Talisman Energy Reports Organic Production Growth Of 16% Over First Quarter 2003 Cash Flow Of $779 Million.

News Editors

CALGARY Calgary (kăl`gərē), city (1991 pop. 710,677), S Alta., Canada, at the confluence of the Bow and Elbow rivers. The largest city in Alberta and the fastest-growing major city in Canada, Calgary is a corporate, transportation, and financial , Alberta--(BUSINESS WIRE)--May 4, 2004

Talisman Energy Talisman Energy TSX: TLM is one of Canada's largest petroleum companies. It was originally part of British Petroleum, known as BP Canada, but in 1992 it became an independent company named Talisman Energy. Inc. (NYSE NYSE

See: New York Stock Exchange :TLM TLM Telemetry
TLM Transaction Level Modeling
TLM Tout Le Monde (French)
TLM The Leprosy Mission (Northern Ireland)
TLM Transmission Line Matrix
TLM The Little Mermaid (fairy tale) ) (TSX TSX Toronto Stock Exchange (TSE before April, 2002)
TSX Transfer from Stack Pointer to Index
TSX True Space Extension :TLM) today reported its first quarter operating and financial results.

Production averaged 436,000 boe/d in the quarter, an increase of 16% over the first quarter of 2003 (excluding Sudan Sudan (s

dăn`), officially Republic of Sudan, republic (2005 est. pop. 40,187,000), 967,494 sq mi (2,505,813 sq km), NE Africa. ) and 4% growth over the fourth quarter. The comparable numbers for first quarter 2003 were 430,000 boe/d (including Sudan) and 377,000 boe/d (excluding Sudan).

Cash flow was $779 million ($6.09/share) for the quarter, compared to $845 million ($6.52/share) a year ago. Excluding Sudan, the Sudan, The
officially Republic of the Sudan

Country, northeastern Africa. Area: 966,757 sq mi (2,503,890 sq km). Population (2005 est.): 36,233,000. Capitals: Khartoum (executive), Omdurman (legislative). comparable number for 2003 was $769 million ($5.93/share). Net income for the quarter was $223 million ($1.70/share) versus $574 million ($4.38/share) in the first three months of 2003. The comparable number for 2003, excluding the gain on sale and income from Sudan operations, was $234 million ($1.76/share).

A stronger Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin"
loonie

dollar - the basic monetary unit in many countries; equal to 100 cents and lower US natural gas prices lowered Talisman's realized price from $44.86/boe a year ago to $38.32/boe in the first quarter of 2004.

"This is a great start to 2004, with Talisman's volume growth and high oil prices offsetting lower NYMEX See New York Mercantile Exchange.

NYMEX

See New York Mercantile Exchange (NYM). gas prices and the stronger Canadian dollar," said Dr. Jim Buckee, President and Chief Executive Officer. "I am very pleased with our production growth and we have more projects and more growth on the way.

"Production reached 450,000 boe/d at one point in March. Although I think it would be premature pre·ma·ture
adj.
1. Occurring or developing before the usual or expected time.

2. Born after a gestation period of less than the normal time, especially, in human infants, after a period of less than 37 weeks. to revise the guidance number of 415,000-445,000 boe/d for the year, all areas of the Company are performing well. In less than a year, we have replaced the production from Sudan.

"Production in Malaysia/Vietnam is averaging approximately ap·prox·i·mate
adj.
1. Almost exact or correct: the approximate time of the accident.

2. 40,000 boe/d. The South Angsi oilfield development is underway and we are excited about our new acreage in Malaysia Malaysia (məlā`zhə), independent federation (2005 est. pop. 23,953,000), 128,430 sq mi (332,633 sq km), Southeast Asia. The official capital and by far the largest city is Kuala Lumpur; Putrajaya is the adminstrative capital. . The Greater Angostura Angostura: see Ciudad Bolívar. development in Trinidad Trinidad (trēnēthäth`), town (1983 est. pop. 43,500), Sancti Spíritus prov., central Cuba. Tobacco processing is the chief industry, although other agricultural processing has been developed. is on schedule for first oil production early in 2005.

"Production in the North Sea is up 11% over the first quarter of last year, our North Tartan Tartan, in the Bible
Tartan (tär`tăn), in the Bible, official title of two Assyrians sent to Hezekiah by Sennacherib and Sargon.

tartan, pattern
tartan: see plaid. development and Tweedsmuir The hamlet of Tweedsmuir (Sliabh Thuaidh in Gaelic) is situated 8 miles from the source of the River Tweed, in The Borders of Scotland. It is home to the Crook Inn. The Talla Reservoir and Fruid Reservoir are nearby. field pre-project developments are on schedule and we have just recently increased our stake in the Flotta For other places with the same name, see Flodday (disambiguation).

Flotta is a small island in Orkney, Scotland, lying in Scapa Flow. The island is known for its large oil terminal and is linked by Orkney Ferries to Houton on the Orkney Mainland and Lyness and Longhope on Catchment area catchment area or drainage basin, area drained by a stream or other body of water. The limits of a given catchment area are the heights of land—often called drainage divides, or watersheds—separating it from neighboring drainage , adding an average of 5,100 bbls/d this year and 9,000 bbls/d next year.

"Talisman talisman: see amulet.

talisman

amulet with which Saladin cures Richard the Lion-Hearted. [Br. Lit.: The Talisman]

See : Charms set a new record high for its North American North American

named after North America.

North American blastomycosis
see North American blastomycosis.

North American cattle tick
see boophilusannulatus. gas production volumes in March, averaging 897 mmcf/d. We have also set a new production record in the Foothills. Gas production in the northeastern north·east
n.
1. Abbr. NE The direction or point on the mariner's compass halfway between due north and due east, or 45° east of due north.

2. An area or region lying in the northeast.

3. United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. is currently averaging about 75 mmcf/d and should reach volumes in excess of 90 mmcf/d this quarter.

"Given the continuing strength in commodity prices our outlook for cash flow is now closer to $22/share, compared to earlier guidance of $17-22/share. This assumes a US$32.00/bbl WTI WTI West Texas Intermediate
WTI Western Transportation Institute (Montana State University)
WTI World Tribunal on Iraq
WTI With The Idea (used in chess to point to the idea behind a specific move)  oil price, US$5.75 mcf NYMEX gas price and a C$/US$ exchange rate of $0.76."

Talisman First Quarter Summary

- North American gas production averaged 897 mmcf/d in March, a record high.

- Talisman drilled 127 successful natural gas wells in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. .

- Three very successful wells were drilled in the northeastern United States, testing at a combined rate of 56 mmcf/d.

- North Sea production averaged 145,000 boe/d, an increase of 11% over the same quarter a year ago.

- Early in May, Talisman Energy (UK) Limited announced the acquisition of additional working interests in its core Flotta Catchment Area.

- Successful wells were drilled at Claymore (6,000 bbls/d) and North Leven Leven (lē`vən), town (1991 pop. 8,591), Fife, E Scotland, at the mouth of the Leven River on the Firth of Forth. It is a summer resort, famous for its golf links and beaches. (4,000 bbls/d) in the North Sea.

- Production in Malaysia/Vietnam averaged 37,000 boe/d during the quarter.

- Commissioning of PM-3 facilities in Malaysia/Vietnam continued during the quarter.

- Three successful sidetracks of the Bunga Tulip discovery made in Block PM-3 in late 2003 were completed.

- Talisman was awarded a large new block (PM-314) adjacent to the South Angsi oil field in Malaysia.

- Algerian production averaged 13,000 boe/d during the quarter.

- In Trinidad, the Angostura oil and gas development is on schedule for production startup (STARTing UP) "At startup" means when the computer is first turned on or when a program is first loaded. See Startup folder. in early 2005. Production is expected to be 80,000 bbls/d with Talisman's working interest at 25%.

- The onshore on·shore
adj.
1. Moving or directed toward the shore: an onshore wind.

2. Located on the shore: an onshore beacon; an onshore patrol.

adv. seismic program in Trinidad was completed in April.

- The Company renewed re·new
v. re·newed, re·new·ing, re·news

v.tr.
1. To make new or as if new again; restore: renewed the antique chair.

2. its normal course issuer bid in March.

Management's Discussion and Analysis Management's discussion and analysis (MD&A)

A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial (MD&A)

This discussion and analysis should be read in conjunction conjunction, in astronomy
conjunction, in astronomy, alignment of two celestial bodies as seen from the earth. Conjunction of the moon and the planets is often determined by reference to the sun. with the Interim Consolidated Financial Statements Consolidated Financial Statements

The combined financial statements of a parent company and its subsidiaries.

Notes:
Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge . All comparative percentages are between the quarters ended March 31, 2004 and 2003, unless stated otherwise. All amounts are in Canadian dollars unless otherwise indicated.



Quarterly results summary
                                                           Pro forma
                                                    Sudan operations
                                                  and gain on sale(3)
                                  ----------------------------------
                                      Three months ended March 31,
                                  ----------------------------------
                                     2004         2003          2003
                                          (Restated)(4) (Restated)(4)
--------------------------------------------------------------------
Financial (millions of Canadian
 dollars unless otherwise stated)
Cash flow(1)                          779          845           769
Net income(1)                         223          574           234
Exploration and development
 expenditures                         614          455           453
Per common share (dollars)
  Cash flow(1) - Basic               6.09         6.52          5.93
               - Diluted             5.98         6.44          5.86
  Net income(2) - Basic              1.70         4.38          1.76
                - Diluted            1.67         4.33          1.74
--------------------------------------------------------------------
--------------------------------------------------------------------
Production (daily average
 production)
Oil and liquids (bbls/d)          230,136      247,369       194,487
Natural gas (mmcf/d)                1,236        1,096         1,096
--------------------------------------------------------------------
Total mboe/d (6mcf equals 1boe)       436          430           377
--------------------------------------------------------------------
--------------------------------------------------------------------
(1) Amounts are reported prior to preferred security charges of $9
    million ($5 million, net of tax) for the three months ended March
    31, 2004 (2003 - $10 million; $6 million, net of tax).
(2) Per common share amounts for net income and diluted net income
    are reported after preferred security charges.
(3) Pro forma is before the gain on sale of the Sudan operations in
    2003 and excludes Sudan results of operations for the period
    January 1 to March 12, 2003 (sale closing date).
(4) Restatement of prior year to effect retroactive adoption of the
    new accounting policy on asset retirement obligation as at
    January 1, 2004. See note 1 to the Interim Consolidated Financial
    Statements.

Both cash flow and net income decreased from the first quarter of 2003 primarily due to the sale of the Sudan operations in March of last year. On a pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts.

The phrase pro forma basis, after removing the gain on sale and the Sudan operations, cash flow increased from $769 million to $779 million. Net income on a pro forma basis decreased slightly from $234 million to $223 million ($1.70/share) due to production gains of 16% and the benefit of tax rate reductions being more than offset by the impact of the stronger Canadian dollar and stock-based compensation charges.

On March 12, 2003, Talisman completed the sale of its indirectly held interest in the Greater Nile Nile, longest river in the world, c.4,160 mi (6,695 km) long from its remotest headstream, the Luvironza River in Burundi, central Africa, to its delta on the Mediterranean Sea, NE Egypt. The Nile flows northward and drains c. Oil Project for net proceeds Net Proceeds

The amount received after all costs are deducted from the sale of a piece of property or security.

Notes:
In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $1,012 million and a gain of $296 million. See note 7 to the Interim Consolidated Financial Statements.



