Tickers in this Article: TLM, FSY, SSL, LPR
Talisman Energy (NYSE:TLM) is pursuing various conventional and unconventional plays in Canada as the company seeks to grow its production from oil and liquids plays over the next five years.

TUTORIAL: Introduction To Fundamental Analysis

Unconventional Plays
Talisman Energy is involved in a joint venture with Sasol (NYSE:SSL) to develop the Montney Shale formation at the Farrell Creek project, and plans to drill 25 net wells here in 2011. The company will spend only $100 million in capital here in 2011 because Sasol is carrying most of the capital spending during the year.

During the first quarter of 2011, Talisman Energy drilled four net wells at Farrell Creek and reported net production of 26 million cubic feet of natural gas per day. Sasol also bought into Talisman Energy's other Montney assets and will jointly develop the Cypress A properties with the company.

Talisman Energy has a 756,000 net acre leasehold in Quebec and is at an early stage of development of the Utica Shale here. The provincial government is currently conducting a strategic environmental assessment and most development is on hold here.

Other companies that hold acreage prospective for the Utica Shale in Quebec include Forest Oil (NYSE:FST), which has several hundreds of thousands of acres under lease here. The company is planning on spinning off all of its Canadian assets into a separate company through an initial public offering later in 2011. The new company will be called Lone Pine Resources (NYSE:LPR)

Conventional Plays
Talisman Energy has an extensive portfolio of conventional oil and gas assets in Canada and is working on these areas in 2011. During the first quarter of 2011, the company drilled 32 net wells on its acreage and reported production of 441 million cubic feet of natural gas per day.

Talisman Energy has nearly one million acres under lease with exposure to various conventional plays and estimates that the company has approximately 2,500 drilling locations.

In Western Canada, Talisman Energy is working on developing the Cardium on its leasehold. This is an oil and wet gas play where the company has approximately 950 drilling locations. Talisman Energy is also active at the Wild River project and has liquids rich opportunities here as well. The company has 90,000 net acres and 1,000 drilling locations here.

Talisman Energy's liquids production from its conventional properties averaged approximately 21% from 2008 through 2010, and the company hopes to increase this percentage to an average of 30% from 2012 to 2014.

The Bottom Line
Talisman Energy has set a goal of increasing the production of oil and other liquid hydrocarbons from its large inventory of properties in Canada. We'll keep an eye on this stock over the course of its five-year expansion plan and see how this aggressive attempt at growth materializes. (For many reasons, high dividend yields can be dangerous. To find out how, read Dividends To Avoid.)

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