Talisman To Acquire Lundin Oil for $344 Million

Talisman Energy Inc. announced that a wholly-owned Swedish subsidiary will make an offer to acquire all the outstanding shares and warrants of Lundin Oil AB. Talisman is offering SEK 36.5 (approximately US$3.43) for each Class A and Class B share of Lundin Oil. In addition, if the offer is successful, all of Lundin Oil's current interests in Sudan and Russia will be conveyed to a newly formed spin-off company ("Newco") and the shares of Newco distributed to holders of Lundin Oil shares on a one-for-one basis. Newco will be managed by the current Lundin Oil management team.

Talisman will retain Lundin's interests in the North Sea, Malaysia, Vietnam and Papua New Guinea at a cost of approximately US$344 million (C$529 million) including debt and working capital.

In a separate transaction, Lundin Oil's interests in Libya are to be sold to a third party for US$75 million (also conditional upon the offer being successful). The acquisition has two main drivers. Lundin's interests in Malaysia have a high degree of technical certainty and good growth prospects. Talisman expects Malaysia will be a core area by 2004 with net production in excess of 50,000 boe/d. In addition, there is room to expand from this base with known development opportunities. The oil industry has focused on larger opportunities and there are numerous undeveloped fields in excess of 25 million barrels each. Malaysia has recognized the need to provide improved terms for small field development. Lundin's North Sea assets have a 70% overlap with Talisman's assets in the Brae and Claymore areas. In total, the transaction will add over 50 million boe of proved reserves and about 140 million boe of probable reserves.