By YEHIURA HRIEHWAZI
THERE is more good news from the petroleum sector: Talisman Energy Inc is expected to go into production soon in Papua New Guinea.
The company announced yesterday it will start development drilling in one of its fields and also drill four on-shore exploration wells in the Papuan basin.
Development drilling is done to recover oil, gas or condensate that has been discovered and ascertained through exploration and appraisal wells.
“The company expects to start development drilling in PNG, with early condensate recovery scheme in one of the blocks acquired last year,” Talisman president and chief executive John A Manzoni said in a statement released to the stock markets yesterday.
The PNG activities form part of Talisman’s global capital expenditure plan of C$5.2 billion (K13.5 billion) for this year announced by Mr Manzoni.
Apart from PNG, Talisman also step up its exploration and production work in Indonesia, Malaysia, Vietnam, Australia, Europe and North America and sell off some non-core assets to assist with financing of its programmes. It is already cashed up with C$4 billion (K10.4 billion).
He said the company’s main priority for this year is to ramp up its shale plays.
“We will also be examining for sale additional non-core conventional assets in North America and continue to enhance our international exploration portfolio and capabilities as we build on last year’s success.
“The second priority will be to continue the focus on returns and profitability.
He said they expect the returns to increase as they successfully cycle capital into higher value investments, which should also lead to continued improvement in our finding and development costs.
“We have put processes in place to manage our capital programmes more efficiently … we are reviewing costs across the organisation, and implementing performance management tools throughout the business.”
Mr Manzoni said they will continue to build their organisational capability, adding the company’s executive team was strengthened last year with the addition of Paul Smith, Richard Herbert and Nick Walker at the executive level, and significant new talent across the organisation, including new country managers for Malaysia and PNG.
He also said the company will continue to upgrade its capabilities and processes, and develop its talent across the organisation this year.
“We will maintain balance sheet strength and flexibility.
The C$4.9 billion (K5.81 billion) in cash spending will be funded from operating cash flow, non-core asset sales and balance sheet strength.
He said they have designed the programme to be robust at US$60/bbl oil prices and US$3.50/mmbtu natural gas prices, with considerable flexibility to adjust the capital programme up or down in light of conditions throughout the year.
“We will also remain vigilant for strategic acquisition opportunities,” he said.