Company Netbacks

                                        Three months ended March 31,
                                       -----------------------------
Company netbacks (including Sudan)            2004     2003     2002
--------------------------------------------------------------------
Oil and liquids ($/bbl)
  Sales price                                41.00    44.85    31.27
  Hedging expense (income)                    2.67     3.14    (0.75)
  Royalties                                   6.00     8.53     5.52
  Operating costs                             9.98     9.36     7.38
--------------------------------------------------------------------
                                             22.35    23.82    19.12
--------------------------------------------------------------------
--------------------------------------------------------------------
Natural gas ($/mcf)
  Sales price                                 5.89     7.48     3.55
  Hedging expense (income)                    0.04     0.25    (0.33)
  Royalties                                   1.15     1.40     0.63
  Operating costs                             0.64     0.72     0.61
--------------------------------------------------------------------
                                              4.06     5.11     2.64
--------------------------------------------------------------------
--------------------------------------------------------------------
Total ($/boe) (6mcf=1boe)
  Sales price                                38.32    44.86    27.41
  Hedging expense (income)                    1.52     2.44    (1.23)
  Royalties                                   6.43     8.47     4.85
  Operating costs                             7.06     7.22     5.94
--------------------------------------------------------------------
                                             23.31    26.73    17.85
--------------------------------------------------------------------
--------------------------------------------------------------------
Netbacks do not include synthetic oil and pipeline operations.
Additional netback information by major product type and region is
included elsewhere in this interim report.

During 2004, Talisman's netbacks averaged $23.31/boe, down from the first quarter of 2003 due mainly to the 15% increase in the value of the Canadian dollar against its US counterpart counterpart n. in the law of contracts, a written paper which is one of several documents which constitute a contract, such as a written offer and a written acceptance. , which lowered the Canadian dollar reported commodity prices for both oil and natural gas. The Company's royalty Compensation for the use of property, usually copyrighted works, patented inventions, or natural resources, expressed as a percentage of receipts from using the property or as a payment for each unit produced. rate dropped 2% to 17% in the current period due to the sale of the Sudan interest. Unit operating costs operating costs npl → gastos mpl operacionales decreased to $7.06/boe helped by higher production volumes from new low operating cost areas.

Revenue

Revenue for the first quarter was $1.5 billion, with oil and liquids contributing 56% and natural gas contributing 44% of revenue. The 1% increase in production, mostly from the Company's international operations Internal Operations (I.O., IO or I/O) is a fictional American Intelligence Agency in Wildstorm comics. It was originally called International Operations. I.O. first appeared in WildC.A.T.S. volume 1 #1 (August, 1992) and was created by Brandon Choi and Jim Lee. , was overshadowed by lower Canadian dollar commodity prices. More than 90% of the Company's revenues are either received in US dollars or are closely referenced to US dollars. The Company converts these revenues to Canadian dollars for reporting purposes.



                                        Three months ended March 31,
                                       -----------------------------
Production (daily average production)         2004     2003     2002
--------------------------------------------------------------------
Oil and liquids (bbls/d)
North America                               58,291   61,466   63,611
North Sea                                  123,245  108,759  132,718
Southeast Asia                              35,602   21,360   23,034
Algeria                                     12,998    2,902        -
Sudan                                            -   52,882   58,608
--------------------------------------------------------------------
                                           230,136  247,369  277,971
--------------------------------------------------------------------
--------------------------------------------------------------------
Natural gas (mmcf/d)
North America                                  872      870      823
North Sea                                      133      136      119
Southeast Asia                                 231       90      102
--------------------------------------------------------------------
                                             1,236    1,096    1,044
--------------------------------------------------------------------
--------------------------------------------------------------------
Total mboe/d (6mcf equals 1boe)                436      430      452
--------------------------------------------------------------------
--------------------------------------------------------------------

Production highlights for the quarter include a doubling of Southeast Asia Southeast Asia, region of Asia (1990 est. pop. 442,500,000), c.1,740,000 sq mi (4,506,600 sq km), bounded roughly by the Indian subcontinent on the west, China on the north, and the Pacific Ocean on the east. production to over 74,000 boe/d, a 13% increase in North Sea oil and liquids production and additional Algerian production from the MLN MLN Million
MLN Modern Language Notes (literary journal)
MLN Management & Leadership Network (Northern Ireland)
MLN Missouri League for Nursing
MLN Main Listed Number fields. These increases more than offset last year's contribution from Sudan.

Excluding Sudan, oil and liquids production increased 18% over 2003. Current year North Sea oil and liquids production averaged 123,245 bbls/d, up 14,486 bbls/d over last year. These results reflect completion of the Halley development and minor asset acquisitions. Southeast Asia oil and liquids production in the current quarter averaged 35,602 bbls/d, up 67% from 2003 as a result of the completion of the PM-3 phase 2 project in the fourth quarter of last year. Algeria Algeria (ăljēr`ēə), Arab. Al Djazair, Fr. Algérie, officially People's Democratic Republic of Algeria, republic (2005 est. pop. production averaged 12,998 bbls/d, up 348% from the 2,902 bbls/d in 2003, as a result of the MLN fields, which commenced production during the middle of 2003. In North America, oil and liquids production of 58,291 bbls/d was down 5% from the same quarter of last year due to natural declines and emphasis on gas.

Natural gas production averaged 1.2 bcf/d bcf/d Billion Cubic Feet Per Day (oil industry) in the current quarter, up 13% from the first quarter of 2003, mainly due to Southeast Asia operations where gas production in Malaysia/Vietnam started at the end of last year and averaged 96 mmcf/d in this quarter. Indonesia Indonesia (ĭn'dənē`zhə), officially Republic of Indonesia, republic (2005 est. pop. 241,974,000), c.735,000 sq mi (1,903,650 sq km), SE Asia, in the Malay Archipelago. increased 45 mmcf/d, a 50% increase over last year to a current quarter average of 135 mmcf/d with Corridor sales to Caltex Caltex is a petroleum brand name of Chevron Corporation, used in more than 60 countries in the Asia Pacific region, the Middle East, and southern Africa. Brief History and new sales to Singapore Singapore (sĭng`gəpôr, sĭng`ə–, sĭng'gəpôr`), officially Republic of Singapore, republic (2005 est. pop. 4,426,000), 240 sq mi (625 sq km). . The tie in of new wells in North America offset natural declines as production in 2004 increased slightly compared to last year. North Sea natural gas production decreased 3% in 2004 to 133 mmcf/d.



                                        Three months ended March 31,
                                       -----------------------------
Prices and Exchange Rates                     2004     2003     2002
--------------------------------------------------------------------
Oil and liquids ($/bbl)
North America                                37.05    42.74    26.82
North Sea                                    41.55    46.14    33.87
Southeast Asia                               43.91    47.08    32.84
Algeria                                      44.62    40.33        -
Sudan                                            -    43.89    29.35
--------------------------------------------------------------------
                                             41.00    44.85    31.27
--------------------------------------------------------------------
--------------------------------------------------------------------
Natural gas ($/mcf)
North America                                 6.42     8.03     3.29
North Sea                                     5.63     4.93     5.04
Southeast Asia                                4.08     6.09     3.96
--------------------------------------------------------------------
                                              5.89     7.48     3.55
--------------------------------------------------------------------
--------------------------------------------------------------------
Total $/boe (6mcf equals 1boe)               38.32    44.86    27.41
--------------------------------------------------------------------
--------------------------------------------------------------------
Hedging loss (income)-excluded from the
 above prices
  Oil and liquids ($/bbl)                     2.67     3.14    (0.75)
  Natural gas ($/mcf)                         0.04     0.25    (0.33)
  Total $/boe (6mcf equals 1boe)              1.52     2.44    (1.23)
--------------------------------------------------------------------
--------------------------------------------------------------------
Benchmark prices and foreign exchange rates
  WTI (US$/bbl)                              35.15    33.86    21.64
  Brent (US$/bbl)                            31.95    31.51    21.15
  NYMEX (US$/mmbtu)                           5.69     6.60     2.38
  AECO (C$/GJ)                                6.26     7.51     3.17
US / Canadian dollar exchange rate           0.759    0.662    0.627
Canadian dollar / pound sterling exchange
 rate                                        2.424    2.420    2.274
--------------------------------------------------------------------
--------------------------------------------------------------------
Excludes synthetic oil.

Talisman's first quarter commodity price averaged $38.32/boe. Ongoing unrest Unrest is a sociological phenomenon, for instance:

Industrial unrest
Labor unrest
Rebellion

Notable historical unrests

19th century Luddites
1978–79 Winter of Discontent (UK)
1989 Purple Rain Revolt, (South Africa)

in the Middle East, uncertainties over Iraqi oil supplies and continued strong demand for oil, especially in Southeast Asia contributed to a 4% increase in the WTI oil price to US$35.15, but a strengthened Canadian dollar (US$0.76 compared to US$0.66 for the same period in 2003), resulted in lower average Canadian dollar prices realized by Talisman.

During the quarter, Talisman recorded net hedging hedging, in commerce, method by which traders use two counterbalancing investment strategies so as to minimize any losses caused by price fluctuations. It is generally used by traders on the commodities market. losses related to commodity based derivative derivative: see calculus.

derivative

In mathematics, a fundamental concept of differential calculus representing the instantaneous rate of change of a function. financial instruments of $55 million for oil and liquids ($2.67/bbl) and $5 million for natural gas ($0.04/mcf). These hedges represented 34% of oil and liquids production, 10% of North America gas production and 22% of total boe production for the quarter. Currently, the Company has derivative and physical contracts for approximately 23% of its remaining 2004 estimated production (35% of the Company's oil and liquids production and 13% of North American gas production). A summary of the contracts outstanding is included in notes 9 and 10 of the December December: see month. 31, 2003 Consolidated Financial Statements, which has been updated in note 5 to the March 31, 2004 Interim Consolidated Financial Statements.



                            Three months ended March 31,
                 ---------------------------------------------------
Royalties              2004              2003            2002
--------------------------------------------------------------------
                     %  $ millions     %  $ millions    % $ millions
                 ---------------------------------------------------
North America       21      143       21      181      21      81
North Sea            2        9        1        4       6      27
Southeast Asia      33       75       28       39      26      27
Algeria             51       27       50        5       -       -
Sudan                -        -       46       97      39      60
--------------------------------------------------------------------
                    17      254       19      326      18     195
--------------------------------------------------------------------
--------------------------------------------------------------------
Excludes synthetic oil

Royalty expense for the first quarter was $254 million and averaged 17%, down from 19% ($326 million) in 2003. The total amount of royalties Not to be confused with Royal family.

Royalties (sometimes, running royalties) are usage-based payments made by one party (the "licensee") to another (the "licensor") for ongoing use of an asset, most typically an intellectual property (IP) right. and the effective royalty rate decreased from 2003 due to the impact of the sale of the Sudan operations and lower commodity prices. This reduction in royalty rates was partially offset by increases in Southeast Asia, as a result of the payout pay·out
n.
1. The act or an instance of paying out.

2. A percentage of corporate earnings that is paid as dividends to shareholders. of cost recovery pools at Corridor and production increases in Malaysia/Vietnam.



