Talisman Energy Second Quarter Results

Talisman Energy Second Quarter Results 
Talisman delivers year-over-year production, liquids and cash flow
growth 
CALGARY, ALBERTA -- (Marketwired) -- 07/29/14 --   Talisman Energy
Inc. (TSX: TLM) (NYSE: TLM) reported its operating and unaudited
financial results for the second quarter of 2014. All values are in
US$ unless otherwise stated.  
"During the past two years we have focused our efforts and capital on
a strong portfolio of long life assets in our Americas and
Asia-Pacific core regions," said Hal Kvisle, President and CEO. "We
have invested to grow production and cash flow(1) from our best
assets, while working to reduce operating and overhead costs.  
"Our year-over-year performance demonstrates solid progress and
underlines the strength of our core regions. Total production and
liquids volumes from ongoing operations within these areas have grown
12% and 23% respectively. Through disciplined capital investment and
a focus on operational excellence, we have grown corporate cash flow
by 8% year-over-year, driven by strong performance in our core
regions. We remain on track to meet our operating and financial
targets for 2014." 
Second Quarter Highlights 


 
 
--  Total production was 375,000 boe/d - up 4% year-over-year. 
--  Production from ongoing operations in the core regions was 330,000
    boe/d, up 12% year-over-year and 4% from the previous quarter. 
--  Core region liquids production was 115,000 boe/d, up 20% year-over-year.
--  North American liquids production was 45,000 bbls/d, up 36% year-over-
    year. 
--  Cash flow was $567 million, up 8% year-over-year.  

To view the graph associated with this release, please visit the
following link: http://media3.marketwire.com/docs/959417_graph.jpg 
(1) The term "cash flow" is a non-GAAP measure. Please see advisories
and reconciliations elsewhere in this release.  
(2) Reflects announced and /or completed dispositions of Montney,
Monkman, Ojay and Southeast Sumatra (see link to graph for associated
footnote). 
Second Quarter Summary 
Talisman continues its evolution towards a two region company through
focused capital investment and high grading of its portfolio. On a
year-over-year basis, the company has grown total production from
ongoing operations in its core regions by 12% and liquids production
by 20%.  
Capital spending(3) during the quarter was $724 million and is in
line with full year guidance of $3.2 billion. Proceeds from
dispositions will continue to reduce corporate debt, maintaining a
strong balance sheet as the company works to reduce its exposure to
the North Sea and other non-core areas. 
Talisman's North American operations delivered total production of
177,000 boe/d. Production from ongoing operations was 169,000 boe/d,
reflecting the completed Monkman asset disposition and the previously
announced disposition of the Ojay assets, expected to be completed in
the third quarter. On a like-for-like basis, this represents an 18%
increase year-over-year and a 7% increase from the previous quarter.
Netbacks in North America grew 36% and cash flow grew approximately
40% year-over-year. 
New wells in the Eagle Ford and successful rich gas development in
Greater Edson contributed to total North American liquids production
of 45,000 bbls/d, up 36% year-over-year. Compared to the previous
quarter, liquids production is up 7% on increased volumes from the
Eagle Ford.  
In Colombia, production in the quarter was 20,500 boe/d, up 17%
year-over-year and 5% from the previous quarter. In Block CPO-9,
Talisman brought a ninth well onto long-term test and also completed
a successful short-term flow test at the base of the Akacias
reservoir, confirming the trend of mobile oil down-dip in the
structure. Talisman has yet to encounter the oil-water contact in the
reservoir. 
Talisman's Southeast Asia operations delivered total production of
131,000 boe/d. Production from ongoing operations was 128,000 boe/d
for the quarter. On a like-for-like basis, this reflects a 2%
increase year-over-year and is consistent with the previous quarter.
Oil and liquids netbacks grew 47% in the region over the same period
last year due to high netback production from HST/HSD in Vietnam
coming onstream in May 2013. The temporary shut-in of an inter-field
pipeline at PM-3 in Malaysia was successfully lifted during the
quarter. Impacts to production were largely offset by increased
production from Corridor in Indonesia and increased liquids volumes
from Kinabalu in Malaysia.  
In the North Sea, Talisman's share of UK production was 19,500 boe/d,
up 6% from the previous quarter and 12% on a year-over-year basis,
largely due to the restart of production from the Claymore platform
in the middle of the first quarter. In Norway, planned maintenance at
Veslefrikk and Brage reduced production by 12% compared to the
previous quarter, to 14,500 boe/d.  
(3) The term "capital spending" is a non-GAAP measure. Please see
advisories and reconciliations elsewhere in this release. 
Financial Results 
For operational purposes, Talisman has two core operating areas: the
Americas (North America and Colombia) and Asia-Pacific (Southeast
Asia and Algeria). For the purposes of financial reporting,
Talisman's activities are reported in four geographic segments: North
America, Southeast Asia, North Sea and Other (Algeria and Colombia).
The remainder of this press release is based on Talisman's geographic
segments for the purposes of financial reporting. See the advisories
elsewhere in this release for more information or visit Talisman's
website at www.talisman-energy.com. 


