Talisman Energy Announces 2013 Guidance

Talisman Energy Announces 2013 Guidance 
Focus on two core operating areas 
Increasing liquids and international natural gas 
Process underway to unlock $2-3 billion of value through asset sales
or joint ventures 
CALGARY, ALBERTA -- (Marketwire) -- 03/06/13 -- Talisman Energy Inc.
(TSX:TLM) (NYSE:TLM) has announced guidance for this year. The
objective of our 2013 capital and operating plan is to increase total
shareholder returns by unlocking net asset value and growing cash
flow per share. Operationally, the plan focuses on Talisman's two
core areas (the Americas and Asia-Pacific), increasing the
contribution from liquids volumes, maintaining a strong balance
sheet, and driving operational excellence. All values in this release
are in US$ unless otherwise stated. 
2013 Guidance Summary 
Executing a focused and disciplined capital spending program: 

--  $3 billion capital budget - a 25% reduction from 2012. 
--  90% of capital directed at liquids and international gas. 
--  The majority of capital will be spent in our two core regions. 

Replacing low-margin North American natural gas with higher margin

--  375,000-395,000 boe/day production target for 2013. 
--  Liquids weighting expected to increase from 35 to 40%. 
    --  Liquids momentum carries
 into 2014. 
--  High netback international gas expected to account for 25% of
--  Cash flow expected to be approximately $2.5 billion. (i) 
    --  2012 asset sales account for the majority of the reduction from last
    --  Six core properties account for 60% of cash flow. 

(i)assumes $90/bbl WTI oil, $105/bbl Brent oil, $3.60/mmbtu NYMEX
natural gas 
Taking steps to unlock net asset value: 

--  $2-3 billion of dispositions or joint ventures planned for the next 12-
    18 months. 
    --  $1-1.5 billion in North America. 
    --  Actively marketing North Duvernay shale and parts of the Montney. 
    --  $1-1.5 billion of international assets. 
--  Options for proceeds include debt reduction and increasing cash flow per
    share through short-term development spending or share repurchases. 

"We are quickly moving to strengthen and focus our company by
imposing strict capital discipline, increasing the cash margins on
the barrels we produce, and unlocking value through asset sales or
strategic joint ventures," said Hal Kvisle, President and CEO. "Our
focused capital program targets high-margin, near-term opportunities
in our two core areas. We will be less reliant on asset sales to fund
core capital programs in 2013. As a result, once we execute these
planned sales or joint ventures, we will have the option of using
proceeds to pay down debt, or increase cash flow per share through
short-term development spending or share repurchases. 
"Over the past six months, we have stabilized the company. We've
reduced debt by about $750 million over the course of 2012. We will
maintain a strong balance sheet going forward, with a target
debt-to-cash flow ratio of 1.5 times. We are increasingly protecting
our capital program through hedging. 
"We are now a much more focused company. Talisman has two core areas,
Asia-Pacific and the Americas (North America and Colombia), which
account for approximately 90% of our production and 85% of our 2P
reserves. We will continue to strengthen and high-grade our assets
within this core. For other areas, we are examining all options,
including harvesting cash flow, ongoing development, joint venture
opportunities, or sale. 
"We are unlocking the net asset value (NAV) in our portfolio. We
expect to sell (or joint venture) $2-3 billion of non-core assets
over the next 12-18 months to unlock NAV not currently reflected in
our share price. We are actively marketing our stake in both the
North Duvernay shale play and parts of our Montney position.  
"We are building oil and liquids momentum in 2013, which will
continue into next year. Talisman has a large inventory of liquids
and high netback international gas opportunities within our existing
portfolio. In 2013, approximately 90% of our capital program is
directed at these cash flow-generating opportunities. We plan to grow
five key liquids projects - currently producing 10,000 bbls/day - to
approximately 65,000 bbls/day in 2014. 
"Operational excellence and capital efficiency are top priorities. We
will improve all aspects of our cost structure, with the objective of
increasing cash margins on every barrel we produce. A major focus
will be to continue to improve drilling performance in the Eagle
Ford. Significant progress has been made over the past two years and
we will continue to lower costs and reduce drilling times. We are
also taking steps to reduce our run rate for net general and
administrative (G&A) costs by $100-150 million by the end of 2013. 
