Talisman increases Marcellus, Montney shale acreage

Canadian Talisman Energy Inc. has increased its landholdings in two unconventional natural gas plays, the Marcellus and the Montney, in North America.

Paul Smith, executive vice president, North American Operations commented, "We have positioned ourselves for a significant increase in drilling and production in the Marcellus shale next year and are planning to move segments of our Montney shale play to commercial development at the beginning of next year.”

"Recognizing that not all shale acreage is created equal, we define Tier 1 as top quality acreage with an expected full cycle breakeven of approximately $4/mcf. In these two plays alone, we have added 170,000 net acres through a combination of acquisitions and swaps for C$570 million.

In addition to the increased acreage, the company has restructured its North American operations into two businesses, shale and conventional. Jim Fraser, who has headed the company’s Marcellus program, will be in charge of the shale business. Jonathan Wright, who has led Talisman's business in Malaysia, will run the conventional operations.

According to Talisman, average drilling and completion costs are down to US$4.3 million per well and the average assumption for expected ultimate recovery over all Tier 1 acreage has increased by 17%, to 3.5 bcf per well, with the last five wells displaying EURs of 6 bcf.

“Average 30-day initial production rates for wells drilled year-to-date was 4.5 MMcf/d, with the last six wells at 5 MMcf/d or better. We are currently producing over 50 MMcf/d (sales gas) and expect to exit the year at approximately 70 MMcf/d,” Smith said.

Pennsylvania Marcellus Shale
Talisman started commercial development in the Marcellus shale late in 2008. Year-to-date, the Company has drilled 31 gross wells (27 net) with roughly 60 horizontal wells planned by year end.

Talisman has added a third rig and plans to move to six rigs by the end of the year.

Average D&C costs are down to US$4.3 million per well, while the average EUR has increased by 17% to 3.5 bcf per well, with the last five wells in the Marcellus at 6 bcf.

The company started the year with 140,000 acres in the Pennsylvania Marcellus. Through a combination of land acquisitions (at an average cost of US$3,250/acre) and land swaps, Talisman has added over 90,000 Tier 1 acres in the Pennsylvania Marcellus shale year-to-date, doubling its Tier 1 acreage to approximately 180,000 acres.

In total, Talisman currently holds 214,000 net acres in the Pennsylvania Marcellus. These are highly contiguous acres concentrated around the Bradford and Tioga counties in northeastern Pennsylvania.

Montney Shale
Talisman's focus in British Columbia’s Montney shale in 2009 has been in the Greater Groundbirch, Greater Farrell and Greater Cyprus areas. The company expects to complete 20 pilot wells this year (11 horizontal).

Talisman started the year with 178,000 acres in the Montney shale. In total, Talisman currently holds 270,000 net acres in the Montney shale.

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