REG-Talisman Energy Inc. 3rd Quarter Results

http://www.businesswire.com/news/home/20091103006275/en

CALGARY, ALBERTA--(Business Wire)--

Talisman Energy Reports
$838 Million Cash Flow in Third Quarter

Adds 170,000 Acres of Land in Pennsylvania Marcellus & Montney Shale
Expanded Exploration Position in Papua New Guinea

Talisman Energy Inc. reported its operating and financial results for the third
quarter of 2009.

* Cash flow1 during the quarter was $838 million, a decrease from $1.7 billion a
year ago, primarily due to lower prices. Year-to-date cash flow was $3 billion.
* Net income was $30 million, down from $1.4 billion a year earlier, also driven
by lower commodity prices and the impact of prior year hedging gains.
* Earnings from continuing operations were $155 million, compared to $125
million in the second quarter and $654 million in the third quarter of 2008.
* Production averaged 401,000 boe/d, 9% below the third quarter of 2008.
Year-to-date, production from continuing operations averaged 412,000 boe/d, 2%
above last year.
* Netbacks were down 52% from a year earlier, averaging $27.16/boe, with both
oil and natural gas prices significantly lower due to the global economic
slowdown.
* Net debt1 at quarter end was $1.9 billion, down from $3.9 billion at December
31, 2008.
* The Company has added over 170,000 net acres of high quality land in the
Pennsylvania Marcellus and Montney shale plays, investing approximately $570
million, the majority of it subsequent to September 30.
* Production from the Pennsylvania Marcellus shale play was over 50 mmcf/d at
the end of October. A total of 31 gross wells have been drilled year-to-date and
a third rig has been added, with plans to move to six rigs by year end.
* The Company intends to move segments of its Montney shale play into commercial
development early next year.
* In Southeast Asia, the Northern Fields dry gas system was fully commissioned
and 30 successful development wells have been drilled year-to-date.
* Talisman drilled two successful appraisal sidetrack wells in the Shaw oil
discovery in the North Sea and successfully appraised the Situche discovery in
Peru.
* Talisman has completed a number of transactions towards expanding its
exploration position in Papua New Guinea.
* Talisman declared a semi-annual dividend of 11.25 cents per share, payable on
December 31, 2009 to shareholders of record at the close of business on December
11.

"The Company made significant advances in strategy implementation during the
quarter," said John A. Manzoni, President and Chief Executive Officer. "We have
added substantial amounts of high quality unconventional acreage in North
America. In Southeast Asia, we have taken our first steps towards building a
material onshore natural gas position in Papua New Guinea.

"We continue to be very excited by results from our unconventional gas programs,
particularly in the Pennsylvania Marcellus, where we will increase to six rigs
toward year end. Production is currently over 50 mmcf/d and, on average, our
expected ultimate recovery estimate has increased to 3.5 bcf per well. We are
drilling and completing wells at US$4.3 million per well.

"We have doubled our Tier 1 acreage position, which we define as having an
expected full cycle breakeven of approximately $4/mcf. We have added 90,000
acres in the Marcellus in Pennsylvania at a cost of approximately US$3,250 per
acre, bringing our Tier 1 position to 180,000 net acres with about 1,800 net
drilling locations.

"In the Montney shale, we expect to drill 20 pilot wells this year and are now
ready to move segments of our Montney shale play to commercial development early
next year. We have also doubled our Tier 1 landholdings in the Montney shale
adding over 80,000 net acres at a cost of about C$3,500 per net acre. We now
hold 166,000 net Tier 1 acres with approximately 3,000 net drilling locations.

"As part of our program to accelerate the transition into unconventional gas we
are restructuring our North American organization into separate Conventional and
Shale divisions, recognizing the different strategic objectives and different
business models for each. We will continue to review options to release capital
from our portfolio of conventional assets, including additional sales, depending
on market conditions.

"Founded on our continued success and results to date, these steps represent an
important milestone in the implementation of our unconventional gas strategy in
North America.

"The other major strategic initiative during the quarter was the acquisition of
a number of onshore blocks in Papua New Guinea where the Company sees
opportunities to add substantial discovered and prospective gas resources.
Talisman now has interests in eight blocks covering in excess of five million
gross acres both onshore and offshore, containing several significant gas
discoveries.

"Other highlights for the quarter include the acquisition of highly prospective
exploration acreage in Indonesia (offshore North Sumatra) and Malaysia (offshore
Sabah). We have successfully sidetracked a well to appraise our previously
announced Shaw discovery in the UK and have successfully appraised the Situche
discovery in Peru.

"Production in Southeast Asia was up 22% over a year ago with new production
records continuing to be set at the Corridor operation in Indonesia. We have
successfully commissioned the dry gas and compression systems in our Northern
Fields project offshore Malaysia/Vietnam and have completed 30 development wells
in the project. Development planning for the early production scheme in Vietnam
is progressing well.

