CALGARY—Talisman Energy Inc. said Wednesday it has no intention of ditching its potentially “giant” oil discovery in the Iraqi region of Kurdistan as it pares other high-risk exploration projects from its portfolio.
Some observers have pressed Talisman to shed Kurdistan, but CEO Hal Kvisle said the company will take its time to explore its options, one of which could be bringing on new partners to help develop the resource.
“This is a tremendously exciting discovery and I’m really looking forward to the results of the two wells that we’ve got planned for the rest of this year,” said Kvisle.
Talisman and Calgary-based junior WesternZagros Resources Ltd. each own 40% of the Kurdamir block, with the Kurdistan Regional Government holding the rest.
In November, Talisman announced it had found a “significant accumulation of light oil” in its Kurdamir-2 well and that more tests were planned.
Talisman also holds 60% in the adjacent Topkhana block. The KRG owns the other 40%.
There could be anywhere between a few hundred million and several billion barrels of crude recoverable.
“The range is really that wide,” said Kvisle. “Until we do more drilling and get a better sense for what exactly is in the rocks on the different parts of these big structures, we really don’t know.”
Talisman’s experience in dealing with regulators in the semi-autonomous region have been good, but operating there does have its challenges, Kvisle said.
“The terrain that we work in is rugged and the regions are remote and if you suddenly decide you need a particular piece of equipment, it’s usually not available the way it would be in Alberta.”
Moving and setting up a drilling rig in Alberta takes a few days, whereas in Kurdistan it might take weeks. Figuring out the best way to get oil out of the country via pipeline is also a challenge.
In addition to safety concerns inherent to the oil and gas business, there are additional risks in Kurdistan “which involve guns and things like that,” said Kvisle.
“We have to be very careful,” he said. “We’ve got people running that operation that understand this kind of stuff really well and I think we’re able to run a safe operation, notwithstanding the part of the world that we’re in.”
While global exploration spending has traditionally made up 20% of Talisman’s capital spending, it’s at just over 10% now.
The company is pulling out of Poland and Peru and is reducing its exposure to the UK North Sea. Its position in Colombia is a “good keeper,” Kvisle said, and offshore Norway still has a lot of value despite major headaches getting its Yme project there on stream.
Active sales processes are underway to whittle down Talisman’s North American unconventional natural gas business, but there are no details yet on where those assets are or who the buyer might be.
Earlier Wednesday, Talisman said it recorded net income of US$367 million, or 37 cents per share, during the last three months of 2012, the first full quarter under Kvisle’s leadership.
That’s a reversal of the $117 million, or 11 cents per share, it lost in the same quarter of 2011.
The improvement was mainly due to $862 million in gains from asset sales. During the quarter, Talisman completed a $1.5-billion joint-venture with Sinopec that gives the Chinese company a 49% stake in its North Sea operations.
©The Canadian Press