                             Three months ended March 31,
                 ---------------------------------------------------
Operating expenses    2004              2003            2002
--------------------------------------------------------------------
                 $/boe $ millions  $/boe $ millions $/boe $ millions
                 ---------------------------------------------------
North America     4.96      91      5.04      92     4.41      79
North Sea        12.24     162     12.22     145     9.28     127
Southeast Asia    3.22      22      6.49      21     5.17      19
Algeria           3.51       4      6.23       2        -       -
Sudan                -       -      3.73      18     2.89      15
--------------------------------------------------------------------
                  7.06     279      7.22     278     5.94     240
--------------------------------------------------------------------
Synthetic oil    19.00       5     22.10       5    16.71       4
--------------------------------------------------------------------
Pipeline                    12                11               12
--------------------------------------------------------------------
                           296               294              256
--------------------------------------------------------------------
--------------------------------------------------------------------

Operating expenses Operating expenses

The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. remained relatively flat at $296 million in the first quarter of 2004, as an increase in the North Sea was offset by the sale of Sudan operations. Unit operating costs decreased by 2% in 2004 due to increased production. Southeast Asia unit operating costs dropped in half as total expenses remained relatively flat with a 103% increase in boe production. Algerian unit costs were down 44% from the previous quarter due to the increase in oil production in the current quarter. North Sea operating expenses increased due to recent acquisitions, however unit costs remained relatively unchanged.



                             Three months ended March 31,
                 ---------------------------------------------------
DD&A                  2004              2003(1)          2002(1)
--------------------------------------------------------------------
                 $/boe $ millions  $/boe $ millions $/boe $ millions
--------------------------------------------------------------------
North America     9.49     176      8.99     167     8.29     150
North Sea        12.23     162     12.83     152    11.39     156
Southeast Asia    6.60      44      5.82      19     6.10      22
Algeria           6.09       7      7.90       2        -       -
Sudan                -       -      3.98      19     4.32      23
--------------------------------------------------------------------
                  9.81     389      9.27     359     8.63     351
--------------------------------------------------------------------
--------------------------------------------------------------------
(1) Restatement of prior years to effect retroactive adoption of the
    new accounting policy on asset retirement obligation as at
    January 1, 2004. See note 1 to the Interim Consolidated Financial
    Statements.

The 2004 first quarter DD&A expense was $389 million, up 8% from the same quarter of 2003 as a result of increased current quarter production in Southeast Asia and Algeria at rates higher than the rates on the Sudan production sold. The North America rate increased due to additional expenditures in the US and the Vista Midstream mid·stream
n.
1. The middle part of a stream.

2. The part of a course that is neither at the beginning nor at the end: the midstream of life.

Noun 1. acquisition in 2003.



                                        Three months ended March 31,
                                       -----------------------------
Other ($ millions except where noted)        2004      2003     2002
--------------------------------------------------------------------
G&A ($/boe)                                  0.98      0.99     0.75
Dry hole expense                               79        72       27
Stock-based compensation                       30         -        -
Other expense (income)                          3        (7)      51
Interest expense                               38        40       38
Interest costs capitalized                      3         7        7
Other revenue                                  22        23       21
--------------------------------------------------------------------

Dry hole expense for the quarter was $79 million, with $31 million expensed in North America and $25 million in the North Sea, including $8 million relating to relating to relate prep → concernant

relating to relate prep → bezüglich +gen, mit Bezug auf +acc the Eta 2 redrill well and $14 million relating to the Cyrus Cy·rus Known as "the Younger." 424?-401 b.c.

Persian prince who led a mammoth force of Greeks against his brother Artaxerxes II. well.

Stock-based compensation expense relates to the appreciated value of the Company's outstanding stock options and cash units at March 31, 2004, which was first expensed during the second quarter of 2003.



Taxes ($ millions)                      Three months ended March 31,
                                       -----------------------------
                                            2004    2003(1)   2002(1)
--------------------------------------------------------------------
Current income tax                            51        92        51
Future income tax                             15        91        (3)
Petroleum revenue tax                         24        33        41
--------------------------------------------------------------------
                                              90       216        89
--------------------------------------------------------------------
--------------------------------------------------------------------
Effective tax rate                            23%       24%       32%
--------------------------------------------------------------------
--------------------------------------------------------------------
(1) Restatement of prior years to effect retroactive adoption of the
    new accounting policy on asset retirement obligation as at
    January 1, 2004. See note 1 to the Interim Consolidated Financial
    Statements.

The effective tax rate is based on pre-tax pre-tax adj → anterior al impuesto

pre-tax adj → avant impôt(s)

pre-tax adj → al lordo d'imposta income adjusted for production revenue tax, which is deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). in determining taxable income Under the federal tax law, gross income reduced by adjustments and allowable deductions. It is the income against which tax rates are applied to compute an individual or entity's tax liability. The essence of taxable income is the accrual of some gain, profit, or benefit to a taxpayer. . The Company's effective tax rate for the current quarter is lower than in 2003 due to the impact of Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. corporate tax rate reductions of $31 million. Excluding these tax rate reductions, the effective tax rate on the Company's income this quarter would have been 34%. The Company's effective tax rate for last year is low due to the inclusion of the gain on the sale of the Sudan operations. Excluding the gain, the effective tax rate on the Company's income last year would have been 39%. Current income taxes decreased in 2004, primarily due to the sale of Sudan operations and lower cash taxes at Corridor.



                                        Three months ended March 31,
                                       -----------------------------
Capital expenditures ($ millions)             2004     2003     2002
--------------------------------------------------------------------
North America                                  381      636      287
North Sea                                      119       78      148
Southeast Asia                                  53       80       50
Algeria                                          3       15       17
Sudan                                            -        2       25
Other                                           74       18       36
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                                               630      829      563
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Capital expenditures include exploration and development expenditures
and net asset acquisitions but exclude corporate acquisitions.

North America capital expenditures include $378 million for exploration and development with the drilling of 127 gas wells and 23 oil wells. North Sea expenditures were comprised of $40 million of exploratory spending, including the Cyrus well at $14 million and development spending of $81 million at various fields. The majority of the Southeast Asia spending related to the ongoing development of PM-3 CAA Caa

See CCC. in Malaysia/Vietnam, including the drilling of eight development wells. Other expenditures in the first quarter of 2004 included spending in Trinidad of $50 million, primarily progressing the Angostura development towards first oil anticipated in early 2005, and spending in Alaska Alaska (əlă`skə), largest in area of the United States but third smallest (exceeding only Vermont and Wyoming) in population, occupying the northwest extremity of the North American continent, separated from the coterminous United States of $14 million. Additional information regarding Talisman's planned 2004 exploration and development expenditures is included in the Outlook for 2004 section of the Company's December 31, 2003 MD&A.

Long-term debt Long-Term Debt

Loans and financial obligations lasting over one year.

Notes:
For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. and liquidity

Talisman's total debt, exclusive of the preferred securities, at March 31, 2004 was $2.4 billion ($2.0 billion, net of cash and cash equivalents) up from $2.2 billion at year end. This increase resulted primarily from the elimination of hedge accounting Why is hedge accounting necessary?
Many financial institutions and corporate businesses (entities) use derivative financial instruments to hedge their exposure to different risks (eg interest rate risk, foreign exchange risk, commodity risk, etc). treatment of the US dollar cross currency and interest rate swap Interest Rate Swap

A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. contracts. As a result, the 250 million pounds sterling Eurobond Eurobond

A bond that is denominated in a different currency than the one of the country in which the bond is issued.

Notes:
A eurobond is usually categorized by the currency in which it is denominated, and is usually issued by an international syndicate. has been converted to Canadian dollars at current quarter end rates. Previously, this debt was converted using historical foreign exchange rates contained in the cross currency and interest rate swap contracts.

At quarter end, debt to debt plus equity was 32% (29% net of cash and cash equivalents). Had the preferred securities been classified as debt, the ratio would have been 34% (32% net of cash and cash equivalents). For the 12 months ended March 31, 2004, the debt to cash flow ratio was 0.88:1.

In February February: see month. of this year, the Company redeemed re·deem
tr.v. re·deemed, re·deem·ing, re·deems
1. To recover ownership of by paying a specified sum.

2. To pay off (a promissory note, for example).

3. one half of its outstanding Junior Subordinated Debentures subordinated debenture

An unsecured bond with a claim to assets that is subordinate to all existing and future debt. Thus, in the event that the issuer encounters financial difficulties and must be liquidated, all other claims must be satisfied before . The redemption The liberation of an estate in real property from a mortgage.

Redemption is the process by which land that has been mortgaged or pledged is bought back or reclaimed. It is accomplished through a payment of the debt owed or a fulfillment of the other conditions. was funded from current cash flow, with the $16 million (net of tax) difference between the carrying value Carrying Value

Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt.

Notes:
This is different than market value, as it can be higher or lower depending on the circumstances. and the redemption cost credited to retained earnings Retained Earnings

The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. . In March 2004, the Company gave notice of its intention to exercise its right to redeem redeem v. to buy back, as when an owner who had mortgaged his/her real property pays off the debt. The term also refers to paying the amount due and all charges after a foreclosure (due to failure to make payments when due) has begun. the remaining outstanding Junior Subordinated Debentures as of June June: see month. 15, 2004.

In March of this year, the Company renewed its normal course issuer bid to permit the purchase of up to 6,401,603 of its common shares, representing 5% of the total number of common shares outstanding at the time of the renewal.

In March 2004, the Company announced plans to implement a three-for-one share split of its issued and outstanding common shares. The decision has been approved by Talisman's Board of Directors and is subject to shareholder and regulatory reg·u·late
tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates
1. To control or direct according to rule, principle, or law.

2. approval. As at March 31, 2004 there were 128,032,078 common shares outstanding.

Asset Retirement Obligations Asset Retirement Obligations provide for future disposal of assets as required by SFAS 143 [1].

Firms must recognize the ARO liability in the period it was acquired, generally acquisition. (future site restoration and abandonment abandonment, in law, voluntary, intentional, and absolute relinquishment of rights or property without conveying them to any other person. Abandonment also means willfully leaving one's spouse or children, intending not to return (see desertion). liabilities)

The Company has asset retirement obligations related to the estimated costs of future dismantlement dis·man·tle
tr.v. dis·man·tled, dis·man·tling, dis·man·tles
1.
a. To take apart; disassemble; tear down.

b. , site restoration and abandonment of oil and gas properties, including offshore production platforms, gas plants and facilities. Effective January January: see month. 1, 2004, the Company adopted, on a retroactive Having reference to things that happened in the past, prior to the occurrence of the act in question.

A retroactive or retrospective law is one that takes away or impairs vested rights acquired under existing laws, creates new obligations, imposes new duties, or attaches a basis, a new accounting standard that changed the method of accruing for costs associated with the retirement of fixed assets fixed assets npl → activo sg fijo

fixed assets npl → immobilisations fpl

fixed assets fix npl → , which an entity is legally obligated ob·li·gate
tr.v. ob·li·gat·ed, ob·li·gat·ing, ob·li·gates
1. To bind, compel, or constrain by a social, legal, or moral tie. See Synonyms at force.

2. To cause to be grateful or indebted; oblige. to incur To become subject to and liable for; to have liabilities imposed by act or operation of law.

Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. . The Company has recorded the fair value of the liability for asset retirement obligations in the period incurred and a corresponding increase in the carrying amount of the related property, plant and equipment asset. See note 1 to the Interim Consolidated Financial Statements for details pertaining per·tain
intr.v. per·tained, per·tain·ing, per·tains
1. To have reference; relate: evidence that pertains to the accident.

2. to this restatement Restatement

A revision in a company's earlier financial statements.

Notes:
The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. and the impact on current period results of operations.

