UPDATE 2-Lower North Sea output dampens Talisman Energy outlook

Wed Jul 31, 2013 1:28pm EDT

* Expects 2013 output at lower end of 375,000-395,000 boepd

* Cash flow of $2.1-$2.3 bln for 2013 vs prior view of $2.5 bln

* Second-quarter loss, excluding items, $0.03/shr vs est $0.00

* Cash flow falls more than 34 pct

* Production declines 17 percent

* Norway properties put up for sale

CALGARY, Alberta, July 31 (Reuters) - Talisman Energy Inc posted a surprise second-quarter loss on Wednesday on weak production from its North Sea operations as added its Norwegian oil fields to the list of properties it has up for sale.

The company, Canada's No.5 independent oil producer, said it has opened a data room for potential buyers of its assets in Norway's North Sea, which produce 13,000 barrels of oil per day, adding to current plans to sell stakes in two Canadian shale-gas fields and its stake in Colombia's Ocensa pipeline.

"We had a number of interested parties come to the data room, Hal Kvisle, Talisman's chief executive, said on a conference call. "Initial interest is strong. There's a number of interesting attributes to our Norway business over and above the production volumes."

The company hopes to raise as much as $3 billion from the asset sales as it restructures it operations to boost its profitability, cut debt and boost a flagging share prices.

The sale would end Talisman's efforts to resuscitate its Yme oil field development offshore Norway. A faulty platform at the field in the North Sea delayed production that was scheduled to start last year. The company said in May it expected to remove the faulty platform next year and submit a plan for a new installation by the first half of 2015.

The company has whittled down its exposure to the North Sea operations, selling a 49 percent stake in its UK fields to China's Sinopec for $1.5 billion in December.

But the operations in Britain's North Sea contributed to Talisman's surprise loss. The company said in March it expected North Sea production of 41,000 to 46,000 barrels of oil equivalent per day. Now it expects the region to average 34,000 bpoed in 2013.

But Talisman said full-year production would likely be at the lower end of its forecast range of 375,000 to 395,000 boepd as unreliable facilities at its UK fields cut output.

The company on Wednesday also cut its outlook for cash flow, an indicator of its ability to pay for new projects and drilling. It now expects cash flow of between $2.1 billion and $2.3 billion for the year, down from its prior expectation of $2.5 billion.

Talisman said capital spending is expected to come within the $3 billion target, plus or minus 5 percent.

NET PROFIT PLUNGES

Net income fell 51 percent to $97 million, or 9 cents per share, in the second quarter.

Excluding items, the company posted a loss of $27 million, or 3 cents per share. Analysts on average had expected the company to break even, according to Thomson Reuters I/B/E/S.

Cash flow fell more than 34 percent to $526 million, or 51 cents per share, due mainly to the stake sale to Sinopec.

Production in the quarter averaged 361,000 boepd, down 17 percent from a year earlier.

Shares of Talisman were down 14 Canadian cents to C$11.80 by early afternoon on the Toronto Stock Exchange. The shares have dropped 7 percent over the past 12 months, against a 1.1 percent rise in the exchange's energy index in the same period.

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