Operations: three core areas + global exploration. . .
North America
North SeaSoutheast Asia
Growth through shale gas
Sustainable cash flowOil price leverage
Self funding built in growth
-10%
0%
10%
20%
30%
40%
International Portfolio 10yr ROACE (%)North America 10yr ROACE (%)
. . .provides a balanced portfolio
-10%
0%
10%
20%
30%
40%
SE Asia25%
Other4%
North America
40%
North Sea31%
Oil50%
Gas39%
Oil Linked Gas11%
SE AsiaNorth SeaConventional
Commodity Price US$/mmbtu
$4
$6
$9
Commodity Price US$ WTI
$40
$60
$90
Unconventional
2009 Production 2009 Commodity Exposure
April 2010 www.talisman-energy.com Page 1 of 31
Robust strategy – a clear business strategy tounlock value
1Establish Long-term Profitable Growth• North America shale gas• Southeast Asia
2Reposition International Exploration Portfolio for Renewal• Support existing core areas• Build new production areas
3Focus Portfolio to Generate Cash for Re-investment• Maximize value from existing mature assets• Exit non-strategic areas
% Undeveloped gas reserve bookings
Strategy drives lower F&D costs. . .
59
494645
30
Unconventional Gas PeersTalisman North America
Talisman total F&D Cost (C$/boe)(Excluding price revisions)
24
43
2009
2008
43% Reduction
April 2010 www.talisman-energy.com Page 2 of 31
. . .and longer reserve life
North America
North Sea
SE Asia
10
11
7
18
13
15
Typical Industry Unconventional 1P Range
15–20
1P
2P
Reserve Life Index 2009Years
2009 Year End 2P Reserves 2.3 Billion boe
Oil39%
Gas52%
ShaleGas9%
People and organizational changes
• Building the Senior Team− Five new EVP’s− New SVPs Shale and HSSE/OI, VP HR − New country managers in Malaysia and Papua New Guinea
• Enhancing Functional Capacity− HSE: New board committee, global standards, performance management− Talent and career development− New Long Term Incentive Plan− Project management
• Organization to drive focus− UK operations delivery− NA shale
April 2010 www.talisman-energy.com Page 3 of 31
Strategy scorecard – delivery
Exploration Key exploration wells: 27
Bid Rounds: Norway, others
Project Delivery
(First Production)
Norway: Rev, Yme
UK: Tweedsmuir Phase B, Affleck
SE Asia: Song Doc, Northern Fields Gas and Oil
• Rev, Yme (expected 2H10)
• Tweedsmuir ‘08, Affleck 3Q09
• Song Doc, Northern Fields Gas and Oil
Disposals North America: Lease 10, non-core assets
UK: Core and non-core assets
SE Asia: Australia
Other: Trinidad and Tobago
Exit: 35–45 mboe/d, $1.5–2.0 Billion
• Lease 10, Non-core conventional, unconventional and midstream
• Netherlands, Beatrice, UK Core (on hold)
• Australia (on hold)
• Trinidad and Tobago, Denmark, Yme Dilution
38 mboe/d, $3.2 Billion to date
NA
Unconventional
Evaluate five unconventional plays and drill 240–290 wells
Capital: $2.5–$3.0 Billion
• Evaluated five plays, over 290 wells drilled/planned• Marcellus 2009 Exit rate: 65 mmcfe/d• Montney Shale 2009 Exit rate: 15 mmcfe/d
• $3.4 Billion, including land
• 25 wells drilled and two currently drilling• Discoveries: Kitan, Grevling, Huron, Godwin, Shaw,
Kurdamir• Successful appraisals: Situche
• Four blocks Colombia, Block 158 Peru, Blocks K-44, K-39 and K-9 KRG (Kurdistan), three Barents Sea blocks, Blocks 133 & 134 Vietnam, Andaman III Block Indonesia, Sabah blocks SB309/SB310 Malaysia, ten blocks PNG
2008 Promises. . . . . .delivered by year end 2009
Success in focusing the portfolio
$660NA Conventional
$300Midstream
$90Yme dilution
$380Trinidad and Tobago
$710Bakken
$595Netherlands
$3,170Total
$90Lease 10
$250Lac La Biche
$95Denmark
Sales price
($C Million)Name
Talisman continues to look at opportunities to focus the portfolio, primarily North America conventional
April 2010 www.talisman-energy.com Page 4 of 31
Strong investment grade ratings. . .
