Talisman Energy targets production growth in 2005

Talisman Energy Inc. has announced a record $3.1 billion exploration and development program for 2005, representing an increase of approximately 15% over 2004.

Talisman Energy Inc. has announced a record $3.1 billion exploration and development program for 2005, representing an increase of approximately 15% over 2004. North America and the North Sea account for 80% of expected spending. The budget includes $1.5 billion for drilling as the company continues to add significant new production volumes through the drill bit.

Talisman expects 5% production growth in 2005, with a mid-point estimate of approximately 460,000 boe/d. With continued share repurchases, the company intends to increase production per share by approximately 10% in 2005. Production in 2004 is estimated at 437,000 boe/d with production per share up 10% over the previous year.

"2004 was a stellar year for Talisman and the momentum is continuing into 2005," said Jim Buckee, president and CEO.

"We expect to generate a record $10 in cash flow per share this year, an increase of 25% over 2004. Unit operating costs could fall by more than 5% this year with new low cost production in Trinidad and the stronger Canadian dollar. The company continues to layer in growth in each of its core operating areas with a view to increasing our production by 100,000 boe/d between now and the end of 2007.

"We made a number of large domestic natural gas discoveries last year, which show signs of continuing in 2005, reinforcing our position as the leading deep gas explorer in Western Canada. In addition, we will continue our successful drilling program in the northeastern US. We plan to spend over $1.4 billion in North America, with almost 90% directed at natural gas projects. Talisman expects to participate in over 500 gross wells including 10-12 high impact exploration wells, increasing our North American natural gas production by 4-5% this year.

"In the North Sea, Talisman increased production by an estimated 7% in 2004, bringing the North Tartan field onstream and adding additional exploration acreage in Norway. The company's largest single project in 2005 will be development of the Tweedsmuir and Tweedsmuir South fields in the North Sea. Production is expected to start late in 2006, adding approximately 45,000 boe/d net to Talisman in 2007.

"The major contributor to growth in 2004 was the PM-3 project in Malaysia/Vietnam, which averaged over 40,000 boe/d for the year, net to Talisman. This year, we expect to start production from the South Angsi field, which will add an estimated 6,500 b/d net to Talisman this year and 12,000 b/d next year. We also expect to sanction development of the PM-3 northern fields.

"In Indonesia, Talisman has a 36% interest in the Corridor PSC with very large natural gas reserves. In August, the company announced a long-term contract for the sale of 2.3 tcf to the Indonesian national gas transmission and distribution company. In 2005, we will start expansion of our gas processing facilities with deliveries expected in the first quarter of 2007.

"Production doubled in Algeria in 2004, averaging over 13,000 b/d. This year, we expect to sanction the MLSE development project and we will commence facilities expansion to handle increased liquids volumes in 2007. Production is about to start in Trinidad and is expected to average approximately 14,000 b/d net to Talisman in 2005. We have up to eight exploration wells planned in Trinidad, including our first two onshore locations.

"In addition, we will continue our high impact wildcat exploration drilling programs in Colombia and Peru and plan to spud our first well in Qatar this year. We will also spend upwards of $20 million in Alaska with a view to drilling our next exploration well there in 2006.

01-12-05

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