Talisman Energy Third Quarter Results

Talisman Energy Third Quarter Results 
Production and Cash Flow Up on Higher Liquids Volumes 
Building Momentum for 2014 
CALGARY, ALBERTA -- (Marketwired) -- 11/06/13 -- Talisman Energy Inc.
(TSX:TLM) (NYSE:TLM) has reported its operating and financial results
for the third quarter of 2013. All values in this release are in US$
unless otherwise stated. 
"Our third quarter results reflect the progress the company has made
against its four strategic priorities," said Hal Kvisle, President
and CEO. "Cash flow(1) has steadily increased over the course of the
year, and we are on track to reach full year cash flow and production
targets. Year-to-date capital spending is down 17% from 2012 and we
will continue to work towards balancing cash flows with our capital
budget through 2014 and 2015.  
"We are now focused on two core regions, the Americas and
Asia-Pacific, and our assets in these regions are performing well. We
are achieving excellent results in the Marcellus, sustaining gas
production rates through production optimization and a modest
drilling program. We have increased Eagle Ford production by more
than 50% through artificial lift, compression and improved drilling
and completion practices. In Canada we are seeing steady production
from legacy assets at Chauvin and Edson, and impressive early results
from our Duvernay shale appraisal program. In Colombia, our Block 9
appraisal program is delivering strong results, and we have now
received approval to proceed with oil development on Block 6.  
"Our Asia-Pacific core region continues to deliver solid production
and cash flow, with continuing strong performance at Corridor and
PM-3. We have now seen a full quarter of impressive production from
HST/HSD in Vietnam, and we are seeing positive results from our first
well on the recently acquired Red Emperor Block 07/03.  
"Throughout Talisman, people are embracing the operational excellence
principles of safer, better, faster and at lower cost. Our renewed
focus on stable, sustainable, low cost production is generating
positive results in all parts of our company.  
"We remain committed to our $2 billion to $3 billion disposition
target and we expect to have more to say on this in the near future." 
(1) The term "cash flow" is a non-GAAP measure. Please see the
advisories and reconciliations elsewhere in this news release. 
2013 Third Quarter Highlights 


 
--  Production averaged 371,000 boe/d, up 3% over the previous quarter. Oil
    and liquids production was up 6% versus the second quarter primarily due
    to increased volumes from the Eagle Ford and HST/HSD offshore Vietnam. 
 
--  The company's two core areas, the Americas and Asia-Pacific, are
    expected to meet or exceed full-year production guidance. In North
    America, liquids production is expected to come in at the top of the
    full-year liquids range of 35,000 bbls/d. 
 
--  Cash flow was $573 million, a 9% increase over the second quarter,
    driven primarily by higher liquids volumes. Year to date, the company
    has generated $1.6 billion in cash flow and is on track to reach its
    target of $2.1 billion-$2.3 billion for the year. 
 
--  The company recorded a net loss of $54 million, compared to net income
    of $97 million in the second quarter. This was due to a loss in the
    company's hedging program, partially offset by higher production volumes
    and liquids pricing. 
 
--  Talisman continues to improve operational efficiency in North America.
    Year over year, drilling and completion costs are down 16% in the Eagle
    Ford and the Duvernay, and 11% in the Montney. Drilling costs are down
    12% in the Marcellus. 
 
--  The company has logged encouraging initial well test results from Block
    CPO-9 in Colombia and South Duvernay in Canada. 
 
--  In Colombia, Talisman and its partner have received an environment
    license from Colombian regulatory authorities for Block CPE-6. 
 
--  Talisman continues to make good progress on its planned $2 billion-$3
    billion divestment program. 

 
"It has been a year since I stepped in as Talisman's CEO, and I am
impressed with the progress our team has made over the past 12
months. We have focused our efforts and our capital program on two
core regions, we are living within our means, we are operating to a
higher standard and we are making progress against our divestment
targets. We are building a more focused, better performing and more
valuable company.  
"Management and the Board understand the company's opportunities and
challenges and have considered a range of scenarios and structural
options to maximize shareholder value. Our internal analysis,
together with external advice, confirms that a two-region model, with
disciplined capital programs and steady operational improvements, is
the best route to higher value for Talisman shareholders. We are
committed to delivering that value in 2014 and beyond." 
Financial Results 
Table includes the company's proportionate results from Talisman
Sinopec Energy UK Limited (TSEUK) and Equion Energia Limited
(Equion.) 


 
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September 30                  Q3 13     Q2 13     Q3 12  YTD 2013  YTD 2012 
----------------------------------------------------------------------------
Cash flow(2) ($ million)        573       526       693     1,616     2,347 
----------------------------------------------------------------------------
Cash flow per share(2)         0.56      0.51      0.68      1.57      2.29 
----------------------------------------------------------------------------
Earnings (loss) from                                                        
 operations(2)($ million)       (45)      (27)      (36)     (132)      202 
----------------------------------------------------------------------------
Earnings (loss) from                                                        
 operations per share(2)      (0.04)    (0.03)    (0.04)    (0.13)     0.20 
----------------------------------------------------------------------------
Net income (loss) ($                                                        
 million)                       (54)       97      (731)     (170)     (244)
----------------------------------------------------------------------------
Net income (loss) per                                                       
 share                        (0.05)     0.09     (0.71)    (0.17)    (0.24)
----------------------------------------------------------------------------
Average shares outstanding                                                  
 - basic (million)            1,031     1,030     1,026     1,029     1,025 
----------------------------------------------------------------------------