 
 
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June 30                                           Q2 14      Q1 14    Q2 13 
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Cash flow ($ million)                               567        616      526 
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Cash flow per share(4)                             0.55       0.60     0.51 
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Earnings (loss) from operations ($ million)(4)       (9)        79      (27)
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Net income (loss) ($ million)                      (237)       491       97 
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Net income (loss) per share                       (0.23)      0.47     0.09 
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Average shares outstanding - basic (million)      1,034      1,032    1,030 
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Capital spending ($ million)                        724        768      843 
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Dispositions ($ million, net of deal cost)           52      1,340       99 
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Net debt(4)($ million)                            4,227      3,813    4,590 
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Cash flow for the second quarter was $567 million, up 8% year-over-year
and down 8% over the previous quarter. The quarter-on-quarter
reduction was due largely to the impact of the sale of 123 mmcf/d of
dry gas production associated with the Montney and Monkman assets in
the first quarter and lower North American gas prices, partially
offset by higher liquids volumes. 
During the quarter the company recorded a net loss of $237 million.
The primary driver for the loss was a $171 million movement relating
to cash settlements ($46 million) and non-cash mark-to-market loss
($125 million) on commodity derivatives. In addition, the company
lowered the credit adjusted discount rate applied to its asset
retirement obligation liabilities across the portfolio by 100 basis
points, resulting in an after-tax impairment of $50 million in the UK
and $12 million in Norway.  
The company recorded a loss of $9 million (on a non-GAAP basis) from
operations, compared to earnings from operations of $79 million in
the first quarter, mainly due to lower North American gas prices,
partially offset by higher liquids volumes. 
Talisman's ongoing disciplined capital program resulted in spending
for the quarter of $724 million on a non-GAAP basis, down 14%
year-over-year and down 6% from the previous quarter. Capital
spending to date is in line with the company's expectations and
full-year guidance of $3.2 billion. 
Net debt at June 30, 2014 was approximately $4.2 billion, up from
approximately $3.8 billion in the previous quarter. Talisman aims to
divest $2 billion of long dated, non-core, capital intensive assets
over the next 12-18 months. Proceeds from dispositions will be
primarily used to maintain a strong balance sheet. 
(4) The terms "cash flow per share", "earnings (loss) from
operations" and "net debt" are non-GAAP measures. Please see
advisories and reconciliations elsewhere in this release. 
Commodity Pricing and Netbacks 
North Sea results include Norway and the company's proportionate
results from TSEUK. Other results include Algeria, Colombia and the
company's proportionate results from Equion. The company's realized
sales price includes the impact of physical commodity contracts, but
does not include the impact of the financial commodity price
derivatives.  


 
 
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June 30                                            Q2 14     Q1 14     Q2 13
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Pricing                                                                     
----------------------------------------------------------------------------
WTI benchmark ($/bbl)                             102.99     98.68     94.22
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Brent benchmark ($/bbl)                           109.63    108.22    102.44
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NYMEX benchmark ($/mmbtu)                           4.57      4.90      4.09
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Oil and liquids netbacks ($/bbl)                                            
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North America                                      41.67     45.40     36.45
                                              ------------------------------
Southeast Asia                                     43.69     44.97     29.67
                                              ------------------------------
North Sea                                          14.02     21.80     17.96
                                              ------------------------------
Other                                              50.24     49.60     57.74
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Total oil and liquids netbacks ($/bbl)             38.05     40.62     33.13
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Natural gas netbacks ($/mcf)                                                
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North America                                       2.27      2.70      1.72
                                              ------------------------------
Southeast Asia                                      5.18      5.04      5.60
                                              ------------------------------
North Sea                                           5.28      4.78     13.71
                                              ------------------------------
Other                                               1.48      2.08      1.86
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Total natural gas netbacks ($/mcf)                  3.38      3.55      3.20
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Total company netback ($/boe)                      27.18     28.44     24.06
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Pricing  
In North America, Talisman's realized oil and liquids prices
(excluding the impact of financial hedging) were flat compared to the
same period last year and down 3% compared to the previous quarter,
primarily due to increased NGL production resulting in a higher
weighting to NGL prices in the realized liquids price. This was
offset by higher realized liquids prices in Western Canada. In
Southeast Asia, realized oil and liquids prices were consistent with
movements in regional benchmark prices during the quarter and
increased 10% year-over-year. 
Realized natural gas prices in North America were up 11%
year-over-year and down 11% compared to the previous quarter. The
quarterly reduction was due to lower NYMEX and AECO prices and
widening differentials in some markets over the same period. In
Southeast Asia, realized natural gas prices decreased by 2% from the
previous quarter.  
Netbacks 
Talisman's average gross netback was $27.18/boe, up 13%
year-over-year and down 4% from the previous quarter. The
quarter-on-quarter reduction was due to lower realized gas prices in
North America, higher overall royalties due to increased production
in higher royalty paying locations, and higher operating costs in the
UK and Norway as a result of planned maintenance.  
Gross oil and liquids netbacks were $38.05/boe, up 15% year-over-year
and down 6% over the previous quarter, primarily due to higher
operating costs and royalties. Talisman's gross natural gas netback
was $3.38/boe, up 6% year-over-year and down 5% quarter-over-quarter
due to fluctuations in North American gas prices. 
Production 
Table includes Talisman's share of production from subsidiaries and
equity-accounted entities.  


 
 
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June 30                                            Q2 14     Q1 14     Q2 13
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Oil and liquids (mbbls/d)                                                   
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North America                                         45        42        33
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Southeast Asia                                        45        44        43
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North Sea                                             30        32        30
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Other (including Colombia and Algeria)                25        24        20
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Total oil and liquids (mbbls/d)                      145       142       126
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Natural gas (mmcf/d)                                                        
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North America                                        795       867       846
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Southeast Asia                                       515       522       519
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North Sea                                             22        17         6
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Other (including Colombia and Algeria)                48        46        43
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Total natural gas (mmcf/d)                         1,380     1,452     1,414
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Total mboe/d                                         375       384       361
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Assets sold or held for sale (mboe/d)                                       
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North America(5)                                       8        28        32
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Southeast Asia(6)                                      3         3         4
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Total assets sold or held for sale (mboe/d)           11        31        36
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Production from ongoing operations (mboe/d)          364       353       325
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(5) Includes Monkman - sale closed April 16, 2014, and Ojay - sales         
    agreement in place and expected to close in 2014 (99% dry gas).         
(6) Includes Southeast Sumatra - sales agreement reached in December 2013,  
    and Northwest Java - sold in May 2013.                                  

