Talisman Energy 2014 Guidance

Talisman Energy 2014 Guidance 
Expected liquids growth of 14-19% in two core regions 
Approximately $2 billion in additional asset sales planned within
12-18 months 
Target 5% cash flow growth 
CALGARY, ALBERTA -- (Marketwired) -- 02/12/14 --   Talisman Energy
Inc. (Talisman) (TSX: TLM) (NYSE: TLM) has announced its capital
spending program and expected operating results for 2014. All values
in this press release are in US$ unless otherwise stated.  
2013 was a foundational year for Talisman. The company reset its
strategy and made significant progress against its four key
priorities. It increased North American liquids production by 30%,
and reduced and reset its cost structure, cutting capital by 20% and
underlying net G&A by 20% compared to 2012 (on a run-rate basis). The
company improved operating performance, reduced drilling and
completion costs and cycle times in North America, produced first oil
at HST/HSD offshore Vietnam ahead of schedule and under budget, and
lowered its commodity price risk through its ongoing hedging program.
Asset sales agreed in 2013 and in Q1 2014(1) total over $2.2 billion.
By continuing to pursue its four key priorities, the company will
build on this momentum. 
"In 2014, we expect more improvements in performance, with continued
growth in high-margin liquids production generating increased cash
flow," said Hal Kvisle, President and CEO. "While our overall
production base will be lower as a result of non-core asset sales,
production from ongoing operations in our two core regions, the
Americas and Asia-Pacific, is expected to grow 4-7% with liquids
volumes increasing 14-19%. In addition, we will begin a second phase
of non-core asset sales, and aim to dispose of a further $2 billion
of assets that demand substantial capital investment to generate
long-dated cash flows. 
"Our objective is to create sustainable value for our shareholders,
and we will continue to position the company to achieve this by
generating near-term steady cash flow from our best assets in our two
core regions. Our goal as we move into 2014 and beyond is to deliver
annual cash flow per share growth and maintain a strong balance
sheet." 
(1) On February 7, 2014, Talisman agreed the sale of its Monkman
asset in Western Canada, representing production of approximately 75
mmcf/d. 
2014 Guidance Summary 
Capital program focused on near-term, high-margin volumes  


 
 
--  2014 capital expenditure is expected to be approximately $3.2 billion,
    unchanged from 2013 and down around 20% from 2012. 
--  Over 70% of expected 2014 capital spending will be invested in the
    Americas and Asia-Pacific.

Liquids production growth of 14-19% from two core regions 


 
 
--  The two core regions (the Americas and Asia-Pacific) are expected to
    deliver a 14-19% increase in liquids volumes in 2014 (from 97,000 bbls/d
    in 2013 to 111,000-115,000 bbls/d in 2014). The majority of growth will
    come from North America and Colombia. 
--  In 2013, production was 373,000 boe/d. Dispositions agreed in 2013 and
    Q1 2014 reduce this by approximately 28,000 boe/d, resulting in
    production from ongoing operations of 345,000 boe/d. 
--  In 2014, production from ongoing operations is expected to grow from
    345,000 boe/d to a range of approximately 350,000 boe/d to 365,000
    boe/d, reflecting growth of between 2-6% on an annual basis. 
--  Talisman's two core regions are expected to contribute over 90% of the
    company's production in 2014.

Increase cash margin per barrel by approximately 6-11% 


 
 
--  Talisman expects to increase cash margins per barrel by approximately 6-
    11% with 2014 cash flow expected at around $2.3 billion - a 5% increase
    over 2013. 
--  Having delivered a 20% reduction in underlying net G&A in 2013 (on a
    run-rate basis), the company is targeting a further 10% reduction in
    2014. 
--  Cash flow assumptions are based on $100/bbl Brent oil, $90/bbl WTI and
    $4.00/mmbtu NYMEX natural gas prices, underpinned by Talisman's 2014
    hedging programs.

Unlock additional value and continue to focus the portfolio on two core
regions 


 
 
--  In addition to non-core asset sales agreed in 2013 and in Q1 2014,
    expected to total over $2.2 billion, Talisman will continue to simplify
    and streamline its portfolio with the expected sale of approximately $2
    billion of additional assets (primarily long-dated, non-core capital
    intensive) over the next 12-18 months. 
--  Disposition proceeds will primarily be used to maintain a strong and
    flexible balance sheet.