 
Cash flow increased by 9% versus the previous quarter to $573
million. This was driven primarily by a 6% increase in liquids
volumes from the Eagle Ford, HST/HSD, the North Sea, the start of
production from the EMK field in Algeria and income received from
excess capacity in the Ocensa pipeline in Colombia. This was
partially offset by higher royalties in Vietnam, Algeria and
Colombia, and higher taxes on improved results. Compared to the same
quarter last year, cash flow is down 17% primarily due to the sale of
a 49% equity interest in Talisman's UK North Sea business in December
2012.  
The company recorded a loss from operations of $45 million, compared
to a loss of $27 million in the second quarter. While cash flow
increased $47 million from the second quarter, deferred tax 
expense
on pre-tax earnings from operations and unrealized foreign exchange
losses were higher than the second quarter.  
The company recorded a net loss of $54 million, compared to net
income of $97 million in the second quarter. This was due to lower
North American gas prices, mark-to-market hedging losses and foreign
exchange losses, partially offset by higher production volumes and
liquids pricing and recognition of tax benefits from Vietnam
production. Compared to the same period last year, earnings have
increased due to higher impairments recorded in 2012.  
Year to date capital spending(2) is $2.5 billion, 17% lower than
2012. Net debt(2) increased to $5.0 billion. The company continues to
target a long term debt to cash flow ratio of 1.5 or less, and will
use proceeds from its disposition program to reduce net debt.  
(2) The terms "cash flow", "cash flow per share", "earnings (loss)
from operations" "earnings (loss) from operations per share",
"capital spending" and "net debt" are non-GAAP measures. Please see
the advisories and reconciliations elsewhere in this news release. 
Commodity Pricing and Netbacks 
North Sea results include the UK and Norway; "Other" results include
Colombia and Algeria. The table does not include the impact of
hedging. 


 
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September 30                   Q3 13     Q2 13     Q3 12  YTD 2013  YTD 2012
----------------------------------------------------------------------------
Pricing                                                                     
----------------------------------------------------------------------------
WTI benchmark ($/bbl)         105.83     94.22     92.22     98.14     96.23
----------------------------------------------------------------------------
Brent benchmark ($/bbl)       110.36    102.44    109.61    108.45    112.14
----------------------------------------------------------------------------
NYMEX benchmark ($/mmbtu)       3.60      4.09      2.81      3.68      2.62
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Netbacks                                                                    
----------------------------------------------------------------------------
Oil and liquids netback ($/bbl)                                             
North America                  47.68     36.45     44.10     41.06     45.09
                          --------------------------------------------------
Southeast Asia                 40.06     29.66     42.55     32.75     47.64
                          --------------------------------------------------
North Sea                      35.80     17.96     50.00     33.94     60.74
                          --------------------------------------------------
Other                          53.43     57.74     54.48     58.54     61.92
                          --------------------------------------------------
Total oil and liquids                                                       
 ($/bbl)                       43.17     33.13     48.05     39.31     55.32
----------------------------------------------------------------------------
Natural gas netback ($/mcf)                                                 
----------------------------------------------------------------------------
North America                   1.35      1.72      1.01      1.43      0.66
                          --------------------------------------------------
Southeast Asia                  5.18      5.59      5.28      5.50      5.64
                          --------------------------------------------------
North Sea                       5.79     13.71      6.94      7.61      6.98
                          --------------------------------------------------
Other                           1.97      1.86      1.49      2.01      2.00
                          --------------------------------------------------
Total natural gas ($/mcf)       2.72      3.20      2.55      2.94      2.47
----------------------------------------------------------------------------
Total company netback                                                       
 ($/boe)                       25.98     24.06     27.87     25.27     30.46
----------------------------------------------------------------------------

 
Pricing  
WTI prices increased 12% quarter over quarter and 15% compared to the
same quarter the previous year. Brent prices increased 8% over the
previous quarter and were flat versus the same quarter last year.
NYMEX natural gas prices were down 12% from last quarter, and up 28%
over the same quarter in 2012. 
Total company netbacks  
The company's average third quarter netback was $25.98, up 8% from
last quarter on higher liquids prices in North America and Southeast
Asia, and lower operating costs in North America.  
Year to date, average netbacks were down primarily due to the impact
of lower Brent pricing and higher royalties in Southeast Asia and
North America. This was partially offset by higher realized gas
prices. 
Oil and liquids netbacks  
In the second quarter of 2013 liquids netbacks were down due to lower
capital spend in Malaysia resulting in higher royalties, and lower
North Sea production. In the third quarter, liquids netbacks
increased as royalty rates normalized and North Sea production
increased.  
Year to date, oil and liquids netback were down due to higher
Southeast Asia royalties, lower North Sea production resulting in
higher unit operating costs, and lower Brent prices.  
Gas netbacks  
Gas netbacks have fluctuated largely in line with prices on a quarter
over quarter and year to date basis.  
Production 
Table includes Talisman's share of production from subsidiaries and
equity-accounted entities.  


 
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September 30                   Q3 13     Q2 13     Q3 12  YTD 2013  YTD 2012
----------------------------------------------------------------------------
Oil and liquids (mbbls/d )                                                  
----------------------------------------------------------------------------
North America                     37        33        26        33        27
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Southeast Asia                    44        43        39        43        42
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North Sea(i)                      32        30        71        33        77
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Other (including Colombia                                                   
 and Algeria)                     21        20        23        21        23
----------------------------------------------------------------------------
Total oil and liquids                                                       
 (mbbls/d)                       134       126       159       130       169
----------------------------------------------------------------------------
Natural gas (mmcf/d)                                                        
----------------------------------------------------------------------------
North America                    882       846       953       868     1,005
----------------------
------------------------------------------------------
Southeast Asia                   491       519       509       514       529
----------------------------------------------------------------------------
North Sea(i)                       6         6        28         9        34
----------------------------------------------------------------------------
Other (including Colombia                                                   
 and Algeria)                     44        43        43        42        41
----------------------------------------------------------------------------
Total natural gas (mmcf/d)     1,423     1,414     1,533     1,433     1,609
----------------------------------------------------------------------------
Total mboe/d                     371       361       415       368       437
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Assets sold (mboe/d)                                                        
----------------------------------------------------------------------------
North America                      -         -         -         -         5
----------------------------------------------------------------------------
North Sea                          -         -        27         -        27
----------------------------------------------------------------------------
Southeast Asia                     -         1         3         -         3
----------------------------------------------------------------------------
Production from ongoing                                                     
 operations (mboe/d)             371       360       385       368       402
----------------------------------------------------------------------------