"This plan is the result of an in-depth review of our strategy and
business by our Board of Directors and management. I believe we now
have a focused and deliberate path forward that will both unlock, and
create sustainable growth in, shareholder value. We have started to
reposition Talisman for futur
e cash-flow-per-share growth on the
foundation of a stronger balance sheet, better capital discipline, a
more focused portfolio, and operational excellence."  
In October 2012, Talisman set four strategic priorities - which are
described below - along with actions and outcomes.  
Priority 1 -- live within our means. We will set capital spending
budgets that can be largely funded by operating cash flows. We will
maintain balance sheet strength so that we are able to respond to
quality investment opportunities within our core regions.  
We are reducing our capital budget from $4 billion in 2012 to $3
billion in 2013 - a reduction of 25%.  
Priority 2 -- focus our capital program. We will invest in projects
(focused in our two core regions) that come onstream more quickly,
and deliver sustainable cash flow over the longer term. We will
reduce upfront capital invested in high-risk exploration.  
The 2013 capital program will focus on near-term, higher netback
opportunities. Exploration spending has been cut in half, and is
directed primarily at proving up substantial oil potential in
Colombia, Kurdistan and Asia-Pacific. Long-dated exploration spending
in 2013 is expected to account for only about 5% of Talisman's total
capital spend. 
Priority 3 -- improve operational performance and reduce cost
structure. We will do things better, faster, safer, and at lower
cost. Our aim is to enhance project execution and to improve margins
on every barrel we produce.   
Talisman is reviewing all aspects of our cost structure. In 2013, we
are taking actions to reduce G&A costs, and will continue to improve
drilling performance in the Eagle Ford.  
Priority 4 -- unlocking net asset value of the portfolio. Talisman's
asset base includes large positions in several long-dated plays that
generate little to no cash flow. We will surface value for
shareholders. We will continue to high-grade our portfolio and
consider divestments and joint ventures where underlying asset values
are not reflected in our share price.  
Our target is to unlock $2-3 billion in value through asset sales or
joint ventures over the next 12-18 months.  
2013 Guidance 

                                       Production range         Capital     
    Region            Play                  (mboe/d)           ($ million)  
Americas     Marcellus                       68-70             approx. 150  
             Eagle Ford                    approx. 30          approx. 650  
             Edson/Duvernay/Montney          62-64             approx. 270  
             Other                           10-12             approx. 30   
             Colombia                      approx. 20          approx. 250  
Asia-Pacific Indonesia                       74-79             approx. 190  
             Malaysia                        40-43             approx. 240  
             Vietnam                       approx. 8           approx. 140  
             Australia/PNG                 approx. 8           approx. 80   
             Algeria                       approx. 14          approx. 25   
Other        North Sea                       41-46             approx. 800  
             Kurdistan                         -               approx. 70   
             Other & Corp.                     -               approx. 100  
                                            375-395          approx. $3,000 

The Americas - large resource base and liquids-rich opportunities 
North America  
Talisman is well positioned in five leading plays in North America,
with over 35 tcfe (approximately 6 billion boe) of contingent
resource in an area of 1.3 million net acres. We have material
positions in three liquids-rich plays and upside exposure in two of
the best dry gas plays in North America.  
A significant portion of this resource base is located in our
Canadian heritage region, which stretches from Fort St. John in
northeastern British Columbia to Edson in west-central Alberta. Here,
we have a large, contiguous land base, providing extensive running
room. This land is supported by company-operated midstream
Talisman has established itself as a top-tier operator in the
Marcellus shale play, with 5 tcf of contingent resource and an
estimated 1,600 prospective drilling locations. The play is currently
self-funded and provides material upside with an increase in North
American natural gas prices. 
In the current low natural gas price environment, we have sharpened
our focus in North America in 2013, reducing spending on dry gas
plays. Our short-term priority is to continue to develop the
liquids-rich Eagle Ford shale play, where production growth combined
with capital and operating efficiency improvements will deliver
considerable cash flow from this high-cash margin play. 
In addition, our 2013 priorities for North America include drilling
to hold strategic land positions in some of our dry gas plays. We
will also seek to monetize assets wi
th minimal cash flow and high net
asset values, specifically the Montney and North Duvernay plays.  