0.0 x
0.5 x
1.0 x
1.5 x
2004 2009
Debt to Trailing Twelve Month Cash FlowRatio
0%
20%
40%
60%
2004 2009
Debt to Debt + EquityPercentage
$0
$1
$2
$3
$4
$5
$6
$7
$8
$9
$10
0.0x
0.5x
1.0x
1.5x
2.0x
2.5x
3.0x
3.5x
4.0x
. . .with low leverage relative to peers and good liquidity
Average = 1.72x
Talisman
Debt to Trailing Twelve Month Cash Flow
Peer companies
Talisman
Available Liquidity
Average = $3.5 billion
C$ billion
April 2010 www.talisman-energy.com Page 5 of 31
New Growth - North American shale gas plays
Québec• Unproven play• 756,000 total net acres
Montney Shale• Proven and expanding play• 272,000 total net acres• 168,000 tier 1 net acres• 3,000 tier 1 drilling locations
Marcellus• Proven and expanding play• 512,000 net acres in NY• 218,000 tier 1 net acres in PA• 2,000 tier 1 PA drilling locations
Industry Perspective
• Talisman top three in resource potential
• One of the top two shale plays in North America
• IRR: 10% - 35% ($4.50- $8.50 NYMEX)
• Breakeven gas price US$/mmbtu 3.50 – 4.50
• Total basin OGIP up to 500 tcf
The Marcellus Shale – large contiguous land base
Marcellus Development Metrics
Tier 1 Net Acres – PA 218,000
Net Acres – NY 512,000
Spacing (acres/well) 80
• Focus on PA – 2,000 potential tier 1 drilling locations
• Exit rates: 2009 – 65 mmcf/d; 2010 – 250-300 mmcf/d
• 2010 plan: drill 170 net wells, complete and tie-in 145
• D&C optimization ongoing
• Water management plans in place for 2010
• Majority of permitting in place for 2010
• Egress ramping up to 600 mmcf/d
Talisman Updates
Marcellus Shale FairwayTLM Shale AcreageMajor Pipelines
Source: BMO January 2009, Tristone October 2008, Ross Smith Energy Group 2008, First Energy Capital Corp January 2009
April 2010 www.talisman-energy.com Page 6 of 31
Talisman Updates
• Development of Farrell Creek and Greater Cypress in 2010
• Continue piloting in 2010
• 3,000 potential tier 1 drilling locations
• 2010 exit rate: 40 – 60 mmcf/d
• 2010 plan: drill 25 development wells, 10-15 pilot wells
• Excellent industry and stakeholder relationships
• Incorporating learnings and technology to reduce costs and improve well efficiency
• Egress capacity of 320 mmcfe/d
Montney Shale - proven and expanding play
168,000Tier 1 Acreage
Montney ShaleKey Metrics
272,000Net Acres
80Spacing (acres/well)
Pilot & Development
Industry Perspective
• Talisman top tier resource potential
• One of the largest economically viable resource plays in North America
•IRR: 10% - 66% (US$4.50 - $8.50 NYMEX )
•Breakeven gas price US$/mmbtu 3.50 – 4.50
• Total basin OGIP up to 600 tcf
Source: BMO January 2009, Tristone October 2008, Ross Smith Energy Group 2008, First Energy Capital Corp January 2009
ABBC
TLM Montney LandMontney ShaleMontney CoreMajor Pipelines
Talisman Updates
• Largest land position in most prospective shale fairway
• Proven we can systematically fracture Utica formation
• Actively building government and industry relationships
• Excellent proximity to premium markets
• Earning wells demonstrate opportunity
Proving Québec - extensive land position
Industry Perspective
4Horizontal Well Tests - 2010
6Gross Earning Wells drilled
Available on TQMSecured Egress Capacity
756,000Net Acres
Key Metrics
Acres following earning
Not testedSt Francois Du Lac #1
700Saint-Edouard / Questerre
Test Rate (mcfe/d)Earning Well / Partner Name
900
>400Saint-David / Questerre
Leclercville / Intragaz
>800Gentilly / Questerre
>300La Visitation / Questerre
Early Success (Vertical Wells)
April 2010 www.talisman-energy.com Page 7 of 31
SE Asia provides access to large-scale opportunities
Development
Malaysia: PM3 IOR
Vietnam: Cuu Long Basin Hai Su Den
Indonesia: Corridor Jambi Merang
Exploration
Development
ExplorationIndonesia
Papua New Guinea
Australia
PhilippinesThailandVietnam
Malaysia
Vietnam: Nam Con Son
Indonesia: Makassar Strait
PNG: onshore/offshore
Other: offshore Sabah, Aceh
0
40
80
120
160
2002 2009 2013
• PM-3 IOR
• HSD/HST oil
• Kitan oil
• Northern Fields oil
Growth in SE Asia ca. 8 - 10% per annum over next 4 years
Oil
Gas
Rate (mboe/d)
30
680CAPEX
($C Millions)767512331305235316269
(82) 5122361220195(82)Free Cash Flow
($C Millions)
• Corridor additional gas
• Northern Fields gas
• Jambi Merang
• PNG gas condensate
Future projectsSE Asia production
16%
ca. 8-10%
Vietnam
• Nam Con Son gas
• Cuu Long
Indonesia
• Makassar Strait
• Tangguh Phase 2
• Andaman III Block
Malaysia
• Sabah Blocks
Papua New Guinea
• Foreland Gas Commercialization
April 2010 www.talisman-energy.com Page 8 of 31
GSF Explorer
• Potential for giant fields in emerging new basin
• Completed 3D seismic acquisition on Pasangkayu and 2D on Sageri
• Two Pasangkayu wells planned in 2010
• Sageri well planned in 2011
• 9 prospects and leads
Indonesia – Makassar Straits
JSA: Joint Study AreaPSC: Production Sharing Contract
Talisman JSA
Talisman acreage
Sageri PSC
Sulawesi
Kalimantan
Makassar Strait
Sultan 1
Pasangkayu PSC
Indonesia – North Sumatra
Andaman III Seismic
• Awarded block in 2009
• Large gas/condensate prospects identified
• Close to infrastructure
− Arun LNG facility has significant excess capacity
• 3D seismic planned for 2010
• Exploration well planned for 2012
0 25 50 75 100Kms
Andaman III
Indonesia(Sumatra)
Arun LNG Plant
Talisman acreage
April 2010 www.talisman-energy.com Page 9 of 31
Malaysia – Sabah
• Awarded two PSC contracts with working interest of 70%
• Over 13,000 square kilometres of highly prospective shallow water acreage
• Designated operator in both blocks
• 3D seismic program planned for 2011
• Exploration drilling planned for 2012
0 25 50 75 100Kms
SB309
SB310
Malaysia
Murphy/Shell Fields: > 1100 MMBO rec.