 
(i)UK North Sea equity interest reduced to 51% in December 2012.  
Production from ongoing operations was 371,000 boe/d, up 3% over the
previous quarter due to higher liquids volumes from the Eagle Ford, a
full quarter of production from HST/HSD offshore Vietnam, increased
development activity in the Marcellus and the start of production
from the EMK field in Algeria. These increases were partially offset
by lower volumes in Southeast Asia. Total oil and liquids production
is up 6% over the previous quarter. In North America, liquids
production is up 12% quarter over quarter and 42% over the same
period last year. 
The Americas  
North America 


 
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September 30                   Q3 13     Q2 13     Q3 12  YTD 2013  YTD 2012
----------------------------------------------------------------------------
Gas                                                                         
----------------------------------------------------------------------------
  Edson-Duvernay-Montney         349       349       385       352       398
----------------------------------------------------------------------------
  Marcellus                      443       426       507       437       527
----------------------------------------------------------------------------
  Eagle Ford                      66        50        37        56        37
----------------------------------------------------------------------------
  Other                           24        21        24        23        26
----------------------------------------------------------------------------
Gas from ongoing                                                            
 operations (mmcf/d)             882       846       953       868       988
----------------------------------------------------------------------------
Liquids                                                                     
----------------------------------------------------------------------------
  Edson-Duvernay-Montney           5         5         5         5         5
----------------------------------------------------------------------------
  Eagle Ford                      21        17         9        17         8
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  Chauvin                         11        11        12        11        12
----------------------------------------------------------------------------
Liquids from ongoing                                                        
 operations (mbbls/d)             37        33        26        33        25
----------------------------------------------------------------------------
Assets sold (mboe/d)               -         -         -         -         5
----------------------------------------------------------------------------
Total North America gas                                                     
 production (mmcf/d)             882       846       953       868     1,005
----------------------------------------------------------------------------
Total North America                                                         
 liquids production                                                         
 (mbbls/d))                       37        33        26        33        27
----------------------------------------------------------------------------
Total North America                                                         
 production (mboe/d)             184       174       185       178       195
----------------------------------------------------------------------------

 
Production in North America averaged 184,000 boe/d, up 6% from the
previous quarter on liquids growth from the Eagle Ford and increased
development activity in the Marcellus, partially offset by natural
declines. The company expects to exceed its North American production
guidance of 180,000 boe/d, with liquids production expected to be at
the top of the company's guided range at approximately 35,000 bbls/d. 
In the Eagle Ford, production was 32,000 boe/d net to Talisman, a 28%
increase from the previous quarter and more than double the same
period last year. Liquids volumes were up 24% to 21,000 boe/d,
compared to the previous quarter. Year to date, Talisman has brought
on stream 102 gross operated wells, versus 38 in the same period last
year, and activity has shifted from drilling single land retention
wells to higher value acreage and pad drilling. The company continues
to make improvements to cost and operational efficiency. Year to
date, drilling and completion costs were 16% lower than last year at
$8.4 million per well. Artificial lift and compression projects aimed
at optimizing production have helped increase volumes quarter over
quarter.  
In the Marcellus, production averaged 443 mmcf/d, up 4% from the
previous quarter as a result of production optimization activities
and a $50 million injection of capital to complete and tie in
additional wells. Year to date, the company completed 20 wells from
its inventory of 70 drilled but uncompleted wells. In addition,
drilling cycle times have been reduced by 25% over the same period
last year, to an average of 13 days, and drilling costs have been
reduced by 12%. Optimization of compression costs and the short-term
sale of excess transportation capacity lowered operating costs by $36
million.  
Talisman has finished drilling the first well of a seven-well program
in the Friendsville area. This program is intended to be the focus of
the Marcellus operations for the remainder of 2013 and into 2014.  
In the Greater Edson area, the third party deep cut processing plant
at Wild River came on stream in late October. Natural gas liquids
volumes from this plant are expected to be approximately 5,000 bbls/d
net to Talisman (approximately 70% ethane), once the plant reaches
full operating efficiency in mid-November. During the quarter,
Talisman commenced a horizontal drilling program targeting the
liquids-rich Wilrich formation, with three wells drilled and a fourth
well currently drilling. Initial rates are encouraging, with one of
the wells coming on stream at a restricted rate of approximately 10
mmcf/d with 600-700 bbls/d of liquids. Also in Wild River, Talisman
continues to progress its vertical well drilling program where
improved geological targeting has increased production rates by 50%
compared to 2012.  
In the South Duvernay, Talisman continues to evaluate its acreage
with five appraisal wells drilled to date. Two wells were completed
during the quarter, with seven-day average rates of 2.8 mmcf/d of gas
and 730 bbls/d of condensate for the first well, and 1.6 mmcf/d and
365 bbls/d of condensate for the second well. Year-to-date drilling
and completions costs average $16.2 million per well, down 16%
compared to 2012, despite drilling wells with longer horizontal
sections and more fracture stages.  
In the Montney, Talisman initiated a 27-well completion program in
Farrell Creek. The company is operating two drilling rigs targeting
the liquids-rich area of the play. Recent completions have shown a 40
bbls/mmcf condensate-to-gas ratio on test. Talisman continues to make
significant improvements in operational efficiency, reducin
g average
drilling and completion costs by 11% compared to 2012, to $8.9
million per well. Drilling cycle times are down 24% compared to 2012,
averaging 31 days. In Cypress A, drilling commenced on the third well
of a five-well vertical drilling appraisal program. The company also
completed the Cypress 3D seismic program, one of the largest of its
kind in Western Canada, on schedule and under budget.  
In the Chauvin area, production for the quarter remained steady at
11,000 boe/d. A total of 17 infill wells have been drilled to the end
of October. Talisman is evaluating lower risk opportunities to
maintain the company's stable base of high netback oil production. 
Colombia  
Third quarter production was down slightly quarter over quarter to
17,000 boe/d. In the heavy oil region, Talisman has expanded the
appraisal program on the Akacias field in Block CPO-9 to nine wells,
seven of which have been drilled. Akacias-1 has now produced 2,100
bbls/d (gross) for the last two years with minimal decline. Initial
production from Akacias-9 is approximately 1,700 bbls/d on long-term
test with additional upside potential. Four more wells on short-term
test had initial production rates of 600 to 2,000 bbls/d (gross). All
remaining wells are awaiting approval to proceed with long-term test
or are in various stages of testing and completion.  
The environmental license for development on Block CPE-6 has been
received from the Colombian regulator, and the company expects the
operator, Pacific Rubiales, to ramp up activity over the next six
months.  
In the foothills region, four deep wells continue to be drilled by
Equion: two at Piedemonte, one on the Cusiana field and one on the
Niscota Block.  
Talisman is in the final phase of monetizing an approximately 27%
equity stake in the Ocensa pipeline with three other owners
(Talisman's ownership position is approximately 12%). Talisman will
retain its full rights to pipeline capacity. 
Asia-Pacific  
Southeast Asia 