We plan to spend approximately $1.1 billion in our core North
American business in 2013 - a decrease of roughly 30% from the
previous year. Approximately 80% of capital is being allocated to
three liquids-rich plays, with a significant reduction in spending on
dry gas plays. This activity set positions Talisman to double its
North American liquids production over the next few years.  
In the Eagle Ford, we will continue to focus on liquids-rich parts of
the acreage, and we are increasing pad drilling in 2013. We have
built a secure egress position and we entered the year with 50
uncompleted wells, which we plan to complete and tie-in. 
In the liquids-rich Duvernay shale, we hold approximately 350,000 net
acres. We recently completed a well reporting one of the highest
liquids ratios in the play and we plan continued appraisal drilling
in 2013. 
At Wild River, we are growing NGL volumes through development of this
multi-zone play, with a new Deep Cut liquids extraction facility that
should be operational by the end of this year.  
In the Montney, the majority of the capital program is funded by our
joint venture partner. Here, we will continue to assess and appraise
the property and continue to develop the liquids-rich eastern part of
the play. We will also invest capital at Edson to maintain mineral
rights and assess liquids-rich opportunities.  
In the Marcellus shale, we will selectively spend capital to hold
strategic core acreage positions. 
In the three years since the Equion joint venture, we have drilled
some exciting exploration wells, completed a successful stratigraphic
program - which indicates large heavy oil potential -and secured
interest in a key pipeline to access markets. With these activities,
we have moved into the development phase.  
We have three key areas in Colombia: the Equion joint venture (with
the Piedemonte complex), the heavy oil region (Block CPO-9 and
CPE-6), and the Ocensa pipeline. Part of Talisman's Niscota license
(adjacent to Piedemonte) and operatorship is being transferred to
Equion. We plan to spend approximately $250 million on exploration
and development activities in Colombia in 2013.  
The majority of production comes from Piedemonte within our Equion
joint venture. In 2012, daily production from Colombia averaged
17,000 boe/day of high netback liquids and natural gas. In 2013, we
will continue to progress toward Piedemonte Phase II facilities
expansion. Exploration activities in the Niscota Block continue with
imminent flow testing of the Huron-2 well and ongoing drilling of the
Huron-3 well.  
In the heavy oil region, we have secured the Exploration
Environmental License for CPO-9, allowing us to move forward with a
seven-well Akacias appraisal program with the intention of flowing
wells on extended well tests in 2013. An exploration well in the
Lorito prospect is also planned. In CPE-6, 3D seismic is ongoing.
Upon license approval, we will drill and flow test three wells prior
to proceeding toward development activity. While we have made
progress on securing permits, permitting delays continue to affect
the pace of development.  
Talisman now has ownership in 12.15% of the Ocensa pipeline and
approximately 55,000 bbls/day of capacity, plus an additional 13,900
bbls/day through Equion. Ocensa is now a profit centre for the
company, generating dividends from our ownership position and
marketing/capacity fees from oil transport capacity that is in short
supply in the Llanos Basin. As Talisman's production from Blocks
CPO-9, CPE-6, and the Niscota Block ramp up, we will have access to
the export facilities on the Caribbean coast. Monetization of all or
part of our Ocensa pipeline equity is also an option. 
Asia-Pacific - high netback self-funded growth 
Asia-Pacific is characterized by rapid economic growth supporting
strong energy demand. Talisman's portfolio in the region is anchored
by projects at Corridor (South Sumatra, Indonesia) and PM-3 CAA
(Malay Basin, offshore Malaysia/Vietnam), which are connected to high
netback natural gas markets through existing pipeline infrastructure.
We have been operating in the region for 20 years and have
demonstrated our operating capability with a strong track record of
consistent, safe delivery. We have established close working
relationships with host governments and national oil companies to
take full advantage of the region's investment opportunities. The
company is on track to deliver average production growth of
ly 8% per annum over the medium term, and the region is
expected to contribute over $400 million annually in free cash flow
to Talisman. 
Total capital spending in the region is expected to be approximately
$650 million, with five projects accounting for 85% of the total.  
The focus of the Malay Basin is long-life production and cash flow.
