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Talisman Energy posts first-quarter profit, reversing last year's loss

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CALGARY - Talisman Energy Inc. (TSX:TLM) has returned to profitability during the first three months of 2014, posting a profit of $491 million.

The Calgary-based oil and gas producer credits higher North American energy prices, increased production of valuable natural gas liquids and the $1.5 billion sale of part of the company's Montney gas properties in British Columbia for the improved bottom line.

The profit amounted to 43 cents per diluted share on $1.34 billion in revenue, and reversed a loss of $213 million or 21 cents per diluted share on $1.12 billion in revenue during the same period a year earlier.

Talisman has also recorded cash flow of $616 million in the quarter, up six per cent from the previous quarter

"Talisman is a more focused company with stronger performance compared to one year ago," said CEO Hal Kvisle. "We continue to deliver against our objectives."

Year over year, production from ongoing operations is up six per cent to 360,000 barrels of oil equivalent per day and North American liquids volumes have risen 45 per cent.

During the fourth quarter of 2013, Talisman posted a $1-billion loss as it wrote down the value of its North Sea operations, which have been a long-running headache.

Output in the North Sea averaged 35,000 barrels per day during the first three months of 2014, up 21 per cent over the previous quarter as the Claymore project was restarted, the Piper and Tweedsmuir projects saw more uptime and new production came onstream from the Varg project.

After taking over as CEO in September 2012, Kvisle has worked on making Talisman a more focused company. Instead of investing in several projects around the world, it is now focused on North America, Colombia and Southeast Asia.

In February, Talisman said it planned to sell $2 billion in assets over the next 12 to 18 months, on top of $2.2 billion it had already announced.

One of the assets on the sale block is an interest in a major oil discovery in the semi-autonomous northern Iraqi region of Kurdistan.

"If we don't bring in a partner, we're going to be spending $500 million a year there for quite a while," Kvisle told reporters following the company's annual general meeting.

Also up for sale is a share of Talisman's Duvernay shale acreage in central Alberta — one of the most "exciting" resource plays out there, Kvisle said.

But Kvisle dismissed rumours that the company is looking to sell its position in the Eagle Ford shale in Texas, in which fellow Canadian energy company Encana Corp. (TSX:ECA) announced Wednesday it is investing US$3.1 billion.

Talisman is partnered up with Norway's Statoil in the Eagle Ford.

"We've transformed the Eagle Ford from something that was a huge burden for Talisman for something that's working. I have no particular motive to sell it," Kvisle said.

However, if someone were to offer an "aggressive" price so that Talisman could invest in other promising areas, Kvisle said Talisman would consider it.

Follow @LaurenKrugel on Twitter

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