 
----------------------------------------------------------------------------
September 30                   Q3 13     Q2 13     Q3 12  YTD 2013  YTD 2012
----------------------------------------------------------------------------
Malaysia liquids (mbbls/d)        18        20        14        19        16
----------------------------------------------------------------------------
Malaysia gas (mmcf/d)             98       124       108       118       119
----------------------------------------------------------------------------
Malaysia total (mboe/d)           34        40        32        39        36
----------------------------------------------------------------------------
Indonesia liquids                                                           
 (mbbls/d)                         9        10        11        11        11
----------------------------------------------------------------------------
Indonesia gas (mmcf/d)           385       391       401       391       410
----------------------------------------------------------------------------
Indonesia total (mboe/d)          73        76        78        75        79
----------------------------------------------------------------------------
Vietnam liquids (mbbls/d)         13         6         2         7         2
----------------------------------------------------------------------------
Vietnam gas (mmcf/d)               8         4         -         5         -
----------------------------------------------------------------------------
Vietnam total (mboe/d)            14         7         2         8         2
----------------------------------------------------------------------------
Australia total (mboe/d)           4         7        12         6        13
----------------------------------------------------------------------------
Southeast Asia total                                                        
 (mboe/d)                        125       130       124       128       130
----------------------------------------------------------------------------

 
Southeast Asia production averaged 125,000 boe/d in the third
quarter, slightly lower than the previous quarter and in line with
the same period last year. Compared to the second quarter, a full
quarter of oil production from HST/HSD in Vietnam was offset by
planned turnarounds in Malaysia, lower seasonal demand in Indonesia
and declines in Australia.  
Natural gas production for the quarter averaged 491 mmcf/d, with
prices averaging $9.41/mcf and netbacks of $5.18/mcf. Gas production
was down 5% from the previous quarter due to planned turnarounds in
Malaysia and lower seasonal demand due to the Eid holidays in
Indonesia.  
In Vietnam, production averaged 14,000 boe/d in the quarter,
significantly higher than both the previous quarter and the same
period last year, with HST/HSD reporting its first full quarter of
production. HST/HSD continues to produce in line with expectations,
averaging nearly 13,000 boe/d net to Talisman in the quarter,
constrained by export infrastructure. The first appraisal well in the
recently acquired Block 07/03 commenced drilling in late August, and
early results are promising. A sidetrack well will be drilled once
testing is complete, followed by the final exploration commitment
well for the block.  
In Indonesia, production from continuing operations averaged 73,000
boe/d, slightly lower than both the previous quarter and same period
last year. Gas sales are expected to increase after completion of
facility upgrades and tie-in work at Corridor during the fourth
quarter.  
In Malaysia, production averaged 34,000 boe/d, down 15% from the
prior quarter. This was due to planned turnarounds at PM-3 CAA, and
minor operational issues exacerbated by weather conditions which
impacted platform uptime at Kinabalu. Year to date production was
higher due to the addition of Kinabalu. Infill drilling commenced at
the end of the quarter on the first of a multi-well rejuvenation
program at Kinabalu, and will continue throughout 2014.  
Production in Australia/Timor Leste is down from both the second
quarter and the same period last year due to decline and facility
interruptions at Kitan, and a planned shutdown at Lam/Cor. The Stena
Clyde offshore rig is expected at Kitan in the fourth quarter to
commence drilling Kitan-South, the first of a two-well appraisal
drilling program. 
Algeria 
Third quarter production averaged 11,000 boe/d, up 22% from the prior
period with EMK continuing to ramp up as commissioning nears
completion. Production is down from the same period last year with
first oil from EMK offset by temporary production restrictions
imposed by the regulator. Discussions with the Algerian authorities
to lift production restrictions are progressing, with a partial
lifting at EMK from the beginning of the fourth quarter. 
Other Operating Areas 
North Sea  
Talisman's share of UK production averaged 21,000 boe/d, up 24% from
the previous quarter; however, operations continue to be negatively
affected by scheduled turnarounds and reliability issues. A new
compressor was successfully lifted onto the Claymore platform at the
end of August, but the facility remains shut down due to a scheduled
turnaround and additional work needed for corrosion issues.
Production is expected to resume in the first quarter of 2014. The
Piper platform is shut down for replacement of the flare tip;
production is expected to resume by the end of the year.  
Information related to Talisman's investment in TSEUK is contained in
notes 9 and 20 of the Interim Condensed Consolidated Financial
Statements and the related Interim Management's Discussion and
Analysis for the period ended September 30, 2013. Both documents will
be available at www.sedar.com.  
In Norway, average daily production was 13,000 boe/d, unchanged from
the second quarter. The Varg Gas Export project is progressing as
planned, with the first export expected around year-end. 
Kurdistan Region of Iraq  
In Kurdistan, testing is now complete on the company's K-3 appraisal
well. The testing confirms the presence of oil on the southwestern
flank of the Kurdamir structure, which is deeper than previously
proven in the K-2 well. The testing and build up data indicates lower
than expected permeability when compared to previous wells drilled in
the Kurdamir and Topkhana Blocks. Interpretation of the drill stem
test results are ongoing and include analyses of collected oil and
formation water samples. The oil quality is similar to K-2 results.
The Topkhana-2 well is expected to spud late in the fourth quarter.  
The 3D seismic acquisition program over the Topkhana and Kurdamir
blocks was completed in the third quarter. The company continues to
look at options to monetize a portion of its net working interest in
Topkhana, which will also reduce its capital exposure going forward. 
Common Share and Preferred Share Dividend Declaration  
The company has declared a quarterly dividend on the company's common
shares of US$0.0675 per 
share. The dividend will be paid on December
31, 2013 to shareholders of record at the close of business on
November 18, 2013.  
The company has also declared a quarterly dividend of CAD$0.2625 on
its Cumulative Redeemable Rate Reset First Preferred Shares, Series
1. The dividend will be paid on December 31, 2013 to shareholders of
record at the close of business on November 18, 2013.  
Conference Call 
A conference call and webcast for investors, analysts and media will
be held at 8:30 a.m. MT (10:30 a.m. ET), November 6, 2013 to discuss
results. Participants will include Hal Kvisle, President and Chief
Executive Officer, and members of senior management. A transcript of
this call will be available on the Talisman Energy website at
www.talisman-energy.com. 
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 production; expected cash flow;
progress regarding asset dispositions;; expected capital spending;
expected drilling activity in the Americas; expected drilling
activity in Asia-Pacific; expected timing of production resumption
following platform shutdowns; expected lifting of restrictions in
Algeria; 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.  
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.  
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
law.  
Unless the context indicates otherwise, references in this news
release to "Talisman" or the "company" include, for reporting
purposes only, the direct or indirect subsidiaries of Talisman Energy
Inc. and the partnership interests held by Talisman Energy Inc. and
its subsidiaries unless stated otherwise. Such use of "Talisman" or
the "company" to refer to these other legal entities and partnership
interests does not constitute waiver by Talisman Energy Inc. or such
entities or partnerships of their separate legal status, for any
purpose.  
Oil and Gas Information  
Throughout this news release, Talisman makes reference to production
volumes. Unless otherwise stated, such production volumes are stated
on a gross basis, which means they are stated on a Company interest
basis prior to the deduction of royalties and similar payments. In
the US, net production volumes are reported after the deduction of
these amounts.  
Barrel of oil equivalent (boe) throughout this news release is
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 reference to mcf equivalents (mcfes) which are calculated at
a conversion rate of one barrel of oil to 6,000 cubic feet of gas.
Boes and mcfes may be misleading, particularly if used in isolation.
A boe conversion ratio of 6 mcf:1 bbl and an mcfe conversion ratio of
1 bbl: 6 mcf are based on an energy equivalence conversion method
primarily applicable at the burner tip and does not represent a value
equivalency at the wellhead.  
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.  
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. 
Forecasted Cash Flow  
This news release 
also contains discussions of anticipated cash flow.
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.  
Non-GAAP Financial Measures  
Included in this news release are references to financial measures
commonly used in the oil and gas industry such as cash flow, earnings
(loss) from operations, capital spending and net debt. These terms
are not defined by International Financial Reporting Standards
(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.  
Cash Flow 


