Talisman Energy Inc. - Shareholder/Analyst Call

| About: Talisman Energy (TLM)

Talisman Energy Inc. (NYSE:TLM)

May 01, 2013 1:00 pm ET


Charles R. Williamson - Chairman and Chairman of Executive Committee

Harold N. Kvisle - Chief Executive Officer, President, Independent Director and Member of Executive Committee

Charles R. Williamson

Well, good morning, everyone. Everyone, please come in and take a seat and we'll begin the meeting. I want to welcome all of you to Talisman's Annual Shareholder Meeting. Thank you, all, for coming. I'm Chuck Williamson, the Chairman of the Board of Directors at Talisman. And I will serve as Chairman for this meeting. I will now call the meeting to order. This meeting is being webcast, and is available on the company's website as well.

As you all know, safety is a top priority at Talisman. And so I'd like to bring your attention to a few safety items. In the event of a medical emergency, the convention center security services will respond immediately and will contact external assistance as needed. In the event of an emergency, an alarm will sound. For the first stage alarm, no immediate action is necessary and you're asked to await further instructions from the public address system. In a rare case of a second-stage alarm, you will hear a highly audible rapid ring with instructions over the public address system, which may include orderly evacuation. Once the announcement is made, would you please proceed to the nearest exit, the same entrance that you came in.

Before the formal business today, I'd like to introduce the company's Director nominees. Following the formal matters of business, Hal Kvisle, our President and CEO, will make a few remarks about the company. And that will be followed by a question period that we'll have before the meeting concludes.

Sharing the podium with me today are Hal Kvisle, and Tamiko Ohta, our Corporate Secretary. Tamiko will act as Secretary of this meeting. I will also appoint Kyle Gould and Robyn Hall of Computershare Services -- Investor Services Inc., the company's registrar and transfer agent, to act as our scrutineers for the meeting. The notice calling this meeting and the accompanying Management Proxy Circular and formal proxy, as well as the Annual Report, were mailed to shareholders on March 25, 2013. The Secretary has provided me with a declaration by Computershare stating that proper notice of this meeting has been given. The quorum for this meeting is not less than 2 persons present, in person or by proxy and holding or representing at least 25% of the issued and outstanding common shares. The scrutineers have advised me that a quorum is present. They will later provide us with the exact number of shares that are represented at this meeting.

I declare this meeting has been regularly called and is duly constituted for the transaction of business. Although we've opened this meeting to guests, only registered shareholders who have not submitted proxies and proxy holders, are entitled to participate in the business of the meeting. This includes making motions and voting or speaking on a matter when it is before the meeting. Those persons who received a yellow card when they entered the meeting, I would ask them please to show their yellow card when they make motions or ask questions. I also ask that they raise their yellow card when voting by a show of hands. In order to expedite the business of the meeting, certain shareholders have been asked to propose and second the motions that will be presented today.

I'll now introduce the Director nominees for the company who are here today. We currently have 11 directors on the board. At this meeting, all of these 11 directors are standing for election. Hal Kvisle is the only Director who is a member of the management. All the other directors are independent directors. I now will introduce the independent directors as a group and I'd ask that they please remain standing as I call their names. Christiane Bergevin; Don Carty; Bill Dalton, he's having a little trouble standing, Bill; Kevin Dunne; Brian Levitt, our newest Member of the Board; Lisa Stewart; Peter Tomsett; Michael Waites; and Charles Winograd. Ladies and gentlemen, these individuals, in addition to Hal and myself, are the Director nominees.

I now have been provided with the scrutineer's report on attendance at the meeting, which indicates that there are 544 registered shareholders present in person or represented by proxy at the meeting, holding 772,225,532 common shares, representing 74.65% of the outstanding common shares of the company.

We will now proceed to the formal business of the meeting. The first item of business relates to the Consolidated Financial Statements of the company for the year ended December 31, 2012. The financial statements for 2012 and the auditors' report thereon, are contained in the Annual Report. On behalf of the directors, I now place before the meeting the Consolidated Financial Statements and the report of the auditor for the year ended December 31, 2012. Our Chief Financial Officer, Scott Thomson -- Scott, would you please stand? Thank you, will be pleased to deal with any questions concerning the financial statements for 2012 and for the first quarter of this year during the general question period following the end of the meeting.

