Talisman Energy said yesterday it planned to increase capital spending this year by more than 10% on 2009 to £3.15billion.
Canada’s third largest oil and gas operator said this reflected increases in shale drilling in North America and higher development spending in the North Sea and south-east Asia.
Development spending of £485million is planned in the UK North Sea, including on the Auk North, Auk South and Burghley development projects, where first production is scheduled for 2011, 2012 and late 2010 respectively.
Aberdeen-based Talisman UK vice-president John Forrest said: “We are spending significantly more in the UK North Sea this year than we did in 2009.
“This investment represents a big vote of confidence for our business as we look to build a long-term, sustainable future for Talisman in the UK.”
Last year, Talisman expected to have capital spending of £418million in the UK.
Talisman chief executive John Manzoni said: “The plan for the North Sea is to establish the region as a stable, cash-generating business through the medium-term. Almost half of the UK development spending in 2010 is slated for the Auk North and Auk South field developments.
“There are also significant expenditures planned for Claymore, Blake and Burghley. In addition, we are evaluating development options for the Godwin, Cayley and Shaw discoveries.
“In Norway, the majority of the development budget is directed at bringing the Yme field on stream, with first oil expected in the second half of 2010.”
Mr Manzoni said Talisman was also examining for sale non-core parts of its conventional business in North America, adding that at the same time, it would remain vigilant for strategic acquisition opportunities.
He said: “Our main priority in 2010 will be continuing the portfolio transition, in particular ramping up development of the Marcellus and Montney shale plays in Pennsylvania.
“The second priority will be to continue the focus on returns and profitability.
“We expect returns to increase as we successfully cycle capital into higher-value investments, which should also lead to continued improvement in our finding and development costs.
“Production in 2010 is expected to be broadly the same as 2009 at around 425,000 barrels of oil equivalent per day. Gains in shale volume and from south-east Asia offset declines in North American conventional production and the UK.
“However, actual 2010 production volume will depend on the outcome of our divestment programme in North America.”
Talisman has budgeted £425million for exploration drilling this year, but plans to drill only one exploration well in the UK and two in Norway.