 
----------------------------------------------------------------------------
                            September   June 30,  September     YTD     YTD 
                             30, 2013       2013   30, 2012    2013    2012 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Cash provided by operating                                                  
 activities                       637        357        379   1,325   1,988 
----------------------------------------------------------------------------
Changes in non-cash working                                                 
 capital                         (166)        61        223     (84)     59 
----------------------------------------------------------------------------
Add: Exploration                                                            
 expenditure                       66         67         81     208     228 
----------------------------------------------------------------------------
Add: Pennsylvania impact                                                    
 fee(1)                             -          -          -       -      25 
----------------------------------------------------------------------------
Add: Restructuring costs            6         11          -      34       - 
----------------------------------------------------------------------------
Add: Income tax                                                             
 adjustments(3)                     -         15          -      15       - 
----------------------------------------------------------------------------
Less: Dividends and                                                         
 distributions received                                                     
 from equity accounted                                                      
 entities                         (37)         -          -     (37)      - 
----------------------------------------------------------------------------
Less: Finance costs (cash)        (77)       (71)       (51)   (218)   (145)
----------------------------------------------------------------------------
Cash flow from subsidiaries       429        440        632   1,243   2,155 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Add: Cash provided by                                                       
 operating activities from                                                  
 equity accounted entities         86        124          2     358     182 
----------------------------------------------------------------------------
Change in non-cash working                                                  
 capital from equity                                                        
 accounted entities                54        (38)        59      12      11 
----------------------------------------------------------------------------
Add: Exploration                                                            
 expenditure from equity                                                    
 accounted entities                11          5          -      18       - 
----------------------------------------------------------------------------
Less: Finance costs (cash)                                                  
 from equity accounted                                                      
 entities                          (7)        (5)         -     (15)     (1)
----------------------------------------------------------------------------
Cash flow from equity                                                       
 accounted entities               144         86         61     373     192 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Cash Flow(2)                      573        526        693   1,616   2,347 
----------------------------------------------------------------------------
Cash flow per share              0.56       0.51       0.68    1.57    2.29 
----------------------------------------------------------------------------
Diluted cash flow per share      0.55       0.51       0.68    1.56    2.27 
----------------------------------------------------------------------------
 
1.  Pennsylvania impact fee amount represents the one-time impact of the
    retrospective application of the legislation to wells drilled pre-2012. 
2.  Includes cash flow from subsidiaries and Talisman's share of equity
    accounted entities' cash flow. 
3.  A court ruling in Southeast Asia indicated an additional current income
    tax of $31 million be charged during Q2 2013. In addition, the company
    recorded a $16 million benefit from the resolution of a tax position in
    North America in Q2. 