The election of Directors is the next item of business. In accordance with the articles of the company, the Directors have determined that 11 directors are to be elected, and all of the current Directors are being put forward for election at this meeting.

As I discussed in my letter to shareholders in Talisman's Annual Report, board renewal is a top priority for the Governance and Nominating Committee and for the Board of Directors. We want to ensure that the board continues to maintain the right mix of skills and experience. In that regard, Brian Levitt has recently been added to the board, and we've been actively reviewing potential candidates -- board candidates, to identify a candidate with a strong oil and gas background and experience. This search is progressing well. We expect the chosen candidate will be added to the board for the second quarter of 2013. In addition, the Governance and Nominating Committee is continuing to seek additional candidates who will bring new perspectives to the board. We intend to add a second Director within the next few months, which would bring the total on the board to 13. On behalf of the Board of Directors, I'd like to thank all of the shareholders who have provided their perspectives to me and to the chair of Governance and Nominating Committee and to individual board members. As always, we welcome the feedback from all of our shareholders.

I now declare the meeting open for nominations for directors and -- to hold election and hold office for a term expiring at the close of the 2014 Annual Meeting. May I have the nominations for Directors?

Unknown Shareholder

Mr. Chairman, my name is Jim Courtright and I'm a shareholder of the company. I nominate: Christiane Bergevin, Don Carty, Bill Dalton, Kevin Dunne, Hal Kvisle, Brian Levitt, Lisa Stewart, Peter Tomsett, Michael Waites, Charles Williamson and Charles Winograd for election as Director.

Charles R. Williamson

Thank you, Mr. Courtright. Are there any other nominations? There being no other nominations, I declare the nominations closed. Since 11 directors are to be elected and only 11 persons have been nominated, it's a foregone conclusion of the election. I will, therefore, be asking for a motion to elect the individuals nominated. However, in order to comply with the voting instructions in the proxies, and to be able to report on a number of shares voted or withheld from voting for each of the nominees, a ballot of the individual nominees will be conducted. All persons present who are entitled to vote at the meeting should have received a green ballot before entering the meeting. If you've not already done so, please complete your ballots now to either vote for or withhold your vote in relation to each of the nominees. Once your ballot has been completed, please raise your ballot and the scrutineers will collect it. If you did not receive a ballot and believe that you should have, please notify one of the scrutineers. We'll now take a brief pause while the scrutineers collect any additional ballots.


Charles R. Williamson

Okay. I think all the ballots have been collected. I'm happy to report that based on the proxies received, the majority of votes will be cast in favor of each nominee. The results of the ballot will be disclosed in a report to be filed with the securities regulatory authorities shortly after the meeting. I will now ask for a motion for the election of the nominees.

Dianna Kyles

Mr. Chairman, my name is Dianna Kyles, and I'm a shareholder of the company. I move that the persons nominated be elected Directors of the company to hold office until the close of the next annual meeting of shareholders.

Charles R. Williamson

Thank you, Miss Kyles, will someone please second the motion?

Stephen Chivers

Mr. Chairman, my name is Stephen Chivers, and I am a shareholder of the company. I second the motion.

Charles R. Williamson

Thank you, Mr. Chivers. All in favor of the election of the nominees, will you please raise your yellow card? Contrary, if any?


Charles R. Williamson

I declare that the persons nominated have been duly elected as Directors of the company to hold office until the close of the next annual meeting of shareholders. I'd like to thank all of the Talisman shareholders for their support of the board nominees. The next item of business is the appointment of the auditor. The current auditor is Ernst & Young LLP. They've been auditor of the company since the company's inception. Representatives of Ernst & Young are present at the meeting today. The Audit Committee and the Board of Directors recommend reappointment of Ernst & Young as auditor of the company. May I please have a motion to appoint the auditor?

