North Sea oil producer Talisman posted an unexpected fourth-quarter loss after being hit by a downturn in oil and gas production from the region.
The net loss was $1.01 billion, compared with net income of $376million a year earlier, the Calgary-based company said today in a statement.
Excluding one-time items, the per-share loss of 11 cents missed the break-even point that was the average of 14 analysts’ estimates compiled by Bloomberg.
Talisman, targeted last year by activist investor Carl Icahn, saw output fall as it cuts spending and sells assets to reduce debt amid operational troubles in the North Sea.
Chief Executive Officer Hal Kvisle has said he plans to sell as much as $3 billion in assets by mid-2014.
Capital spending this year will be about $3.2billion – similar to 2013’s spend and down around a fifth from 2012 – the company said.
Output forecasts for the year were set at around 350,000 barrels to 365,000 barrels of oil equivalent a day, compared with 345,000 barrels a day last year.
Fourth-quarter production fell to 387,000 barrels of oil equivalent a day from 392,000 barrels a day a year earlier, according to the statement. Asset and goodwill impairments totaled $826 million after tax in the period.
The company said in November that unplanned maintenance in the North Sea would probably result in lower cash flows and may require the company to cut the value of the assets.
In December 2012, Talisman sold a 49 percent stake in its U.K. assets, including North Sea production, to China Petrochemical Corp.
Icahn, the second-largest shareholder in Talisman with a 7.3 percent stake, agreed in December not to conduct a proxy fight at the company’s next annual meeting in exchange for two board seats.
“During the fourth quarter, the company experienced more downtime and operational issues in the North Sea, with some of these issues over the past year potentially increasing future capital and abandonment costs going forward,” Jeff Martin, a Calgary-based analyst at Peters & Co. who rates Talisman the equivalent of a hold, wrote in a Jan. 24 note.
The stock is undervalued and investors should use “any weakness on 2014 guidance as a buying opportunity,” Phil Skolnick, an analyst at Canaccord Genuity Corp. in New York, wrote in a note last month. “The market is giving no credit to any potential fixes associated with Carl Icahn.”
Talisman reported results before the start of regular trading on North American markets. The stock, which has dropped 5.4 percent this year, was unchanged at C$11.68 in Toronto yesterday. The shares have seven buy and 15 hold recommendations from analysts.
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