Talisman acreage
Prospects and leads
Kinabalu Field:240 MMBO rec.
CoPi/Petronas Fields: > 6 Tcf rec.
Samarang Field:450 MMBO rec.
Vietnam - building an acreage position in the prolific Nam Con Son Basin
Talisman acreage
Block 15/2-01
Block 133
Block 134
Nam Con Son Basin
Cuu Long Basin
Hai Su Den
Bach Ho
• Talisman WI 38% (operator) farm-in Blocks 133/134 – added 3.3 Million gross acres
• Large gas potential allows Talisman to pursue gas-to-power strategy
• Proven hydrocarbon system in Nam Con Son blocks - Talisman prospective resource up to 2 tcf
April 2010 www.talisman-energy.com Page 10 of 31
Papua New Guinea
PNG Foreland Basin
• Gas aggregation strategy targeting 2-4 tcf
• Additional ten blocks acquired in 2009 - total 15 Million gross acres
• Acquire approx. 1,000 km of 2D seismic and commence exploration and appraisal drilling in 2010
• Evaluate early condensate production scheme in 2010
0 60 120 180 240Kms
Talisman acreage
HighlandArea
Papua New Guinea
Pandora Gas Field Planned
LNG Plant
Lowland Area(ForelandBasin)
Exploration – Building the portfolio. . .
SE Asia
South America
NorthSea
KRG (Kurdistan)
European Shale Gas
April 2010 www.talisman-energy.com Page 11 of 31
2009-2013 Exploration targets:
• ca. 600-650 mmboe resource adds in 5 years
• Less than $5/boe Finding Cost
• ca. C$600-700 MM capital budget per year
0%
50%
100%
2007 2008 2009 2010E 2011E
0
20
40
60
80
Exploration Capital Expenditures & Average Prospect Size
Percent of Capital Expenditures
. . .and Positioning for Renewal
mmboe
Support Existing Production Area
Build New Production Area
Average prospect size (working interest resource estimate)
2010 2013
Foothills
Foreland
Heavy Oil
Exploration Drilling Timeline
Foothills (4 Blocks)
• Exploration success in the Niscota block (Huron-1)
− Appraisal program in late 2010
• Captured significant land position in foothills
Foreland (5 Blocks)
• Two wells planned for 2010
Heavy Oil (Block 6, 8)
• Extensive land position
• Seismic acquisition underway
Colombia
Talisman acreage
Block 8
Block 6
Block 9
Block 12
Foothills Blocks
Niscota
Foreland Blocks
Huron-1
Cusiana
Rubiales
April 2010 www.talisman-energy.com Page 12 of 31
Situche Central Appraisal
• Under-explored petroleum basin with material prospectivity
• Working interest in 5 blocks– Over 9 Million gross acres– 15 prospects and leads
• Successful appraisal at Situche Central in 2009
• Block 101 exploration well planned for 2010
Talisman acreageBlock 64
Block 101
Block 134
Block 158
SitucheCentral
Block 103
Peru
Situche Central Appraisal
Block 39 Seismic Acquisition
KRG (Kurdistan) region of northern Iraq
• 40% working interest in Block 44
• Sarqala-1 drilled with oil & gas indications; currently suspended
• Kurdamir-1 spudded in May 2009
– Significant gas condensate discovery
• Option to enter Block 39 PSC in 2010
– Potential 60% earned interest in Block 39
• 2D seismic acquisition completed on Block 39 in 2009
• Acquired operatorship in Block 9 (55% earned interest) and will commence 2D seismic acquisition in 2010
Talisman acreage
Block 39
Block 44Kurdamir-1
Kirkuk Field
Green Line
Sarqala-1
Block 9
Prospects
April 2010 www.talisman-energy.com Page 13 of 31
Key milestones
Projects for sanction
• Burghley
• Kitan
Projects(First Production)
Key Exploration Wells
• Rev
• Northern Fields (oil)
• Affleck
• Huron
• Godwin
• Grevling
• Situche
• Kurdamir
• Shaw
• Yme, Burghley
• Corridor additional gas sales
20102009
DivestmentsContinue non-core divestments
• Pasangkayu (2 wells)
• Runtusapa
• K-44 Well 3
• PNG Lowland (3 wells)
• Grevling Appraisal
UnconventionalMarcellus
Montney Shale
Quebec
• Three to six rig development
− Drilled 53 wells
• Three pilot areas
• Commence horizontal pilots
• Six to ten rig development
− Drill 170 net wells
• Drill 25 horizontal development wells and 1 10-15 pilot wells
• Complete and test four horizontal pilot wells
Continuing successful execution
• Strategic Transition Continues− Accelerate portfolio transition− Maintain focus on returns and profitability− Geographic and commodity diversity retained
• Delivering on Promises− Production targets met− Improving F&D costs − Focused operating cost reduction in the North Sea
• New Strategy is working− NAO transition to shale− SE Asia growth underpinned− International exploration beginning to show results
• Strengthening Internal Capability− Organizational change− Improved functional capabilities
• Health, Safety and Environment• Drilling• Information Technology• Performance management• Capital management• Human Resources
April 2010 www.talisman-energy.com Page 14 of 31
Appendix
Priorities for 20101. Accelerate portfolio transition
2. Maintain focus on returns and profitability
3. Continue to build organizational capacity
Capital program C$5.2 Billion• Fund from cash flow, asset sales, balance sheet strength
• Scalable up and down
• Includes $300 Million non-cash capital lease
2010 production approximately flat with 2009• NA shale gas and SE Asia gains offset declines in NA conventional & UK,