Unknown Shareholder

Mr. Chairman, my name is Ronnie Hogan[ph], and I am a shareholder of the company. I move that Ernst & Young LLP, Chartered Accountants, be appointed the auditor of the company to hold office until the close of the next annual meeting of shareholders.

Charles R. Williamson

Thank you, Miss Hogan. Will someone please second the motion?

Aaron Shelby-James

Mr. Chairman, my name is Aaron Shelby-James, and I am a shareholder of the company. I second the motion.

Charles R. Williamson

Thank you, Mr. Shelby-James. All in favor, please raise your yellow card. Contrary, if any?


Charles R. Williamson

I declare that Ernst & Young LLP has been duly appointed as the auditor of the company to hold office until the next annual meeting of shareholders. The only item of special business, as described in the Management Proxy Circular under the heading Advisory Vote on Executive Pay or Compensation. In keeping with corporate governance developments in Canada and United States, shareholders are being asked, on a nonbinding advisory basis, to accept the company's approach to executive compensation, which is described in the section entitled Compensation Discussion and Analysis in the Management Proxy Circular. May I have a motion on this matter please?

Unknown Shareholder

Mr. Chairman, my name is Brent Molesky, and I am a shareholder of the company. I move that the following resolution be passed: be it resolved, on an advisory basis and not to diminish the role and responsibilities of the company's Board of Directors, that shareholders of the company accept the company's approach to executive compensation disclosed in the Management Proxy Circular of the company dated March 6, 2013.

Charles R. Williamson

Thank you, Mr. Molesky. Will someone please second the motion?

Unknown Shareholder

Mr. Chairman, my name is Adam Wolfenden[ph], and I am a shareholder of the company. I second the motion.

Charles R. Williamson

Thank you, Mr. Wolfenden. Are there any questions or comments? The votes for this special item or item of special business will also be conducted by ballot. All persons who are entitled to vote at the meeting should have received a blue ballot before entering the meeting. If you've not already done so, please complete your ballots now by either vote for or against the motion regarding the company's approach to executive compensation. Once your ballot has been completed, please raise your ballot and the scrutineers will collect it. If you did not receive a ballot and believe you should have, please identify yourself, and the scrutineers will bring you one. I will now take a short pause while the scrutineers collect any outstanding ballots for this measure.


Charles R. Williamson

Okay. I think all are collected. So ladies and gentlemen, that concludes the formal business of this meeting.

And it's now my pleasure to ask Hal Kvisle, our President and Chief Executive Officer, to address the meeting. Hal's presentation contains some forward-looking information and statements, which are based on certain material factors and assumptions, and are subject to risks and uncertainties accordingly. Our actual results may differ from those projected. They will differ. And I refer you to the advisory in that regard contained in our Annual Report. There'll be a question period after the presentation, so I'd ask that you please hold your questions until that time and then, we'll open it up for questions-and-answers. Hal?

Harold N. Kvisle

Thank you, Chuck, and good morning, everyone. Thanks for attending our Annual General Meeting, and I would like to take about 15 minutes and just run through an overview of the things that Talisman is doing today, and I think some of the things that are very exciting in the portfolio of assets and activities that we have. Of course, if you could very quickly read this disclosure advisory, I'd appreciate that. And knowing that you have, I'll now move on.

One of the most significant changes we've made since I stepped into this role last September is to take a serious look at our asset base, consider what our growth opportunities and options are, and to really think carefully about what are we good at? What can Talisman really excel at and where can we deliver value for shareholders in a predictable way? So we've made some significant changes. And as you'll see on the map, we've now defined 2 core regions: Asia Pacific and the Americas, as the places that Talisman will build and grow into the future. We look forward to building on our competitive advantages, the relationships we've got in Asia, the very large resource positions we've got in North America. Our great assets in places like Colombia. These really define what we're going to do in the years ahead here at Talisman. And of course, we have some valuable properties that fall outside of those 2 core regions, notably, in the U.K. and in Norway. We also have some undeveloped assets in places like Kurdistan, and we have a number of minor but very high-quality properties in places like Algeria. We'll look at all of those things, consider the options carefully and in all likelihood, divest all or some of them in the years ahead. But we won't engage in fire sales and until the time comes to shed those assets, we'll take very good care of them and maximize cash flow for the benefit of our shareholders.

