Talisman Energy Plans To Spend $2.35 Billion In 2004

Talisman Energy plans to spend a record $2.35 billion on exploration and development in 2004 and has reconfirmed its annual production growth expectations of 5-10% per share through 2006. The Company estimates that production will average between 415,000-445,000 boe/d in 2004. Cash flow per share is expected to average between $17-$21 based on WTI oil prices of US$25-28/bbl, NYMEX natural gas prices of US$4.75-5.50/mmbtu and a C$/US$ exchange rate of $0.73-$0.77.

"We have worked hard to establish Talisman's unique portfolio of North American deep gas and international growth opportunities," said Dr. Jim Buckee, President and Chief Executive Officer. "We are well positioned to meet our stated goals for production growth in 2004, 2005 and 2006 from existing development projects.

"In addition, we have built a high reward exploration portfolio, with sizeable, albeit higher risk, prospects in all of our operating areas, in particular Colombia, Qatar, Alaska and Trinidad. Talisman's balance sheet is strong, mitigating against the effects of a downturn in commodity prices and giving us flexibility to continue to grow our programs. All in all, our 2004 spending plans are tailor made for both growth and value creation."

Talisman has set targets of 5-10% production per share growth on a go forward basis. The Company produced approximately 398,000 boe/d in 2003. Fourth quarter production averaged about 417,000 boe/d, a 13% increase in production per share (excluding Sudan) over the fourth quarter of 2002.

Production in 2004 is expected to average between 415,000-445,000 boe/d, with most of the increase coming from Malaysia, Vietnam and Algeria. Talisman expects that it can sustain 5-10% growth rates in 2005 and again in 2006 from existing development programs (Trinidad, PM-305 in Malaysia, Gyda in Norway, Buchan and Tartan area discoveries in the UK) without acquisitions or significant exploration discoveries.

Talisman increased its North America gas production volumes by 5% in 2003. Continuing growth in Appalachia (30%), Deep Basin (15%) and the Alberta Foothills (10%) will contribute to an expected 3-5% increase in 2004 natural gas volumes. Oil and liquids volumes continue to decline slowly as Talisman targets more attractive international oil opportunities, combined with larger, deeper gas prospects in North America (which typically have few if any associated liquids).

North Sea production is expected to be relatively flat in 2004, however, there are a number of development projects underway which are expected to lead to 5-10% growth in oil volumes in 2005 and 2006.

With the completion of the PM-3 CAA development project in Malaysia and Vietnam in 2003, on schedule and on budget, production from the region is expected to quadruple in 2004. Current production in the region is approximately 40,000 boe/day.

Algerian production is expected to average between 14,000-16,000 bbls/d in 2004 with completion of the initial Ourhoud and MLN development projects.

Talisman expects a 20-30 mmcf/d increase in Indonesian gas volumes in 2004 with a full year of sales to Singapore. The Company is currently in negotiations with a number of potential buyers, which could lead to sales in excess of 250 mmcf/d (net Talisman) by 2007.

Talisman has budgeted $2.35 billion in exploration and development spending in 2004, up 3% over estimated 2003 expenditures. Roughly two-thirds of this will be directed at development projects and one-third at exploration.

The majority of money ($1.2 billion) will be spent on drilling, with 640 gross domestic and 118 gross international wells planned. The Company has also budgeted $830 million for plant and equipment and almost $300 million for exploration related costs (land, seismic and technical evaluations).

Approximately half of the budget is earmarked for North America, one quarter for the North Sea and the remainder for other international exploration and development and projects.

North America
Talisman will continue to shift spending in 2004 to the remaining underdeveloped parts of the Basin, with an emphasis on areas where Talisman owns infrastructure. Strategically, the Company expects it can organically grow its North American gas production at rates of 3-5% over the next five years while generating surplus funds for high impact, high value international programs.