Total production averaged 375,000 boe/d in the quarter, up 4%
year-over-year. This includes production of 11,000 boe/d in the
quarter from the company's Monkman, Ojay and Southeast Sumatra assets
that have either been sold or held for sale. Production from ongoing
operations averaged 364,000 boe/d, up 12% year-over-year and 3%
compared to the previous quarter.  
Total production from Talisman's core Americas and Asia-Pacific
businesses was 341,000 boe/d, up 3% over the same period last year.
Production from ongoing operations from these core regions was
330,000 boe/d, up 12% year-over-year.  
Total liquids production averaged 145,000 bbls/d, up 15%
year-over-year and up 2% from the previous quarter, reflecting the
company's continued focus on growing higher value liquids. In North
America, total liquids production was up 36% year-over-year, to
45,000 bbls/d. In Southeast Asia, total liquids production was up 5%
year-over-year, to 45,000 boe/d. 
North American production from ongoing operations up 19%, liquids up
33% year-over-year 


 
 
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June 30                                            Q2 14     Q1 14     Q2 13
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Gas                                                                         
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  Edson-Duvernay-Montney                             182       180       159
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  Marcellus                                          469       440       426
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  Eagle Ford                                          77        67        50
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  Other                                               18        15        21
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Gas from ongoing operations (mmcf/d)                 746       702       656
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Liquids                                                                     
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  Edson-Duvernay-Montney                              12        11         5
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  Eagle Ford                                          23        21        17
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  Chauvin                                             10        10        11
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Liquids from ongoing operations (mbbls/d)             45        42        33
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Total production from ongoing operations                                    
 (mboe/d)                                            169       158       142
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Assets sold or held for sale (mmcf/d)(7)              49       165       190
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Total North America production (mboe/d)              177       186       174
----------------------------------------------------------------------------
(7) Assets sold or held for sale in Q214 include Monkman - sale closed April
    16, 2014, and Ojay - sales agreement in place and expected to close in  
    2014 (99% dry gas), and in Q114 include Montney - sale closed March 12, 
    2014, Monkman and Ojay.                                                 

In North America, total production averaged 177,000 boe/d for the
quarter. Production from ongoing operations averaged 169,000 boe/d,
up 7% from the previous quarter and 19% year-over-year. The increase
from the previous quarter was due to additional wells coming onstream
in both the Marcellus and Eagle Ford. Year-over-year liquids
production is up 36% on higher liquids volumes from the Eagle Ford
and Greater Edson.  
In the Eagle Ford, production averaged 36,000 boe/d in the quarter,
up 13% over last quarter and 44% over the same period last year.
Liquids volumes averaged 23,000 boe/d, up 35% compared to the same
period last year and up 10% versus the previous quarter.
Year-to-date, Talisman and its partner have drilled 29 wells and
brought 45 wells onstream. 
In the Marcellus, production for the quarter averaged 469 mmcf/d, up
7% from last quarter and 10% over the same period last year, as the
company brought more wells onstream and further reduced cycle times
versus plan through completion efficiencies. The company has reduced
its inventory of drilled but uncompleted wells from 58 at the
beginning of the year to 23.  
In the Friendsville area of the Marcellus, 11 wells of a planned 24
net wells in 2014 have been drilled. Construction of key
infrastructure projects in the area is ongoing, with production
expected to come onstream in 2015. A second rig is expected to start
drilling in the western part of the company's Marcellus acreage in
the third quarter. 
In the Greater Edson area (which includes Wild River), total
production for the quarter was 47,000 boe/d. Liquids production
averaged 11,000 bbls/d, in line with the previous quarter. Gas
production from ongoing operations was 170 mmcf/d in the second
quarter, up 11% compared to the same period last year and up 3% from
the previous quarter, due to a successful horizontal drilling
program. 
Drilling activity in the quarter was reduced during spring break up,
with one Wilrich well spud. The company now has seven Wilrich wells
onstream, with average initial 30-day restricted production rates of
5.5 mmcf/d with 235 bbls/d of liquids net to Talisman. Two horizontal
wells in the Dunvegan formation have also been drilled, with average
initial 30-day production rates of 5.1 mmcf/d with 375 bbls/d of
liquids net to Talisman. Following spring break up, the company
resumed drilling activity in Greater Edson with two drilling rigs and
plans to ramp-up to four rigs by year-end. In addition to the Wilrich
and Dunvegan formations, the drilling program will be expanded to
include wells targeting the Falher, Gething and Bluesky formations.
Talisman expects third quarter production will be impacted by
approximately 3,000 boe/d due to a planned turnaround at the Edson
Gas Plant.  
In the Duvernay, four wells have been drilled this year, including
one in the Wild River area, one in Bigstone and two from a common
surface location in the Ferrier area. Drilling operations are nearly
finished at a fifth well in the Willesden Green area. Drilling
performance has improved as the company gains operational experience
in the play, with the second Ferrier well drilled from surface to a
total depth of 5,700 metres in 27 days, and the Willesden Green well
reaching total depth of 5,400 meters in 24 days. Both wells are
pacesetters for the company in these areas of the Duvernay, despite
each having longer lateral sections than any previous Duvernay wells
drilled by Talisman. 
In the Chauvin area, liquids production averaged 10,000 boe/d,
consistent with the previous quarter and the same period last year.
The company realized Western Canadian Select pricing of $83.01/bbl in
the quarter, up 10% from the previous quarter. Talisman plans to
drill approximately 30 wells in Chauvin before year-end.  
Colombia production up 17% year-over-year  
In Colombia, production averaged 20,500 boe/d, up 17% year-over-year
and up 5% over the previous quarter. In the foothills region, the
Equion joint venture averaged 16,500 boe/d. As part of the Piedemonte
expansion project, five wells have been drilled, three more are
currently drilling and two more wells are scheduled to spud later in
2014. Expansion of the processing plant at Piedemonte is progressing
and is expected to be complete in the first quarter of 2015.  
In Block CPO-9, nine of ten Akacias production wells have been put on
long-term test, producing an average of approximately 7,500 bbls/d
gross (3,400 bbls/d net to Talisman) of oil. During the quarter,
production was intentionally reduced as improvements to the temporary
production facilities began in an effort to accommodate longer term
production. The operator is working to resume production to full
potential over the third quarter. Until completed, Akacias production
will be constrained to approximately 6,500 - 7,500 bbls/d gross
(3,000 - 3,400 bbls/d net to Talisman).  
A successful short-term flow test at the base of reservoir in the
AK-20 appraisal well continued the trend of finding mobile oil
down-dip on the structure and supports the previously reported best
estimate of 2.5 billion barrels of mobile heavy oil in place. Longer
term flow testing is required to determine the recovery factor and
implications for recoverable resources. The partners are in the
process of obtaining approval from the regulator to flow test two
stratigraphic wells drilled down-dip of AK-20. To date, the oil-water
contact in the reservoir has yet to be found. Talisman and its
operating partner have submitted the first phase of the field
development program, which would see the construction of a 50,000
boe/d facility. The Nueva Esperanza-1 well, along the same structural
trend as the Akacias field, spudded July 18 and is drilling ahead.
Additional wells are planned for 2015.  
In Block CPE-6, five appraisal wells continued on long-term test and
averaged approximately 500 bbls/d gross (250 bbls/d net to Talisman)
in the second quarter. Technical evaluation will continue through the
remainder of the year to determine future development plans. 
Southeast Asia liquids production from ongoing operations up 10%
year-over-year 