2014 Total production from ongoing operations and capital
guidance 


 
 
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                     2013 Production                                        
                      from ongoing     2014 Production from   2014 Capital  
Region                operations(1)     ongoing operations      Guidance    
                        (mboe/d)             (mboe/d)         (US$ million) 
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Americas                                                                    
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North America              158              162 to 168            1,250     
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Colombia                   17                21 to 22              300      
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Americas Total             175              183 to 190            1,550     
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Asia-Pacific                                                                
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Southeast Asia             126              129 to 132             750      
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Algeria                    11                   12                  0       
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Asia-Pacific                                                                
 Total                     137              141 to 144             750      
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Total Core                                                                  
 Regions                   312              324 to 334            2,300     
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Non-core Total(2)          33                26 to 31              900      
----------------------------------------------------------------------------
 
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Total                      345              350 to 365            3,200     
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(1) Includes adjustments for dispositions agreed in 2013 and in Q1 2014,    
    comprising Montney (approximately 66 mmcf/d), Southeast Sumatra         
    (approximately 3,000 boe/d), onshore Northwest Java (approximately 1,000
    boe/d) and Monkman (approximately 75 mmcf/d).                           
(2) Includes North Sea and the Kurdistan Region of Iraq.                    

2014 Plan - Four priorities to drive value creation 
Live within our means  
Talisman has a large, attractive portfolio of investment
opportunities. The company continues to focus its capital on
high-margin, near-term opportunities, while those with large capital
requirements and long-dated returns have been identified as
candidates for sale or farm-down. 
Through disciplined capital allocation and cost control in the two
core regions - and additional expected dispositions of capital
intensive assets - Talisman remains committed to creating a business
that generates sustainable cash flow growth and strong shareholder
returns. Achieving $2 billion of planned asset sales over the next
12-18 months will enable Talisman to maintain a strong balance sheet
in the near term. 
Focused capital program  
In 2013, Talisman focused on its two core areas: the Americas
(comprising North America and Colombia) and Asia-Pacific (comprising
Southeast Asia and Algeria). In North America, the company is
competitively positioned in a number of shale gas and liquids plays
and has a core of profitable conventional properties. In
Asia-Pacific, the company's core assets are characterized by long
production life, low costs and high netbacks.  
Between 2011 to 2014, Talisman has reduced investment in low netback
North American natural gas programs by 70% and increased investment
in higher margin liquids projects in North America and Colombia. As a
result, liquids volumes in the Americas are expected to grow from
31,000 bbls/d in 2011 to a range of 58,000 bbls/d to 61,000 bbls/d in
2014.  
In 2013, capital spending was $3.2 billion - down $800 million from
2012. In 2014, the company plans to hold spending flat at
approximately $3.2 billion. Approximately $2.3 billion (around 70%)
will be invested in the two core regions.  
Improve operational performance and cash margins  
Talisman continues to improve operational performance and cash
margins, particularly in its North American shale operations where it
has reduced drilling and completions costs and cycle times.  
Through its focus on operational excellence, the company brought the
HST/HSD oilfield development offshore Vietnam onstream ahead of
schedule and under budget. As a result of the ongoing shift to higher
margin production and increased efficiencies, cash margin per boe is
expected to increase by approximately 6-11% in 2014.  
By the end of 2013, excluding one-off costs, Talisman had reduced its
underlying net G&A by 20% ($100 million on a run-rate basis) compared
to 2012 and intends to reduce it by a further 10% in 2014.  
Unlock net asset value within the portfolio  
In March 2013, Talisman set a 12-18 month target to realize $2-3
billion of value through the sale of non-core assets that were
generating little or no short-term cash flow. The company achieved
this target within 12 months and asset sales agreed in 2013 and in Q1
2014 will total over $2.2 billion.  
Talisman plans to dispose of approximately $2 billion of additional
assets (primarily long-dated, capital intensive) over the next 12-18
months. The majority of the proceeds will be directed towards
maintaining a strong and flexible balance sheet. 
2014 Operational Headlines  
Americas - high-margin liquids growth  
North America  
In North America, the portfolio provides a stable platform for cost
efficient production and cash flow growth. 2014 capital expenditure
in North America is forecast to be approximately $1.3 billion, in
line with 2013. Spending increases in the Marcellus and the Duvernay
will be partially offset by lower spending in the Eagle Ford as the
infrastructure build out is largely complete.  
The company anticipates 25-30% liquids growth and relatively flat gas
production, resulting in overall growth from ongoing operations of
approximately 3-6%. Planned operational activities in 2014
include: 


