Talisman Energy - North Sea Review

By Eric Fox | June 06, 2011 AAA

Talisman Energy (NYSE:TLM) is planning to spend billions on the development of various properties in the North Sea in 2011 and beyond as the company looks to keep production from this region stable through 2020.

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North Sea
Talisman Energy has allocated $1.2 billion out of its total cash capital budget of $4 billion on exploration and development of the North Sea in 2011. Two-thirds of this spending will be directed towards the United Kingdom with the balance in Norway. The company will keep this level of capital spending in the North Sea stable through 2015.

Talisman Energy has a goal of keeping production from its North Sea properties between 110,000 and 140,000 barrels of oil equivalent (BOE) per day through 2020. In 2011, the company expects production from the North Sea to range between 130,000 and 135,000 BOE per day.

United Kingdom
One major area for Talisman Energy in the United Kingdom portion of the North Sea is the Auk North project, which started up production ahead of schedule in late 2010. The company estimates that production from this project will peak in 2011 and 2012 at approximately 14,000 BOE per day, with proven and probable reserves of 23 million BOE.

Talisman Energy is working on the Auk South development and expects first oil from here in 2013. The company estimates that the Auk South project will yield proven and probable reserves of 36 million BOE.

Talisman Energy is also planning on redevelopment at Claymore and will conduct infill drilling here with production expected in 2011. Eni (NYSE:E) has a 20% ownership of the Claymore complex.

Other projects scheduled for development over the next few years include the Cayley, Godwin and Shaw discoveries from the MonArb Hub, and the Flyndre and Cawdor discoveries from the Fulmar Hub.

Norway
In Norwegian waters, Talisman Energy is nearly finished with the Yme redevelopment project, with first production expected in late 2011. The company estimates that production from Yme will peak at approximately 30,000 BOE per day with proven and probable reserves of 44 million BOE.

Other Players
One large operator in the North Sea is Statoil ASA (NYSE:STO), which recently reported a discovery at the Krafla prospect. The company is also developing the Visund South project, which is expected to come online in 2012.

Not all operators have been successful in the North Sea. In April 2011, Nexen (NYSE:NXY) reported an unsuccessful wildcat well at the Ronaldo project. The well was testing various lower Jurassic reservoirs in the area.

The Bottom Line
Talisman Energy will allocate billions during the decade to try to keep production from the North Sea in a stable range through 2020, as the company looks to get growth from other areas of its portfolio. (For related reading, also take a look at our Oil And Gas Industry Primer.)


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