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We expect Canadian energy explorer Talisman Energy Inc. (TLM - Analyst Report) to beat expectations when it reports first quarter 2013 results before the opening bell on Wednesday, May 1.

Why a Likely Positive Surprise?

Our proven model shows that Talisman is likely to beat earnings because it has the right combination of two key ingredients.

Positive Zacks ESP: Earnings Expected Surprise Prediction or ESP (Read: Zacks Earnings ESP: A Better Method), the difference between the Most Accurate estimate of 5 cents and the Zacks Consensus Estimate of 4 cents, stands at +25.0%.

Zacks Rank #3 (Hold): Note that stocks with Zacks Rank of #1, 2 and 3 have a significantly higher chance of beating earnings. The Sell rated stocks (#4 and 5) should never be considered going into an earnings announcement. 

The combination of Talisman’s Zacks Rank #3 (Hold) and +25.0% ESP makes us confident of a positive earnings beat this release.

What's Driving Better-than-Expected Earnings?

The operating environment and growth prospects seem bright for Talisman, as earnings estimates for this Calgary, Alberta-based company are on the rise. Over the last 30 days, the Zacks Consensus Estimate for the first quarter of 2013 has doubled to 4 cents per share.

In particular, Talisman’s major positions in the prolific Marcellus Shale play in western Pennsylvania and the nascent Montney formation in northeastern British Columbia and northwestern Alberta provide significant room for continued growth.

Moreover, Talisman’s financial flexibility and strong balance sheet are real assets in this highly uncertain economy. At the end of 2012, the company had cash balance of approximately $721 million. Additionally, with no near-term debt maturities and $3.7 billion in available borrowing capacity, the company is well equipped to face this environment.

Other Stocks to Consider

Here are some other energy firms that warrant a look as these have the right ingredients to report earnings beat this quarter:

Exterran Partners L.P. (EXLP - Snapshot Report) has an earnings ESP of +4.35% and a Zacks Rank #1 (Strong Buy).

SemGroup Corp. (SEMG - Snapshot Report) has an earnings ESP of +28.95% and a Zacks Rank #1 (Strong Buy).

Delek US Holdings Inc. (DK - Snapshot Report)has an earnings ESP of +0.86% and a Zacks Rank #2 (Buy).

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