 
 
--  In the Eagle Ford, the company aims to grow high margin liquids
    production by over 30%, from 18,000 bbls/d to approximately 24,000-
    26,000 bbls/d, while reducing capital spending by roughly 20%. Together
    with its partner, Talisman plans to drill and complete 80 wells (gross)
    in 2014. 
--  In the Marcellus, Talisman will invest to retain its strategic land
    position and build on its production optimization activities to hold
    production at around 440 mmcf/d. Talisman will run one rig in
    Susquehanna County to retain key lands, with a second rig to be added
    mid-year to drill wells in Bradford County. 
--  In Greater Edson, capital spending is expected to increase as the
    company continues to appraise the Wilrich Formation through a nine-well
    drilling program. Through the deep cut facility in Wild River, the
    company expects to increase liquids production by around 4,000 bbls/d. 
--  In the Duvernay, Talisman intends to drill six wells in 2014, as the
    company continues to appraise its extensive land position. Talisman will
    drill its first multi-well pad in the southern part of the play and will
    begin a process to secure a strategic partner. 
--  At Chauvin, Talisman expects to drill and complete approximately 30
    wells to hold production in this heavy oil play flat at 10,000-11,000
    bbls/d. 

Colombia 
Talisman's business in Colombia provides exposure to near-term high
value oil growth.  


 
 
--  The company aims to develop near-term cash producing assets and expects
    to deliver over 30% incremental oil production growth, with overall
    production increasing from 17,000 boe/d to 21,000-22,000 boe/d. 
--  All 10 wells in the Akacias Field in Block CPO-9 will be put on long-
    term test while awaiting environmental permits for full field
    development. 
--  In Block CPE-6, Talisman will continue to appraise the existing
    discovery and explore the license through ongoing activity with its
    partner. 
--  The Equion infill drilling program is expected to continue through 2014
    and 2015, with the facilities expansion complete in 2015.

Asia-Pacific - long-life assets with high net backs 
Talisman's Asia-Pacific business contributes approximately 40% of the
company's total production, with the majority linked to oil pricing,
providing strong netbacks. Planned operational activities in 2014
include: 
Southeast Asia 


 
 
--  In Malaysia, Talisman plans to drill infill and exploration wells at PM-
    3 CAA and Kinabalu, and up to four exploration wells at Sabah. 
--  In Indonesia, the company will continue infill drilling at Corridor and
    expects to sanction Phase 2 development activities at Jambi Merang. 
--  In Vietnam, two exploration wells and a 3D seismic program are planned
    in the Nam Con Son Basin. The company will also deliver a full year of
    production from HST/HSD.  
--  Talisman will continue to progress its gas aggregation strategy across
    its Papua New Guinea land position. Three exploration wells and a 2D
    seismic campaign are planned.

Kurdistan Region of Iraq  


 
 
--  Testing to date has indicated significant potential and, in 2014,
    Talisman plans to further explore the Kurdamir and Topkhana Blocks.  
--  The company expects to spud the Kurdamir-4 horizontal well and conduct
    an extended well test at Kurdamir-2 to prove the continuity of the oil
    formation. In the Topkhana Block, Talisman will complete drilling and
    conduct an extended test of the Topkhana-2 well. 
--  Talisman will continue to explore options to dilute its ownership in the
    Kurdistan Region of Iraq.