As we look at our 2 core regions, what does it mean and how significant are they? And you'll see from these pie charts on the screen that these regions represent more than 90% of our production, almost 90% of our reserves, about 90% of our appraised value in our proved and probable reserves case. The vast majority of our contingent resources in places like the Montney, for example, and a big chunk of the prospective resource that we have yet to identify as being economically developable.

So it's, I think, a significant move but into territory that we're very comfortable with. When we look at Talisman going forward, we're committed to long-term growth and to value creation in 2 core regions where the bulk of our assets exist today, where the bulk of our people work today and where we will be competitive and strong players in the years ahead.

The last 6 or 7 months have been challenging for the company, and a big workload for myself and my colleagues on the management committee. But we have made some significant progress. I think, as you look back over the last 6 months, we've made the move to core regions. We completed a very difficult transaction, the sale of 49% of our U.K. business to Sinopec, and the Talisman Sinopec joint venture is now moving ahead with the program to maximize the value of our assets in the U.K. But having said that, for Talisman, the U.K. is just 11% of our production today. So it is no longer a significant piece of this company.

In Asia Pacific, we've continued what I think is a very strong track record of growth and value creation. Today, we're investing in Vietnam, and we're just commencing a program on the Sabah region of Malaysia on the island of Kalimantan. We have 2 large core assets there: the Corridor Block in Sumatra; and PM-3, offshore Peninsular Malaysia that continue to perform very well and are 2 of the most valuable assets in Talisman. In fact, I think Corridor could be identified as the most valuable asset that Talisman has anywhere in the world.

Closer to home, here in the Americas, over the past 6 months, we've embarked on a new direction. We've made, first of all, a clear commitment to the Edson-Duvernay-Montney region of west central Alberta. We were considering previously doing different things including exiting much of that region. But as we look at the experience of our people, the size of our land holdings, the quality and extent of our infrastructure, these are significant competitive advantages that will continue to be an active area for industry in the years ahead. I think Talisman can be a strong player there, and we're committed to it.

Secondly, and I'll show you some slides on this in a moment, we've been really a successful player in Marcellus. We got caught in the national gas price downdraft, as did all of our competitors, but our position there is strong today. And we have a number of different options as to how we can grow and build on our Marcellus production in the years ahead.

And finally, we're in the middle of a very focused drive for operations and development excellence in the Eagle Ford play in south Texas. We've made some good progress. I'll show you some of that on the slide coming up. In addition, over the past 6 months, we've looked at our asset base very carefully. In addition to the sale of the U.K. and the withdrawal from areas like Poland and Peru, moves that are now in progress, we've identified $2 billion to $3 billion of divestment candidates that we will work on over the next 12 to 18 months. These kind of transactions do not come together quickly, they're complex, difficult and may take time. But we have set out roughly $1 billion to $1.5 billion here in North America, and a similar sized target for our international portfolio and there'll be more on that to come in the months ahead.

So as we look at our priorities to create value for our shareholders, first of all, I think we'd have to make a move towards living within our means, and this is not unique. When we talked about reducing our capital program and living within cash flow last October, we came under some criticism from some shareholders and analysts. But increasingly, we're seeing most of our peers, most of our competitors here in North America going in the same direction. It's just one of those periods where cost structures are very high, where commodity prices for natural gas, anyway, are relatively low and where we just have to rebalance and recalibrate our programs with a real focus on creating value rather than grow for growth's sake.