and impact of 2009 asset sales• Marcellus shale: 250-300 mmcf/d 2010 exit rate, up from 65 mmcf/d yr end 2009
• Montney shale: 40-60 mmcf/d 2010 exit rate
• Growth expected from 2H 2010• NA shale gas emerging as growth driver
2010 Corporate Outlook
April 2010 www.talisman-energy.com Page 15 of 31
2010 Activity
North America• Marcellus shale: drill 170 net wells
• Montney shale: drill 35-40 net wells (development/pilot)
• Quebec: continue piloting activity
• Non-core conventional asset dispositions
North Sea• Auk North & South, Burghley, Yme development
• Infill drilling
SE Asia• Kitan development
• Malaysia infill drilling and platform upgrades
• PNG appraisal
• Jambi Merang development
• Evaluation of HST/HSD early production scheme
International Exploration• 10 new core area wells
• Colombia (2), Peru (1), Kurdistan (2), Makassar Strait (2), PNG (3)
Capital expenditures increased in 2010 to support strategic transition
International Exploration
SE Asia
NA Conventional
Norway
UK
NA Unconventional
2008 2009 2010E
Cash Capital Expenditure
C$ Billion
5.2
4.3
4.9
Other
April 2010 www.talisman-energy.com Page 16 of 31
Hedging Program
February 26, 2010 Disclosure
1H 2010
• 335 mmcf/d @ ~C$6/C$7.25 (AECO)2010
75,000 bbl/d in collars
• 28,000 bbls/d @ ~US$52/US$80
• 25,000 bbls/d @ ~US$71/US$90
• 22,000 bbls/d @ ~US$50/US$602011
• 95 mmcf/d @ ~US$6/US$6.50 (NYMEX)
2H 2010
• 240 mmcf/d @ ~C$6/C$7.50 (AECO)
• 95 mmcf/d @ ~US$6/US$7 (NYMEX)
North American GasOil
Repositioning into the best rocks to ensurewe are the low cost producer
Plays where Talisman has material positions
0
2
4
6
8
10
12
FayettevilleMarcellusMontney
Haynesville(8–12 bcf/well)
WoodfordUtica
West TXBarnettMuskwa
Conventional
North America Strategic Shift
Other North American plays
Estimated North America gas supply costs
Supply cost
(US$/mmbtu NYMEX)
Source: Tristone Capital Feb 2009April 2010 www.talisman-energy.com Page 17 of 31
0
1
2
3
4
5
6
7
0 50 100 150 200 250 300 350 400 450
Days
Top 5 Wells
200 Day Average (11 Wells)
First Well
2 Bcf
3.5 Bcf
5 Bcf
Marcellus Shale - demonstrating ability to execute
2.3 – 5.0
3.0 – 6.0
3.4 – 5.5
65
53
2009
3.0
3.5
3.8
250 - 300
214
2010Target
Horizontal Well Metrics
4# Wells Drilled (Gross)
2008
2.5
3.3
6.5
5
30 Day IP per Well (mmcfe/d)
EUR per Well (bcfe)
D&C Cost per Well (US$ Million)
Exit Production Rate (mmcf/d)
• 27 horizontal wells on stream (23 Op + 4 Non-Op)
• 2010 program has commenced with six rigs, plan to exit with 10 rigs
Rate (mmcf/d)
Pennsylvania Horizontal Wells
Operational Highlights
• Lean operations
• Pad drilling and pre-set rigs
• Optimizing water management plan
• Supply management negotiations
• Last five wells in 2009: D&C Costs = ~ $4 million
Marcellus Shale – driving to top tier execution
3.0
4.0
5.0
6.0
7.0
8.0
D&C Cost ReductionsD&C Cost (US$ MM)
First Well
0
2
4
6
8
10
12Most Recent
Well
Middle Well
0.5 1.0 1.5 2.0 2.5 3.0 3.5
Drilling Performance – Cost vs. Depth(ft thousands)
US$ MM
Key cost reduction levers
Fourth Well Last WellFirst Well Target
US$5.6US$7.5 US$4.3 US$3.8
Stage Pad DrillingCompletions Logistics
Invert Drilling Fluid
Supply Chain
Data acquisition and well evaluation
Applied Drilling LearningsImproved completion techniques
Hole stability management
Operational ImprovementsFacility Standardization
April 2010 www.talisman-energy.com Page 18 of 31
Upper Montney
Lower Montney
Montney Shale – early success
GR NeutronDensity
GasSaturationPorosity
Operational Highlights
• Target 5 bcf EUR and 4.5 mmcf/d IP per well
• Moved two pilot areas into development for 2010
• Piloting three areas in 2010
• Drill first multilaterals in 2010
Metrics 20092010
Target
Number of Wells Drilled (Gross) 19 35 - 40
Exit Product Rate (mmcfe/d) 15 40 - 60
Number of Pilot Areas 3 3
• Returns are stable and predictable
– Downside commodity price protection
• Long Life Assets
– Extended production profiles
– Materiality
• Material Growth
– Current portfolio has built in growth
– Large accessible YTF resources
• Competitively Positioned
– Well established relationships
– Staff in five countries
– Incumbent advantage
1513
18
15
Total North America
North Sea SE Asia
5.0
7.9
21.1
11.5
SE Asia is a great place to do business
2P Reserve Life IndexYears
OPEX ($/boe)2005–2009 Average
April 2010 www.talisman-energy.com Page 19 of 31
• Talisman 41.4% WI (Operator)
• C$1.6 Billion project (4 Platforms, FSO, 50 wells and 100+ km of subsea pipelines)
• Early Gas on production Q3 2008, Oil on production Q1 2009, Dry Gas Q3 2009
• Increasing PM 3 CAA gross liquid production to 45,000 bbl/d and gas production to 290 mmcf/d
• PM-3 CAA working interest 2P reserves: 161 mmboe
Malaysia/Vietnam - PM-3 CAA Demonstrating project capabilities
Oil
Gas
ProspectsFuture Platform
Producing Platform
Gas export to
Ca Mau, Vietnam
Gas export to Resak, Malaysia
Legend
Song Doc
Northern Fields Southern
Fields
PM-3
VietnamMalaysia
Duri
Corridor
Sumatra
Jakarta
Java
Singapore
Indonesia - CorridorLong life, low cost asset with significant upside. . .
