By Scott Haggett
CALGARY, Alberta (Reuters) - Talisman Energy Inc
The company, Canada's No. 3 independent oil explorer, said its net income fell to C$30 million ($27.9 million), or 3 Canadian cents a share, down from C$1.4 billion, or C$1.40 a share, a year ago.
However earnings from continuing operations, which exclude most one-time gains and charges, fell 76 percent to C$155 million, or 15 Canadian cents a share, from C$654 million, or 64 Canadian cents a share, in the third quarter of 2008. That surpassed the average analyst estimate for 10 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Talisman has shifted its operations to focus in part on unconventional natural gas production, where new technology has allowed companies to profitably tap massive reserves trapped in shale formations that were once too expensive to exploit.
Since the beginning of the year, Talisman has bolstered its land holdings in two unconventional gas discoveries where the company thinks it can produce gas for about C$4 per thousand cubic feet, making it profitable at current prices.
It said it added 90,000 acres of properties in Pennsylvania's Marcellus shale gas region, North America's largest natural gas reserve, with an estimated 1,500 trillion cubic feet of gas in place.
Talisman's production from the region has risen ten-fold since the start of the year to more than 50 million cubic feet a day.
It also boosted its land holdings in the Montney region of British Columbia, adding 80,000 acres of exploration lands and doubling its holdings in the heart of the play to 166,000 acres.
"They've locked up huge land positions in both those plays," said Phil Skolnick, an analyst with Genuity Capital Markets. "They have thousands of drilling locations and the economics look really good."
Cash flow, a glimpse into an oil company's ability to fund drilling and major projects, was C$838 million, or 83 Canadian cents a share, down 50 percent from C$1.68 billion, or C$1.65 a share.
During the quarter, benchmark oil prices averaged $68.24 a barrel, down 42 percent from a year earlier. Natural gas averaged $3.44 per million British thermal units on the New York Mercantile Exchange, down 62 percent.
Overall production averaged 401,000 barrels of oil equivalent a day, down 9 percent from the third-quarter of 2008, mostly as Talisman temporarily closed some of its North Sea operation for maintenance in the quarter.
Talisman shares fell 30 Canadian cents to C$18.03 midmorning on the Toronto Stock Exchange.
($1=$1.08 Canadian)
(Additional reporting by Ajay Kamalakaran; editing by Rob Wilson)
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