Talisman Learned Lessons From Sudan, Company Pledges Better Record in Peru
Talisman Energy's involvement in Peru won't turn into another Sudan, company officials said Wednesday, after the company recorded lower first-quarter profits.
Following a protest by leaders of indigenous communities in the Peruvian Amazon, Talisman CEO John Manzoni vowed that Talisman would not perform oil and gas exploration without the consent of the people living in the area.
"I think the lessons (of Sudan) have been learned deeply inside the company," Manzoni said following the company's annual general meeting.
"Call it the school of hard knocks, but we've learned."
Talisman entered Sudan in 1998 but was forced to sell its assets there in 2003 following intense pressure from non-governmental organizations and a lawsuit filed by the Presbyterian Church of Sudan in a U.S. court.
Since then the company has implemented strict corporate social responsibility codes and earlier this week was recognized by watchdog group Transparency International for its reporting efforts.
In Peru, Talisman holds drilling rights on two concessions formerly owned by Occidental Petroleum.
Together the blocks cover almost a million hectares of tropical rainforest in the Pastanza and Morona River basins inhabited by the Achuar people.
The Peruvian delegation, led by tribal elder Manuel Tampet Najarip, sought -- and received -- a letter of assurance from Manzoni that the company would not conduct exploration activity without their approval.
Najarip told reporters he was well-received by company officials and said he intends to hold the company to its word.
"We want to clearly say to them, as we have done in the past and as we will do in the future, the Achuar people won't permit the arrival of any petroleum company because we don't want to develop ourselves under the risks of this activity."
Meanwhile, the company reported lower first-quarter results due to lower production resulting from asset sales. Total output amounted to 419,000 barrels of oil equivalent per day in the quarter compared with 470,000 boe last year.
Consequently, net income of $466 million, or 46 cents a share, fell 10 per cent from $520 million recorded a year earlier.
However, cash generated in the quarter jumped 23 per cent to $1.2 billion as higher world oil prices offset the effects of a stronger Canadian dollar and Talisman's lower production volumes.
Manzoni, who took over from Jim Buckee on Sept. 1, has promised a strategic review that will refocus the company as an unconventional natural gas player in Western Canada.
Details are expected in the third week of May, but Steve Calderwood, an analyst with Raymond James in Calgary, said the review is likely to position Talisman in several large resource-style plays including shale gas and tight gas sands.
"They basically laid out the broad strokes of the strategy," he said. "I think they'll be more realistic about what their growth is going to be."
Calderwood said Manzoni earned top marks for his style and presentation at the annual meeting, and predicted he will prove to be a capable successor to the professorial Buckee.
"He (Manzoni) really did present Talisman in a different way. It was a simple message presented simply. Some of the changes are subtle, but he did put his stamp on things."
Talisman shares rose 21 cents in Toronto on Wednesday, to close at $20.37
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