The PM-3 CAA fields are characterized by multiple stacked reservoirs,
which offer significant opportunities for increased recoveries. In
the near term, we will maintain production through infill drilling,
well interventions, and continuous operations improvements. We are
currently in discussion with key stakeholders with respect to an
extension of the current PM-3 CAA license, with the blocks expiring
in 2017 and 2018. In addition, we are looking for near-field
exploration opportunities.  
Talisman's acreage in the Sabah Basin provides access to low-cost
discovered oil and gas reserves, with extensive infrastructure in
place. In late 2012, we took over operatorship of the Kinabalu field
and will seek to enhance production through workovers, development
drilling, and enhanced oil recovery techniques. We hold two large
exploration licenses next to Kinabalu where new 3D seismic has
identified potential hydrocarbons, and two exploration wells will be
drilled in 2013.  
In Indonesia, the South Sumatra area includes key assets such as
Corridor and Jambi Merang. At Corridor, the company has a very large
natural gas reserve base. Here, we continue to invest in development
opportunities, including proving up additional reserves to
potentially allow sanction of another production train at the Suban
field. At Jambi Merang, we will invest to maintain a high level of
operating efficiency and consider expanding into the next development
In Vietnam, Talisman is completing the HST/HSD field development,
which is expected to come onstream in the second half of 2013 with
net production expected at approximately 10,000 boe/day.   
In PNG, we are continuing our gas aggregation strategy across our
large land position, with potential of up to 20 tcf of undiscovered
petroleum initially in place (unrisked). Our principal partner,
Mitsubishi, brings funding and LNG expertise. In the near term, we
will high-grade our land position to maintain quality and focus,
while we execute the Stanley condensate recovery scheme with the goal
of bringing on first production in late 2014 at the earliest. 
Other Operating Areas 
The North Sea  
The North Sea is an oil-based portfolio in a strong Brent oil price
environment. With 20 years of operating experience in the basin,
Talisman has focused on operating late-life, mature fields. In recent
years, we have not invested adequate capital in the UK, which has
contributed to asset reliability challenges as well as reduced
production capability.  
Recognizing the need for additional capital and looking to reduce our
exposure to inherent production volatility, Talisman sold a 49%
working interest in our UK assets to Sinopec for $1.5 billion in late
This transaction enables increased investment by the joint venture in
the UK North Sea, while allowing Talisman to reduce net spending. In
2013, investments will be made to improve operational efficiency in
the UK and to execute economic redevelopment and life extension
Redevelopment of the Montrose area - including facilities upgrades,
development drilling, and the tie-back of undeveloped fields -
accounts for approximately one-half of our UK North Sea spending this
year. Investment will also be directed to infill drilling, water
injection, platform, and subsea upgrades. We will also re-examine the
possibility of developing the Auk South field.  
In Norway, spending will be focused at Brage and Varg, including
development drilling, field extensions, near-field exploration, and
the Varg gas export project. In 2012, the Yme project experienced
significant delays, quality issues and cost overruns. Given the
uncertainty of the timing of first oil, Talisman removed Yme from its
forward production projections and recorded impairment losses. 
Talisman's overall capital spending in the region is expected to be
about one-third less in 2013, after accounting for the joint venture.
Our strategy across the North Sea is to optimize value through
near-term opportunities, while driving safe, efficient, and reliable
Kurdistan Region of Iraq 
Talisman operates two blocks in the Kurdistan Region of Iraq:
Kurdamir and Topkhana. Kurdistan is a world-class exploration
opportunity in an under-explored basin. In 2012, we made a
significant oil discovery in Kurdamir. Talisman's net 2C contingent
resources in Kurdamir/Topkhana today are 114 mmbbls of liquids and
1.5 tcf of natural gas. Further appraisal drilling is targeted at
proving the significant oil upside that exists. We currently estimate
329 mmbbls and 1.2 tcf of net unrisked prospective resource.  
One of our key priorities this year is to recognize value in our
portfolio. To do so, we will continue exploration and appraisal
drilling to establish the extent of the resource base in Kurdistan.
In 2013, we will drill two wells: Kurdamir-3 to evaluate the extent
of the oil column, and a second well at Topkhana. Once these drilling
programs are completed, we will consider all options to unlock value
in this asset. 