The North Sea  
Talisman continues to explore options to exit or dilute its exposure
to the North Sea, while aiming to stabilize production and identify
operational and cost efficiencies. In the UK, the joint venture will
spend capital to secure base production and improve reliability, as
well as the ongoing redevelopment of the Montrose Area.  
2014 Liquids production guidance from ongoing operations 


 
 
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                          2013 Liquids production   2014 Liquids production 
Region                    from ongoing operations   from ongoing operations 
                                (mboe/d)(1)                 (mboe/d)        
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North America                        35                     44 to 46        
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Colombia                             10                     14 to 15        
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Americas Total                       45                     58 to 61        
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Southeast Asia                       41                     41 to 42        
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Algeria                              11                        12           
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Asia-Pacific Total                   52                     53 to 55        
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Total Core Regions                   97                    111 to 115       
----------------------------------------------------------------------------
 
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Non-core Total(2)                    32                     22 to 26        
----------------------------------------------------------------------------
 
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Total                               129                    133 to 141       
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(1) Includes adjustments for dispositions agreed in 2013 comprising Montney 
    (approximately 200 bbls/d), Southeast Sumatra (approximately 3,000      
    bbls/d) and onshore Northwest Java (approximately 600 bbls/d).          
(2) Includes North Sea and the Kurdistan Region of Iraq.                    

2014 Gas production guidance from ongoing operations 


 
 
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                            2013 Gas production       2014 Gas production   
Region                    from ongoing operations   from ongoing operations 
                                (mmcf/d)(1)                 (mmcf/d)        
----------------------------------------------------------------------------
North America                       738                    708 to 732       
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Colombia                             43                        42           
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Americas Total                      781                    750 to 774       
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Southeast Asia                      509                    528 to 540       
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Algeria                                                                     
----------------------------------------------------------------------------
Asia-Pacific Total                  509                    528 to 540       
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Total Core Regions                 1,290                 1,278 to 1,314     
----------------------------------------------------------------------------
 
----------------------------------------------------------------------------
Non-core Total(2)                    9                      24 to 30        
----------------------------------------------------------------------------
 
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Total                              1,299                 1,302 to 1,344     
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(1) Includes adjustments for dispositions agreed in 2013 and Q1 2014,       
    comprising Montney (approximately 66 mmcf/d), Southeast Sumatra         
    (approximately 3 mmcf/d) and onshore Northwest Java (approximately 3    
    mmcf/d) and Monkman (approximately 75 mmcf/d).                          
(2) Includes North Sea and the Kurdistan Region of Iraq.                    

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 increase in liquids production;
expected cash flow, company-wide and regionally; expected cash margin
per barrel; anticipated asset sales, targeted value and timing of
such sales or farm-downs, and expected use of proceeds; expected
capital expenditure and focus of spending; expected production,
company-wide, regionally and by asset, and timing of such production;
targeted G&A reductions; planed drilling and rigs in North America;
planned testing, exploration and infill drilling, and completion of
facilities expansion in Colombia; planned infill and exploration
drilling, development activities and seismic program in Southeast
Asia; planned progress on gas aggregation strategy in PNG; planned
exploration and testing in the Kurdistan Region of Iraq; and other
expectations, beliefs, plans, goals, objectives, assumptions,
information and statements about possible future events, conditions,
results of operations or performance. The company priorities and
goals 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 2014 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
law.  
Throughout this news release, Talisman uses the term "unlocking
value" to describe the realization of the value of an asset within
Talisman's portfolio that, prior to its full or partial disposition,
was not valued at its full market value, as reflected in Talisman's
share price and enterprise value. By monetizing the asset through a
disposition or joint-venture, the company is able to attribute a
market value to the asset that can quantifiably be reflected in
Talisman's share price and enterprise value. 
Oil and Gas Information 
Unless otherwise stated, production volumes 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. 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, all references to "core" and "non-core" assets,
properties, areas and regions align with the company's current public
disclosure regarding its assets and properties. 
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). Boes may be misleading,
particularly if used in isolation. A boe conversion ratio of 6 mcf:1
bbl is 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. 
Financial Information 
Dollar amounts are presented in US dollars, except where otherwise
indicated. The financial information is presented in accordance with
International Financial Reporting Standards (IFRS). IFRS may differ
from generally accepted accounting principles in the US. 
Forecasted Cash Flow: This news release also contains discussions of
anticipated cash flow 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 taxes and cash payments made upon surrender of existing
stock options 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 used in the oil and gas industry
such as 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.  
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.  
Capital expenditure (or "capex" or "cash capital spending") is
calculated by adjusting the capital expenditure per the financial
statements for exploration costs that were expensed as incurred.  
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. 
Contacts:
Talisman Energy Inc. - Media and General Inquiries
Brent Anderson
Manager, External Relations
403-237-1912
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
 
 
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