"North Sea volumes were affected by a number of planned, as well as some
unplanned, shutdowns for maintenance during the quarter. The Affleck field came
onstream during the quarter and several successful development wells were
completed. Progress continues on the Auk North, Auk South, Burghley and Yme
development projects.

"Year to date, Talisman`s total production from continuing operations is up 2%
over 2008. As expected, production was lower in the quarter, which is typical
during a period of high plant turnarounds for maintenance. Production is
expected to increase in the fourth quarter.

"Production guidance for the year was 430,000 boe/d, with downside limited to
5%. The reason for the downside was the uncertainty associated with estimating
the impact of ongoing non-core asset sales. Excluding asset sales in Trinidad
and the Netherlands, which were included in our guidance estimates, we expect to
sell an additional 8,000 boe/d on an annualized basis. We now expect overall
production for the year will average between 423,000 - 426,000 boe/d.

"The financial results in this quarter reflect a substantially lower price
environment than a year ago. We generated approximately $840 million in cash
flow and net income was $30 million. Earnings from continuing operations, which
strips out certain non-operational items, were $155 million, up from $125
million in the second quarter, but down from $654 million a year earlier.

"As a result of land acquisition and accelerated drilling programs in North
America, and successful sidetracks and testing in several of our exploration
wells, total cash capital spending this year is expected to be approximately
$4.5 billion, versus an original plan of $3.6 billion. Our cash position allows
us to move forward with this accelerated program and I am very comfortable we
will continue to maintain a very strong financial position going forward.

"In summary, we are continuing to make good progress in our strategy
implementation and have now secured sufficient running room in our
unconventional acreage for Talisman to grow sustainably into the future. We are
making good progress on building our Southeast Asian portfolio and the
international exploration strategy is also showing early signs of success."

Financial Highlights

Three months ended Nine months ended
September 30, 2009 2008 2009 2008
Cash flow ($ million) 838 1,675 3,042 4,598
Cash flow per share2 The terms "cash flow per share" and "earnings from continuing operations per share" are non-GAAP measures. Please see the advisories and reconciliations elsewhere in this news release. 0.83 1.65 3.00 4.52
Cash flow from continuing operations ($ million) 828 1,551 2,959 4,231

Net income ($ million) 30 1,425 548 2,317
Net income per share 0.03 1.40 0.54 2.28

Earnings from continuing operations ($ million) 155 654 564 1,850
Earnings from continuing operations per share 2 0.15 0.64 0.55 1.82

Average shares outstanding (million) 1,015 1,018 1,015 1,018

Cash flow during the quarter was $838 million compared to $1,675 million a year
earlier. The main reason for the decrease has been a significant fall in oil and
gas prices, resulting in a 52% reduction in netbacks. The price impact was
partially offset by lower royalties and cash taxes and realized gains on
commodity derivatives. Relative to the second quarter, cash flow decreased by
$62 million primarily due to production decreases.

Year-to-date, Talisman has generated $3 billion in cash flow, down from $4.6
billion in 2008.

Earnings from continuing operations totalled $155 million during the quarter,
versus $654 million a year earlier primarily due to reduced commodity prices. By
way of comparison, earnings from continuing operations were $125 million in the
second quarter.

Net income for the quarter was $30 million compared to $1.4 billion a year
earlier. The main reason for the difference was the fall in commodity prices,
lower production, increased stock-based compensation expense and higher
unrealized gains on commodity derivatives in the previous year.

Dry hole expense was $84 million during the quarter, a $53 million decrease
compared to the same period of 2008. Exploration and development spending was
$889 million during the quarter, bringing the total to $2.7 billion for the
year.

Talisman`s net long-term debt at September 30 was $1.9 billion, down from $3.9
billion at year end. The reduction was primarily due to proceeds from asset
dispositions that closed during the first half of 2009. The majority of the $570
million spent on unconventional land is not reflected in Talisman`s net debt or
cash position at September 30.

Production

Three months ended Nine months ended
September 30, 2009 2008 2009 2008
Oil and liquids (bbls/d) 192,293 231,420 212,949 222,486
Natural gas (mmcf/d) 1,253 1,268 1,271 1,253
Total (mboe/d) 401 443 425 431

Continuing operations (mboe/d) 395 419 412 402

Year-to-date, production from continuing operations averaged 412,000 boe/d, an
increase of 2%, as a result of higher volumes in Southeast Asia and Scandinavia.
Production from continuing operations averaged 395,000 boe/d during the quarter,
a decrease of 6% over the third quarter of 2008, due principally to decreased
liquids volumes in the UK.

Netbacks

Three months ended Six months ended
September 30, 2009 2008 2009 2008
Sales 50.29 88.00 47.36 85.31
Hedging loss - (0.11) - (0.24)
Royalties 8.16 16.26 6.74 15.49
Transportation 1.41 1.56 1.37 1.41
Operating expenses 13.56 13.88 12.93 13.66
Netback ($/boe) 27.16 56.19 26.32 54.51

Oil and liquids netback ($/bbl) 38.20 71.88 35.17 70.63
Natural gas netback ($/mcf) 2.82 6.51 2.90 6.22

WTI oil prices averaged US$68.30/bbl during the quarter, up from US$59.62/bbl in
the second quarter, but well below US$118/bbl a year ago. North American natural
gas prices continued to weaken, with NYMEX averaging US$3.41/mmbtu compared to
US$10.09/mmbtu a year ago.

