Talisman to Develop Tweesmuir Fields in the North Sea

Talisman Energy has announced the C$770 million (Pounds Sterling 320 million) development of the Tweedsmuir and Tweedsmuir South oilfields approximately 100 miles northeast of Aberdeen. Tweedsmuir was discovered in 1983, although it was the Talisman appraisal program in 2002 that discovered the main part of the field. Tweedsmuir South was discovered by Talisman in 2003 and appraised in 2004.

The fields will be developed using a four well subsea tieback to the Talisman operated Piper B facility some 55 kilometers to the north. Drilling is expected to begin in early 2005 with production scheduled to commence late 2006 at a plateau rate of 40,000 bbls/d. The oil will be processed using the existing Piper platform and export pipeline to the Talisman owned Flotta terminal in Orkney.

The announcement was made at a celebration in Aberdeen marking Talisman's tenth anniversary in the UK. Among guests in attendance were the UK Energy Minister Stephen Timms, who gave formal Government approval for the development and Jack McConnell, the first Minister for Scotland.

"This connection between the Buchan area and Talisman's core operated Flotta Catchment Area infrastructure is important for our growth plans in the North Sea," said Dr Jim Buckee, President and Chief Executive Officer. "The Tweedsmuir development will be constructed with considerable flexibility for tie-in of additional fields, supporting Talisman's exploration plans in the area. This sort of development coupled with a strengthening commodity price outlook provides increased opportunity for the development of a greater number of small discoveries in the area. Incremental operating costs are expected to be about C$1.30/boe, which combined with the expected long life of Piper will allow high oil recovery rates.

"By making use of our existing infrastructure and applying innovative technical practices, we have been able to minimize costs and reduce the time to project sanction. Working closely with our partners, both in Tweedsmuir and at Piper, together with Government, we have moved speedily since discovery to gain approval for this significant oilfield development project."

Located in UKCS Block 21/1aN, Talisman estimates the fields contain gross reserves of 71 mmboe (87% liquids, 13% natural gas), which are classified as "probable" prior to development approval. It is expected that approximately half of these reserves will be transferred to the proven category in the 2004 reserves evaluation process with additional reserves transferred as the fields are developed and brought onstream.

Talisman Energy (UK) Limited holds an 87.43% working interest in these fields and has an agreement to acquire an additional 7.0%. First Oil Expro Limited has a 5.57% working interest.