The second is to focus our capital program. There are some things that Talisman is very good at, and there are some things that we're an average competitor at. And so we need to really focus our capital program on those assets and those opportunities where we can outperform the industry average. We're also focused on shortening the cycle time. We've invested several billion dollars in very long cycle exploration around the world, and we've made some impressive discoveries in Papua New Guinea and Kurdistan. But the time to first production from those kind of discoveries is longer than we can handle today. And so we need to focus our capital on shorter cycle returns in places like Edson, Montney, Duvernay, Eagle Ford, and of course, in the Marcellus. In Southeast Asia, we have some excellent opportunities. We've just taken over Kinabalu, as I mentioned, and we have a number of investments there that we think can yield returns in a relatively short time.

Our third objective is to improve operational performance in everything that we do, not just in our production operations but also in the execution of our capital programs.

And fourthly, unlocking that asset value from our portfolio. I mentioned, we're aiming for $2 billion to $3 billion of divestments globally in the next 12 to 18 months. But in addition to that, we have assets like Kurdistan, a very substantial discovery in the Kurdish district of Iraq that holds great promise for significant production, and we're working today on what an early production scheme for the Kurdamir discovery in that part of the world might be able to bring in terms of cash flow and production.

So we've laid out some guidance goals for the year, and we just want to reaffirm here at the end of the first quarter, that we remain committed to delivering on our guidance: 375,000 to 395,000 boe a day of production; cash flow in the range of $2.5 billion; capital, which still exceeds cash flow, in part, because of a number of programs that carried over from prior years. We can't rebalance everything immediately. The $2 billion to $3 billion divestiture target; getting production from places like Kurdistan and looking very carefully as we generate capital, what do we do with that money? We do have, still, the $500 million gap between cash flow and capital this year. There are a number of incremental projects that are just dying to be funded if we could allocate a bit more capital to them. And finally, share repurchase as an alternative.

I'd now like to talk a little bit about some of our specific areas of opportunity where, I think, we can be a strong competitor. Firstly, we're recommitting Talisman to our Western Canada core. In Edson, we have 500,000 net acres; many multizone opportunities as you'll see in places like our Wild River play. We've got great gas option value. Cash flow increases dramatically as gas prices go up from this kind of an operation. And we have very extensive infrastructure with pipelines and gas plants spanning much of that part of western Alberta and Northeast B.C. Up towards the Montney, we have 182,000 net acres. And this is extraordinary, about 28 trillion cubic feet of contingent resource. So the Montney is economically challenged at a $3.50 gas price and it could be the most valuable property in Talisman's portfolio at a $6 gas price. It's highly levered to gas price, and of course, highly levered to LNG developments that we think are going to bring value to that part of the world. And then, 2 exciting plays: the North Duvernay and the South Duvernay where, between them, we have over 300,000 net acres. A lot of industry excitement. We're looking at the possibility of a joint venture or sale of the North Duvernay not because we don't like it, but because we've got more acreage than we can handle and we very much like the early stage results that we're seeing in the South Duvernay.

As we look to Eagle Ford down in south Texas, we have a strong land position. Our share, net, 74,000 acres. And that's all in a 50-50 joint venture with Statoil. We have more than 1,000 horizontal well locations remaining on our lands, roughly 600,000 barrels equivalent of recoverable reserves per well. This is interesting and valuable opportunity for us. We have grown from 5,000 barrels a day to 15,000 boe a day. We expect this year to end the year around 30,000 boe a day and 2 more years of significant growth ahead of us before we will shift to a sustainable production scenario and aim to keep our Eagle Ford production at a sustainable flat hold for many years into the future.

Marcellus, probably the best asset that we have in North America today. It's -- we have 208,000 net acres in Pennsylvania, we have additional acreage in New York that we don't count on these days because of the difficulties in getting approvals to do shale gas development in New York, so we're just focused on Pennsylvania at this time, where we have over 1,600 horizontal drilling opportunities in lands that are essentially delineated and defined in the Marcellus Shale. We're using proven technologies, we've got proven capabilities, a strong team in the region that runs that business. We're looking at nearly 6 Bcf of expected recoveries per well on our lands in the Marcellus. So it's very economic to sustain the Marcellus at 400 million cubic feet a day at a $4 gas price. And we could ramp this up easily to higher sustainable rates if we were to see indications of a higher gas price and our ability to hedge into that going forward.