Netbacks in the third quarter averaged $27.16, down 52% from a year earlier.
Royalty expenses totalled $264 million (15%), down $318 million from $582
million (18%) in the corresponding quarter for 2008, due to reduced commodity
prices.

North America

Production in North America averaged approximately 163,000 boe/d in the quarter,
down 11% from the same period in 2008 and 5% lower than the previous quarter,
largely due to dispositions, as well as planned maintenance and an unplanned
shutdown at Monkman. Production from continuing operations was down 7% over the
same period in 2008, reflecting a shift in development focus from conventional
areas to unconventional plays, as well as natural declines. Production from new
shale areas increased 40% from the second quarter.

Talisman`s non-core asset sales in Western Canada during the quarter are
expected to generate proceeds of approximately C$300 million when the
transactions close.

During the quarter, North America capital expenditures totaled $366 million,
with $357 million focused on unconventional natural gas areas. During the first
nine months of the year, Talisman participated in 116 gross wells (75 net), with
106 gross wells in unconventional plays.

The Company has invested approximately $570 million over the past few months,
doubling its Tier 1 landholdings in the Pennsylvania Marcellus and Montney shale
plays. Talisman defines Tier 1 properties as high quality acreage, with an
expected full cycle breakeven of approximately $4/ mcf. The Company currently
holds approximately 350,000 net acres of Tier 1 acreage in the Pennsylvania
Marcellus and Montney shale plays with the potential for 4,800 net drilling
locations.

In the Pennsylvania Marcellus shale, nine wells were brought on during the
quarter, bringing the total to 17 operated wells on production. Talisman
currently has three horizontal rigs operating, with plans to increase this to
six rigs by year end. The Company has drilled 31 gross wells (27 net) in the
first nine months of the year and expects to drill approximately 60 horizontal
wells this year.

Marcellus wells continue to exceed expectations, with current production volumes
over 50 mmcf/d (sales gas) and 30 day initial production rates from the last six
wells averaging 5 mmcf/d or greater.

Drilling and completion (D&C) costs are down to US$4.3 million per well and
average expected ultimate recovery rates (EURs) have increased to 3.5 bcf per
well, with the last five wells displaying EURs of 6 bcf.

In New York, draft guidelines dealing with horizontal natural gas wells have
been issued. The Company is currently reviewing these guidelines.

The Company expects to drill 20 pilot wells (11 horizontal) in the Montney shale
this year. As a result of the successful pilot program, Talisman expects to move
segments of the Montney shale play to commercial development early next year.

In the Montney Core, Talisman has drilled 27 Montney/Doig horizontal wells to
date. In the Pouce Coupe area, two pads have been completed and one pad brought
onstream in the third quarter. The Company`s well execution performance
continues to improve, with D&C costs for the last two wells averaging $3.7
million each.

In Quebec, Talisman spudded its first horizontal pilot well and is on track to
spud an additional horizontal well before year end. Vertical wells drilled to
complete the land earning requirements tested with encouraging results.

In October, the decision was made to reorganize Talisman`s North American
business into two main businesses, Shale and Conventional. This will help
Talisman accelerate its transition towards becoming a major North American
unconventional natural gas producer. As part of this acceleration process, the
Company is considering additional sales of conventional assets, depending on
market conditions.

UK

Production from continuing operations in the UK averaged approximately 74,000
boe/d during the quarter, down 33% from the same period in 2008 and down 21%
from the second quarter. A number of major planned shutdowns were completed,
reducing UK production by approximately 14,000 boe/d during the third quarter.
There were also a number of unplanned shutdowns due to operational issues, which
have now been resolved.

At Burghley, Auk North and Auk South, Talisman continues to progress its
developments on schedule and on budget. At Burghley, a development well
commenced drilling in the quarter. At Auk North, a second development well was
completed. The non-operated Affleck field came onstream in mid-August.

Scandinavia

Production from continuing operations in Scandinavia averaged approximately
36,000 boe/d during the quarter, up 6% over the third quarter of 2008 and down
5% from the second quarter of 2009. Production during the third quarter was down
due to planned shutdowns at Armada, the host facility for Rev, and at Gyda. Rev
East came onstream at the end of the quarter and Rev is now at full gross
production capacity of approximately 22,000 boe/d.

Successful development wells were drilled at Brage and Veslefrikk. A successful
infill well was also completed at Varg, with a further well to be drilled before
the end of the year.

Work continues to progress at the Yme project. Two successful development wells
were completed during the quarter and installation of the subsea facilities was
completed in October. First oil from the field is expected in the second half of
2010.