Talisman expects to spend $1.13 billion in 2004 (a 2% increase) with 77% directed towards natural gas projects. Major focus areas include Alberta Foothills ($130 million), Bigstone & Wild River ($110 million), the Deep Basin ($100 million), the Greater Arch ($100 million), Edson ($90 million) and the eastern United States ($85 million). The Company will also continue an active deep drilling program at Monkman with up to four deep Paleozoic wells planned.

North Sea
Talisman has developed a successful and repeatable strategy in the North Sea, developing commercial hubs around core operated infrastructure and properties.

Exploration and development spending in the North Sea is expected to increase by 14% to $605 million in 2004. Plans include major development drilling programs ($485 million total development spending, including 25 development wells) and $120 million on exploration, including eight wells. This program is expected to lead to increased oil production in 2005 and 2006.

Following Talisman's strategic entry into Norway in 2003, the Company plans to drill three development wells.

The Company plans three exploration wells in the Clyde area, two exploration wells in the Ross/Blake area and two exploration wells in the Flotta Catchment area.

Malaysia & Vietnam
Malaysia/Vietnam is now a core area with operated production, and Talisman's focus will shift towards undeveloped fields on existing acreage, new drilling opportunities and acquiring additional acreage.

With the start-up of production from the PM-3 CAA project, the Company expects to spend $250 million in the region in 2004. The budget includes development drilling in PM-3 CAA (approximately 30 wells) and development of the South Angsi discovery in PM-305 (first production in mid-2005). As a follow-up to its successful exploration program in 2003, the Company plans to drill three more exploration wells in 2004 on PM-3 CAA and Block PM-305.

Talisman and the joint venture participants have also had early exploration success in Block 46-02 offshore Vietnam, where the Company plans to drill two more exploration wells in 2004.

A total of $65 million will be spent in Indonesia in 2004. The majority of this is allocated to the Phase 2 expansion of the Suban gas plant to provide processing capacity for gas sales to West Java.

Trinidad & Tobago
Development of the Greater Angostura Project is underway in offshore Block 2c with first oil expected early in 2005. Angostura facilities include a central processing platform, three wellhead production platforms and an 18-inch oil pipeline. Fifteen development wells are planned for 2004.

Two appraisal wells are planned for Block 2c, with two exploration wells on Block 3a. The onshore seismic program on the Eastern Block is expected to finish in 2004 in preparation for drilling in 2005.

Spending in Trinidad has been budgeted at $170 million.

Expansion of the Greater MLN Phase 1 facilities is planned for 2004, with startup of Phase 2 liquids production commencing in 2005/2006. Spending in 2004 is estimated at $44 million and includes drilling six wells in the Greater MLN area and 10 wells at Ourhoud.

North American Frontier Exploration
Talisman plans to drill one well in Alaska this year with a budget of $15 million. The Company will also continue technical evaluation of its offshore East Coast acreage.

Talisman spud two wells in 2003 and plans an additional two exploration wells in 2004. The Company holds interests in five blocks, three in the highly prospective thrust belt of the Upper Magdalena Valley and two in the Llanos Basin adjacent to the giant Cuisiana and Capiagua oil fields. Capital spending in 2004 will be approximately $28 million.

Talisman acquired Block 10 offshore Qatar in 2003. During 2004, the Company will shoot 1,000 kilometers of 2D seismic and 400 square kilometers of 3D seismic.

Talisman Energy Inc. is a large, independent oil and gas producer, with operations in Canada and, through its subsidiaries, the North Sea, Indonesia, Malaysia, Vietnam, Algeria and the United States. Talisman's subsidiaries also conduct business in Trinidad, Colombia and Qatar. Talisman has adopted the International Code of Ethics for Canadian Business and is committed to maintaining high standards of excellence in corporate citizenship and social responsibility wherever its business is conducted. Talisman's shares are listed on Toronto Stock Exchange in Canada and New York Stock Exchange in the United States under the symbol TLM.

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