• Talisman working interest 36% (ConocoPhillips Operator)
• Connection to multiple markets strengthens the ability to commercialize un-booked reserves
• Talisman working interest production 310 mmcf/d in 2009
• Working Interest 2P reserves: 2.3 tcfe with additional P3 reserves of 860 bcfe
• 2P Reserve life: 18 years
April 2010 www.talisman-energy.com Page 20 of 31
. . .strong growth with good price realizations and netbacks
Corridor Gas Productionmmcf/d
0
50
100
150
200
250
300
350
5yr Average Corridor Netback Realization($/mcf)
19%
2002 2009 Realized Price
Netback
$8.61
$5.03
Opex
$2.73
Royalties
$0.84
Malaysia - PM-3 Improved Oil Recovery project leverages Talisman’s core strengths
0
2
4
6
8
10
12
Rate (mboe/d)
PM-3 South incremental IOR Production
Typical reservoir cross section over 800 meters thick
2009 2010 2011 2012 2013
Phase 2
Phase 1
• Development Optimization of the PM-3 CAA Southern Field’s main oil reservoirs
• Improve average oil recovery factor from 25% to 35% via re-completions, infill drilling facility upgrade
• Offsets natural field production decline and provides access to new reserves
• Targeting 53 mmboe 3P reserves and additional prospective resources
April 2010 www.talisman-energy.com Page 21 of 31
Indonesia – Jambi MerangSignificant near term production
• Talisman working interest 25% (joint operator with Pertamina)
• Two gas condensate discoveries (Pulau Gading & Sungai Kenawang)
• Talisman working interest production ramping up to 11,000 boe/d over three years starting in 2011
• Working interest 2P reserves up to 28 mmboe
• Strategically located near major pipelines and adjacent to Corridor South Sumatra
Corridor
Talisman acreage
Discoveries
0 30 60 90 120 Km
Sungai KenawangPulau Gading
Gas to Singapore
Gas toDuri
Gas toJava
Geragai Facility
Jambi Merang
Vietnam - Block 15-2 HSD/HST Early Production Scheme (EPS) leverages in-house capabilities
• Talisman WI 60% (JOC Operator)
• HST (Hai Su Trang) clastic reservoir and HSD (Hai Su Den) basement reservoir is a phased development
• Early Production system to focus on HSD (central fault Block B only) and HST development
• Sanction late 2010 or 2011 targeting an initial 30 – 40 mmboe 2P reserves
• First oil in late 2012 or 2013 with peak production around 25,000 - 30,000 boe/d (gross)
• Obtain HSD production history to assess reservoir potential before any further development activity
production
Block 15-2/01 JOCHSD
Gas Export HST
Legend
EPS Platform
Oligocene Clastic Reservoir
Basement Reservoir
Potential Future Development area
April 2010 www.talisman-energy.com Page 22 of 31
0
25
50
75
100
2005 2009
0
10
20
30
40
UK provides a strong profitable base and leverageto high oil prices
0.0
0.5
1.0
1.5
2005 2009
% ROACE
ROACE
Free Cash Flow(C$ Billion)
Netbacks and ROACEC$/boe
Despite low commodity prices in 2009, UK remained a Free Cash Flow generator
UK in context – projected resources 25 Billion boe with Talisman’s hubs strategically placed in Central North Sea
Central North Sea
Flotta Hub
46
11
7
13
24
MonArb Hub
Fulmar Hub
2009Production
mboe/d
2P Reserve Life Index
Years
North Sea projected 25 Billion boe remaining resources
NorthernNorth Sea
West of Shetland
Irish Sea
Southern North Sea
19%
14%51%
13%3%
FulmarHub
MonArb Hub
Flotta Hub
Central North Sea
NorthernNorth Sea
West of Shetland
Irish Sea
SouthernNorth Sea
25Billion
boe
Source: Oil & Gas UK March 2009, DECC
37
April 2010 www.talisman-energy.com Page 23 of 31
• 2P 21 mmboe reserves
• Successfully completed two subsea horizontal producers in 2009
• Drill and complete third subsea horizontal, install subsea manifold, pipelines and riser (2010 / 2011)
• Install topsides reception facilities on Fulmar (2010 / 2011)
Schedule
• Project Sanction: October 2008
• First Oil: 2011
• Peak production 10 mboe/d
Auk North Target Area
Auk South Target Area
Auk South Redevelopment• Auk rejuvenation to access
36 mmboe 2P reserves
• Field life extension
• Drill 9 wells and 3 re-completes
• New integrated drilling deck, living quarters, and power from Fulmar
Schedule
• Project sanction 4Q 2008
• First oil 2012
• Peak production 11 mboe/d
Auk South redevelopment / Auk North development
Auk North Development
AukDrained Area
FulmarHub
NorthernNorth Sea
S th
CentralNorth Sea
Fulmar Hub
Auk
Clyde
Fulmar
Orion
Halley
Norw
ay
Affleck
Central North Sea Exploration focus drives expansion of strategic hubs
199
40
112
FulmarMonArb2009 year end reserves and resources
(mmboe)
218Unrisked prospective resource
43P3 reserves
882P reserves
Arbroath
Montrose
Arkwright
Wood
Brechin
Exploration2 wells drilled(2009)
Exploration1 well (2010)Fulmar
Hub
MonArb Hub
Flotta Hub
Aberdeen
Flotta
Montrose / Arbroath Hub
FiddichGodwin
Cawdor
Flyndre
Cayley
Shaw
Talisman Recent Discoveries
Export Pipelines
Talisman Fields
Discoveries/Prospects/Leads
April 2010 www.talisman-energy.com Page 24 of 31