Southeast Asia

In Southeast Asia, production averaged 114,000 boe/d, 22% higher than the same
period last year and 8% above the last quarter. Indonesian production averaged
66,900 boe/d, 18% higher than the same period last year and 3% higher than the
last quarter, driven primarily by increased gas sales from the Corridor Block.
In Malaysia/Vietnam, production averaged 36,100 boe/d, 8% above than the same
period last year and 17% higher than the previous period, mainly due to
increased oil and dry gas volumes from Northern Fields and the successful
incremental oil recovery (IOR) program in Southern Fields.

Production from Corridor reached a new record high of 333 mmcf/d (net to
Talisman) during the quarter as demand continues to grow in several key sales
markets.

At the Tangguh Liquefied Natural Gas (LNG) facility, commissioning continued
throughout the quarter.

In Malaysia, commissioning of the dry gas and compression systems in the
Northern Fields was completed during the quarter. Gas production from the
Northern Fields averaged 55 mmcf/d gross sales during the quarter, with liquids
production averaging approximately 9,700 bbls/d. To date, 30 development wells
have been drilled on Northern Fields with 100% success.

In the Southern Fields, the fifth of six wells in the IOR Phase One program is
currently being drilled. The IOR program contributed approximately 3,000 bbls/d
during the quarter.

In Vietnam, production averaged 3,600 bbls/d, 19% lower than the previous
period, due to natural declines and one shut-in well. The Company continued the
appraisal of the HSD discovery in Block 15-2/01 in Vietnam. The HST/HSD early
production scheme field development plan is currently being progressed for
sanctioning in the first half of 2010 and the Outline Development Plan has been
submitted to the government for approval.

Production in Australia was approximately 7,100 bbls/d, 126% higher than the
same period last year and 52% higher than the last period, due to riser and
flowline repairs being completed and a new infill well drilled in the Corallina
field.

Sanction of the field development plan for the Kitan discovery in the
Australia/East Timor area is expected in fourth quarter with first oil planned
for the second half of 2011.

Other Operating Areas

In North Africa, production from continuing operations averaged 13,800 boe/d,
down 13% compared to the same period a year ago, mainly due to continued OPEC
production restrictions. Two development wells at EMK were drilled during the
quarter.

The Company is in negotiations for the sale of its assets in Tunisia.

International Exploration

International exploration spending during the third quarter was approximately
$144 million.

The Company drilled two successful appraisal sidetracks to its Shaw oil
discovery well in Block 22/22a, in the UK, the first of which tested at 7,700
boe/d. Shaw is estimated to contain discovered oil initially in place in excess
of 100 million barrels. Talisman is reviewing options for a development via its
operated Montrose/Arbroath facilities. The development will likely include
upgrades to the host facility to improve operating efficiency and to enhance
recovery from the Montrose/Arbroath reservoirs.

In Malaysia, Talisman was recently awarded two highly prospective exploration
blocks offshore Sabah. The blocks, SB 309 and SB 310, cover 5,815 square
kilometres and 7,271 square kilometres, respectively, and are located in water
depth less than 100 metres. The blocks give Talisman exposure to under-explored,
shallow water acreage in a proven petroleum system.

In Indonesia, Talisman was awarded the Andaman III Block, offshore North
Sumatra. This is an under-explored, deep water block, which offers material gas
and condensate potential. 3D seismic will be acquired prior to drilling in 2012.

In Vietnam, the HSD-4X well has recently finished drilling. The well was
production tested in the basement and a second test was conducted in the
Oligocene. The HSD basement appraisal program will continue with the HSD-5X
well, which is expected to spud in November

In June, Talisman announced the acquisition of Rift Oil PLC, whose main
interests are two exploration licences in the Foreland Basin in Papua New Guinea
(PNG). This acquisition is a key component of our gas aggregation strategy for
PNG, where the Company sees the opportunity to add significant discovered and
prospective onshore gas resources to its existing Pandora gas discovery offshore
in the Gulf of Papua.

In September, Talisman completed the acquisition of a subsidiary of Horizon Oil
Limited for interests in Blocks PRL 4 and 5 in the PNG Foreland gas fairway.
Since quarter end, Talisman completed a farm-in with New Guinea Energy on two
neighbouring, highly prospective exploration blocks, PPL 268 and PPL 269,
adjacent to both the Rift and Horizon acreage.

In the Kurdistan region of northern Iraq, the Kurdamir-1 well, which spud in
early May, is currently drilling. Talisman has signed an agreement for an
operated interest in Block K9, located north of Block K44 and adjacent to
Heritage Oil`s Miran West well. Talisman is committed to a 2D seismic program,
with an option to exit in 18 months.

In Colombia, following the successful testing campaign on Huron-1 in the Niscota
Block, the well has been suspended and the Company is currently acquiring 3D
seismic over the discovery.

The Situche discovery on Block 64 in Peru was successfully appraised with the
Situche Central 3X well. The well encountered oil shows in the upper reservoir
and a sidetrack well was recently commenced. The Company has also started
acquisition of a 3D seismic program in Block 101.