 
 
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June 30                                            Q2 14     Q1 14     Q2 13
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Indonesia liquids (mbbls/d)                            7         6         6
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Indonesia gas (mmcf/d)                               408       386       385
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Indonesia (mboe/d)                                    74        71        72
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Malaysia liquids (mbbls/d)                            20        20        20
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Malaysia gas (mmcf/d)                                 99       124       124
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Malaysia (mboe/d)                                     37        40        40
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Vietnam liquids (mbbls/d)                             13        12         6
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Vietnam gas (mmcf/d)                                   5         8         4
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Vietnam (mboe/d)                                      14        14         7
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Australia (mboe/d)                                     3         3         7
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Total production from ongoing operations                                    
 (mboe/d)                                            128       128       126
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Assets sold or held for sale (mboe/d)(8)               3         3         4
----------------------------------------------------------------------------
Southeast Asia total (mboe/d)                        131       131       130
----------------------------------------------------------------------------
(8) Includes Northwest Java - sold May 2013, and Southeast Sumatra - sales  
    agreement reached in December 2013.                                     

Total production in Southeast Asia averaged 131,000 boe/d in the
quarter, consistent with the previous period. Production from ongoing
operations averaged 128,000 boe/d, consistent with the previous
quarter following stable gas demand from Corridor in Indonesia and
additional liquids production at Kinabalu through successful infill
drilling and improved uptime. This was offset by lower gas production
from PM-3 in Malaysia following the temporary shut-in of an
inter-field pipeline. Liquids production from ongoing operations was
43,000 bbls/d, up 10% year-over-year. 
In Indonesia, production from ongoing operations averaged 74,000
boe/d, up over both the same period last year and the previous
quarter, with stable gas demand and the completion of facility
upgrade projects at Corridor in 2013. Two infill wells at Corridor
are expected to spud later this year. At the Tangguh LNG project, the
Fujian pricing contract (applicable to one-third of Tangguh sales)
was successfully renegotiated, resulting in a price increase for this
year and escalating annually through 2017. At Sakakemang, Talisman
expects to begin a 2D and 3D seismic program later this year and
drill an exploration well in 2015. 
In Malaysia, production averaged 37,000 boe/d for the quarter, down
8% over the previous quarter and the same period last year, after a
partial shut-in of an inter-field pipeline at PM-3 as a precautionary
measure over potential corrosion concerns. The pipeline returned to
full capacity in June following testing and is expected to remain in
service through to its full replacement planned for next year. Also
at PM-3, a multi-well drilling campaign is ongoing, with a follow-up
appraisal well to a new oil pool discovery encountering an 18-metre
oil column. Early in the third quarter, a two-week turnaround at PM-3
was successfully completed.  
At Kinabalu, production averaged 6,000 boe/d during the quarter, up
50% over the prior period due to increased operating efficiency and a
successful infill drilling campaign. Drilling is currently underway
on the sixth and final infill well, with the first five wells adding
over 6,000 boe/d of oil production.  
In Vietnam, production averaged 14,000 boe/d, up significantly over
the prior year following the startup of HST/HSD in May 2013. Due to
high netbacks and strong reservoir performance, the additional
barrels Talisman is realizing through its carry recovery will expire
early in the third quarter of this year. The company expects
production post carry recovery to be approximately 9,000 boe/d, in
line with its equity participation. In the Nam Con Son basin,
Talisman is planning to start the first of a two-well exploration
program in the second half of 2014 on the Red Emperor extension in
Blocks 135 and 136. 
In Papua New Guinea (PNG), the government granted PDL10 and PL10
licenses during the quarter, awarding regulatory approval to Talisman
and its partners to proceed with the Stanley liquids and domestic gas
project. The first development well spud in June and drilling is
progressing. Elsewhere in PNG, the Manta-1 well in PPL 426 tested at
42 mmcf/d in the Elevala sandstone, while the NW Koko well tested at
48 mmscf/d in the Elevala sandstone and also flowed oil from the Kimu
sandstone. 
Algeria 
In Algeria, production averaged 12,000 boe/d during the second
quarter, in line with the previous quarter. Production was up 33%
compared to the same period last year with EMK commencing production
in 2013, offset by production restrictions imposed by the regulator
last year.  
Other Operating Areas 
North Sea 
In the UK North Sea, Talisman's share of production was 19,500 boe/d,
up 6% from the previous quarter and 12% on a year-over-year basis,
largely due to the restart of production from the Claymore platform
in the middle of the first quarter.  
In Norway, planned maintenance at Veslefrikk and Brage reduced
production 12% compared to the previous quarter, to 14,500 boe/d.  
Kurdistan Region of Iraq 
In the Topkhana Block, testing continues on the T-2 well and is
expected to be complete in the coming days. In the Kurdamir Block,
Talisman continues to evaluate next steps after the completion of the
K-2 extended well test. 
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 September
30, 2014 to shareholders of record at the close of business on
September 15, 2014. 
The company has also declared a quarterly dividend of C$0.2625 per
share on its Cumulative Redeemable Rate Reset First Preferred Shares,
Series 1. The dividend will be paid on September 30, 2014 to
shareholders of record at the close of business on September 15,
2014. 
Conference Call 
A conference call and webcast for investors, analysts and media will
be held at 1 p.m. MT (3 p.m. ET), July 29, 2014 to discuss results.
Participants will include Hal Kvisle, 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 capital spending;
anticipated asset sales and/or joint ventures, targeted value and
timing of such sales, and expected use of proceeds; planned drilling,
spudding, seismic and other exploration and development activities;
expected timing of the Piedemonte processing plant, expected expiry
