UPDATE 2-Talisman profit jumps as shale gas focus pays off

* Q3 shr C$0.12 vs C$0.03 yr-ago

* Q3 shr C$0.02 from cont ops vs C$0.09

* Sees 2010 production of 415,000 boe/d

* Shares rise 1.9 pct
(Recasts, add details and comment)

By Scott Haggett

CALGARY, Alberta, Nov 2 (BestGrowthStock) – Talisman Energy Inc
(TLM.TO: ), Canada’s No. 4 independent oil producer, said on
Tuesday its third-quarter profit (Read more your timing to make a profit.) rose fourfold on higher
natural gas prices and rising output from its shale gas
prospects in North America.

Talisman said a lengthy restructuring to focus its North
American operations on prolific shale gas deposits is nearly
complete and production is set to climb as it wraps up the sale
of properties that don’t fit into its new operations.

Indeed, on Tuesday the company boosted its forecast for
2010 production to 415,000 barrels of oil equivalent per day
from 400,000, backed by a 24 percent rise in natural gas
production from its shale holdings.

“They’re moving in the the right direction … and they’ve
made themselves an interesting story,” said Phil Skolnick, an
analyst with Canaccord Genuity.

Though it plans a further C$2 billion in asset sales this
year, Talisman said the majority of its restructuring is
complete and it expects its production growth to continue.

Its rising forecast is backed by a big jump in output from
its holdings in Pennsylvania’s Marcellus shale gas region.

Output from Marcellus averaged 222 million cubic feet per
day in the quarter, up from 38 million in the third quarter of
2009.

“Shale now accounts for 36 percent of our North American
natural gas holdings, up from 6 percent a year ago,” John
Manzoni, Talisman’s chief executive, said in a statement.

Benchmark gas prices rose 23 percent in the quarter,
averaging $4.23 per million British thermal units on the New
York Mercantile Exchange. However Talisman said its average
price increased just 13 percent as the Canadian dollar
strengthened.

Talisman also said it was considering bringing in a partner
to help develop its shale gas holdings in the Montney region of
northeastern British Columbia. The strategy has been used by
other companies, including Encana Corp (ECA.TO: ), which teamed
up with Chinese and Korean companies to speed up drilling on
its northeastern British Columbia holdings.

PROFIT CLIMBS

Talisman reported net income of C$121 million ($119.6
million), or 12 Canadian cents per share, up from C$30 million,
or 3 Canadian cents, in the year-prior quarter.

Excluding one-time items, the company earned C$22 million,
or 2 Canadian cents a share from continuing operations, down
from C$95 million, or 9 Canadian cents a share, in the
year-earlier quarter. Talisman attributed the shortfall to
changes in the value of foreign currency (Read more about trading foreign currency. holdings, which cost
it C$70 million in the quarter.

Analysts, on average, had forecast a profit of 12 Canadian
cents a share, according to Thomson Reuters I/B/E/S.

Cash flow, an indicator of the company’s ability to pay for
new projects and acquisitions, fell to C$727 million, or 71
Canadian cents per share, from C$838 million, or 83 Canadian
cents a share, a year ago.

Production at Talisman, which also operates in the North
Sea and Southeast Asia, averaged 404,000 barrels of oil
equivalent a day, up from 401,000 in the year-earlier quarter.

Talisman shares rose 34 Canadian cents to C$18.78
midmorning on the Toronto Stock Exchange.

($1=$1.01 Canadian)
(Additional reporting by Sakthi Prasad in Bangalore; editing
by Rob Wilson)

UPDATE 2-Talisman profit jumps as shale gas focus pays off