Colombia is the southern part of our Americas portfolio. And we have a couple of different things going on there. First, Equion is a joint venture that we owned with Ecopetrol, the former BP upstream business in Colombia. We also have a number of blocks of land that we have pursued outside of Equion, the most notable being Block 9, where we're again partners with Ecopetrol and this is now under a multiwell appraisal program. Block 9 is a relatively small yellow block on the map but this is a very high-quality opportunity. The first well that we drilled into has now produced over 1 million barrels of oil of actual production from that first well. With a well like that, you'd have thought we'd be moving very aggressively to drill further step out wells. We have been unable to do that because of delays in regulatory processing. I thought I left those behind me at TransCanada, but they're still plaguing me today. So we have just received permits and we're going ahead with the second well. The third well coming soon. We have 7 wells in the current program and all indications are this is going to be a great development asset for Talisman and for our partner, Ecopetrol.

Block 6 that you'll see on the map, just below block 12, is -- these are joint blocks that we hold with Pacific Rubiales, a very successful company in that part of the world. And finally, the red line from, roughly, the Block 6 area over to the coast is the OCENSA pipeline, where we have about 12% of that. We're currently examining our options. I expect that we will sell our equity ownership in the OCENSA pipeline, but we'll keep all or a significant part of the shipping capacity that we have, as that capacity is very valuable and useful as we grow our production in Colombia.

Let me leave the Americas now and take you quickly to Asia Pacific. What you see on this map is an area that east to west is about the same distance as Canada, east to west. And there are hydrocarbon opportunities from one end of it to the other. Our core production areas that you see in green are Vietnam, 2 of them in Malaysia and of course, our valuable assets in Sumatra. Exploration opportunities shown in blue, again in Vietnam, in Papua New Guinea, over at the east end of the region and Sabah on the north shore of Kalimantan. We also have some very high-quality minor positions, assets that I see a lot of value in. One being Tangguh, which is a BP-operated worldscale LNG project that is currently undergoing expansion. Great rates of return and valuable for Talisman to be in that asset, for the asset itself but also for the learning and exposure to the development of LNG projects. And Kitan is a producing property on the north coast of Australia. To delve a little deeper into some of the specifics in South Sumatra, we've got 3 assets there. Corridor is of course, as I mentioned, the most valuable asset that Talisman holds today. We own 35% of a property that produces 1 Bcf a day of gas and that gas, essentially, gets sold at prices closely tied to crude oil. So very strong cash flow, long-term sustainability. It's been 1 Bcf a day for many years. We expect that to continue. We're also looking, today, at expansion opportunities to grow Corridor to an even larger production rate. So the north of Corridor is Jambi Merang, which is a smaller property of one of the Indonesian joint operating bodies, but with very high netbacks and long life production. I visited that property a couple of weeks ago, a very impressive operation, where the Talisman team has had a lot of input into the way it's been developed and the way it will be expanded in the years ahead. And finally, Ogan Komering inland is a smaller property but one that does very well on a sustainable basis for us.

As we go to the north and look at the Malay Basin, it's PM-3, the long, skinny sliver of a property in joint waters between Vietnam and Malaysia, that is particularly valuable to us. This is Talisman's largest single operation. In gross terms, it produces almost 100,000 barrels a day, and we have about 1/3 of that. You can see in the photograph, the kind of high-quality facilities that Talisman has developed and currently operates in that location. A very high netback, very high-quality property.