of carry at HST/HSD; 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 the achievement of these objectives 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
access to capital, including 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.  
As used in the context of the Company's Colombian assets, long-term
testing indicates continuous well production going to market at the
most recent weekly average. A permit for long term testing is
required for a well to produce oil until the permit for full field
development has been granted. 
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.  
In this news release, Talisman discloses average cumulative well test
results for seven wells drilled into the Wilrich formation in Edson,
Alberta, two wells drilled into the Dunvegan formation in Edson,
Alberta, and two wells drilled into the Elevala sandstone formation
in Papua New Guinea  
The production tests' actual flow period durations were approximately
30 days. The average rate of flow for the seven wells in the Wilrich
formation was approximately 5.5 mmcf/d of gas with 235 bbls/d of
total liquids net to Talisman The wells produced natural gas with an
average 60 degrees API for condensate. No significant production or
pressure decline was observed on the tests. The average rate of flow
for the two wells in the Dunvegan formation was approximately 5.1
mmcf/d of gas with 375 bbls/d of liquids net to Talisman. The wells
produced natural gas with an average 57 degrees API for condensate.
No significant production or pressure decline was observed on the
tests. The production tests in Papua New Guinea ran over a period of
9.4 days for Manta-1 and 8.7 days for NW Koko-1, with the main flow
period durations being approximately 2.5 days for Manta-1 and 2.6
days for NW Koko-1. The average rate of flow for the wells during the
main flow period was approximately 21 mmcf/d for Manta-1 & 28 mmcf/d
for NW Koko-1 of gas and approx. 0.04 bbls/mmcf of condensate for
Manta-1 and approx. 0.1 bbl/mmscf of condensate for NW Koko-1.
Manta-1 produced natural gas of 0.63 SG with an average 35 degrees
API of condensate. NW Koko-1 produced natural gas of 0.59 SG with an
average 35 degrees API of condensate. No significant production or
pressure decline was observed on the tests. This data should be
considered to be preliminary until a pressure transient analysis
and/or well-flow test interpretation has been done. The test results
are not necessarily indicative of long-term performance or ultimate
recovery.  
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 


 
 
-----------------------------------------------------------------------
-----
                                          Three Months Ended                
                          --------------------------------------------------
                           June 30, March 31,  December September  June 30, 
                               2014      2014  31, 2013  30, 2013      2013 
----------------------------------------------------------------------------
Cash provided by operating                                                  
 activities                     365       471       442       637       357 
----------------------------------------------------------------------------
Changes in non-cash                                                         
 working capital                167       104        80      (166)       61 
----------------------------------------------------------------------------
Add: Exploration                                                            
 expenditure                     57        52        52        66        67 
----------------------------------------------------------------------------
Add: Restructuring costs         14         3        10         6        11 
----------------------------------------------------------------------------
Add: Income tax                                                             
 adjustments(1)                   -         -         -         -        15 
----------------------------------------------------------------------------
Add: Current tax on                                                         
 disposal(2)                      -         -        51         -         - 
----------------------------------------------------------------------------
Less: Dividends and                                                         
 distributions received                                                     
 from equity-accounted                                                      
 entities                         -         -       (21)      (37)        - 
----------------------------------------------------------------------------
Less: Finance costs (cash)      (76)      (76)      (77)      (77)      (71)
----------------------------------------------------------------------------
Cash flow from                                                              
 subsidiaries                   527       554       537       429       440 
----------------------------------------------------------------------------
Add: Cash provided by                                                       
 operating activities from                                                  
 equity-accounted entities       82       (26)       58        86       124 
----------------------------------------------------------------------------
Change in non-cash working                                                  
 capital from equity-                                                       
 accounted entities             (34)       93        (9)       54       (38)
----------------------------------------------------------------------------
Add: Exploration                                                            
 expenditure from equity-                                                   
 accounted entities               1         2         -        11         5 
----------------------------------------------------------------------------
Less: Finance costs (cash)                                                  
 from equity-accounted                                                      
 entities                        (9)       (7)       (6)       (7)       (5)
----------------------------------------------------------------------------
Cash flow from equity-                                                      
 accounted entities              40        62        43       144        86 
----------------------------------------------------------------------------
Cash Flow(3)                    567       616       580       573       526 
----------------------------------------------------------------------------
Cash flow per share            0.55      0.60      0.56      0.56      0.51 
----------------------------------------------------------------------------
Diluted cash flow per                                                       
 share                         0.55      0.59      0.56      0.55      0.51 
----------------------------------------------------------------------------
 
1.  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 2013. 
2.  Current tax on the gain on disposal of Talisman's equity interest in the
    Ocensa pipeline in Colombia in Q4 2013. 
3.  Includes cash flow from subsidiaries and Talisman's share of equity-
    accounted entities' cash flow. 

