainty of estimates and projections relating to production, costs and expenses;
- the impact of the economy on the ability of the counterparties to the company’s commodity price derivative contracts to meet their obligations under the contracts;
- potential delays or changes in plans with respect to exploration or development projects or capital expenditures;
- fluctuations in oil and gas prices, foreign currency exchange rates and interest rates;
- the outcome and effects of any future acquisitions and dispositions;
- health, safety and environmental risks;
- uncertainties as to the availability and cost of financing and changes in capital markets;
- risks in conducting foreign operations (for example, political and fiscal instability or the possibility of civil unrest or military action);
- changes in general economic and business conditions;
- the possibility that government policies or laws may change or governmental approvals may be delayed or withheld; and
- results of the company’s risk mitigation strategies, including insurance and any hedging activities.
The foregoing list of risk factors is not exhaustive. Additional information on these and other factors, which could affect the company’s operations or financial results are included in the company’s most recent Annual Information Form. In addition, information is available in the company’s other reports on file with Canadian securities regulatory authorities and the United States Securities and Exchange Commission (SEC). Forward-looking information is based on the estimates and opinions of the company’s management at the time the information is presented. The company assumes no obligation to update forward-looking information should circumstances or management’s estimates or opinions change, except as required by law.
The completion of any contemplated disposition is contingent on various factors including favorable market conditions, the ability of the company to negotiate acceptable terms of sale and receipt of any required approvals for such disposition.
Oil and Gas Information
Throughout this news release, Talisman makes reference to production volumes. Such production volumes are stated on a gross basis, which means they are stated prior to the deduction of royalties and similar payments. In the US, net production volumes are reported after the deduction of these amounts.
Barrels of oil equivalent (boe) throughout this news release is calculated at a conversion rate of six thousand cubic feet (mcf) of natural gas for one barrel of oil and is based on an energy equivalence conversion method. Boes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl is based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Talisman also discloses its company netbacks in this news release. Netbacks per boe are calculated by deducting from sales price associated royalties, operating and transportation costs.
An aerial view of VTTI’s tank terminal assets 