Shifting now to Kurdistan, some of the excitement on the exploration side. This map -- on the large map, you'll see the general location of our Kurdamir and Topkhana discoveries over at the east end of the map. In the Kurdistan region of Iraq, in the foothills of the Zagros Mountains. Those mountains, essentially, are the edge of Iran. So we're close to the border between Iraq and Iran, and in that Kurdish region of Iraq that is called Kurdistan. If you look at the red lines on that large map, the solid red line is an existing pipeline that takes oil from the Kirkuk Field, which is in the Iraqi-controlled part -- the Baghdad-controlled part, I should say, of the country as opposed to Kurdistan. And that existing pipeline flows crude oil to Cheyham on the coast of the Mediterranean through Turkey. Also shown are a couple of dotted pipelines. Those are not yet built. Those are being proposed to move oil from new discoveries such as our Kurdamir and Topkhana fields to markets, essentially the same Cheyham loading point. More interesting, maybe, is the smaller inset map. If you look in the upper part of the middle of that map, the Kirkuk Field is 25 billion barrels recoverable. This is one of the largest oil fields in the world, and it's been discovered many years ago and on production for a long time. You'll see that our 2 blocks, for Topkhana and Kurdamir, the 2 yellow blocks, are on trend geologically with Kirkuk and produce from the same geological formation. Interesting in the orange block, just to the southwest of our holdings, is the new discovery that's recently been announced by Genel, a company that's been quite successful in Kurdistan. And the first well that they drilled on that block has tested at 11,000 barrels a day. So that's encouraging in a couple of ways. It's from the same geological interval that we're testing in Topkhana and Kurdamir, and it's also in a location where we could collaborate with them on pipeline and infrastructure to get the oil to market.

The really exciting way to look Kurdamir and Topkhana is on this cross-section, you'll see on the right-hand side that we drilled Kurdamir-1 and discovered a thick, very high-quality reservoir with rich gas that's shown in red. We then went over to Topkhana and drilled Topkhana-1. And similarly, on the top of the structure, discovered a thick, high-quality reservoir section with rich gas, and that made us think that we were into a large rich gas and, perhaps, gas-cycling scheme kind of a discovery. We were very pleased to drill Kurdamir-2 down the flank on the Kurdamir structure and encountered nearly 500 feet of permeable oil play in that part of the reservoir, shown in dark green. We're currently drilling in Kurdamir-3. We're about 2/3 of the way to total depth. And Kurdamir-3, you can see, is testing to see whether the high-quality reservoir extends down the structure and whether it's oil bearing. We've not yet encountered water anywhere in the structure. So Kurdamir-3 is going to be a very significant route. The next one will be Topkhana-2 on the other side. So Kurdamir-2 on the outer flank was a very pivotal well. It transformed what we thought was a rich gas discovery into a high-quality oil pool with a gas cap over top and we're quite excited and very much looking forward to the results of the Kurdamir-3 discovery well.

So just in conclusion, I take you back to the map of the world. We have 2 strong regions in the Americas and Asia Pacific. We have some valuable assets in Norway and the United Kingdom. We have a number of early-stage opportunities in places like Kurdistan, the gas and potential LNG developments in PNG and the large blocks of land of the newly acquired Kinabalu property in Sabah. We have some high-quality, nonoperated properties in Australia, Kitan, Tangguh, the LNG project and of course, in Algeria, where we're now partners with one of our critical and very strategic partners, Pertamina, the oil company from Indonesia. So that's my quick overview of what we're doing within Talisman today. Thanks for your attention. I'd be happy to attempt to answer any questions that you might have from the floor this morning. If you do have a question, maybe you could just approach one of the microphones and ask away. Any questions?

While hearing none, I'd like to thank you for attending today, and for suffering through my presentation. And I'm excited about the future opportunities that we have within Talisman. I think we've got a strong team that is committed to delivering value for shareholders from the kinds of things that I showed you. Thank you for coming.

Charles R. Williamson

Well, thank you, Hal, for a very good overview. And on behalf of the Board of Directors, I think we should all give Hal a round of applause for stepping into this leadership position. He's been very helpful. Every once in a while, he thinks about the ski slopes.

Okay, this does conclude the meeting. But before we conclude, I thought I would give you the results of the advisory vote on the company's approach to executive compensation. The percentage voted in favor of the motion was 75%, and I declare the motion carried. The detailed results of the vote will be provided in the report to be filed later.

And there being no further business, I can now declare the meeting adjourned. I understand we have some refreshments in the back or outside and we'd welcome all of you to join and mix and talk to some of the Members of the Board. Thank you, again, for coming.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.


If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!