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 July
29, 2014. A reconciliation of cash provided by operating activities
to cash flow is provided above. 
Capital Spending  


 
 
-----------------------------------------------------------------------
-----
                                                 Three Months Ended         
                                        ------------------------------------
                                            June 30,   March 31,    June 30,
                                                2014        2014        2013
----------------------------------------------------------------------------
Subsidiaries                                                                
----------------------------------------------------------------------------
Exploration, development and other               470         547         649
----------------------------------------------------------------------------
Exploration expensed                              57          52          67
----------------------------------------------------------------------------
Exploration and development spending -                                      
 subsidiaries                                    527         599         716
----------------------------------------------------------------------------
 
----------------------------------------------------------------------------
Talisman's share of equity- accounted                                       
 entities                                                                   
----------------------------------------------------------------------------
Exploration, development and other               196         167         122
----------------------------------------------------------------------------
Exploration expensed                               1           2           5
----------------------------------------------------------------------------
Exploration and development spending -                                      
 joint ventures                                  197         169         127
----------------------------------------------------------------------------
 
----------------------------------------------------------------------------
Capital spending for subsidiaries and                                       
 joint ventures                                  724         768         843
----------------------------------------------------------------------------

Capital spending is calculated by adjusting the capital expenditure per
the interim condensed Consolidated Financial Statements for
exploration costs that were expensed as incurred and adding
Talisman's share of joint ventures. 
Earnings (loss) from Operations  


 
 
-----------------------------------------------------------------------
-----
                                                 Three Months Ended         
                                        ------------------------------------
                                           June 30,   March 31,    June 30, 
                                               2014        2014        2013 
----------------------------------------------------------------------------
Net income (loss)                              (237)        491          97 
----------------------------------------------------------------------------
Gain on disposals (tax adjusted)                 (1)       (486)        (45)
----------------------------------------------------------------------------
Unrealized (gain) loss on financial                                         
 instruments(tax adjusted)(1)                   120           1        (193)
----------------------------------------------------------------------------
Share-based payments (tax adjusted)(2)           15         (32)         (4)
----------------------------------------------------------------------------
Foreign exchange on debt (tax adjusted)          10           3           4 
----------------------------------------------------------------------------
Impairment (tax adjusted)                        39         107           7 
----------------------------------------------------------------------------
Restructuring costs (tax adjusted)               14           2           8 
----------------------------------------------------------------------------
Income tax adjustment(3)                          -           -          41 
----------------------------------------------------------------------------
Derecognition of deferred tax asset(4)            6           -           - 
----------------------------------------------------------------------------
Deferred tax adjustments(5)                      25          (7)         58 
----------------------------------------------------------------------------
Earnings (loss) from operations(6)               (9)         79         (27)
----------------------------------------------------------------------------
 
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 relates to the mark-to-market value of the
    Company's outstanding stock options and cash units at June 30.  The
    Company's share-based payments expense is based on the difference
    between the Company's share price and its stock options or cash units
    exercise price. The Company uses the Black-Scholes option pricing model
    to estimate the fair value of its share-based payment plans.           
3.  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 2013. 
4.  During Q2 2014, the Company derecognized deferred tax assets in
    Australia. 
5.  Deferred tax adjustments largely comprise tax on foreign exchange on tax
    pools.        
6.  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 interim condensed Consolidated
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. A
reconciliation of net income (loss) to earnings (loss) from
operations is provided above. 
Net Debt  


 
 
-----------------------------------------------------------------------
-----
                                          As at                             
                          --------------------------------------------------
                             June 30,   March 31,  December 31,   June 30,  
                                 2014        2014          2013        2013 
----------------------------------------------------------------------------
Long-term debt                  4,690       4,365         5,239       4,923 
----------------------------------------------------------------------------
Cash and cash equivalents,                                                  
 net of bank indebtedness        (352)       (515)         (351)       (232)
----------------------------------------------------------------------------
Cash and cash equivalents                                                   
 from equity accounted                                                      
 entities(1)                                                                
----------------------------------------------------------------------------
  TSEUK                           (47)          5           (21)        (41)
----------------------------------------------------------------------------
  Equion                          (64)        (42)          (34)        (60)
----------------------------------------------------------------------------
Total net debt                  4,227       3,813         4,833       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 interim condensed Consolidated 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. 
Sensitivities  
Talisman's financial performance is affected by factors such as
changes in production volumes, commodity prices and exchange rates.
The estimated annualized impact of these factors for 2014 (excluding
the effect of derivative contracts) is summarized in the following
table, based on a Dated Brent oil price of approximately $105/bbl, a
NYMEX natural gas price of approximately $4.45/mmbtu and exchange
rates of US$0.90=C$1 and UKGBP 1=US$1.65. 


 
 
-----------------------------------------------------------------------
-----
                                               Cash Provided                
                                                by Operating                
                                                  Activities      Cash Flow 
(millions of $)                 Net Income(1)       (GAAP(2))  (Non-GAAP(3))
----------------------------------------------------------------------------
Volume changes                                                              
----------------------------------------------------------------------------
Oil - 10,000 bbls/d                        70            135            190 
----------------------------------------------------------------------------
Natural gas - 60 mmcf/d                    15             65             65 
----------------------------------------------------------------------------
Price changes(4)                                                            
----------------------------------------------------------------------------
Oil - $1.00/bbl                            20              5             30 
----------------------------------------------------------------------------
Natural gas (North America)(5)                                              
 - $0.10/mcf                               15              5             25 
----------------------------------------------------------------------------
Exchange rate changes                                                       
----------------------------------------------------------------------------
US$/C$ decreased by US$0.01                (5)            (5)            (5)
----------------------------------------------------------------------------
US$/UKGBP  increased by US$0.02             -              -              5 
----------------------------------------------------------------------------
 
