Talisman Energy Inc

From Wikimarcellus

Talisman Energy Inc. (TSX:TLM) (NYSE:TLM), is an oil and gas exploration and production company headquartered in Calgary, Alberta. It has a leasehold position in the Marcellus shale fairway amounting to 218,000 acres and also holds a large swath of Saint Lawrence Lowlands acreage prospective for Utica shale. As of February, 2010 its Utica interest amounted to 756,000 net acres in Quebec Province.

Fortuna Energy Inc. had been a wholly-owned subsidiary of Talisman with large leaseholds in the states of New York and Pennsylvania. In January, 2010 Fortuna Energy Inc. was renamed Talisman Energy USA Inc.

An October, 2009 report indicated some of the 88 jobs at Fortuna's headquarters in Big Flats, NY were to be transferred to a new office being set up in Pittsburgh, PA by Talisman Energy. Talisman's new Pittsburgh office was to manage Talisman's interests in the Marcellus shale formation and be known as Talisman USA.

Utica shale play - St. Lawrence Lowlands, Quebec

Talisman has been active in the Utica shale play via its Gentilly well, located in Quebec, 62 miles south of Quebec City on the south side of the St. Lawrence River. Talisman owns a 75% interest and is well operator. Gentilly had been the first of four wells drilled under a farm-in agreement with Questerre Energy Corporation. In September, 2008 this well was reported as having flowed 800 Mcf/d before shut-in. It had been a recompleted Trenton-Black River well that was producing from the Utica shale. The Lorraine shale interval with this well was also being studied.

Talisman held options with Questerre (now exercised) to earn 75% of a large leasehold in the Province of Quebec through drilling. As of November, 2008 it had started to exercise its options to 1,200 net sections (400,000 acres) through drilling the La Visitation well as part of a four-well pilot program. In January, 2009, the company announced the completion of the St. David well drilled to 6545 feet, as third one in the series. The latter well had been in the process of undergoing log analysis. In late June, 2009, a fourth well, St. Edouard #1 had been fracture stimulated and tested for different intervals--the company planned to evaluate both the Utica and Lorraine shale formations. Its Trenton-Black River interval had already been tested. For three days, this well had flowed at an initial rate of 2.2 Mmcf/d with wellhead pressure of 2,000 psi on a 7/32-inch choke after acid stimulation. However, its flow rate had not been deemed adequate to justify a tie-in for the well. The well offsets another one called the Leclercville #1 that produced 900 Mcf/d from the Utica interval in testing.

A July, 2009 report indicated that Talisman and Questerre planned to drill two additional horizontal wells in the Lowlands to test the Utica shale before the end of the year. Update #1: A February, 2010 update mentioned that Talisman was going to continue its pilot program in Quebec and that the company expected to test four horizontal wells during 2010. It also had completed the earning phase of its farm-in agreement with Questerre. In late February, 2010, joint venture partner, Questerre Energy, announced successful completion of the St. Edouard 1A, a horizontal well that had achieved a commercial volume of production with an initial flow rate of 12 Mmcf/d that settled out to a rate during testing of 6 Mmcf/d. Update #2: A May, 2010 update clarified that the 30-day initial production on this well had been 5 Mmcf/d. The company had drilled 2 horizontal wells during the first quarter of 2010 that were to be tested during the second half of the year.

In July, 2010 the company updated that it expected to complete 5 horizontal Utica shale wells in Quebec during the year. Drilling was underway on the 5th well, and two wells were in the process of being completed. Talisman also mentioned that it was satisfied with test results from the St. Edouard well. Additional details about the Quebec pilot drilling program are available on the Questerre wiki page.

Trenton-Black River Wells In New York State

Map depicting Talisman's area of operations in south central NY State and in northeastern PA
Map courtesy of: Talisman Energy Inc.

Since its inception in 2002, Fortuna/Talisman Energy USA had acquired vast holdings of Trenton-Black River (TBR) drilling rights in the States of New York and Pennsylvania from several other energy companies. The company has dozens of successful TBR wells in New York State and is now the State's largest natural gas producer. An October, 2009 report numbered Fortuna's producing TBR wells at 75. Its wells are concentrated in Chemung, Schuyler, Steuben and Tioga counties in NY.