Talisman Energy Inc. is a global, diversified, upstream oil and gas company,
headquartered in Canada. Talisman`s three main operating areas are North
America, the North Sea and Southeast Asia. The Company also has a portfolio of
international exploration opportunities. 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.

For further information, please contact:

Media and General Inquiries: Shareholder and Investor Inquiries:

David Mann, Vice-President Christopher J. LeGallais, Vice-President
Corporate & Investor Communications Investor Relations
Phone: 403-237-1196 Fax: 403-237-1210 Phone: 403-237-1957 Fax: 403-237-1210
E-mail: tlm@talisman-energy.com E-mail: tlm@talisman-energy.com

21-09

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 and plans;
* expected production;
* planned capital spending;
* planned drilling, expected recovery estimates and drilling locations in the
Marcellus;
* target breakeven costs, planned drilling, expected timing of development and
drilling locations in the Montney;
* planned drilling in Quebec;
* expected first oil from Yme;
* HST/HSD development plan;
* plans in PNG;
* expected production restrictions in North Africa;
* planned sale of assets in Tunisia;
* planned timing of seismic and drilling in Indonesia;
* expected sanctioning and first oil at the Kitan discovery;
* expected proceeds from planned dispositions of non-core assets; and
* other expectations, beliefs, plans, goals, objectives, assumptions,
information and statements about possible future events, conditions, results of
operations or performance.

Each of the forward-looking information listed above are based on Talisman`s
2009 capital program announced on January 13, with the revisions described
herein. The material assumptions supporting the 2009 capital program, as
revised, are: (1) 2009 annual production between 423,000 - 426,000 boe/d; (2) a
US$60/bbl WTI oil price for 2009, and (3) a US$4/mmbtu NYMEX natural gas price
for 2009. 2009 production estimates are subject to the timing of development
activities and include the anticipated completion of planned dispositions. The
completion of any planned disposition is contingent on various factors including
market conditions, the ability of the Company to negotiate acceptable terms of
sale and receipt of any required approvals of such dispositions.

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, market demand and
unpredictable facilities outages;
* risks and uncertainties involving geology of oil and gas deposits;
* 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 and credit crisis 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 are included in the Company`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 (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.

Oil and Gas Information

In this news release, Talisman also discloses discovered oil initially in place.
Discovered oil initially in place is that quantity of petroleum that is
estimated to exist originally in naturally occurring accumulations. It includes
that quantity of gas that is estimated, as of a given date, to be contained in
known accumulations, prior to production. There is no certainty that it will be
commercially viable to produce any portion of the discovered oil initially in
place.

Gross Production

Where 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 US, net production volumes are reported after the deduction of
these amounts. US readers may refer to the table headed "Continuity of Proved
Net Reserves" in Talisman`s Annual Information Form dated March 9, 2009 for a
statement of Talisman`s net production volumes.

Boe conversion

Throughout this news release, 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. Boes may be
misleading, particularly if used in isolation. A boe

conversion ratio of 6 mcf:1 bbl is based on an energy equivalence conversion
method primarily applicable at the burner tip and do not represent a value
equivalency at the wellhead.

Canadian Dollars and GAAP

Dollar amounts are presented in Canadian dollars unless otherwise indicated.
Unless otherwise indicated, financial information is presented in accordance
with Canadian generally accepted accounting principles that may differ from
generally accepted accounting principles in the US. Talisman`s Consolidated
Financial Statements as at and for the year ended December 31, 2008, which were
filed with Canadian and US securities authorities on March 5, 2009, contain
information concerning differences between Canadian and US generally accepted
accounting principles.

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, cash flow per share, earnings
from continuing operations, earnings from continuing operations per share and
net debt. These terms are not defined by GAAP in either Canada or the US.
Consequently, these are referred to as non-GAAP measures. Talisman`s reported
cash flow, cash flow per share, earnings from continuing operations, earnings
from continuing operations per share and net debt may not be comparable to
similarly titled measures by other companies.

Cash flow, as commonly used in the oil and gas industry, represents net income
before exploration costs, DD&A, future taxes and other non-cash expenses. Cash
flow is used by the Company to assess operating results between years and
between peer companies that use 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 Canadian GAAP 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. A reconciliation of cash provided
by operating activities to cash flow follows.

($ million, except per share amount) Three months ended Nine months ended
September 30, 2009 2008 2009 2008
Cash provided by operating activities 747 1,735 2,977 4,585
Changes in non-cash working capital 91 (60) 65 13
Cash flow2 838 1,675 3,042 4,598
Less: Cash provided by discontinued operations1 10 124 83 367
Cash flow from continuing operations1,2 828 1,551 2,959 4,231
Cash flow per share1,2 0.83 1.65 3.00 4.52
Cash flow from continuing operations per share1,2 0.82 1.52 2.92 4.16

1. Comparatives restated for operations classified as discontinued since
September 30, 2008.

2. This is a non-GAAP measure.

Earnings from continuing operations are calculated by adjusting the Company`s
net income per the financial statements, for certain items of a non-operational
nature, on an after-tax basis. The Company uses this information to evaluate
performance of core operational activities on a comparable basis between
periods. Earnings from continuing operations per share are earnings from
continuing operations divided by the average number of common shares outstanding
during the period. A reconciliation of net income to earnings from continuing
operations follows.

