On Nov 4, Canadian energy explorer, Talisman Energy Inc. (TLM) reported third-quarter 2014 adjusted earnings of approximately 5 cents per share, which missed the Zacks Consensus Estimate by a penny. Lower volumes and realizations affected the result. Notably, the company stock has tanked over 10% since the earnings release.
However, the bottom line improved substantially from the year-ago quarter level of a loss of 4 cents. Lower expenses led to the improvement.
Total quarterly revenue of $1,136 million declined 8.7% from the third-quarter 2013 level of $1,244 million and also fell short of the Zacks Consensus Estimate of $1,367 million.
Volume Analysis
Total production for July–September was 353 thousand barrels of oil equivalent per day (MBOE/d), down about 5% from the prior-year level owing to higher planned turnaround activities.
Total liquids production improved marginally to 134,648 barrels per day (Bbl/d) from 134,198 Bbl/d in the year-ago quarter. Higher production from North America was marred by increased turnaround activity.
Talisman Energy’s natural gas volumes were down 8% year over year to 1,310 million cubic feet per day (MMcf/d), mainly on account of lower production from North America and Southeast Asia.
Realized Prices
During the reported quarter, Talisman Energy’s realized commodity prices decreased 2.1% from the year-ago quarter to $55.66 per barrel of oil equivalent (BOE).
Overall liquids realizations averaged $89.23 per barrel, down 10.3% from the prior-year level, while natural gas prices increased to $5.82 per Mcf from the year-ago quarter level of $5.47 per Mcf.
Cash Flow and Capital Expenditure
Cash flow totaled $507 million, down 11.5% year over year. Capital expenditure for the quarter totaled $755 million for Talisman Energy.
Balance Sheet
As of Sep 30, 2014, Talisman Energy had cash and cash equivalents of approximately $237 million and long-term debt (including current portion) of $4,695 million, with a debt-to-capitalization ratio of 34.2%.
Guidance
Talisman Energy lowered the 2014 capital guidance to about $3 billion from the earlier level of $3.2 billion.
The company announced that it is on track with its 2014 production guidance of 350–365 MBOE/d. Moreover, Talisman expects lower cash flow in the fourth quarter as a result of lower commodity prices.
Zacks Rank
Talisman Energy, an independent oil and gas exploration and production (E&P) firm, currently carries a Zacks Rank #5 (Strong Sell).
Stocks to Consider
One could consider better-ranked players from the energy sector like Murphy USA Inc. (MUSA), PBF Logistics LP (PBFX) and Alon USA Partners, LP (ALDW). All these stocks sport a Zacks Rank #1 (Strong Buy).
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