CALGARY (CP) -- Talisman Energy [TSX:TLM; NYSE:TLM] doubled its second-quarter profits to a record C$686 million despite operational problems and said Thursday that it plans more than C$1 billion in further asset sales and will exit some non-core countries to streamline its business.
Calgary-based Talisman said net income for the quarter was 62 cents a share compared with C$340 million or 31 cents per share a year ago. Cash flow jumped 15% to C$1.14 billion.
Chief executive Jim Buckee said earnings were buoyed by a 6% production growth, along with a gain on asset sales and lower federal and provincial taxes.
Still, Talisman said failures in four different compressors at various operations around the globe would hurt annual production. As a result, the company lowered its guidance slightly to about 500,000 barrels of oil equivalent per day, down from a previous forecast of about 530,000 barrels.
''I have to say that operationally, the quarter was very disappointing,'' Buckee told analysts.
Compressor failures in Algeria, the North Sea and Canada collectively shut in more than 20,000 barrels of oil equivalent per day production during the quarter.
''The point is, these are not old compressors - they are all relatively new,'' he said.
The company said that it has expedited repairs and expects to resume production growth in the second half of the year.
Other issues that conspired to lower the production forecast included asset sales over the past several months as well as ''reservoir issues,'' particularly at Talisman's operations in the Norwegian North Sea.
While Talisman has already sold more than C$800 million worth of assets in Canada and the North Sea this year, Buckee said Thursday that it now plans to sell more non-core assets from across the company's diverse portfolio.
''Given the appetite in the marketplace, I believe this is an opportune time to monetize some assets which may not be getting full credit in our share price,'' he told analysts.
''And at the same time, allowing us to streamline, focus and simplify our operations. It also allows us to deploy our people in areas where we can add the most value.''
Along with further properties in Canada and the North Sea, Talisman plans to exit several non-identified countries ''where we do not see comparative strategic value.''
Like it did in the earlier asset sales, Talisman said it would use the proceeds to buy back its own shares.
Talisman is also viewed as the most likely buyer of Houston-based Anadarko Petroleum's [NYSE:APC] Canadian assets, which were put on the block late last month and are expected to fetch upwards of C$5 billion.
But while admitting he was interested, Buckee said Thursday he would not overpay for the portfolio, which includes numerous complimentary assets in northwestern Alberta and northeastern B.C.
''I have to say it's a very hot market - we're certainly not prepared to overpay, especially when the alternative is a buy-back of our own cheap stock,'' he said.
''We have no imperative to buy this,'' he told analysts. ''We're value-conscious, we remain disciplined and it's hard to see us selling and buying at the same time.''
Earlier this week, another major Canadian natural gas producer, EnCana Corp. [TSX:ECA; NYSE:ECA] said it was not particularly interested in bidding for the Anadarko properties.
Talisman also told investors Thursday that its major growth projects continue to proceed as planned.
The largest of which, Tweedsmuir in the North Sea, is expected to be on-stream during the first quarter of next year, and should produce more than 50,000 barrels per day net to Talisman.
In Canada, Talisman finished its Lynx gas pipeline in June and continues to grow its midstream operations with the Palliser pipeline that will be operational in September.
In Indonesia, natural gas production is expected to continue to expand with the expansion of the Corridor gas plant at Suban and the new pipeline to West Java.
On the Toronto stock market Thursday, Talisman shares closed down 38 cents or nearly 2% at C$18.89.
(c) The Canadian Press 2006