Marcellus shale drilling in Pennsylvania

Talisman also owns a Marcellus leasehold in Pennsylvania, where it leases 218,000 net acres in the Marcellus shale fairway. Its TBR and Marcellus leaseholds overlap. The company announced 2009 plans to drill 36 horizontal Marcellus wells. (See July, 2009 update below) Talisman's holdings in the play are centered on Bradford and Tioga counties in Pennsylvania.

In April, 2009 Talisman announced that it had drilled four horizontal Marcellus wells during the first quarter of the year. The company had fielded three drilling rigs to complete its 2009 drilling plans. The most recent of its four wells averaged 4.5 Mmcfe/d during its initial 30 days of production. The company reported that it had been experiencing greater cost efficiencies with each new well drilled.

According to Talisman's June 30, 2009 quarterly report the company had drilled 12 gross (12 net) Marcellus shale wells during the first half of 2009. These resulted in production greater than 30 Mmcf/d which had exceeded management's expectations.

In a July, 2009 update, the company indicated that it planned to maintain at least four rigs in the field for the balance of 2009 and was increasing the number of wells that it would drill for the year from 36 to 50. It also stated that the above-mentioned four horizontal wells were now averaging 5 Mmcf/d apiece. The company had experimented with up to 11 fracture stages in drilling these wells at a cost of up to $4 million each.

In a November, 2009 update, Talisman mentioned that it had increased its Marcellus shale leasehold by 90,000 acres during the year. Its most recent Marcellus wells averaged production of 4.5 Mmcf/d on an initial 30 day basis. The most recent 6 wells had averaged 5 Mmcf/d or better. At the time, the company's overall Marcellus production amounted to 50 Mmcf/d and was expected to grow to 70 Mmcf/d by year-end.

According to a third quarter, 2009 operational update issued in December the company planned to go from three rigs in the Marcellus play up to six by year-end 2009. This could increase to ten rigs by year-end 2010.

A January, 2010 update stated that the company planned to drill 170 new Marcellus wells during the year. That was up from 53 wells during 2009. The company exited 2009 with 65 Mmcf/d in Marcellus shale production.

In February, 2010 the company was reporting that 38 of the wells drilled in 2009 were operated and 15 were non-operated. It had fielded 6 rigs during 2009 and planned to increase this number to 10 by the end of 2010. Talisman intended to drill up to 170 wells during 2010 and produce 250-300 Mmcf/d. Update: Talisman updated in May, 2010 that first quarter production from Pennsylvania's Marcellus shale play had averaged 85 Mmcf/d. By the end of April, production had reached 150 mmcf/d. Talisman's production during the first quarter came from 49 producing wells. The company had brought 22 wells onstream (21 operated and 1 non-operated). Average initial production (IP) for wells brought onstream during the quarter had been 5 Mmcf/d (based on 30-day IP). 41 gross additional wells were drilled, but awaited completion (34 net). 35 gross wells (30.5 net) had been drilled during the first quarter--26 operated and 9 non-operated. Talisman had fielded 7 horizontal rigs for most of the quarter, with an eighth one added by the end.

Talisman updated again at the end of July, 2010 that its July production was in excess of 190 Mmcf/d and the company expected to exit the year with production of 250-300 Mmcf/d. It had drilled 76 wells net during the first half of 2010 and brought 61 net new wells onstream to production. The company commented that it had permits for all of the water that it needed and was currently recycling 100% of its flowback water.

An August, 2010 news account mentioned that Talisman had leased 5,700 acres in Tioga County's Tioga State Forest and 13 wells there were producing 55 Mmcf/d. That amounted to roughly $33,500 in royalties per day added to the state's fund.

Executive Contacts

• Talisman's President and Chief Executive Officer is John A. Manzoni.
• L. Scott Thomson is Executive Vice-President and CFO.
• Robert R. Rooney is Executive Vice President Legal and General Counsel.
• Richard Herbert is the company's Executive Vice-President for Exploration.
• Paul Smith is the Executive Vice President of No. American Operations.
• A. Paul Blakeley is Talisman's Executive Vice President-International Operations (East).
• Jim Fraser is Senior Vice President - No. American Shale Business.
• Nick Walker is a Senior Vice President.
• Philip D. Dolan is Vice President-Finance.
• Phoebe Buckland is a Talisman spokesperson.