($ million, except per share amounts)

Three months ended Nine months ended
September 30, 2009 2008 2009 2008
Net income 30 1,425 548 2,317
Operating income from discontinued operations 6 87 56 253
Gain (loss) on disposition of discontinued operations 11 (5) 1,007 83
Net income from discontinued operations5 17 82 1,063 336
Net income (loss) from continuing operations5 13 1,343 (515) 1,981
Unrealized (gains) losses on financial instruments 1 (tax adjusted) 33 (467) 884 (72)
Stock-based compensation expense (recovery)2 (tax adjusted) 71 (214) 174 (33)
Future tax (recovery) of unrealized foreign exchange losses on net foreign denominated debt 3 38 (8) 21 (26)
Earnings from continuing operations 4 155 654 564 1,850
Per share 4 0.15 0.64 0.55 1.82

1. Unrealized losses on financial instruments relate to the change in the period
of the mark-to-market value of the Company`s outstanding held-for-trading
financial instruments

2. Stock-based compensation expense relates principally to the mark-to-market
value of the Company`s outstanding stock options and cash units at September 30.
The Company`s stock-based compensation expense is based principally on the
difference between the Company`s share price and its stock options or cash units
exercise price

3. Tax adjustments reflect future taxes relating to unrealized foreign exchange
gains and losses associated with the impact of fluctuations in the Canadian
dollar on net foreign denominated debt.

4. This is a non-GAAP measure.

5. Comparatives restated for operations classified as discontinued subsequent to
September 30, 2008.

This calculation does not reflect differing accounting policies and conventions
between companies. All amounts are reported on an after-tax basis.

Net debt is calculated by adjusting the Company`s long-term debt per the
financial statements for bank indebtedness and cash and cash equivalents. The
Company uses this information to assess its true debt position since cash could
potentially be used to pay down long-term debt.

($ million)
September 30 2009 December 31
2008
Long-term debt 3,851 3,961
Bank indebtedness 69 81
Cash and cash equivalents (2,007) (91)
Net Debt 1,913 3,951

1 The terms "cash flow", "earnings from continuing operations" and "net debt"
are non-GAAP measures. Please see the advisories and reconciliations elsewhere
in this news release.

2

Talisman Energy Inc.
Highlights
(unaudited)

Three months ended Nine months ended
September 30 September 30
2009 2008 2009 2008
Financial
(millions of C$ unless otherwise stated)
Cash flow1 838 1,675 3,042 4,598
Net income 30 1,425 548 2,317
Exploration and development expenditures 889 1,426 2,814 3,493
Per common share (C$)
Cash flow1 0.83 1.65 3.00 4.52
Net income 0.03 1.40 0.54 2.28
Production
(daily average)
Oil and liquids (bbls/d)
North America 31,372 40,971 36,283 40,461
UK 71,300 103,644 87,859 92,828
Scandinavia 30,067 31,451 32,018 32,401
Southeast Asia 45,145 34,623 40,222 35,894
Other 14,409 20,731 16,567 20,902
Total oil and liquids 192,293 231,420 212,949 222,486
Natural gas (mmcf/d)
North America 790 860 808 865
UK 14 37 21 37
Scandinavia 38 18 44 19
Southeast Asia 411 353 398 332
Total natural gas 1,253 1,268 1,271 1,253
Total mboe/d2 401 443 425 431
Prices3
Oil and liquids (C$/bbl)
North America 60.17 104.10 52.46 96.82
UK 74.59 115.11 65.22 112.41
Scandinavia 76.53 112.39 66.53 113.47
Southeast Asia 74.30 117.52 66.52 117.78
Other 71.45 115.24 66.15 119.02
Total oil and liquids 72.24 113.17 63.56 111.21
Natural gas (C$/mcf)
North America 4.05 9.18 4.65 9.11
UK 3.24 10.06 4.80 9.47
Scandinavia 4.83 7.72 6.54 6.73
Southeast Asia 6.92 12.37 6.12 11.11
Total natural gas 5.01 10.08 5.18 9.62
Total (C$/boe)2 50.29 88.00 47.36 85.31

1. Cash flow 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. Prices are before hedging.

Includes the results from continuing and discontinued operations.