Storage tank – installed
Drilling – on track
Subsea installation – mid ‘09
First Oil – 2H 2010
Topside in construction yard
Topside in construction yard
Yme redevelopment project
Exploration success at Grevling and entry into Barents
Near Term
• Grevling discovery (15/12-21)
• Tested oil from 3 formations
• Appraisal well planned for 2010
• Evaluating development options
• Norwegian Petroleum Directorate estimates 40-130 mmboe recoverable reserves
Long Term
• Entry into Barents Sea through 20th Round award and acreage swap (1Q 2009)
• Access to large prospects to replenish Norway exploration inventory
• Veslemoy – 1 commitment well planned in 2012
Varg
Grevling
Norway
PL490 – 10%PL491 – 20%
Feb ’09 Strategic entry
Talisman acreage
PL531 (Veslemoy)20th Round Award
(25% equity)
PL490 – 10%PL491 – 20%
Feb ’09 Strategic entry
Goliat
Snøhvit
April 2010 www.talisman-energy.com Page 25 of 31
Build NewProduction
Area
• Explore in regions where Talisman has existing production
• Support current production and generate near-term cash flow for reinvestment
• Conduct exploration programs in regions with significant undiscovered resource potential
• Successful efforts will result in new core operating areas
SupportExisting
ProductionArea
Global Exploration - A two-pronged approach to renew the resource base
Colombia: Huron-1
North Sea: Ocean Princess
April 2010 www.talisman-energy.com Page 26 of 31
Key Historical Data2009 2008 2007 2006 2005
Daily production, before royaltiesOil & liquids (mbbl/d) 211 224 241 262 250 Natural gas (mmcf/d) 1,283 1,247 1,265 1,342 1,319 Barrels of oil equivalent (mboe/d) 425 432 452 485 470
Daily production, after royaltiesOil & liquids (mbbl/d) 181 187 203 217 213 Natural gas (mmcf/d) 1,088 992 1,017 1,091 1,043 Barrels of oil equivalent (mboe/d) 352 373 402 390
Proved reserves, before royaltiesOil & liquids (mmbbl) 532 545 749 767 736 Natural gas (bcf) 5,273 5,338 5,464 5,403 5,417 Barrels of oil equivalent (mmboe) 1,411 1,434 1,660 1,667 1,639
Drilling activityNorth America - Oil & liquids 5 138 128 194 171 North America - Natural gas 154 286 288 496 495 North America Total 159 424 416 690 666 North America - Drilling success (%) 98 100 98 98 97
International - Oil & liquids 59 73 73 65 51 International - Natural gas 12 37 11 18 5 International Total 71 110 84 83 56 International - Drilling success (%) 86 89 79 83 81
Net undeveloped land (thousands of acres)North America 9,145 9,786 9,559 18,886 5,588 International 26,208 16,443 12,948 85 13,484 Total 35,353 26,229 22,507 18,971 19,072
April 2010 www.talisman-energy.com Page 27 of 31
Key Historical Data2009 2008 2007 2006 2005
Ratios and Key Indicators (C$ millions, except per share)Cash flow 3,961 6,163 4,327 4,748 4,672 Net Income 437 3,519 2,078 2,005 1,561 Per Common Share
Cash flow 3.90 6.06 4.19 4.35 4.23 Net Income 0.43 3.46 2.01 1.84 1.41
Exploration & development spending 4,245 5,106 4,449 4,578 3,179 Acquisitions 438 452 317 204 3,170 Dispositions 2,772 442 1,477 872 22
Average Royalty Rate (%) 15 18 17 17 17 Unit operating costs (C$/boe) 12.91 13.57 12.14 9.98 8.41 Unit DD&A (C$/boe) 17.36 16.44 14.74 12.22 10.88 Return on capital employed (%) 4 27 18 19 19
Balance Sheet Info (C$ millions)Property, plant & equipment 18,914 18,540 16,363 16,655 13,806 Total assets 23,618 24,275 21,420 21,481 18,354 Long-term debt (including current portion) 3,780 3,961 4,862 4,560 4,263 Shareholders' equity 11,111 11,150 7,963 7,307 5,729
Share information, adjusted to reflect stock splitsCommon shares outstanding (millions) 1,019 1,019 1,019 1,064 1,099 TSX trading info
Average daily trading volume (thousands) 4,066 3,727 2,951 3,254 3,143 High (C$) 20.17 24.92 22.67 24.84 20.83 Low (C$) 9.92 8.28 16.90 16.12 10.50 Close (C$) 19.69 12.18 18.39 19.80 20.53
NYSE trading infoAverage daily trading volume (thousands) 3,998 4,248 2,115 2,139 1,384 High (US$) 19.51 25.71 22.08 21.62 18.08 Low (US$) 7.97 6.42 15.04 14.21 8.36 Close (US$) 18.64 9.99 18.52 16.99 17.63
Commodity InformationWTI (average US$/bbl) 61.79 99.65 72.31 66.25 56.70 NYMEX gas (average US$/mmbtu) 4.05 8.95 6.92 7.26 8.55 US$/C$ exchange rate (year end) 0.9555 0.8166 1.0120 0.8581 0.8577
Realized product pricing, before hedging activitiesOil & liquids (C$/bbl) 67.36 96.43 75.00 69.82 62.78 Natural gas (C$/mcf) 5.29 9.01 6.99 7.20 8.30
2007 and 2008 have been restated for operations classified as discontinued in 2009.Notes: Return on capital employed = Net income plus tax effected interest / (average shareholders' equity + average net debt)
April 2010 www.talisman-energy.com Page 28 of 31