Talisman Energy Inc. is a global upstream oil and gas company,
headquartered in Canada. Talisman has two core operating areas: the
Americas (North America and Colombia) and Asia-Pacific. Talisman is
committed to conducting business safely, in a socially and
environmentally responsible manner, and is included in the Dow Jones
Sustainability (North America) Index. Talisman is listed on the
Toronto and New York stock exchanges under the symbol TLM. Please
visit our website at (www.talisman-energy.com) 
Forward-Looking Information  
This news release contains information that constitutes
"forward-looking information" or "forward-looking statements"
(collectively "forward-looking information") within the meaning of
applicable securities legislation. This forward-looking information
includes, among others, statements regarding: business strategy,
priorities and plans; expected capital expenditures, company-wide and
regionally; expected production, company-wide; regionally and by
product; expected divestitures and/or JVs and targeted timing and
targeted value of disposals; potential share repurchase and other
potential reinvestment alternatives; targeted debt to cash flow
ratio; expected G&A reductions; expected cash flow - company-wide,
regionally and by product-type; expected free cash flow; expected
benefits of the JV with Sinopec in the UK; expected improvement in
drilling performance in the Eagle Ford and expected associated
benefits; planned drilling and rigs and drilling strategy in North
America; expected completion of the Deep Cut facility; expected
seismic, drilling, testing and other activity in Colombia; expected
benefits of t
he ownership share in the Ocensa pipeline; expected
exploration and development activities in Talisman's Asia-Pacific
region; possible exploration upside in the Sabah basin; potential
sanction of production train at the Suban field; expected completion
of and production at HST/HSD; targeted first production at Stanley;
planned focus and strategy in the UK; planned drilling, extensions
and exploration in Norway; planned upgrades, drilling and tie-back in
the UK; planned drilling in Kurdistan; and other expectations,
beliefs, plans, goals, objectives, assumptions, information and
statements about possible future events, conditions, results of
operations or performance. The company priorities disclosed in this
news release are objectives only and their achievement cannot be
guaranteed. Indicative capital estimates for 2013, which are provided
in this news release, are subject to change. 
The factors or assumptions on which the forward-looking information
is based include: assumptions inherent in current guidance; projected
capital investment levels; the flexibility of capital spending plans
and the associated sources of funding; the successful and timely
implementation of capital projects; the continuation of tax, royalty
and regulatory regimes; ability to obtain regulatory and partner
approval; commodity price and cost assumptions; and other risks and
uncertainties described in the filings made by the Company with
securities regulatory authorities. The Company believes the material
factors, expectations and assumptions reflected in the
forward-looking information are reasonable but no assurance can be
given that these factors, expectations and assumptions will prove to
be correct. Forward-looking information for periods past 2013 assumes
escalating commodity prices. Closing of any transactions will be
subject to receipt of all necessary regulatory approvals and
completion of definitive agreements. 
Undue reliance should not be placed on forward-looking information.
Forward-looking information is based on current expectations,
estimates and projections that involve a number of risks which could
cause actual results to vary and in some instances to differ
materially from those anticipated by Talisman and described in the
forward-looking information contained in this news release. The
material risk factors include, but are not limited to: the risks of
the oil and gas industry, such as operational risks in exploring for,
developing and producing crude oil and natural gas; risks and
uncertainties involving geology of oil and gas deposits; risks
associated with project management, project delays and/or cost
overruns; uncertainty related to securing sufficient egress and
access to markets; the uncertainty of reserves and resources
estimates, reserves life and underlying reservoir risk; the
uncertainty of estimates and projections relating to production,
costs and expenses, including decommissioning liabilities; risks
related to strategic and capital allocation decisions, including
potential delays or changes in plans with respect to exploration or
development projects or capital expenditures; fluctuations in oil and
gas prices, foreign currency exchange rates, interest rates and tax
or royalty rates; the outcome and effects of any future acquisitions
and dispositions; health, safety, security and environmental risks,
including risks related to the possibility of major accidents;
environmental regulatory and compliance risks, including with respect
to greenhouse gases and hydraulic fracturing; uncertainties as to the
availability and cost of credit and other financing and changes in
capital markets; risks in conducting foreign operations (for example,
civil, political and fiscal instability and corruption); risks
related to the attraction, retention and development of personnel;
changes in general economic and business conditions; the possibility
that government policies, regulations or laws may change or
governmental approvals may be delayed or withheld; and results of the
Company's risk mitigation strategies, including insurance and any
hedging activities. 