Hedge Accounting

The Company has adopted the new accounting guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. on Hedging Relationships (AcG 13), effective January 1, 2004. This guideline, in addition to supplementing and interpreting in·ter·pret
v. in·ter·pret·ed, in·ter·pret·ing, in·ter·prets

v.tr.
1. To explain the meaning of: interpreted the ambassador's remarks. See Synonyms at explain. existing hedging requirements under Canadian GAAP GAAP

See: Generally Accepted Accounting Principles

GAAP

See generally accepted accounting principles (GAAP). , established certain other conditions required before hedge accounting may be applied.

Effective January 1, 2004, the Company's US dollar cross currency and interest rate swap contracts were no longer designated as hedges of the Eurobond, which resulted in a revaluation Revaluation

A calculated adjustment to a country's official exchange rate relative to a chosen baseline. The baseline can be anything from wage rates to the price of gold to a foreign currency. In a fixed exchange rate regime, only a decision by a country's government (i.e. of this Eurobond debt and a deferred gain of $17 million, which is being amortized over the period to 2009. The swap contracts were terminated ter·mi·nate
v. ter·mi·nat·ed, ter·mi·nat·ing, ter·mi·nates

v.tr.
1. To bring to an end or halt: in 2004 for cash proceeds of $138 million and resulted in an additional gain of $15 million. The termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of these contracts did not accelerate the recognition of the deferred gain into income. The Company's outstanding commodity price derivative contracts have been designated as hedges of the Company's anticipated future commodity sales.

The Company's long-term debt denominated in UK pounds sterling and Canadian dollars has been designated as hedges of the Company's net investments in the UK and Canadian self-sustaining self-sus·tain·ing
adj.
Able to sustain oneself or itself independently.

self-sus·tain operations. Unrealized foreign exchange gains and losses resulting from the translation of this debt are included in a separate component of shareholders' equity Shareholders' Equity

A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. described as cumulative foreign currency translation.

Non-GAAP financial measures

Included in the MD&A and elsewhere in the news release are references to terms used in the oil and gas industry such as cash flow and cash flow per share. These terms are not defined by Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records.

Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting in either Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of or the US. Consequently these are referred to as non-GAAP measures. Cash flow, as commonly used in the oil and gas industry, appears as a separate caption on the Company's cash flow statement and represents net income before exploration costs, DD&A, future taxes and other non-cash expenses Noun 1. non-cash expense - an expense (such as depreciation) that is not paid for in cash
disbursal, disbursement, expense - amounts paid for goods and services that may be currently tax deductible (as opposed to capital expenditures) .

Use of BOE equivalents

Throughout the MD&A and elsewhere in the news release the calculation of barrels of oil equivalent (boe) is calculated at a conversion rate of six thousand cubic feet (mcf) of natural gas for one barrel barrel: see English units of measurement. 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 A drive that writes write-once optical discs such as CD-Rs and DVD-Rs. A "burner" implies a one-time recording, but the term is erroneously used to refer to drives that "write" to re-recordable CD-RW and DVD-RW/+RW media as well. See burn, CD-R and DVD-R. tip and does not represent a value equivalence at the wellhead well·head
n.
1. The source of a well or stream.

2. A principal source; a fountainhead.

3. The structure built over a well.

wellhead
Noun

1. .

Operation and Exploration Highlights

North America

During first quarter 2004, Talisman participated in 156 gross wells (101 operated) resulting in a total of 127 gas and 23 oil wells for an average success rate of 96%. Included in the 156 wells are 41 exploration wells, which resulted in 34 gas wells and four oil wells.

Gas production in North America during the first quarter averaged 872 mmcf/d, slightly higher than first quarter 2003, and 1% higher than last quarter. Talisman set a new monthly record for its gas production in North America, averaging 897 mmcf/d in March. Liquids production averaged 58,291 bbls/d, a 1% increase over last quarter but a decrease of 5% over the same period last year. This decrease in liquids production is in line with expectations given that natural gas continues to be the focus of the Company's exploration and development activities in North America, supplemented by low risk oil projects.

In the Alberta Alberta (ălbûr`tə), province (2001 pop. 2,974,807), 255,285 sq mi (661,188 sq km), including 6,485 sq mi (16,796 sq km) of water surface, W Canada. Foothills, natural gas production averaged 149 mmcf/d, another record quarter. Gas production has increased 18% over the same period last year and 5% over the last quarter. Current weekly rates are averaging 154 mmcf/d. The winter drilling program of nine gross wells was highly successful.

In the Southern Alberta Southern Alberta is a region located in the Canadian province of Alberta. As of the year 2004, the region's population was approximately 272,017^[1]^[2]. Foothills, which includes the Turner Valley Turner Valley, village (1991 pop. 1,352), SW Alta., Canada, at the foot of the Rocky Mts., on the Sheep River, SW of Calgary. It is in the center of the Turner Valley oil and natural gas fields, opened in 1914. The village has sulfur and propane and pentane gas plants. area, the construction of the Little Chicago Little Chicago is a 2002 novel by Adam Rapp

Little Chicago is a story told by eleven-year-old Gerald 'Blacky' Brown, a victim of sexual abuse and neglect. gas plant was successfully completed and gas production is averaging 25 mmcf/d, an increase of 82% over the fourth quarter rate. This plant allows Talisman to continue to develop shallow This article or section may contain original research or unverified claims.

Please help Wikipedia by adding references. See the for details.
This article has been tagged since October 2007.
Shallow means not very deep. sweet gas targets in the region.

In Appalachia Appalachia, region: see Appalachian Mountains.

Appalachia

West Virginia coal mining region known for its abysmal poverty. [Am. Hist.: NCE, 160]

See : Poverty , two Trenton-Black River gas wells were completed, the Fortuna Fortuna (fôrt

`nə), in Roman religion, goddess of fortune. Worshiped under several forms, she appears to have originally been a goddess of fertility. Reed Hz#1 (tested at 20.3 mmcf/d) and Hakes Hz#1 (tested at 17.5 mmcf/d). Three additional wells were completed and are logging or testing, with three wells currently drilling. Current gas rates are averaging 74 mmcf/d and the Reed and Hakes wells will be connected in the second quarter. Full productive capacity will be achieved with the commissioning of the second compressor compressor, machine that decreases the volume of air or other gas by the application of pressure. Compressor types range from the simple hand pump and the piston-equipped compressor used to inflate tires to machines that use a rotating, bladed element to achieve at Catlin Cat·lin , George 1796-1872.

American artist who painted portraits and tribal scenes in the American West and in South and Central America. and additional access to pipelines. In the second quarter, daily production rates are expected to reach in excess of 90 mmcf/d.

During first quarter 2004, the Edson Edson can refer to:

Edson, Alberta
Edson, Wisconsin
Edson, Merritt Austin, U.S. Marine Corps General
Edson (tractors)
Edson Buddle, United States soccer player for New York Metrostars
Edson de Jesus Nobre, Angolan footballer

area produced 39,111 boe/d, an increase of 4% over the same period last year and a 7% increase over last quarter. West Whitecourt achieved another record production level, averaging 10,520 boe/d over the quarter, an increase of 5% over the same period last year and 10% over last quarter. This increase in both gas and liquids production is a result of a 19 well winter drilling program (100% success rate).

In February, West Whitecourt achieved a new monthly gas record of 56 mmcf/d. Bigstone/Wild River's quarterly production of 16,610 boe/d continues to grow with an increase of 10% over first quarter last year and a 7% increase over last quarter. This winter's 20 well drilling Well drilling is the process of drilling a hole in the ground for the extraction of a natural resource such as ground water, natural gas, or petroleum. Drilling for the exploration of the nature of the material underground (for instance in search of metallic ore) is best described program was 95% successful. In March, Bigstone/Wild River attained at·tain
v. at·tained, at·tain·ing, at·tains

v.tr.
1. To gain as an objective; achieve: attain a diploma by hard work.

2. a new monthly record of 97 mmcf/d.

In the Deep Basin BASIN Boulder Area Sustainability Information Network (Boulder, Colorado)
BASIN Brothers And Sisters In Need area, Talisman established another quarterly production record averaging 64.6 mmcf/d of gas and 2,370 bbls/d of liquids for a total of 13,140 boe/d. This represents a 38% increase over first quarter 2003 and a 23% increase over last quarter. A total of 25 wells were drilled with a success rate of 96%.

During first quarter 2004, Talisman transported and processed record gas volumes through the Edson and the Cutbank complexes. Throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together.

1. in the Edson plant has risen to almost 200 mmcf/d. The Cutbank system, acquired last year through the Vista Midstream Solutions acquisition, is operating at approximately 80-90% capacity. During 2004, debottlenecking projects will be undertaken to increase capacity.

International

North Sea

Production averaged 145,000 boe/d in the first quarter at a similar level to the fourth quarter and an 11% increase over the first three months of 2003.

Year to date, successful development wells have been drilled at Claymore (6,000 bbls/d) and North Leven (4,000 bbls/d). A further step out well at Claymore found the updip limit of the reservoir reservoir (rĕz`əvôr, -vwär), storage tank or wholly or partly artificial lake for storing water. Building an embankment or dam to preserve a supply of water for irrigation is an ancient practice; India and Egypt have many old and and has been suspended sus·pend
v. sus·pend·ed, sus·pend·ing, sus·pends

v.tr.
1. To bar for a period from a privilege, office, or position, usually as a punishment: suspend a student from school. and a farmin well at Cyrus has been abandoned. The first Gyda development well is near TD. An exploration well is currently drilling at Delta (south of Clyde Clyde, principal river of SW Scotland, 106 mi (171 km) long, rising in the Southern Uplands and flowing generally NW through Glasgow to the Firth of Clyde. It drains c.1,480 sq mi (3,830 sq km). ) and the final Tweedsmuir appraisal well (formerly called J1/J5) is also drilling.

The Tartan North development project is proceeding on schedule and first production is expected in the fourth quarter. Engineering design for the Tweedsmuir development is proceeding and the project environmental statement has been submitted for regulatory review.

Talisman has just announced the acquisition of further interests in the Flotta Catchment Area (FCA FCA

Abbreviation for the Free Carrier ), which will increase Talisman's share of production in the FCA area by 5,100 bbl/d (2004 annualized annualized

Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. ) and 9,000 bbl/d in 2005.

Malaysia/Vietnam

Production averaged 37,000 boe/d in the first quarter, which was ahead of plan.

Eight development wells were completed during the quarter at the PM-3 development. Full commissioning of the PM-3 facilities continued, gas reinjection Gas reinjection is the reinjection of natural gas into an underground reservoir, typically one already containing both natural gas and crude oil, in order to increase the pressure within the reservoir and thus induce the flow of crude oil or else sequester gas that cannot be is complete and water injection and gas lift commissioning is in progress.

During the quarter, three successful sidetracks of the Bunga Tulip discovery in PM3 made at the end of 2003 were completed. The original well tested at 2,200 bbls/d, limited by equipment.

The project to develop the South Angsi field continued and remains on schedule for production startup in mid- mid-
pref.
Middle: midbrain. 2005.

A new block (PM-314) adjacent to the South Angsi field was awarded to Talisman as operator (60% working interest). This is highly prospective acreage, with an area of 2.3 million acres.

Indonesia

Production averaged 37,000 boe/d during the quarter.