1.  Net income includes Talisman's share of net income (loss) from TSEUK and
    Equion, after tax. 
2.  Changes in cash flow provided by operating activities (GAAP) excludes
    TSEUK and Equion due to the application of equity accounting. 
3.  Changes in cash flow (Non-GAAP) includes TSEUK and Equion and is
    included for comparative purposes only. 
4.  The impact of price changes excludes the effect of commodity
    derivatives. See specific commodity derivative terms in the 'Risk
    Management' section of the MD&A, and note 16 to the interim condensed
    Consolidated Financial Statements filed on July 29, 2014. 
5.  Price sensitivity on natural gas relates to North American natural gas
    only. The company's exposure to changes in the natural gas prices in
    Norway and Malaysia/Vietnam and Colombia is not material. Most of the
    natural gas price in Indonesia is based on the price of crude oil and,
    accordingly, has been included in the price sensitivity for oil except
    for a small portion which is sold at a fixed price. 
 
                            Talisman Energy Inc.                            
                                 Highlights                                 
                                (unaudited)                                 
 
                                  Three months ended       Six months ended 
                                             June 30                June 30 
                                   2014         2013        2014       2013 
----------------------------------------------------------------------------
Financial                                                                   
(millions of US$ unless                                                     
 otherwise stated)                                                          
Cash flow (1)                       567          526       1,183      1,043 
Net income (loss)                  (237)          97         254       (116)
Capital Spending (1)                724          843       1,492      1,618 
Per common share (US$)                                                      
  Cash flow (1)                    0.55         0.51        1.15       1.01 
  Net income (loss)               (0.23)        0.09        0.24      (0.12)
----------------------------------------------------------------------------
Production (3)                                                              
(Daily Average - Gross)                                                     
Oil and liquids (bbls/d)                                                    
  North America                  44,776       32,675      43,310     30,785 
  Southeast Asia                 44,963       43,116      44,521     42,115 
  North Sea                      30,872       29,506      31,542     33,364 
  Other                          24,949       20,251      24,400     21,016 
----------------------------------------------------------------------------
Total oil and liquids           145,560      125,548     143,773    127,280 
----------------------------------------------------------------------------
Natural gas (mmcf/d)                                                        
  North America                     795          846         831        861 
  Southeast Asia                    515          519         518        525 
  North Sea                          22            6          19         11 
  Other                              48           43          47         41 
----------------------------------------------------------------------------
Total natural gas                 1,380        1,414       1,415      1,438 
----------------------------------------------------------------------------
Total mboe/d (2)                    375          361         380        367 
----------------------------------------------------------------------------
Prices (3)                                                                  
Oil and liquids (US$/bbl)                                                   
  North America                   66.11        65.84       67.04      64.92 
  Southeast Asia                 110.99       101.07      110.67     106.54 
  North Sea                      108.61       103.34      107.61     108.68 
  Other                          105.02        94.78      103.63     106.24 
----------------------------------------------------------------------------
Total oil and liquids             95.66        91.42       95.66      96.99 
----------------------------------------------------------------------------
Natural gas (US$/mcf)                                                       
  North America                    4.35         3.92        4.62       3.62 
  Southeast Asia                   8.94         9.51        9.04       9.87 
  North Sea                        7.51        24.01        8.30      13.87 
  Other                            3.88         4.11        3.99       4.37 
----------------------------------------------------------------------------
Total natural gas                  6.10         6.06        6.27       6.00 
----------------------------------------------------------------------------
Total (US$/boe) (2)               59.49        55.50       59.58      57.14 
----------------------------------------------------------------------------
 
(1) Cash flow, capital 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) Production and realized prices include Talisman's proportionate results 
    from Talisman Sinopec Energy UK Limited (TSEUK) and Equion Energia      
    Limited (Equion).                                                       
 
                            Talisman Energy Inc.                            
                         Consolidated Balance Sheets                        
                                 (Unaudited)                                
 
                                                     June 30,   December 31,
(millions of US$)                                        2014           2013
----------------------------------------------------------------------------
 
Assets                                                                      
Current                                                                     
  Cash and cash equivalents                               356            364
  Accounts receivable                                   1,060          1,117
  Risk management                                          22             17
  Income and other taxes receivable                        57             52
  Restricted cash                                         125            121
  Inventories                                             175            137
  Prepaid expenses                                         26             14
  Assets held for sale                                    134            776
----------------------------------------------------------------------------
                                                        1,955          2,598
----------------------------------------------------------------------------
Other assets                                              184            160
Restricted cash                                            61             94
Investments                                             1,535          1,204
Risk management                                            16             20
Goodwill                                                  568            575
Property, plant and equipment                           9,603          9,752
Exploration and evaluation assets                       3,138          3,165
Deferred tax assets                                     1,694          1,593
----------------------------------------------------------------------------
                                                       16,799         16,563
----------------------------------------------------------------------------
Total assets                                           18,754         19,161
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
Liabilities                                                                 
Current                                                                     
  Bank indebtedness                                         4             13
  Accounts payable and accrued liabilities              1,652          1,835
  Current portion of Yme removal obligation               125            121
  Risk management                                         180            101
  Income and other taxes payable                           94            155
  Loans from joint ventures                               306            288
  Current portion of long-term debt                       696            882
  Liabilities associated with assets held for                               
   sale                                                    57            160
----------------------------------------------------------------------------
                                                        3,114          3,555
----------------------------------------------------------------------------
Decommissioning liabilities                             1,824          1,727
Yme removal obligation                                     98            131
Other long-term obligations                               270            246
Risk management                                            86             37
Long-term debt                                          3,994          4,357
Deferred tax liabilities                                  681            553
----------------------------------------------------------------------------
                                                        6,953          7,051
----------------------------------------------------------------------------
Shareholders' equity                                                        
Common shares                                           1,759          1,723
Preferred shares                                          191            191
Contributed surplus                                       124            135
Retained earnings                                       5,802          5,695
Accumulated other comprehensive income                    811            811
----------------------------------------------------------------------------
                                                        8,687          8,555
----------------------------------------------------------------------------
Total liabilities and shareholders' equity             18,754         19,161
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
                            Talisman Energy Inc.                            
                  Consolidated Statements of Income (Loss)                  
                                (Unaudited)                                 
                               Three months ended       Six months ended    
                                   June 30,                June 30,         
(millions of US$)                  2014        2013        2014        2013 
----------------------------------------------------------------------------
 