AdvisoriesForward-Looking InformationThis presentation 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 first production; planned and potential dispositions; planned drilling, development, redevelopment, piloting, sanctioning, appraisals, upgrades, egress and exploration; estimated supply and finding costs; planned production and production growth, incremental production and future projects; asset life, costs and returns; planned capital expenditures and program; planned prospective resource additions and expected prospect size; planned reduction of F&D and extension of reserves life; planned profitable growth; planned hedging programs; targeted drilling and completions costs; targeted EUR and IP; increases in operational efficiencies; reserves life and remaining resources; improved average oil recovery factors; forecasted cash flow; planned seismic acquisitions; and planned and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance.
The forward-looking information included in this presentation is based on Talisman’s 2010 capital program as announced on January 11, 2010. Talisman has set its 2010 capital expenditure plans assuming: (1) Talisman’s production in 2010 will be broadly the same as 2009 at around 425,000 boe/d, excluding any sales in North America during the year; (2) a US $60/bbl WTI oil price for 2010; and (3) a US $3.50/mmbtu NYMEX natural gas price for 2010.
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 presentation. 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, market demand and unpredictable facilities outages; risks and uncertainties involving geology of oil and gas deposits; uncertainty related to securing sufficient egress and markets to meet shale gas production; 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; the impact of the economy on the ability of the counterparties to the Company’s commodity price derivative contracts to meet their obligations under the contracts; 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 and interest rates; the outcome and effects of any future acquisitions and dispositions; health, safety and environmental risks; uncertainties as to the availability and cost of financing and changes in capital markets; risks in conducting foreign operations (for example, political and fiscal instability or the possibility of civil unrest or military action); changes in general economic and business conditions; the possibility that government policies 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 SEC.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.
The completion of any contemplated acquisition or disposition 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 acquisition or disposition.
April 2010 www.talisman-energy.com Page 29 of 31
AdvisoriesOil and Gas Information
ReservesNational Instrument 51-101 (“NI 51-101”) of the Canadian Securities Administrators imposes oil and gas disclosure standards for Canadian public companies engaged in oil and gas activities. Talisman has obtained an exemption from Canadian securities regulatory authorities to permit it to provide disclosure in accordance with the US disclosure requirements, in order to provide for comparability of oil and gas disclosure with that provided by US and other international issuers. Accordingly, some of the reserves data and other oil and gas information included in this Presentation are disclosed in accordance with US disclosure requirements. Such information, as well as the information that Talisman discloses in the future in reliance on the exemption, may differ from the corresponding information prepared in accordance with NI 51-101 standards.
The primary differences between the current US requirements and the NI 51-101 requirements are that (i) SEC rules require disclosure only of proved reserves, whereas NI 51-101 requires disclosure of proved and probable reserves; (ii) SEC rules require reserves to be cash flow positive on an undiscounted basis, whereas NI 51-101 requires reserves to show a hurdle rate of return; and (iii) SEC rules require that reserves and the associated future net revenue be estimated using historic average annual prices, whereas NI 51-101 requires disclosure of reserves and the associated future net revenue using forecast prices.
The exemption granted to Talisman also permits it to disclose internally evaluated reserves data. Any reserves and resources data contained in this presentation reflects Talisman’s estimates of its reserves and resources. While Talisman annually obtains an independent audit of a portion of its proved and probable reserves, no independent qualified reserves evaluator or auditor was involved in the preparation of the reserves and resources data disclosed in this presentation.
Possible reserves are those additional reserves that are less certain to be recovered than probable reserves. There is a 10% probability that the quantities actually recovered will equal or exceed the sum of proved plus probable plus possible reserves.
Talisman defines “Tier 1” acreage as top quality acreage with an expected full cycle breakeven of approximately $4/mcf.