The foregoing list of risk factors is not exhaustive. Additional
information on these and other factors which could affect the
Company's operations or financial results or strategy are included in
Talisman's most recent Annual Information Form. In addition,
information is available in the Company's other reports on file with
Canadian securities regulatory authorities and the United States
Securities and Exchange Commission. Forward-looking information is
based on the estimates and opinions of the Company's management at
the time the information is presented. The Company assumes no
obligation to update forward-looking information should circumstances
or management's estimates or opinions change, except as required by
Oil and Gas Information 
National Instrument 51-101 ("NI 51-101") of the Canadian Securities
Administrators imposes oil and gas disclosure standards for Canadian
public companies engaged in oil and gas activities. Talisman has
obtained an exemption from Canadian securities regulatory authorities
to permit it to provide certain disclosures in accordance with the US
disclosure standards, in addition to the disclosure mandated by NI
51-101, in order to provide for comparability of oil and gas
disclosure with that provided by US and other international issuers.
Accordingly, in addition to the reserves data and certain other oil
and gas information included in this news release which is provided
in accordance with NI 51-101, there is data and information provided
in accordance with US disclosure standards. 
A separate exemption granted to Talisman also permits it to disclose
internally evaluated reserves data. Any reserves and resources data
contained in this news release reflects Talisman's estimates of its
reserves and resources. While Talisman annually obtains an
independent audit of a portion of its proved and probable reserves,
no independent qualified reserves evaluator or auditor was involved
in the preparation of the reserves and resources data disclosed in
this news release. 
Production and Reserves Volumes  
Unless otherwise stated, production volumes and reserves estimates
are stated on a Company interest basis prior to the deduction of
royalties and similar payments. In the US, net production volumes and
reserve estimates are reported after the deduction of these amounts.
US readers may refer to the table headed "Continuity of Net Proved
Reserves" in Talisman's most recent Annual Information Form for a
statement of Talisman's net production volumes and reserves. The use
of the word "gross" in this news release means a 100% interest prior
to the deduction of royalties and similar payments.  
In this news release, Talisman also discloses contingent resources,
prospective resources and PIIP as at February 28, 2013. Where not
otherwise indicated, in this news release, the contingent resources
provided are 2C and the prospective resources provided are unrisked
best estimates.  
Contingent resources are defined as those quantities of petroleum
estimated, as of a given date, to be potentially recoverable from
known accumulations using established technology or technology under
development, but which are not currently considered to be
commercially recoverable due to one or more contingencies. The
contingencies that prevent the resources from being classified as
reserves are: lack of gas sales contract; additional testing;
production and performance appraisal activities; development time
frame too far in the future; demonstration of economic viability;
facilities and egress; access to equipment and services; hydraulic
fracturing technology; commodity prices and regulatory approvals.
There is no certainty that it will be commercially viable to produce
any portion of the resources. In addition to these contingencies and
uncertainties the development of commerciality of resources is also
subject to a number of risk factors, as discussed more fully above. 
Prospective resources are those quantities of petroleum estimated, as
of a given date, to be potentially recoverable from undiscovered
accumulations by application of future development projects.
Prospective resources have both an associated chance of discovery and
a chance of development. There is no certainty that any portion of
the resources will be discovered. If discovered, there is no
certainty that it will be commercially viable to produce any portion
of the resources. Unrisked prospective resources are not risked for
change of development or chance of discovery. If a discovery is made,
there is no certainty that it will be developed or, if it is
developed, there is no certainty as to the timing of such
development. In this news release risked prospective resources have
been risked for chance of discovery but have not been risked for
chance of development. If a discovery is made, there is no certainty
that it will be developed or, if it is develo
ped, there is no
certainty as to the timing of such development.  