Negotiations continued for the sale and transportation of 2.4 tcf of natural gas (Talisman 36%) from the Corridor Block to West Java West Java (Indonesian: :Jawa Barat) is a province of Indonesia, located on the island of Java. The capital is Bandung. History . Substantive Substantive may refer to:

In grammar:

a noun substantive, now also called simply noun
a verb substantive, a verb like English "be" when expressing existence (in contrast to use as a copula)

In law:

progress has been made on the gas sales and transportation agreements, including agreement on the tariff tariff, tax on imported and, more rarely, exported goods. It is also called a customs duty. Tariffs may be distinguished from other taxes in that their predominant purpose is not financial but economic—not to increase a nation's revenue but to protect domestic for gas transportation.

Algeria

Production averaged 13,000 bbls/d during the quarter. Production was limited by a bearing failure in the gas reinjection system in mid-March n. 1. the middle part of March.

Noun 1. mid-March - the middle part of March
period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" ; this was repaired during April.

Trinidad

The Angostura oil and gas field development is continuing on schedule for production startup in early 2005. The Kairi Kairi can mean several things:

Kairi (Kingdom Hearts), a character from the Kingdom Hearts series of video games
Kairi (Street Fighter), a character from the Street Fighter series of video games
Trinidad was formerly known as Kairi

1, Canteen 1 and Aripo wellhead towers and the central production jacket A plastic housing that contains a floppy disk. The 5.25" disk is built into a flexible jacket; the 3.5" disk uses a rigid jacket. have been installed and the production facilities are under construction and due to be installed later this year. To date three development wells have been completed and two are nearing completion.

Talisman completed its onshore seismic program in April. Data is being evaluated with expectations that an exploration well will be drilled in 2005.

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 Vietnam (vēĕt`näm), officially Socialist Republic of Vietnam, republic (v), 128,400 sq mi (332,642 sq km), Southeast Asia. Occupying the eastern coastline of the Southeast Asian peninsula, Vietnam is bounded by China on the north, by Laos , Algeria and the United States. Talisman's subsidiaries also conduct business in Trinidad, Colombia Colombia (kəlŭm`bēə, Span. kōlōm`byä), officially Republic of Colombia, republic (2005 est. pop. 42,954,000), 439,735 sq mi (1,138,914 sq km), NW South America. Bogotá is the capital and largest city. and Qatar Qatar or Katar (both: kŭ`tər, gŭ–, kətär`), officially State of Qatar, independent emirate (2005 est. pop. 863,000), c. . Talisman has adopted the International Code of Ethics Code of Ethics can refer to:

Ethical code, a code of professional responsibility, noting what behaviors are "ethical".
Code of Ethics (band), a 90's Christian New Wave/Pop band

for Canadian Business Canadian Business is the longest-publishing business magazine in Canada. It was founded in 1928 as The Commerce of the Nation, the organ of the Canadian Chamber of Commerce. The magazine was renamed Canadian Business in 1933. and is committed to maintaining high standards of excellence in corporate citizenship Corporate Citizenship

The extent to which businesses are socially responsible in meeting legal, ethical and economic responsibilities placed on them by shareholders. The aim it to create higher standards of living and quality of life in the community in which it operates, while and social and environmental responsibility wherever its business is conducted. The Company is a participant Participant

A party of a funding. It usually refers to the lowest rank or smallest level of funding. in the United Nations Global Compact, a voluntary initiative that brings together companies, governments, civil society and other groups to advance human rights, labour and environmental principles. Talisman's shares are listed on the Toronto Stock Exchange Toronto Stock Exchange (TSE)

Canada's largest stock exchange, trading approximately 1,200 company stocks and 33 options. in Canada and the New York Stock Exchange New York Stock Exchange (NYSE)

World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. in the United States under the symbol TLM.

Readers are referred to the Advisories and definitions at the back of this press release.

Advisory - Forward-Looking Statements forward-looking statement

A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections.

This news release contains statements concerning future projects and growth, anticipated cash flow, estimated volumes and timing of future production, business plans for development and drilling, or other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance that constitute "forward-looking statements" within the meaning of the United States (US) Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and "forward -looking information as contemplated by Canadian Securities regulators' Form 51-102F1 (collectively "forward looking statements".)

Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated by the Company and described in the forward-looking statements. These risks and uncertainties include:

- the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas and market demand;

- risks and uncertainties involving geology geology, science of the earth's history, composition, and structure, and the associated processes. It draws upon chemistry, biology, physics, astronomy, and mathematics (notably statistics) for support of its formulations. of oil and gas deposits;

- the uncertainty of reserves estimates and reserves life;

- the uncertainty of estimates and projections relating to production, costs and expenses;

- 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;

- health, safety and environmental risks;

- uncertainties as to the availability and cost of financing;

- uncertainties related to the litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute.

When a person begins a civil lawsuit, the person enters into a process called litigation. process, such as possible discovery of new evidence or acceptance of novel legal theories and the difficulties in predicting the decisions of judges and juries;

- risks in conducting foreign operations (for example, political and fiscal instability instability /in·sta·bil·i·ty/ (-stah-bil´i-te) lack of steadiness or stability.

detrusor instability or the possibility of civil unrest or military action);

- general economic conditions;

- the effect of acts of, or actions against international terrorism Noun 1. international terrorism - terrorism practiced in a foreign country by terrorists who are not native to that country
act of terrorism, terrorism, terrorist act - the calculated use of violence (or the threat of violence) against civilians in order to attain ; and

- the possibility that government policies or laws may change or governmental approvals may be delayed or withheld.

We caution that the foregoing list of risks and uncertainties 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 Annual Report under the headings "Management's Discussion and Analysis- Risks and Uncertainties", "- Liquidity and Capital Resources", and "-Outlook for 2004", as well as in the Company's other reports on file with Canadian securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest
regulatory agency

administrative body, administrative unit - a unit with administrative responsibilities and the United States Securities and Exchange Commission.

Forward-looking statements are based on the estimates and opinions of the Company's management at the time the statements are made. The Company assumes no obligation to update forward-looking statements should circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact.
2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or or management's estimates or opinions change.

Advisory - Reserves Data and Other Oil and Gas Information

Talisman's disclosure of reserves data and other oil and gas information is made in reliance on an exemption exemption n. 1) in income taxation, a credit given for each dependent, blindness or other disability, and age over 65, which result in a downward calculation in tax levels. granted to Talisman by Canadian securities regulatory authorities, which permits Talisman to provide disclosure in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.^[]

As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with US disclosure requirements. The information provided by Talisman may differ from the corresponding information prepared in accordance with Canadian disclosure standards under National Instrument 51-101 (NI 51-101). Information about the differences between the US requirements and the NI 51-101 requirements is set forth under the heading "Note Regarding Reserves Data and Other Oil and Gas Informatin in Talisman's Annual Information Form.

The exemption granted to Talisman also permits it to disclose internally evaluated reserves data.

The following definitions are used by the Company to describe its reserves.

"Proved" oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids, which geological ge·ol·o·gy
n. pl. ge·ol·o·gies
1. The scientific study of the origin, history, and structure of the earth.

2. The structure of a specific region of the earth's crust.

3. A book on geology. and engineering data demonstrate with reasonable certainty CERTAINTY, UNCERTAINTY, contracts. In matters of obligation, a thing is certain, when its essence, quality, and quantity, are described, distinctly set forth, Dig. 12, 1, 6. It is uncertain, when the description is not that of one individual object, but designates only the kind. Louis. to be recoverable in future years from known reservoirs under existing economic and operating conditions. Prices include consideration of changes in existing prices provided only by contractual arrangements, but not on escalations based upon future conditions.

Throughout this news release, Talisman makes reference to production volumes. Where not otherwise indicated, such production volumes are stated ona gross basis, which means they are stated prior to the deduction deduction, in logic, form of inference such that the conclusion must be true if the premises are true. For example, if we know that all men have two legs and that John is a man, it is then logical to deduce that John has two legs. of royalties and similar payments. In the US, net production volumes are reported after the deduction of these amounts.



Talisman Energy Inc.
Highlights


                                                  Three months ended
                                                       March 31
                                                  2004          2003
--------------------------------------------------------------------
Financial
(millions of Canadian dollars unless
 otherwise stated)
Cash flow                                          779           845
Net income                                         223           574
Exploration and development expenditures           614           455
Per common share (dollars)
  Cash flow (1)                                   6.09          6.52
  Net income (2)                                  1.70          4.38
--------------------------------------------------------------------
--------------------------------------------------------------------
Production
(daily average)
Oil and liquids (bbls/d)
  North America                                 55,241        58,878
  North Sea                                    123,245       108,759
  Southeast Asia                                35,602        21,360
  Algeria                                       12,998         2,902
  Sudan                                              -        52,882
  Synthetic oil                                  3,050         2,588
--------------------------------------------------------------------
Total oil and liquids                          230,136       247,369
--------------------------------------------------------------------
Natural gas (mmcf/d)
  North America                                    872           870
  North Sea                                        133           136
  Southeast Asia                                   231            90
--------------------------------------------------------------------
Total natural gas                                1,236         1,096
--------------------------------------------------------------------
Total mboe/d                                       436           430
--------------------------------------------------------------------
--------------------------------------------------------------------
Prices (3)
Oil and liquids ($/bbl)
  North America                                  37.05         42.74
  North Sea                                      41.55         46.14
  Southeast Asia                                 43.91         47.08
  Algeria                                        44.62         40.33
  Sudan                                              -         43.89
--------------------------------------------------------------------
Crude oil and natural gas liquids                41.00         44.85
  Synthetic oil                                  43.91         47.17
--------------------------------------------------------------------
Total oil and liquids                            41.04         44.87
--------------------------------------------------------------------
Natural gas ($/mcf)
  North America                                   6.42          8.03
  North Sea                                       5.63          4.93
  Southeast Asia                                  4.08          6.09
--------------------------------------------------------------------
Total natural gas                                 5.89          7.48
--------------------------------------------------------------------
Total ($/boe) (includes synthetic)               38.36         44.88
--------------------------------------------------------------------
--------------------------------------------------------------------

(1) Cash flow per common share is before deducting preferred security
    charges.
(2) Net income per common share is after deducting preferred
    security charges.
(3) Prices are before hedging.


Talisman Energy Inc.
Consolidated Balance Sheets


                                              March 31   December 31
(millions of Canadian dollars)                    2004          2003
--------------------------------------------------------------------
Assets                                                     (restated)
Current                                                      (note 1)
  Cash and cash equivalents                        310            98
  Accounts receivable                              746           760
  Inventories                                       97           100
  Prepaid expenses                                  12            17
--------------------------------------------------------------------
                                                 1,165           975
--------------------------------------------------------------------

Accrued employee pension benefit asset              63            63
Other assets                                        76            76
Goodwill                                           476           473
Property, plant and equipment                   10,510        10,193
--------------------------------------------------------------------
                                                11,125        10,805
--------------------------------------------------------------------
Total assets                                    12,290        11,780
--------------------------------------------------------------------
--------------------------------------------------------------------


Liabilities
Current
  Accounts payable and accrued liabilities       1,144         1,064
  Income and other taxes payable                   190           154
--------------------------------------------------------------------
                                                 1,334         1,218
--------------------------------------------------------------------

Deferred credits                                    93            57
Asset retirement obligation (note 1)             1,241         1,157
Long-term debt (note 4)                          2,351         2,203
Future income taxes                              2,175         2,127
--------------------------------------------------------------------
                                                 5,860         5,544
--------------------------------------------------------------------

Shareholders' equity
Preferred securities                               216           431
Common shares (note 2)                           2,727         2,725
Contributed surplus                                 73            73
Cumulative foreign currency translation            (57)         (114)
Retained earnings                                2,137         1,903
--------------------------------------------------------------------
                                                 5,096         5,018
--------------------------------------------------------------------
Total liabilities and shareholders' equity      12,290        11,780
--------------------------------------------------------------------
--------------------------------------------------------------------

See accompanying notes.
Interim statements are not independently audited.