Talisman Energy Inc.
Consolidated Balance Sheets
(unaudited)

September 30 December 31
(millions of C$) 2009 2008
(restated)
Assets
Current
Cash and cash equivalents 2,007 91
Accounts receivable 1,133 2,419
Inventories 141 181
Prepaid expenses 24 17
Assets of discontinued operations 21 220
3,326 2,928

Other assets 260 234
Goodwill 1,256 1,251
Property, plant and equipment 18,569 18,636
Assets of discontinued operations 493 1,226
20,578 21,347
Total assets 23,904 24,275

Liabilities
Current
Bank indebtedness 69 81
Accounts payable and accrued liabilities 1,926 1,875
Income and other taxes payable 282 468
Current portion of long-term debt 11 -
Future income taxes 50 300
Liabilities of discontinued operations 2 94
2,340 2,818

Deferred credits 54 51
Asset retirement obligations 1,948 1,954
Other long-term obligations 235 173
Long-term debt 3,840 3,961
Future income taxes 3,933 4,007
Liabilities of discontinued operations 81 161
10,091 10,307

Shareholders' equity
Common shares, no par value
Authorized: unlimited
Issued and outstanding:
2009 - 1,015 million (December 2008 - 1,015 million) 2,374 2,372
Contributed surplus 134 84
Retained earnings 9,399 8,966
Accumulated other comprehensive loss (434) (272)
11,473 11,150
Total liabilities and shareholders' equity 23,904 24,275

Prior period balances have been restated to reflect the financial position of discontinued operations.

Talisman Energy Inc.
Consolidated Statements of Income and Loss
(unaudited)

Three months ended Nine months ended
September 30 September 30
(millions of C$) 2009 2008 2009 2008
(restated) (restated)

Revenue
Gross sales 1,771 3,219 5,371 9,203
Hedging loss - (4) - (28)
Gross sales, net of hedging 1,771 3,215 5,371 9,175
Less royalties 264 582 777 1,634
Net sales 1,507 2,633 4,594 7,541
Other 29 28 89 84
Total revenue 1,536 2,661 4,683 7,625

Expenses
Operating 494 494 1,506 1,449
Transportation 51 62 158 163
General and administrative 79 58 242 195
Depreciation, depletion and amortization 610 595 2,005 1,713
Dry hole 84 137 380 272
Exploration 74 101 202 272
Interest on long-term debt 54 45 144 125
Stock-based compensation (recovery) 98 (297) 249 (37)
(Gain) loss on held-for-trading financial instruments (98) (567) 270 31
Other, net (79) (109) 25 (131)
Total expenses 1,367 519 5,181 4,052
Income (loss) from continuing operations before taxes 169 2,142 (498) 3,573
Taxes
Current income tax 161 409 468 1,133
Future income tax (recovery) (26) 354 (511) 299
Petroleum revenue tax 21 36 60 160
156 799 17 1,592
Net income (loss) from continuing operations 13 1,343 (515) 1,981
Net income from discontinued operations 17 82 1,063 336
Net income 30 1,425 548 2,317

Per common share (C$):
Net income (loss) from continuing operations 0.01 1.32 (0.51) 1.95
Diluted net income (loss) from continuing operations 0.01 1.30 (0.51) 1.91
Net income from discontinued operations 0.02 0.08 1.05 0.33
Diluted net income from discontinued operations 0.02 0.08 1.05 0.32
Net income 0.03 1.40 0.54 2.28
Diluted net income 0.03 1.38 0.54 2.23
Average number of common shares outstanding (millions) 1,015 1,018 1,015 1,018
Diluted number of common shares outstanding (millions) 1,035 1,033 1,015 1,037

Prior period balances have been restated to reflect the results of discontinued operations.

Talisman Energy Inc.
Consolidated Statements of Cash Flows
(unaudited)

Three months ended Nine months ended
September 30 September 30
(millions of C$) 2009 2008 2009 2008
(restated) (restated)

Operating
Net income (loss) from continuing operations 13 1,343 (515) 1,981
Items not involving cash 741 107 3,272 1,978
Exploration 74 101 202 272
828 1,551 2,959 4,231
Changes in non-cash working capital (91) 60 (65) (13)
Cash provided by continuing operations 737 1,611 2,894 4,218
Cash provided by discontinued operations 10 124 83 367
Cash provided by operating activities 747 1,735 2,977 4,585

Investing
Capital expenditures
Exploration, development and other (882) (1,375) (2,644) (3,320)
Property acquisitions (222) (64) (278) (439)
Proceeds of resource property dispositions 44 38 104 38
Changes in non-cash working capital 197 (221) (157) 13
Discontinued operations, net of capital expenditures - (65) 1,850 128
Cash used in investing activities (863) (1,687) (1,125) (3,580)

Financing
Long-term debt repaid (174) (766) (970) (3,130)
Long-term debt issued - 844 1,249 1,874
Common shares purchased - - - 1
Acquisition of common shares for performance share plan - (68) - (68)
Common share dividends - - (115) (102)
Deferred credits and other 7 (2) 14 12
Changes in non-cash working capital (1) (1) 1 (4)
Cash provided by (used in) financing activities (168) 7 179 (1,417)
Effect of translation on foreign currency cash and cash equivalents (73) 5 (93) 24
Net increase (decrease) in cash and cash equivalents (357) 60 1,938 (388)
Cash and cash equivalents net of bank indebtedness, beginning of period 2,305 73 10 521
Cash and cash equivalents net of bank indebtedness, end of period 1,948 133 1,948 133

Cash and cash equivalents 2,007 154 2,007 154
Cash and cash equivalents reclassified to discontinued operations 10 - 10 -
Bank indebtedness 69 21 69 21
Cash and cash equivalents net of bank indebtedness, end of period 1,948 133 1,948 133

Prior period balances have been restated to reflect the cash flows of discontinued operations.