 
Cash flow, as commonly used in the oil and gas industry, represents
net income before exploration costs, DD&A, deferred taxes and other
non-cash expenses including Talisman's share of cash flow from equity
accounted entities. 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. Cash flow per share is cash flow divided by the average
number of common shares outstanding during the period. Diluted cash
flow per share is cash flow divided by the diluted number of common
shares outstanding during the period, as reported in the interim
condensed consolidated financial statements filed on November 6,
2013. A reconciliation of cash provided by operating activities to
cash flow is provided above. 
Earnings (loss) from Operations  


 
                             Three Months Ended                             
----------------------------------------------------------------------------
          
                  September  June 30, September     YTD           
                             30, 2013      2013  30, 2012    2013  YTD 2012 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Net income (loss)                 (54)       97      (731)   (170)     (244)
----------------------------------------------------------------------------
Loss (gain) on disposals                                                    
 (tax adjusted)                     1       (45)        -     (44)     (565)
----------------------------------------------------------------------------
Unrealized (gain) loss on                                                   
 financial instruments(tax                                                  
 adjusted)(1)                      91      (193)       95     (59)       95 
----------------------------------------------------------------------------
Share-based payments (tax                                                   
 adjusted)(2)                       1        (4)       52      21       (24)
----------------------------------------------------------------------------
Foreign exchange on debt                                                    
 (tax adjusted)                    21         4        10       2        22 
----------------------------------------------------------------------------
Impairment (tax adjusted)           1         7       443      52       818 
----------------------------------------------------------------------------
Pennsylvania impact fee (tax                                                
 adjusted)(3)                       -         -         -       -        16 
----------------------------------------------------------------------------
Restructuring costs (tax                                                    
 adjusted)                          5         8         -      26         - 
----------------------------------------------------------------------------
Income tax adjustments(4)           -        41         -      41         - 
----------------------------------------------------------------------------
Recognition of deferred tax                                                 
 asset(5)                         (92)        -         -     (92)        - 
----------------------------------------------------------------------------
Deferred tax adjustments(6)       (19)       58        95      91        84 
----------------------------------------------------------------------------
Earnings (loss) from                                                        
 operations(7)                    (45)      (27)      (36)   (132)      202 
----------------------------------------------------------------------------
Earnings (loss) from                                                        
 operations per share           (0.04)    (0.03)    (0.04)  (0.13)     0.20 
----------------------------------------------------------------------------
Diluted earnings (loss) from                                                
 operations per share           (0.04)    (0.03)    (0.04)  (0.13)     0.20 
----------------------------------------------------------------------------
 
1.  Unrealized (gain) loss on financial instruments relates to the change in
    the period of the mark-to-market value of the company's held-for-trading
    financial instruments. 
2.  Share-based payments relate principally to the mark-to-market value of
    the company's outstanding stock options and cash units at September 30.
    The company uses the Black-Scholes option pricing model to estimate the
    fair value of its share-based payment plans. 
3.  Pennsylvania impact fee amount represents the one-time impact of the
    retrospective application of the legislation to wells drilled pre-2012. 
4.  A court ruling in Southeast Asia indicated an additional income tax of
    $57 million be charged during Q2 2013. In addition, the company recorded
    a $16 million benefit from the resolution of a tax position in North
    America in Q2. 
5.  The company recognized deferred tax assets in Vietnam based on
    successful start up of HST/HSD. 
6.  Deferred tax adjustments largely comprise tax on foreign exchange on tax
    pools. 
7.  Earnings (loss) from operations include results and adjustments from
    subsidiaries and Talisman's share of equity accounted entities. 

 
Earnings (loss) from operations are calculated by adjusting the
company's net income (loss) per the financial statements for certain
items of a non-operational nature, on an after-tax basis. The
adjustments include items from subsidiaries and Talisman's share of
equity accounted entities. The company uses this information to
evaluate performance of core operational activities on a comparable
basis between periods. Earnings (loss) from operations per share are
earnings (loss) from operations divided by the average number of
common shares outstanding during the period. Diluted earnings (loss)
from operations per share are earnings (loss) from operations divided
by the diluted number of common shares outstanding during the period,
as reported in the interim condensed consolidated financial
statements filed on November 6, 2013. A reconciliation of net income
(loss) to earnings (loss) from operations is provided above. 
Capital Spending  


 
                             Three Months Ended                             
----------------------------------------------------------------------------
                             September  June 30, September                  
                              30, 2013      2013  30, 2012 YTD 2013 YTD 2012
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Subsidiaries                                                                
----------------------------------------------------------------------------
Exploration, development and                                                
 other                             608       649       779    1,826    2,673
----------------------------------------------------------------------------
Exploration expensed                66        67        81      208      228
----------------------------------------------------------------------------
Exploration and development                                                 
 spending - subsidiaries           674       716       860    2,034    2,901
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Talisman's share of equity                                                  
 accounted entities                                                         
----------------------------------------------------------------------------
Exploration, development and                                                
 other                             164       122        33      424       86
----------------------------------------------------------------------------
Exploration expensed                11         5         -       17        -
----------------------------------------------------------------------------
Exploration and development                                                 
 spending - joint ventures         175       127        33      441       86
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Capital spending for                                                        
 subsid
iaries and joint                                                     
 ventures                          849       843       893    2,475    2,987
----------------------------------------------------------------------------

 
Capital spending (or run rate or exploration and development
spending) is calculated by adjusting the capital expenditure per the
financial statements for exploration costs that were expensed as
incurred and adding Talisman's share of joint ventures. 
Net Debt  


 
                                                As at                       
----------------------------------------------------------------------------
                                          September 30, 2013  June 30, 2013 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Long-term debt                                         5,504          4,923 
----------------------------------------------------------------------------
Cash and cash equivalents, net of bank                                      
 indebtedness                                           (405)          (232)
----------------------------------------------------------------------------
Cash and cash equivalents from equity                                       
 accounted entities(1)                                                      
----------------------------------------------------------------------------
  TSEUK                                                  (55)           (41)
----------------------------------------------------------------------------
  Equion                                                 (78)           (60)
----------------------------------------------------------------------------
Total net debt                                         4,966          4,590 
----------------------------------------------------------------------------
 
1.  Includes Talisman's share of equity accounted entities' cash and cash
    equivalents. 

 
Net debt is calculated by adjusting the company's long-term debt per
the financial statements for bank indebtedness, cash and cash
equivalents from subsidiaries and joint ventures. The company uses
this information to assess its true debt position and eliminate the
impact of timing differences. 