ResourcesIn this presentation, Talisman also discloses prospective resources as at December 31, 2009. Talisman also discloses prospective undiscovered resource additions. Where not otherwise indicated, the prospective resources included in this presentation are best estimates.
Prospective resources are those quantities of petroleum estimated, as of a given date, to be potentially recoverable from undiscovered accumulations by application of future development projects. Prospective resources have both an associated chance of discovery and a chance of development. There is no certainty that any portion of the resources will be discovered. If discovered, there is no certainty that it will be commercially viable to produce any portion of the resources. Talisman’s prospective resources in the Nam Con Son Basin are partially risked for chance of discovery, but have not been risked for chance of development. If a discovery is made, there is no certainty that it will be developed or, if it is developed, there is no certainty as to the timing of such development. Where not otherwise indicated, references to “resource adds” in this presentation refer to unrisked prospective resources.
Gross ProductionWhere not otherwise indicated, production volumes are stated on a gross basis, which means they are stated prior to the deduction of royalties and similar payments. In the U.S., net production volumes are reported after the deduction of these amounts. U.S. readers may refer to the table headed “Continuity of Proved Net Reserves” in Talisman’s most recent Annual Information Form for a statement of Talisman’s net production volumes.
Boe/Mcfe conversionThroughout this presentation, 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 and is based on an energy equivalence conversion method. This presentation also includes references to mcf equivalent (mcfe) which are calculated at a conversion of rate of one barrel of oil to six thousand cubic feet of gas (1 bbl:6 mcf). 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 do not represent a value equivalency at the wellhead.
April 2010 www.talisman-energy.com Page 30 of 31
Advisories Reserves life indexTalisman discloses reserves life index (“RLI”) for each of North America, the North Sea and Southeast Asia. 1P RLI for 2009 is calculated by dividing the 2009 year end proved reserves at SEC historic average annual prices by the Company’s 2009 gross production. 2P RLI for 2009 is calculated by dividing the 2009 year end proved plus probable reserves at SEC historic average annual prices by the Company’s 2009 gross production.
F&DIn this presentation, Talisman discloses year over year finding and development costs per boe (“F&D”) for 2008 and 2009 for the Company. The annual F&D costs for the Company, for the last 3 years, and historic 3 year average, are as follows: 2009 - $24.30, 2008 - $42.87, 2007- $33.69, 3 year average - $32.38. Historic F&D is calculated by dividing the total costs incurred in oil and gas activities (excluding acquisition costs) by the gross proved reserves additions which include additions and non-price related revisions of gross proved reserves. Gross proved reserves include proved developed and proved undeveloped reserves and represent Talisman’s working interest. Various factors impact both historic reserve additions including: successful wells, improved recovery, new sales contracts and revisions to the economic parameters of a field as a result of changes in commodity prices, development costs or operating costs. F&D is used by the Company to determine the cost of reserves additions in a period. Talisman’s reported F&D may not be comparable to similarity titled measures used by other companies. It should be noted that F&D is a measure that has limitations. As an annual measure, the ratio is limited because it may vary widely, based on the extent and timing of new discoveries, project sanctioning and capital expenditures. F&D may not reflect full cycle finding and development costs. The predictive and comparative value of F&D is limited for the aforementioned reasons.
NetbacksTalisman also discloses netbacks for the UK, and Corridor in this presentation. Netbacks per boe are calculated by deducting from the sales price associated royalties, operating and transportation costs.
Analogous InformationThroughout this presentation, Talisman discloses analogous information as defined by NI 51-101 which is relevant to the Company for comparative purposes. The Company cannot confirm that the analogous information was prepared by a qualified reserves evaluator nor that it was prepared in accordance with the COGEH Handbook.
Canadian Dollars and GAAPDollar amounts are presented in Canadian dollars, except where otherwise indicated. Unless otherwise indicated, the financial information is set out in accordance with Canadian GAAP which may differ from U.S. GAAP. See the notes to Talisman’s Annual Consolidated Financial Statements for the significant differences between Canadian and U.S. GAAP.
Non-GAAP Financial MeasuresIncluded in this presentation are references to financial measures used in the oil and gas industry such as free cash flow and ROACE. These terms are not defined by GAAP in either Canada or the U.S. Consequently, these are referred to as non-GAAP measures. Talisman’s reported results of free cash flow and ROACE may not be comparable to similarly titled measures reported by other companies. The presentation discloses free cash flow for the UK and Southeast Asia reporting segments. Free cash flow is used by management to measure the underlying cash generating ability of these segments. Free cash flow for the UK and South East Asia (UK- $359 million; SE Asia - $ 30 million) represents net income before exploration costs, DD&A, future taxes and other non-cash expenses (UK - $1,038 million; SE Asia - $709 million), less capital expenditures before acquisitions (UK - $679 million; SE Asia - $ 680 million).
ROACE (return on average capital employed) is used to measure returns realized by the Company on capital employed and is calculated for each region by dividing normalized after-tax income by average capital employed.
Reserves EstimatesSE Asia:Corridor: 1P 1.7 tcfe, 2P 2.3 tcfe, 3P 3.2 tcfePM-3 IOR: 1P 7.3 mmboe, 2P 32 mmboe, 3P 53.2 mmboe
UK and Norway:Monarb Hub: 1P 18 mmboe, 2P 88 mmboe, 3P 131 mmboeFulmar Hub: 1P 73 mmboe, 2P 112 mmboe, 3P 152 mmboe
April 2010 www.talisman-energy.com Page 31 of 31