Talisman Energy Earnings Beat on Higher Volume, Prices - Analyst Blog

On May 7, Canadian energy explorer, Talisman Energy Inc. TLM, reported better-than-expected first-quarter 2014 results. Following the earnings release, the stock had gained nearly 8% on the day to settle at $11.02. 

 

The company reported earnings per share from continuing operations of approximately 8 cents, which came ahead of the Zacks Consensus Estimate of earnings of 2 cents per share. The bottom line also improved significantly from the year-ago quarter loss of 6 cents. Higher volumes and increased natural gas realizations led to the beat. 

 

Quarterly total revenue of $1,341.0 million rose 19.4% from $1,123.0 million in the first-quarter of 2013 and was higher than the Zacks Consensus Estimate of $1,239.0 million.

 

Volume Analysis

 

Total production for the Jan–Mar period was 384 thousand barrels of oil equivalent per day (MBOE/d) was up 3.2% from the prior-year level. A substantial growth in North American liquid volumes led to the improvement. 

 

Total liquids production was up 10.0% year over year to 142,000 barrels per day (Bbl/d) due to higher output from the Eagle Ford and Greater Edson regions. 

 

Talisman Energy's natural gas volumes were, however, down by a marginal 0.6% year over year to 1,452 million cubic feet per day (MMcf/d), mainly on account of lower production from North America and Southeast Asia. 

 

Realized Prices

 

During the reported quarter, Talisman Energy's realized commodity prices increased 1.6% from the year-ago quarter to $59.68 per barrel of oil equivalent BOE. 

 

Overall, natural gas prices increased 8.4% year over year to $6.43 per Mcf. However, liquids realizations averaged $95.67 per barrel, down 6.6% from the prior-year level. 

 

Cash Flow and Capital Expenditure

 

Cash flow from continuing operations totaled $616.0 million, up 19.1% year over year. Capital expenditure for the quarter totaled $768.0 million for Talisman Energy. 

 

Balance Sheet

 

As of Mar 31, 2014, Talisman Energy had cash and cash equivalents of approximately $532.0 million and long-term debt of $4,365.0 million (including current portion), with a debt-to-capitalization ratio of 32.7%. 

 

Zacks Rank & Other Stocks to Consider

 

Talisman Energy, an independent oil and gas exploration and production (E&P) firm,  currently carries a Zacks Rank #2 (Buy), which implies that it is expected to outperform the broader U.S. equity market over the next one to three months.

 

Meanwhile, one can consider other players from the oil and gas E&P sector like Canadian Natural Resources Limited CNQ, Bellatrix Exploration Ltd. BXE and Enerplus Corporation ERF. All these stocks hold a Zacks Rank #2 (Buy).