Talisman Energy Inc.
Consolidated Statements of Income


Three months ended March 31
(millions of Canadian dollars)                    2004          2003
--------------------------------------------------------------------
                                                           (restated)
Revenue                                                      (note 1)
  Gross sales                                    1,463         1,643
  Less royalties                                   254           326
--------------------------------------------------------------------
  Net sales                                      1,209         1,317
  Other                                             22            23
--------------------------------------------------------------------
Total revenue                                    1,231         1,340
--------------------------------------------------------------------

Expenses
  Operating                                        296           294
  General and administrative                        39            39
  Depreciation, depletion and
   amortization                                    389           359
  Dry hole                                          79            72
  Exploration                                       44            49
  Interest on long-term debt                        38            40
  Stock-based compensation                          30             -
  Other                                              3            (7)
--------------------------------------------------------------------
Total expenses                                     918           846
--------------------------------------------------------------------
Gain on sale of Sudan operations (note 7)            -           296
--------------------------------------------------------------------
Income before taxes                                313           790
--------------------------------------------------------------------
Taxes
  Current income tax                                51            92
  Future income tax                                 15            91
  Petroleum revenue tax                             24            33
--------------------------------------------------------------------
                                                    90           216
--------------------------------------------------------------------
Net income                                         223           574
Preferred security charges, net of tax               5             6
--------------------------------------------------------------------
Net income available to common shareholders        218           568
--------------------------------------------------------------------
--------------------------------------------------------------------

Per common share (Canadian dollars)
  Net income                                      1.70          4.38
  Diluted net income                              1.67          4.33
--------------------------------------------------------------------
Average number of common shares
 outstanding (millions)                            128           130
Diluted number of common shares
 outstanding (millions)                            130           131
--------------------------------------------------------------------

See accompanying notes.
Interim statements are not independently audited.


Consolidated Statements of Retained Earnings


Three months ended March 31
(millions of Canadian dollars)                    2004          2003
--------------------------------------------------------------------
                                                           (restated)
                                                             (note 1)
Retained earnings, beginning of period (note 1)  1,903         1,141
Net income                                         223           574
Purchase of common shares                            -           (72)
Redemption of preferred securities, net of tax      16             -
Preferred security charges, net of tax              (5)           (6)
--------------------------------------------------------------------
Retained earnings, end of period                 2,137         1,637
--------------------------------------------------------------------
--------------------------------------------------------------------

See accompanying notes.
Interim statements are not independently audited.


Talisman Energy Inc.
Consolidated Statements of Cash Flows


Three months ended March 31
(millions of Canadian dollars)                    2004          2003
--------------------------------------------------------------------
Operating                                                  (restated)
                                                             (note 1)
Net income                                         223           574
Items not involving current cash flow (note 6)     512           222
Exploration                                         44            49
--------------------------------------------------------------------
Cash flow                                          779           845
Deferred gain on unwound hedges                      -            (3)
Changes in non-cash working capital                135           (76)
--------------------------------------------------------------------
Cash provided by operating activities              914           766
--------------------------------------------------------------------
Investing
Proceeds on sale of Sudan operations                 -         1,012
Capital expenditures
  Exploration, development and corporate          (621)         (461)
  Acquisitions                                     (21)         (384)
Proceeds of resource property dispositions           4            10
Investments                                          -            (1)
Changes in non-cash working capital                 (4)          (38)
--------------------------------------------------------------------
Cash (used in) provided by investing activities   (642)          138
--------------------------------------------------------------------
Financing
Long-term debt repaid                                -          (557)
Long-term debt issued                                -           292
Common shares issued (purchased)                     2          (116)
Preferred securities redeemed                     (197)            -
Preferred security charges                          (9)          (10)
Deferred credits and other                         150            18
Changes in non-cash working capital                 (3)            -
--------------------------------------------------------------------
Cash used in financing activities                  (57)         (373)
--------------------------------------------------------------------
Effect of translation on foreign currency cash      (3)            -
--------------------------------------------------------------------
Net increase in cash                               212           531
Cash and cash equivalents, beginning of period      98            27
--------------------------------------------------------------------
Cash and cash equivalents, end of period           310           558
--------------------------------------------------------------------
--------------------------------------------------------------------

See accompanying notes.
Interim statements are not independently audited.

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(tabular tab·u·lar
adj.
1. Having a plane surface; flat.

2. Organized as a table or list.

3. Calculated by means of a table.

tabular

resembling a table. amounts in millions of Canadian dollars ("$") except as noted)

The Interim Consolidated Financial Statements of Talisman Energy Inc. ("Talisman" or the "Company") have been prepared by management in accordance with Canadian generally accepted accounting principles. Certain information and disclosures normally required to be included in notes to annual consolidated financial statements have been condensed con·dense
v. con·densed, con·dens·ing, con·dens·es

v.tr.
1. To reduce the volume or compass of.

2. To make more concise; abridge or shorten.

3. Physics
a. or omitted. The Interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto there·to
adv.
1. To that, this, or it.

2. Archaic In addition to that; furthermore.

thereto
Adverb

Formal

1. to that or it

2. in Talisman's Annual Report for the year ended December 31, 2003.

1. Significant Accounting Policies

The Interim Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation Computation is a general term for any type of information processing that can be represented mathematically. This includes phenomena ranging from simple calculations to human thinking. as the Consolidated Financial Statements for the year ended December 31, 2003 except for the following:

Effective January 1, 2004 the Company retroactively ret·ro·ac·tive
adj.
Influencing or applying to a period prior to enactment: a retroactive pay increase.

[French rétroactif, from Latin adopted the Canadian Institute of Chartered Accountants The Canadian Institute of Chartered Accountants (CICA) is the umbrella body for the Chartered Accountant profession in Canada and Bermuda. Membership of the CICA totals 70,000 Chartered Accountants and 8,500 students. ("CICA CICA Competition In Contracting Act of 1984 (USA)
CICA Canadian Institute of Chartered Accountants
CICA Competition In Contracting Act
CICA Criminal Injuries Compensation Authority (UK) ") new standard for accounting for asset retirement obligations (ARO). This standard requires that the fair value of the statutory, contractual or legal obligation associated with the retirement and reclamation Reclamation

A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. of tangible Possessing a physical form that can be touched or felt.

Tangible refers to that which can be seen, weighed, measured, or apprehended by the senses. A tangible object is something that is real and substantial. An automobile is an example of tangible Personal Property. long-lived long-lived
adj.
1. Having a long life: a long-lived aunt.

2. Lasting a long time; persistent: a long-lived rumor.

3. assets be recorded when the related assets are put into use, with a corresponding increase to the carrying amount of the related assets. This corresponding increase to capitalized Capitalized

Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. costs is amortized to earnings on a basis consistent with depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able , and amortization of the underlying assets. Subsequent changes in the estimated fair value of the asset retirement obligations are capitalized and amortized over the remaining useful life of the underlying asset.

The asset retirement obligation liabilities are carried on the balance sheet at their discounted present value and are accreted over time for the change in their present value, with this accretion The act of adding portions of soil to the soil already in possession of the owner by gradual deposition through the operation of natural causes.

The growth of the value of a particular item given to a person as a specific bequest under the provisions of a will between the charge included in depreciation, depletion and amortization.

The adjustment required to the December 31, 2003 balance sheet to implement this change in accounting is as follows:



                      As previously reported Adjustments As restated
--------------------------------------------------------------------
Property, plant and
 equipment                             9,778         415      10,193
Provision for future
 site restoration/ARO                    840         317       1,157
Future income taxes                    2,088          39       2,127
Retained earnings                      1,844          59       1,903
--------------------------------------------------------------------


The adjustment to the income statement for the 3 months ended
March 31, 2003 is as follows:


                      As previously reported Adjustments As restated
--------------------------------------------------------------------
Depletion,
 depreciation and
 amortization                           361           (2)        359
Future income tax expense                90            1          91
--------------------------------------------------------------------
Net income                              573            1         574
--------------------------------------------------------------------

--------------------------------------------------------------------
Per common share
 (Canadian dollars)
--------------------------------------------------------------------
 Net income                            4.37         0.01        4.38
--------------------------------------------------------------------
 Diluted net income                    4.32         0.01        4.33
--------------------------------------------------------------------

The change in accounting for ARO did not significantly affect earnings for the three months ended March 31, 2004. Total accretion in the quarter ended March 31, 2004 of $16 million (2003 - $15 million) has been included in depreciation, depletion and amortization. At March 31, 2004 the estimated total undiscounted asset retirement obligation was $2.0 billion. These obligations will be settled based on the useful lives of the underlying assets, the majority of which are expected to be settled within the next 25 years. The asset retirement obligation has been discounted using a credit adjusted risk free rate of 5.5 percent. No amount of market risk premium has been included in the estimate of the Company's ARO liability as management does not believe there to be sufficient evidence in the oil and gas industry to estimate any such market premium.

The CICA has issued a new accounting guideline on Hedging Relationships (AcG 13), which is effective for 2004. This guideline, in addition to supplementing and interpreting existing hedging requirements under Canadian GAAP, establishes certain other conditions required before hedge accounting may be applied. Effective January 1, 2004, the Company's US dollar cross currency swap Currency Swap

A swap that involves the exchange of principal and interest in one currency for the same in another currency.

Notes:
Currency swaps were originally done to get around the problem of exchange controls. contracts and interest rate swap contracts are no longer designated as hedges of the Eurobond. These contracts were subsequently terminated in 2004 for proceeds of $138 million. As a result of these contracts no longer hedging the Eurobond debt, on January 1, 2004, the Company recorded a deferred gain of $17 million and an increase to long-term debt of $132 million, based on the March 31, 2004 exchange rate. The unrealized gain Unrealized Gain

A profit that results from holding on to an asset rather than cashing it in and using the funds.

Notes:
Let's say you own a stock that has doubled, but you haven't sold it yet. This is said to be an unrealized gain. of $17 million will be deferred and amortized over the period to 2009, the original term of the contracts. The termination of these contracts does not accelerate the recognition of the deferred gain into income. This accounting guideline has not impacted the Company's accounting for its commodity price derivative contracts that have been designated as hedges of anticipated future commodity sales.

The Company's long-term debts denominated in UK pound sterling and Canadian dollars have been designated as hedges of the Company's net investments in the UK and Canadian self-sustaining operations. Unrealized foreign exchange gains and losses resulting from the translation of these debts are deferred and included in a separate component of shareholders' equity described as cumulative foreign currency translation.

2. Share Capital

Talisman's authorized au·thor·ize
tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es
1. To grant authority or power to.

2. To give permission for; sanction: share capital consists of an unlimited number of common shares without nominal Trifling, token, or slight; not real or substantial; in name only.

Nominal capital, for example, refers to extremely small or negligible funds, the use of which in a particular business is incidental.

NOMINAL. Relating to a name. or par value and first and second preferred second preferred

A class of preferred stock that has a subordinate claim to dividends and assets relative to another class of preferred stock of the same issuer. Compare prior preferred. shares. No preferred shares Preferred shares

Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. have been issued.



