Oil and gas independent Talisman Energy said today its North Sea production fell short of expectations last year.
Despite a 9% increase in production at the firm overall, its North Sea business, cutting across Norway and the UK, saw production slump 19% from 131,000 barrels of oil equivalent per day (boepd) in 2010 to 106,000 boepd in 2011.
Meanwhile, North Sea natural gas production fell nearly half from its 2010 levels.
The firm was also hit by the UK Government’s tax grab on North Sea oil and gas producers, said president and chief executive John Manzoni.
He said: “2011 saw its share of successes as well as challenges for the company. North American natural gas prices fell by a third, and we saw a significant tax increase in the UK. In addition, our own delivery, particularly in the North Sea, fell short of expectations.”
However, Mr Manzoni added: “There were also a large number of positives during the year. Oil prices remained high and helped drive annual cash flow up by 16%.
“The company grew underlying production by 9% with record shale volumes, two new projects in south-east Asia and production from Colombia.”
Revenues at the Canadian-listed firm rose from £4.3billion in 2010 to £5.1billion in 2011, with pre-tax profits up from £1.2billion in 2010 to £1.5billion in 2011.
However, net profits were down 18%, Talisman said, due to higher depletion, depreciation and amortisation, lower gains on asset sales and higher operating costs and taxes.
Of the revenues, just over £2.5billion was generated from the North Sea with £1billion pre-tax profits.
Talisman said the North Sea accounts for 21% of its proved reserves, with North America holding 48% and south-east Asia holding 26%.
Talisman repeated its decision to “reduce its exposure in the North Sea”, previously described as a plan to dilute high working interests in some of the firm’s bigger proposed field developments.
Earlier this year it said 2012 capital spending in the North Sea would be maintained at about £700million in 2012, with about £517million earmarked for the UK.
Mr Manzoni said increased investment would be going into the North American Eagle Ford and Duvernay shale plays and Columbia.
The firm’s North Sea production problems were not specifically explained. However, Talisman said it extended a planned turnaround on its Claymore platform in the third quarter.
Its Tartan platform was shut down throughout the fourth quarter for safety upgrades and is due back on stream in the first quarter of this year.
Off Norway, the firm’s Rev and Yme platforms had also been undergoing turnaround and works.
Last year also saw exploration and development spending of $1.2billion on developments at South Auk and Auk North in the UK, Yme in Norway and a replacement compression project on Claymore.
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