 
                                                                            
                            Talisman Energy Inc.                            
                                 Highlights                                 
                                (unaudited)                                 
                                                                            
                                     Three months ended   Nine months ended 
                                           September 30        September 30 
                                         2013      2012      2013      2012 
----------------------------------------------------------------------------
Financial                                                                   
(millions of US$ unless otherwise                                           
 stated)                                                                    
Cash flow (1)                             573       693     1,616     2,347 
Net loss                                  (54)     (731)     (170)     (244)
Exploration and development spending                                        
 (1)                                      849       893     2,475     2,987 
Per common share (US$)                                                      
 Cash flow (1)                           0.56      0.68      1.57      2.29 
 Net loss                               (0.05)    (0.71)    (0.17)    (0.24)
----------------------------------------------------------------------------
Production (3)                                                              
(Daily Average - Gross)                                                     
Oil and liquids (bbls/d)                                                    
 North America                         36,957    25,836    32,865    27,117 
 Southeast Asia                        43,770    38,759    42,673    41,678 
 North Sea                             12,252    71,440    13,853    76,598 
 Other                                 11,832    12,851    11,457    13,273 
----------------------------------------------------------------------------
Total oil and liquids                 104,811   148,886   100,848   158,666 
----------------------------------------------------------------------------
Natural gas (mmcf/d)                                                        
 North America                            882       953       868     1,005 
 Southeast Asia                           491       509       514       529 
 North Sea                                  4        28         7        34 
 Other                                      -         -         -         - 
----------------------------------------------------------------------------
Total natural gas                       1,377     1,490     1,389     1,568 
----------------------------------------------------------------------------
Total mboe/d (2)                          334       398       332       420 
----------------------------------------------------------------------------
Prices (3)                                                                  
Oil and liquids (US$/bbl)                                                   
 North America                          73.89     65.38     68.32     70.16 
 Southeast Asia                        108.98    109.58    107.39    113.36 
 North Sea                             111.01    110.53    108.96    112.42 
 Other                                 110.68    108.01    106.72    109.38 
----------------------------------------------------------------------------
Total oil and liquids                   97.04    102.23     94.80    105.19 
----------------------------------------------------------------------------
Natural gas (US$/mcf)                                                       
 North America                           3.29      2.67      3.51      2.43 
 Southeast Asia                          9.41      8.88      9.72      9.41 
 North Sea                              14.42      8.99     14.73      9.68 
 Other                                      -         -         -         - 
----------------------------------------------------------------------------
Total natural gas                        5.51      4.91      5.86      4.94 
----------------------------------------------------------------------------
Total (US$/boe) (2)                     53.11     56.74     53.27     58.19 
----------------------------------------------------------------------------
                                                                            
(1) Cash flow, exploration and development spending and cash flow per share 
    are non-GAAP measures.                                                  
(2) Barrels of oil equivalent (boe) is calculated at a conversion rate of   
    six thousand cubic feet (mcf) of natural gas for one barrel of oil.     
(3) 2012 Production and price from Other, was restated to reflect the change
    to equity accounting of Equion on adoption of IFRS 11.                  
                                                                            
                            Talisman Energy Inc.                            
                   Condensed Consolidated Balance Sheets                    
                                (unaudited)                                 
                                                                            
                                                September 30,  December 31, 
(millions of US$)                                        2013          2012 
--------------
--------------------------------------------------------------
                                                                  (restated)
Assets                                                                      
Current                                                                     
  Cash and cash equivalents                               407           553 
  Accounts receivable                                   1,025           884 
  Risk management                                          58            48 
  Income and other taxes receivable                         1            10 
  Restricted cash                                         139             - 
  Inventories                                             134           122 
  Prepaid expenses                                         19            19 
----------------------------------------------------------------------------
                                                        1,783         1,636 
----------------------------------------------------------------------------
                                                                            
Other assets                                              174            55 
Restricted cash                                            85             - 
Investments                                             1,939         1,791 
Risk management                                            47            26 
Long-term income tax receivable                            35             - 
Goodwill                                                  775           775 
Property, plant and equipment                          10,812        10,462 
Exploration and evaluation assets                       3,286         3,319 
Deferred tax assets                                     1,300         1,273 
----------------------------------------------------------------------------
                                                       18,453        17,701 
----------------------------------------------------------------------------
Total assets                                           20,236        19,337 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Liabilities                                                                 
Current                                                                     
  Bank indebtedness                                         2             - 
  Accounts payable and accrued liabilities              1,898         1,744 
  Current portion of Yme removal obligation               139             - 
  Risk management                                          46            81 
  Income and other taxes payable                          100            84 
  Loans from joint ventures                               198           148 
  Current portion of long-term debt                     1,124             8 
----------------------------------------------------------------------------
                                                        3,507         2,065 
----------------------------------------------------------------------------
                                                                            
Decommissioning liabilities                             1,367         1,514 
Yme removal obligation                                    122             - 
Other long-term obligations                               233           256 
Risk management                                             5             1 
Long-term debt                                          4,380         4,434 
Deferred tax liabilities                                1,014         1,157 
----------------------------------------------------------------------------
                                                        7,121         7,362 
----------------------------------------------------------------------------
                                                                            
Shareholders' equity                                                        
Common shares                                           1,714         1,639 
Preferred shares                                          191           191 
Contributed surplus                                       124           121 
Retained earnings                                       6,768         7,148 
Accumulated other comprehensive income                    811           811 
----------------------------------------------------------------------------
                                                        9,608         9,910 
----------------------------------------------------------------------------
Total liabilities and shareholders' equity             20,236        19,337 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                            Talisman Energy Inc.                            
                Condensed Consolidated Statements of Income                 
                                (unaudited)                                 
                                                                            
