With the progress made on development projects, non-core asset sales and share buybacks in 2006, Talisman expects significant production per share growth in 2008 and 2009.
Gross sales were up 5% to $10 billion (including $668 million from discontinued operations) on higher volumes and oil prices.
Cash flow1 increased 2% to $4.7 billion ($4.35/share). The Company expects to generate approximately $5 billion in cash flow in 2007 2.
Net income was a record $2 billion versus $1.6 billion a year earlier. The 2006 results include $432 million of after tax gains on dispositions.
Earnings from continuing operations1 were $1.6 billion. This measure adjusts for one-time and non-operational factors.
The Company announced plans to sell approximately 57,000 boe/d of non-core assets to streamline operations and focus on higher return and higher growth projects. The proceeds from some of these sales have been directed toward repurchasing Talisman shares.
Over the 12-month period ending February 28, 2007, the Company had repurchased approximately 51 million shares at a cost of $958 million.
The Company increased its annual dividend by 32% to 15 cents per share.
The Company subdivided its shares on a three-for-one basis in order to increase trading liquidity.
Production increased by 3% to 485,000 boe/d, largely due to increased Southeast Asian oil volumes. Production per share increased by 4.4%. After asset sales, Talisman expects production in 2007 to average 485,000 boe/d 3, with production per share growth expected to be within its targeted range of 5 to 10%.
Year-end proved reserves were 1.67 billion boe (46% oil and liquids and 54% natural gas). The Company added 202 mmboe of proved reserves through drilling and revisions, replacing 116% of production. Talisman’s reserves life index is 15.2 years based on proved and probable reserves.
Year-end debt was $4.6 billion with a debt to trailing cash flow1 ratio of 0.96.
Exploration and development spending was $4.6 billion and is expected to be $4.8 billion in 2007. The Company spent $1.55 billion on exploration (including low risk drilling in Western Canada) and $3 billion on development activities.
The Company participated in 470 net oil and gas wells with a 97% success rate.
Talisman’s realized oil equivalent price was up 1% as international oil prices increased by 17% and North American natural gas prices fell 15%.
1 Cash flow and earnings from continuing operations are non-GAAP measures. See advisories on page 36.
2 Assumes production of 485,000 boe/d, US$65/bbl WTI oil price, US$7.50/mmbtu NYMEX gas price, US$/C$0.90 exchange rate.
3 +/– 5%.