Revenue                                                                     
  Sales                           1,248       1,152       2,535       2,250 
  Other income                       31          15          79          42 
  Income (loss) from joint                                                  
   ventures and associates,                                                 
   after tax                        (37)         23         (31)         21 
----------------------------------------------------------------------------
Total revenue and other                                                     
 income                           1,242       1,190       2,583       2,313 
----------------------------------------------------------------------------
 
Expenses                                                                    
  Operating                         351         381         712         710 
  Transportation                     44          51          93         102 
  General and administrative        105         111         210         214 
  Depreciation, depletion                                                   
   and amortization                 480         464         949         885 
  Impairment (impairment                                                    
   reversals)                        28          (9)        158          (2)
  Dry hole                           12          69          28          69 
  Exploration                        57          67         109         142 
  Finance costs                      90          79         181         157 
  Share-based payments                                                      
   expense (recovery)                25           2          (7)         24 
  (Gain) loss on held-for-                                                  
   trading financial                                                        
   instruments                      171        (221)        231        (141)
  (Gain) loss on disposals            5         (59)       (554)        (59)
  Other, net                         37          18          45          24 
----------------------------------------------------------------------------
Total expenses                    1,405         953       2,155       2,125 
----------------------------------------------------------------------------
Income (loss) before taxes         (163)        237         428         188 
----------------------------------------------------------------------------
Income taxes                                                                
  Current income tax                129         139         260         286 
  Deferred income tax                                                       
   (recovery)                       (55)          1         (86)         18 
----------------------------------------------------------------------------
                                     74         140         174         304 
----------------------------------------------------------------------------
Net income (loss)                  (237)         97         254        (116)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
Per common share (US$):                                                     
  Net income (loss)               (0.23)       0.09        0.24       (0.12)
  Diluted net income (loss)       (0.24)       0.06        0.19       (0.14)
----------------------------------------------------------------------------
Weighted average number of                                                  
 common shares outstanding                                                  
 (millions)                                                                 
  Basic                           1,034       1,030       1,033       1,029 
  Diluted                         1,034       1,033       1,039       1,033 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 

 
 
                            Talisman Energy Inc.                            
                   Consolidated Statements of Cash Flows                    
                                (Unaudited)                                 
                               Three months ended       Six months ended    
                                    June 30,                June 30,        
(millions of US$)                  2014        2013        2014        2013 
----------------------------------------------------------------------------
Operating activities                                                        
Net income (loss)                  (237)         97         254        (116)
Add: Finance costs (cash and                                                
 non-cash)                           90          79         181         157 
Items not involving cash            679         242         672         729 
----------------------------------------------------------------------------
                                    532         418       1,107         770 
Changes in non-cash working                                                 
 capital                           (167)        (61)       (271)        (82)
----------------------------------------------------------------------------
Cash provided by operating                                                  
 activities                         365         357         836         688 
----------------------------------------------------------------------------
Investing activities                                                        
Capital expenditures                                                        
  Exploration, development                                                  
   and other                       (470)       (649)     (1,017)     (1,218)
Proceeds of resource                                                        
 property dispositions               52          99       1,392          99 
Yme removal obligation               13          (7)         29         275 
Restricted cash                     (13)          7         (29)       (238)
Investments                           -           -           -          (7)
Loan to joint venture              (178)        (19)       (350)        (89)
Changes in non-cash working                                                 
 capital                            (92)        (31)        (42)       (115)
----------------------------------------------------------------------------
Cash used in investing                                                      
 activities                        (688)       (600)        (17)     (1,293)
----------------------------------------------------------------------------
 
Financing activities                                                        
Long-term debt repaid                (2)         (4)       (879)         (4)
Long-term debt issued               315         416         315         509 
Loans from (repayments to)                                                  
 joint ventures                       -         (61)         18          49 
Common shares issued                  -           1           4          17 
Finance costs (cash)                (76)        (71)       (152)       (141)
Common share dividends              (70)        (68)       (140)       (138)
Preferred share dividends            (2)         (2)         (4)         (4)
Deferred credits and other           (6)         (6)          1         (15)
Changes in non-cash working                                                 
 capital                             (2)         (7)         13          11 
----------------------------------------------------------------------------
Cash provided by (used in)                                                  
 financing activities               157         198        (824)        284 
----------------------------------------------------------------------------
Effect of translation on                                                    
 foreign currency cash and            3           1           6           - 
 cash equivalents                                                           
----------------------------------------------------------------------------
Net increase (decrease) in                                                  
 cash and cash equivalents         (163)        (44)          1        (321)
Cash and cash equivalents                                                   
 net of bank indebtedness,          515         276         351         553 
 beginning of period                                                        
----------------------------------------------------------------------------
Cash and cash equivalents                                                   
 net of bank indebtedness,          352         232         352         232 
 end of period                                                              
----------------------------------------------------------------------------
----------------------------------------------------------------------------
 
Cash and cash equivalents           356         270         356         270 
Bank indebtedness                    (4)        (38)         (4)        (38)
----------------------------------------------------------------------------
Cash and cash equivalents                                                   
 net of bank indebtedness,                                                  
 end of period                      352         232         352         232 
----------------------------------------------------------------------------
----------------------------------------------------------------------------

  
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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