Continuity of common shares (year to date)                2004
--------------------------------------------------------------------
                                                  Shares      Amount
--------------------------------------------------------------------
Balance at January 1,                        127,998,728      $2,725
Issued upon exercise of stock options             33,350           2
--------------------------------------------------------------------
Balance at March 31,                         128,032,078       2,727
--------------------------------------------------------------------
--------------------------------------------------------------------

Pursuant to a normal course issuer bid renewed in March 2004, Talisman may repurchase re·pur·chase
tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es
To buy (something) again.

n.
The act of buying something that one previously sold or owned.

Noun 1. up to 6,401,603 common shares representing 5% of the outstanding common shares of the Company at the time the normal course issuer bid was renewed. The total remaining shares that may be repurchased under the existing normal course issuer bid is 6,401,603.

In February of this year, the Company redeemed one half of its outstanding Junior Subordinated Debentures. The redemption was funded from current cash flow, with the $16 million (net of tax) difference between the carrying value and the redemption cost credited to retained earnings. In March, 2004 the Company gave notice of its intention to exercise its right to redeem the remaining outstanding Junior Subordinated Debentures as of June 15, 2004.



3. Stock Options

Continuity of stock options (year to date)                2004
--------------------------------------------------------------------
                                                  Number     Average
                                                      Of    Exercise
                                                 Options       Price
--------------------------------------------------------------------
Outstanding at January 1                       7,866,532       52.64
 Granted during the period                     1,167,435       76.73
 Exercised for common shares                      33,350       29.47
 Exercised for cash payment                      734,427       42.15
 Expired/forfeited                                14,895       59.50
--------------------------------------------------------------------
Outstanding at March 31                        8,251,295       57.06
--------------------------------------------------------------------
--------------------------------------------------------------------

Exercisable at March 31                        3,713,988       47.34
--------------------------------------------------------------------
--------------------------------------------------------------------

As indicated in note 7 of the December 31, 2003 Consolidated Financial Statements, the Company began recording compensation expense in the second quarter of 2003 for stock options and cash units outstanding. Prior to the second quarter of 2003, no amount of compensation expense had been recognized in the financial statements for stock options granted to employees and directors. The following table provides pro forma measures of net income and net income per common share had stock options been recognized as compensation expense during the first quarter 2003 based on the estimated fair value of the options on the grant date.



                                  Three months ended  March 31, 2003
--------------------------------------------------------------------

                                      As Reported(1)     Pro Forma(2)
--------------------------------------------------------------------
Net income ($millions)                          574              566
Per common share ($/share)
 Basic                                         4.38             4.32
 Diluted                                       4.33             4.27
--------------------------------------------------------------------
--------------------------------------------------------------------
(1) Restated as disclosed in note 1
(2) Pro forma net income and net income per common share had stock
    options been recognized as compensation expense based on the
    estimated fair value of the options on the grant date.

All options issued by the Company permit the holder to purchase one common share of the Company at the stated exercise price or, effective July July: see month. 1, 2003, to receive a cash payment equal to the appreciated value of the stock option.



4. Long-Term Debt

                                               March 31, December 31,
                                                   2004         2003
--------------------------------------------------------------------
Debentures and Notes (unsecured)
 US$ denominated (US$850 million)                 1,114        1,098
 Canadian $ denominated                             634          634
 Pounds Sterling denominated
  (Pounds Sterling 250 million)(1)                  603          471
--------------------------------------------------------------------
--------------------------------------------------------------------
                                                $ 2,351      $ 2,203
--------------------------------------------------------------------
--------------------------------------------------------------------
(1) Prior to January 1, 2004 the Pounds Sterling 250 million Eurobond
    was effectively swapped into US$364 million indebtedness.
    Effective January 1, 2004 this debt is no longer swapped into US
    dollars and is now revalued based on the Canadian dollar to Pound
    Sterling exchange rates.

5. Commodity Based Sales Contracts Sales Contract

Contract between a seller and buyer for the sale of goods, services, or both.

The Company's outstanding commodity price derivative contracts have been designated as hedges of the Company's anticipated future commodity sales. The following tables summarize sum·ma·rize
intr. & tr.v. sum·ma·rized, sum·ma·riz·ing, sum·ma·riz·es
To make a summary or make a summary of.

sum commodity price derivative contracts and fixed price sales contracts outstanding at March 31, 2004:



a) Commodity price derivative contracts

Natural gas
-----------------------------------------
Fixed price swaps          Remainder 2004
-----------------------------------------
(NYMEX gas index)
Volumes (mcf/d)                    45,150
Price (US$/mcf)                      5.69


Crude oil contracts
--------------------------------------------------------------------
Fixed price     Remainder   2005  Two-way                  Remainder
  swaps              2004         collars                       2004
--------------------------------------------------------------------
(Brent oil index)                (Brent oil index)
Volumes (bbls/d)   11,000      -  Volumes (bbls/d)            31,000
Price (US$/bbl)     26.08      -  Ceiling price (US$/bbl)      26.61
                                  Floor price (US$/bbl)        23.56
(WTI/NYMEX oil index)            (WTI/NYMEX oil index)
Volumes (bbls/d)   12,000  6,000  Volumes (bbls/d)            25,000
Price (US$/bbl)     29.20  26.97  Ceiling price (US$/bbl)      28.90
                                  Floor price (US$/bbl)        25.08


b) Physical contracts (North America)

Fixed price sales          Remainder 2004        2005      2006-2007
--------------------------------------------------------------------
Volumes (mcf/d)                    43,200      14,650         14,650
Weighted average price ($/mcf)       3.88        3.29           3.29
--------------------------------------------------------------------
--------------------------------------------------------------------

Three-way collars (NIT)         Remainder 2004
----------------------------------------------
Volumes (mcf/d)                         14,300
Ceiling ($/mcf)                           3.31
Floor ($/mcf)                             3.17
Sold put strike ($/mcf)                   2.52
----------------------------------------------
----------------------------------------------

The three-way collars are similar to two-way commodity collars with the call and put strike prices being equivalent to the ceiling and floor prices, except that should the NIT A measurement of luminance. One nit is equal to one candela per square meter (1cd/m2). Ten thousand nits are equal to one stilb. See candela. (Nova Inventory Transfer) index fall below the sold put strike price, Talisman will receive NIT plus the difference between the put strike and sold put strike prices.



6. Selected Cash Flow Information

Three months ended March 31,                           2004     2003
--------------------------------------------------------------------
Net income                                              223      574
--------------------------------------------------------------------
Items not involving current cash flow
 Depreciation, depletion and amortization               389      359
 Dry hole                                                79       72
 Net loss (gain) on asset disposals                       3       (4)
 Gain on sale of Sudan operations                         -     (296)
 Stock-based compensation                                 3        -
 Future taxes and deferred petroleum revenue tax         23       87
 Other                                                   15        4
--------------------------------------------------------------------
                                                        512      222
--------------------------------------------------------------------
Exploration                                              44       49
--------------------------------------------------------------------
Cash flow                                               779      845
--------------------------------------------------------------------

7. Sale of Sudan Operations

On March 12, 2003, the Company completed the sale of its 25% indirectly held interest in the Greater Nile Oil Project in Sudan. Total gross proceeds were $1.13 billion (US$771 million), including interest and cash received by Talisman during the interim period between September September: see month. 1, 2002 and closing on March 12, 2003. The gain on sale is as follows:



Gross proceeds on sale of Sudan operations (US$771 million)  $ 1,135
Less interim adjustments                                        (123)
---------------------------------------------------------------------
                                                               1,012

---------------------------------------------------------------------
  Property, plant and equipment                                  687
  Working capital and other assets                                72
  Future income tax liability                                    (59)
---------------------------------------------------------------------
Net carrying value at March 12, 2003                             700
Closing costs                                                     16
---------------------------------------------------------------------
Gain on disposal                                                $296


8. Segmented Information

Three months ended March 31

                           North           North         Southeast
                        America (1)       Sea (2)         Asia (3)
                       ---------------------------------------------
(millions of
 Canadian dollars)     2004    2003    2004    2003    2004     2003
--------------------------------------------------------------------
Revenue                    restated        restated         restated
Gross sales             688     818     494     475     228      132
Royalties               143     181       9       4      75       39
--------------------------------------------------------------------
Net sales               545     637     485     471     153       93
Other                    17      13       5      10       -        -
--------------------------------------------------------------------
Total revenue           562     650     490     481     153       93
--------------------------------------------------------------------
Segmented expenses
Operating                97      99     173     154      22       21
DD&A                    176     167     162     152      44       19
Dry hole                 31      25      25      47       1        -
Exploration              23      23       6       3       2        4
Other                   (12)    (13)      2       1       1        1
--------------------------------------------------------------------
Total segmented
 expenses               315     301     368     357      70       45
--------------------------------------------------------------------
Segmented income
 before taxes           247     349     122     124      83       48
--------------------------------------------------------------------
Non-segmented
 expenses
General and
 administrative
Interest on
 long-term debt
Gain on sale of
 Sudan operations
Stock-based
 compensation
Currency translation
--------------------------------------------------------------------
Total non-segmented
 expenses
--------------------------------------------------------------------
Income before taxes
--------------------------------------------------------------------
--------------------------------------------------------------------
Capital expenditures
Exploration             134     135      40      15       9       15
Development             243     116      66      66      44       65
Midstream                 1       7
--------------------------------------------------------------------
Exploration and
 development            378     258     106      81      53       80
Property
 acquisitions
Proceeds on
 dispositions
Other non-segmented
--------------------------------------------------------------------
Net capital
 expenditures (5)
--------------------------------------------------------------------
Property, plant and
 equipment            5,929   5,767   3,077   2,995   1,104    1,084
Goodwill                292     291      75      74     109      108
Other                   606     403     317     386     243      217
--------------------------------------------------------------------
Segmented assets      6,827   6,461   3,469   3,455   1,456    1,409
Non-segmented assets
--------------------------------------------------------------------
Total assets (6)
--------------------------------------------------------------------
--------------------------------------------------------------------


                                  Sudan
                       Algeria     (4)       Other          Total
--------------------------------------------------------------------
(millions of
 Canadian dollars)   2004   2003   2003   2004   2003   2004    2003
--------------------------------------------------------------------
Revenue
Gross sales            53      9    209      -      -  1,463   1,643
Royalties              27      5     97      -      -    254     326
--------------------------------------------------------------------
Net sales              26      4    112      -      -  1,209   1,317
Other                   -      -     (1)     -      1     22      23
--------------------------------------------------------------------
Total revenue          26      4    111      -      1  1,231   1,340
--------------------------------------------------------------------
Segmented expenses
Operating               4      2     18      -      -    296     294
DD&A                    7      2     19      -      -    389     359
Dry hole                -      -      -     22      -     79      72
Exploration             -      -      5     13     14     44      49
Other                   -      -      -      -      -     (9)    (11)
--------------------------------------------------------------------
Total segmented
 expenses              11      4     42     35     14    799     763
--------------------------------------------------------------------
Segmented income
 before taxes          15      -     69    (35)   (13)   432     577
--------------------------------------------------------------------
Non-segmented
 expenses
General and
 administrative                                           39      39
Interest on
 long-term debt                                           38      40
Gain on sale of
 Sudan operations                                          -    (296)
Stock-based
 compensation                                             30       -
Currency translation                                      12       4
--------------------------------------------------------------------
Total non-segmented
 expenses                                                119    (213)
--------------------------------------------------------------------
Income before taxes                                      313     790
--------------------------------------------------------------------
--------------------------------------------------------------------
Capital expenditures
Exploration             -     (3)     7     39     14    222     183
Development             3     18     (5)    35      5    391     265
Midstream                                                  1       7
--------------------------------------------------------------------
Exploration and
 development            3     15      2     74     19    614     455
Property
 acquisitions                                             26     384
Proceeds on
 dispositions                                            (10)    (10)
Other non-segmented                                        8       6
--------------------------------------------------------------------
Net capital
 expenditures (5)                                        638     835
--------------------------------------------------------------------
--------------------------------------------------------------------
Property, plant and
 equipment            214    202      -    186    145 10,510  10,193
Goodwill                -      -      -      -      -    476     473
Other                  42     27      -     33     18  1,241   1,051
--------------------------------------------------------------------
Segmented assets      256    229      -    219    163 12,227  11,717
Non-segmented assets                                      63      63
--------------------------------------------------------------------
Total assets (6)                                      12,290  11,780
--------------------------------------------------------------------
--------------------------------------------------------------------