                                                                            
                                     Three months ended   Nine months ended 
                                           September 30        September 30 
(millions of US$)                        2013      2012      2013      2012 
----------------------------------------------------------------------------
                                              (restated)          (restated)
Revenue                                                                     
 Sales                                  1,159     1,620     3,409     5,335 
 Other income                              29        16        66        59 
 Income from joint ventures &                                               
  associates, after tax                    44        11        65       109 
----------------------------------------------------------------------------
Total revenue and other income          1,232     1,647     3,540     5,503 
----------------------------------------------------------------------------
                                                                            
Expenses                                                                    
 Operating                                338       590     1,048     1,783 
 Transportation                            46        60       148       177 
 General and administrative               106       130       320       382 
 Depreciation, depletion and                                                
  amortization                            482       544     1,367     1,663 
 Impairment                                 2     1,037         -     2,163 
 Dry hole                                  13        41        82       166 
 Exploration                               66        81       208       228 
 Finance costs                             87        73       244       211 
 Share-based payments expense                                               
  (recovery)                                6        61        30       (11)
 (Gain) loss on held-for-trading                                            
  financial instruments                   120       116       (21)      128 
 (Gain) loss on asset disposals             1         -       (58)     (759)
 Other, net                                35        61        54        91 
----------------------------------------------------------------------------
Total expenses                          1,302     2,794     3,422     6,222 
----------------------------------------------------------------------------
Loss before taxe
s                         (70)   (1,147)      118      (719)
----------------------------------------------------------------------------
Taxes                                                                       
 Current income tax                       171       138       457       722 
 Deferred income tax recovery            (187)     (554)     (169)   (1,197)
----------------------------------------------------------------------------
                                          (16)     (416)      288      (475)
----------------------------------------------------------------------------
Net loss                                  (54)     (731)     (170)     (244)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
Per common share (US$):                                                     
 Net loss                               (0.05)    (0.71)    (0.17)    (0.24)
 Diluted net loss                       (0.08)    (0.71)    (0.23)    (0.31)
----------------------------------------------------------------------------
Weighted average number of common shares                                    
 outstanding (millions)                                                     
 Basic                                  1,031     1,026     1,029     1,025 
 Diluted                                1,034     1,026     1,035     1,034 
----------------------------------------------------------------------------
                                                                            
                            Talisman Energy Inc.                            
              Condensed Consolidated Statements of Cash Flows               
                                (unaudited)                                 
                                                                            
                                                                            
                                     Three months ended   Nine months ended 
                                           September 30        September 30 
(millions of US$)                        2013      2012      2013      2012 
----------------------------------------------------------------------------
                                              (restated)          (restated)
Operating activities                                                        
Net loss                                  (54)     (731)     (170)     (244)
Add: Finance costs (cash and non-                                           
 cash)                                     87        73       244       211 
Dividends from associates                  37         -        37         - 
Items not involving cash                  401     1,260     1,130     2,080 
----------------------------------------------------------------------------
                                          471       602     1,241     2,047 
Changes in non-cash working capital       166      (223)       84       (59)
----------------------------------------------------------------------------
Cash provided by operating                                                  
 activities                               637       379     1,325     1,988 
----------------------------------------------------------------------------
                                                                            
Investing activities                                                        
Capital expenditures                                                        
  Exploration, development and other     (608)     (779)   (1,826)   (2,673)
  Property acquisitions                   (94)      (57)      (94)      (59)
Proceeds of resource property                                               
 dispositions                               4         1       103       940 
Yme removal obligation                    (14)        -       261         - 
Restricted cash                            14         -      (224)        - 
Investments                                (2)       (7)       (9)      (11)
Loan to joint venture, net of                                               
 repayments                              (126)        -      (215)        - 
Changes in non-cash working capital       (74)      154      (189)       15 
----------------------------------------------------------------------------
Cash used in investing activities        (900)     (688)   (2,193)   (1,788)
----------------------------------------------------------------------------
                                                                            
Financing activities                                                        
Long-term debt repaid                       -         -        (4)     (991)
Long-term debt issued                     557       255     1,066     1,096 
Loans from joint ventures, net of                                           
 Repayments                                 1         2        50       110 
Common shares issued                        4         6        21         9 
Common shares purchased                     -       (11)        -       (24)
Finance costs (cash)                      (77)      (51)     (218)     (145)
Common share dividends                    (70)      (69)     (208)     (207)
Preferred share dividends                  (2)       (2)       (6)       (7)
Deferred credits and other                  3         6       (12)       15 
Changes in non-cash working capital        20        19        31        28 
----------------------------------------------------------------------------
Cash provided by (used in) financing                                        
 activities                               436       155       720      (116)
----------------------------------------------------------------------------
Effect of translation on foreign                                            
 currency cash and cash equivalents         -         8         -        10 
----------------------------------------------------------------------------
Net increase (decrease) in cash and                                         
 cash equivalents                         173      (146)     (148)       94 
Cash and cash equivalents net of                                            
 bank indebtedness, beginning of                                            
 period                                   232       580       553       340 
----------------------------------------------------------------------------
Cash and cash equivalents net of                                            
 bank indebtedness, end of period         405       434       405       434 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Cash and cash equivalents                 407       434       407       434 
Bank indebtedness                          (2)        -        (2)        - 
----------------------------------------------------------------------------
Cash and cash equivalents net of                                            
 bank indebtedness, end of period         405       434       405       434 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

Contacts:
Talisman Energy Inc. - Media and General Inquiries
Phoebe Buckland
Manager, External Communications
403-237-1657
tlm@talisman-energy.com 
Talisman Energy Inc. - Shareholder and Investor Inquiries
Lyle McLeod
Vice-President, Investor Relations
403-767-5732
tlm@talisman-energy.com
www.talisman-energy.com