North America (1) UK Scandinavia Southeast Asia (2) Other (3) Total
Three months ended September 30 Nine months ended September 30 Three months ended September 30 Nine months ended September 30 Three months ended September 30 Nine months ended September 30 Three months ended September 30 Nine months ended September 30 Three months ended September 30 Nine months ended September 30 Three months ended September 30 Nine months ended September 30
(millions of Canadian $) 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008 2009 2008
Revenue
Gross sales 445 1,052 1,432 2,993 484 970 1,606 2,753 224 347 678 993 555 803 1,375 2,088 63 47 280 376 1,771 3,219 5,371 9,203
Hedging - - - - - (4) - (28) - - - - - - - - - - - - - (4) - (28)
Royalties 54 186 186 530 1 6 4 11 - - - - 189 365 466 889 20 25 121 204 264 582 777 1,634
Net sales 391 866 1,246 2,463 # 483 960 1,602 2,714 # 224 347 678 993 # 366 438 909 1,199 # 43 22 159 172 # 1,507 2,633 4,594 7,541
Other 22 22 69 67 6 7 17 15 - 1 2 2 - - - - 1 (2) 1 - 29 28 89 84
Total revenue 413 888 1,315 2,530 489 967 1,619 2,729 224 348 680 995 366 438 909 1,199 44 20 160 172 1,536 2,661 4,683 7,625
Segmented expenses
Operating 131 140 422 409 226 236 655 681 79 64 215 200 54 54 185 143 4 - 29 16 494 494 1,506 1,449
Transportation 17 17 44 51 10 16 33 34 11 10 36 28 11 17 39 44 2 2 6 6 51 62 158 163
DD&A 269 280 807 790 165 162 618 473 77 88 266 261 93 63 285 174 6 2 29 15 610 595 2,005 1,713
Dry hole 36 102 165 169 - 33 30 59 (2) 1 61 43 40 1 90 1 10 - 34 - 84 137 380 272
Exploration 29 48 65 112 6 11 13 23 4 18 16 43 16 11 44 37 19 13 64 57 74 101 202 272
Other (17) (78) (25) (84) 11 6 6 6 1 - 5 3 3 1 3 4 (2) - 10 (4) (4) (71) (1) (75)
Total segmented expenses 465 509 1,478 1,447 418 464 1,355 1,276 170 181 599 578 217 147 646 403 39 17 172 90 1,309 1,318 4,250 3,794
Segmented income (loss) before taxes (52) 379 (163) 1,083 71 503 264 1,453 54 167 81 417 149 291 263 796 5 3 (12) 82 227 1,343 433 3,831
Non-segmented expenses
General and administrative 79 58 242 195
Interest on long-term debt 54 45 144 125
Stock-based compensation (recovery) 98 (297) 249 (37)
Currency translation (75) (38) 26 (56)
(Gain) Loss on held-for-trading financial instruments (98) (567) 270 31
Total non-segmented expenses 58 (799) 931 258
Income (loss) from continuing
operations before taxes 169 2,142 (498) 3,573
Capital expenditures
Exploration 254 555 562 954 40 26 130 104 11 33 139 123 54 42 179 219 39 24 156 76 398 680 1,166 1,476
Development 114 188 324 473 135 153 425 463 136 199 384 500 78 138 364 330 12 1 24 2 475 679 1,521 1,768
Midstream (2) 3 28 34 - - - - - - - - - - - - - - - - (2) 3 28 34
Exploration and development 366 746 914 1,461 175 179 555 567 147 232 523 623 132 180 543 549 51 25 180 78 871 1,362 2,715 3,278
Property acquisitions 227 65 322 454
Proceeds on dispositions (44) (89) (143) (89)
Other non-segmented 11 13 34 42
Net capital expenditures (4) 1,065 1,351 2,928 3,685
Property, plant and equipment 8,171 8,357 4,490 4,738 2,057 1,745 3,019 2,984 832 814 18,569 18,636
Goodwill 214 215 293 306 636 601 113 129 - - 1,256 1,251
Other 2,421 835 224 253 178 153 339 304 110 127 3,272 1,672
Discontinued operations 347 896 - 165 132 93 - - 35 292 514 1,446
Segmented assets 11,153 10,303 5,007 5,462 3,003 2,592 3,471 3,417 977 1,233 23,611 23,005
Non-segmented assets 293 1,270
Total assets (5) 23,904 24,275

Talisman Energy Inc.

Copyright Business Wire 2009