(1) North America                                 2004          2003
--------------------------------------------------------------------
Revenues                             Canada        530           597
                                         US         32            53
--------------------------------------------------------------------
                                                   562           650
--------------------------------------------------------------------
Property, plant and
 equipment (6)                       Canada      5,502         5,356
                                         US        427           411
--------------------------------------------------------------------
                                                 5,929         5,767
--------------------------------------------------------------------
--------------------------------------------------------------------


(2) North Sea                                     2004          2003
--------------------------------------------------------------------
Revenues                     United Kingdom        456           471
                                Netherlands          9            10
                                     Norway         25             -
--------------------------------------------------------------------
                                                   490           481
--------------------------------------------------------------------
Property, plant and
 equipment (6)               United Kingdom      2,853         2,777
                                Netherlands         43            40
                                     Norway        181           178
--------------------------------------------------------------------
                                                 3,077         2,995
--------------------------------------------------------------------
--------------------------------------------------------------------


(3) Southeast Asia                                2004          2003
--------------------------------------------------------------------
Revenues                          Indonesia         76            75
                                   Malaysia         73            12
                                    Vietnam          4             6
--------------------------------------------------------------------
                                                   153            93
--------------------------------------------------------------------
Property, plant and
 equipment (6)                    Indonesia        383           384
                                   Malaysia        697           677
                                    Vietnam         24            23
--------------------------------------------------------------------
                                                 1,104         1,084
--------------------------------------------------------------------

(4) Sudan operations were sold effective March 12, 2003.
(5) Excluding corporate acquisitions.
(6) Current year represents balances as at March 31,
    prior year represents balances as at December 31.



Talisman Energy Inc.
Product Netbacks

                                                  Three months ended
                                                        March 31
(C$ - production before royalties)                2004          2003
--------------------------------------------------------------------
North              Oil and liquids ($/bbl)
America             Sales price                  37.05         42.74
                    Hedging (gain)                3.07          4.38
                    Royalties                     7.57          9.27
                    Operating costs               5.90          6.27
                   -------------------------------------------------
                                                 20.51         22.82
                   -------------------------------------------------
                   Natural gas ($/mcf)
                    Sales price                   6.42          8.03
                    Hedging (gain)                0.06          0.32
                    Royalties                     1.32          1.69
                    Operating costs               0.77          0.76
                   -------------------------------------------------
                                                  4.27          5.26
--------------------------------------------------------------------
--------------------------------------------------------------------
North Sea          Oil and liquids ($/bbl)
                    Sales price                  41.55         46.14
                    Hedging (gain)                3.55          3.74
                    Royalties                     0.13          0.09
                    Operating costs              13.97         14.04
                   -------------------------------------------------
                                                 23.90         28.27
                   -------------------------------------------------
                   Natural gas ($/mcf)
                    Sales price                   5.63          4.93
                    Hedging (gain)                   -             -
                    Royalties                     0.66          0.25
                    Operating costs               0.43          0.58
                   -------------------------------------------------
                                                  4.54          4.10
--------------------------------------------------------------------
--------------------------------------------------------------------
Southeast Asia (1) Oil and liquids ($/bbl)
                    Sales price                  43.91         47.08
                    Hedging (gain)                   -          4.30
                    Royalties                    17.82         18.71
                    Operating costs               4.84          8.37
                   -------------------------------------------------
                                                 21.25         15.70
                   -------------------------------------------------
                   Natural gas ($/mcf)
                    Sales price                   4.08          6.09
                    Hedging (gain)                   -             -
                    Royalties                     0.81          0.34
                    Operating costs               0.29          0.64
                   -------------------------------------------------
                                                  2.98          5.11
--------------------------------------------------------------------
--------------------------------------------------------------------
Algeria            Oil ($/bbl)
                    Sales price                  44.62         40.33
                    Hedging (gain)                   -          4.40
                    Royalties                    22.59         20.16
                    Operating costs               3.51          6.23
                   -------------------------------------------------
                                                 18.52          9.54
--------------------------------------------------------------------
--------------------------------------------------------------------
Sudan              Oil ($/bbl)
                    Sales price                      -         43.89
                    Hedging (gain)                   -             -
                    Royalties                        -         20.34
                    Operating costs                  -          3.73
                   -------------------------------------------------
                                                     -         19.82
--------------------------------------------------------------------
--------------------------------------------------------------------
Total Company      Oil and liquids ($/bbl)
                    Sales price                  41.00         44.85
                    Hedging (gain)                2.67          3.14
                    Royalties                     6.00          8.53
                    Operating costs               9.98          9.36
                   -------------------------------------------------
                                                 22.35         23.82
                   -------------------------------------------------
                   Natural gas ($/mcf)
                    Sales price                   5.89          7.48
                    Hedging (gain)                0.04          0.25
                    Royalties                     1.15          1.40
                    Operating costs               0.64          0.72
                   -------------------------------------------------
                                                  4.06          5.11
--------------------------------------------------------------------

(1) Includes operations in Indonesia and Malaysia/Vietnam.
Netbacks do not include synthetic oil or pipeline operations.


Talisman Energy Inc.
Additional Information for US Readers
Production net of royalties


                                                  Three months ended
                                                        March 31
                                                  2004          2003
--------------------------------------------------------------------

Oil and liquids (bbls/d)
 North America                                  43,954        46,103
 North Sea                                     122,868       108,553
 Southeast Asia (1)                             21,155        12,873
 Algeria                                         6,417         1,451
 Sudan                                               -        28,379
 Synthetic oil (Canada)                          2,900         2,458
--------------------------------------------------------------------
Total oil and liquids                          197,294       199,817
--------------------------------------------------------------------

Natural gas (mmcf/d)
 North America                                     694           687
 North Sea                                         117           129
 Southeast Asia (1)                                185            85
--------------------------------------------------------------------
Total natural gas                                  996           901
--------------------------------------------------------------------

Total mboe/d                                       363           350
--------------------------------------------------------------------
--------------------------------------------------------------------

(1) Includes operations in Indonesia and Malaysia/Vietnam.


Talisman Energy Inc.
Additional Information for US Readers
Product Netbacks

                                                  Three months ended
                                                        March 31
(US$ - production net of royalties)               2004          2003
--------------------------------------------------------------------
North              Oil and liquids (US$/bbl)
America             Sales price                  28.11         28.31
                    Hedging (gain)                2.90          3.72
                    Operating costs               5.62          5.32
                   -------------------------------------------------
                                                 19.59         19.27
                   -------------------------------------------------
                   Natural gas (US$/mcf)
                    Sales price                   4.87          5.33
                    Hedging (gain)                0.06          0.27
                    Operating costs               0.73          0.64
                   -------------------------------------------------
                                                  4.08          4.42
--------------------------------------------------------------------
--------------------------------------------------------------------
North Sea          Oil and liquids (US$/bbl)
                    Sales price                  31.52         30.53
                    Hedging (gain)                2.68          2.49
                    Operating costs              10.63          9.31
                   -------------------------------------------------
                                                 18.21         18.73
                   -------------------------------------------------
                   Natural gas (US$/mcf)
                    Sales price                   4.28          3.26
                    Hedging (gain)                   -             -
                    Operating costs               0.37          0.40
                   -------------------------------------------------
                                                  3.91          2.86
--------------------------------------------------------------------
--------------------------------------------------------------------
Southeast Asia (1) Oil and liquids (US$/bbl)
                    Sales price                  33.32         31.15
                    Hedging (gain)                   -          4.74
                    Operating costs               6.17          9.23
                   -------------------------------------------------
                                                 27.15         17.18
                   -------------------------------------------------
                   Natural gas (US$/mcf)
                    Sales price                   3.09          4.04
                    Hedging (gain)                   -             -
                    Operating costs               0.27          0.45
                   -------------------------------------------------
                                                  2.82          3.59
--------------------------------------------------------------------
--------------------------------------------------------------------
Algeria            Oil (US$/bbl)
                    Sales price                  33.87         26.84
                    Hedging (gain)                   -          5.88
                    Operating costs               5.42          8.26
                   -------------------------------------------------
                                                 28.45         12.70
--------------------------------------------------------------------
--------------------------------------------------------------------
Sudan              Oil (US$/bbl)
                    Sales price                      -         28.91
                    Hedging (gain)                   -             -
                    Operating costs                  -          4.60
                   -------------------------------------------------
                                                     -         24.31
--------------------------------------------------------------------
--------------------------------------------------------------------
Total Company      Oil and liquids (US$/bbl)
                    Sales price                  31.11         29.66
                    Hedging (gain)                2.35          2.59
                    Operating costs               8.84          7.68
                   -------------------------------------------------
                                                 19.92         19.39
                   -------------------------------------------------
                   Natural gas (US$/mcf)
                    Sales price                   4.48          4.97
                    Hedging (gain)                0.04          0.21
                    Operating costs               0.60          0.59
                   -------------------------------------------------
                                                  3.84          4.17
--------------------------------------------------------------------
--------------------------------------------------------------------

(1) Includes operations in Indonesia and Malaysia/Vietnam.
Netbacks do not include synthetic oil or pipeline operations.


Talisman Energy Inc.
Consolidated Financial Ratios
March 31, 2004

The following financial ratios are provided in connection with the
Company's shelf prospectus, filed with Canadian and US securities
regulatory authorities, and are based on the company's consolidated
financial statements that are prepared in accordance with accounting
principles generally accepted in Canada.


The asset coverage ratios are calculated as at March 31, 2004.
The interest coverage ratios are for the 12 month period then ended.

                                             Preferred     Preferred
                                            Securities    Securities
                                          as equity (5)   as debt (6)
--------------------------------------------------------------------
Interest coverage (times)
 Income (1)(restated, see note 1 to
  the interim Consolidated Financial
  Statements)                                     5.54          4.50
 Cash flow (2)                                   19.23         15.60
Asset coverage (times)
 Before deduction of future income taxes
  and deferred credits (3)                        4.66          3.99
 After deduction of future income taxes
  and deferred credits (4)                        3.17          2.71
--------------------------------------------------------------------

(1)Net income plus income taxes and interest expense; divided by the
   sum of interest expense and capitalized interest.
(2)Cash flow plus current income taxes and interest expense; divided
   by the sum of interest expense and capitalized interest.
(3)Total assets minus current liabilities; divided by long-term debt.
(4)Total assets minus current liabilities and long-term liabilities
   excluding long-term debt; divided by long-term debt.
(5)The Company's preferred securities are classified as equity and
   the related charges have been excluded from interest expense.
(6)Reflects adjusted ratios, had the preferred securities been
   treated as debt and the related charges been included in interest
   expense.

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Publication:	Business Wire
Geographic Code:	1CANA
Date:	May 4, 2004
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