PIIP is defined as petroleum initially in place and is that quantity
of petroleum that is estimated to exist originally in naturally
occurring accumulations. It is the total quantity of petroleum that
is estimated, as of a given date, to be contained in known
accumulations, prior to production. PIIP estimates may contain all
resource classifications, both discovered and undiscovered. There is
no certainty that any portion of the resources will be discovered. If
discovered, there is no certainty that it will be commercially viable
to produce any portion of the resources.  
Non-Core Assets  
In this news release, all references to "core" and "non-core" assets
and properties align with the company's current public disclosure
regarding its assets and properties. 
BOE Conversion  
Throughout this news release, barrels of oil equivalent (boe) are
calculated at a conversion rate of six thousand cubic feet (mcf) of
natural gas for one barrel of oil (bbl). This news release also
includes references to mcf equivalents (mcfes) which are calculated
at a conversion rate of one barrel of oil to six thousand cubic feet
of gas. Boes and Mcfes may be misleading, particularly if used in
isolation. A boe conversion ratio of 6mcf:1bbl and an mcfe conversion
ratio of 1bbl:6mcf are based on an energy equivalence conversion
method primarily applicable at the burner tip and do not represent a
value equivalency at the well head. 
Talisman also discloses netbacks in this news release. Netbacks per
boe are calculated by deducting from the sales price associated
royalties, operating and transportation costs. 
The financial information for 2012 and 2013 is presented in
accordance with International Financial Reporting Standards (IFRS).
IFRS may differ from generally accepted accounting principles in the
Non-GAAP Financial Measures  
Included in this news release are references to financial measures
used in the oil and gas industry such as free cash flow, cash flow
and capital expenditure. These terms are not defined by IFRS.
Consequently, these are referred to as non-GAAP measures. Talisman's
reported results of such measures may not be comparable to similarly
titled measures reported by other companies.  
Free Cash Flow is used by management to assess the amount of funds
available for reinvestment or to reduce debt levels or return to
shareholders. Free cash flow is the net of cash provided by
operating, investing and financing activities before the repayment or
issuance of long-term debt.  
Cash Flow represents net income before exploration costs, DD&A,
impairment, deferred taxes and other non-cash expenses. Cash flow is
used by the Company to assess operating results between years and
between peer companies using different accounting policies. Cash flow
should not be considered an alternative to, or more meaningful than,
cash provided by operating, investing and financing activities or net
income as determined in accordance with IFRS as an indicator of the
Company's performance or liquidity.  
The company's 2013 cash provided by operating activities is expected
to be $1.8 billion. 
Capital (or "capital spend" or "exploration and development
spending") is calculated by adjusting the capital expenditure per the
financial statements for exploration costs that were expensed as
incurred, including the capital spend of the jointly controlled
entities of the company.  

                                                      Year Ended   
(US$ millions)                                    December 31, 2012
Exploration, development and other                            3,658
Exploration expensed                                            346
Capital                                                       4,004

The company's 2013 estimated capital expenditure, pursuant to IFRS,
is expected to be $2 billion. 
Forecasted Cash Flow and Forecasted Free Cash Flow:  
This news release also contains discussions of anticipated cash flow
and anticipated free cash flow both on an aggregate and per share
basis. The material assumptions used in determining estimates of cash
flow are: the anticipated production volumes; estimates of realized
sales prices, which are in turn driven by benchmark prices, quality
differentials and the impact of exchange rates; estimated royalty
rates; estimated operating expenses; estimated transportation
expenses; estimated general and administrative expenses; estimated
interest expense, including the level of capitalized interest; and
the anticipated amount of cash income tax and petroleum revenue tax.
The amount of is inherently difficult to predict.  
Anticipated production volumes are, in turn, based on the midpoint of
the estimated production range and do not reflect the impact of any
potential asset dispositions or acquisitions. The completion of any
contemplated asset acquisitions or dispositions is contingent on
various factors including favourable market conditions, the ability
of the Company to negotiate acceptable terms of sale and receipt of
any required approvals for such acquisitions or dispositions.  
In addition to the assumptions that underpin forecasted cash flow,
forecasted free cash flow also includes assumptions around capital
investments and financing activities. 
Talisman Energy Inc. - Media and General Inquiries
Phoebe Buckland
Manager, External Communications
Talisman Energy Inc. - Shareholder and Investor Inquiries
Lyle McLeod
Vice-President, Investor Relations
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