FOR: TALISMAN ENERGY INC.
Talisman Energy Generates $4.7 Billion in Cash Flow in 2005; 516,000 boe/d Fourth Quarter Production; 189% Proved Reserves Replacement
MAR 1, 2006 - 06:00 ET
CALGARY, ALBERTA--(CCNMatthews - March 1, 2006) - Talisman Energy Inc. (TSX:TLM) (NYSE:TLM) released its 2005 consolidated financial and operating results today. The Company set new quarterly and annual records for production, cash flow and earnings from operations.
Cash flow(1) increased 60% to $4,672 million ($12.69/share), compared to $2,916 million ($7.61/share) a year ago. The Company generated $1,468 million ($4.01/share) in cash flow during the fourth quarter, more than double the $679 million ($1.78/share) a year earlier.
Net income was $1,561 million ($4.24/share), an increase of 139% over the $654 million ($1.71/share) in 2004. Net income during the fourth quarter was $533 million ($1.45/share), an increase of 340% versus $121 million ($0.32/share) a year ago.
Earnings from operations(1) were $2,058 million ($5.59/share), compared to $764 million ($1.99/share) in 2004. During the fourth quarter of 2005, Talisman generated $621 million ($1.70/share) in earnings from operations. This was a 322% increase over the $147 million ($0.39/share) for the comparable period a year earlier.
Talisman increased its annual production by 7% to 470,000 boe/d. Oil and liquids production was up 9% to 249,984 bbls/d. The 21,550 bbls/d increase came predominantly from the North Sea (up 10,855 bbls/d) and the first year of production from Trinidad and Tobago, which averaged 10,111 bbls/d. Talisman increased natural gas production by 5% to 1.3 bcf/d. The Company grew its North American natural gas volumes by 3% to 915 mmcf/d and natural gas volumes in Southeast Asia by 9% to 284 mmcf/d.
Production in the fourth quarter averaged 516,000 boe/d, an increase of 14% over the same period in 2004. On November 18, 2005, the Company effectively acquired control of Paladin Resources plc. Paladin contributed an average of 5,650 boe/d for the year based on production from that date.
(1) The terms "cash flow" and "earnings from operations" are non-GAAP measures. Please see advisories elsewhere in this news release.
"2005 was a great year," said Dr. Jim Buckee, President and Chief Executive Officer. "We had a very strong fourth quarter, with production growth of 14%, minor hedges and cash flow per share up 125% over 2004. For the full year, we grew production per share by 11% and replaced 189% of production with high quality reserves. This includes replacement of 162% of North Sea liquids production and 117% of North America natural gas production through discoveries, additions and revisions. Talisman's momentum will continue in 2006 and beyond from a number of significant developments already in progress.
"We have continued to grow our North American gas volumes at a time when the industry is struggling to maintain production levels. Gas volumes in the fourth quarter were up 2% over the same period a year ago, averaging 907 mmcf/d. We estimate that we currently have about 100 mmcf/d of gas awaiting tie-in or completion of infrastructure, with a number of projects underway to bring this gas to market.
"North Sea liquids production was 25% above the fourth quarter of 2004. We had successful development programs in the Clyde, Claymore, Tartan, Gyda and Varg areas. In total, we drilled 28 successful oil and gas wells in the North Sea last year. The acquired Paladin assets were producing about 45,000 boe/d (worldwide) in December. I think shareholders will be very pleased with the Paladin acquisition as we continue to develop the opportunity set.
"Production in Southeast Asia was up 18% in the fourth quarter with strong demand for Corridor gas in both Indonesia and Singapore. Production volumes in the quarter also benefited from the South Angsi field in Malaysia, commissioned in August, which was producing over 17,000 bbls/d net to Talisman at year end. Elsewhere, production from the Greater Angostura Project in Trinidad and Tobago started in January 2005 and contributed over 10,000 bbls/d for the year.
"I am feeling very sanguine about the future. Our capital spending program is $4.4 billion this year, of which approximately half is directed at drilling. Talisman has no shortage of economic drilling prospects. North America accounts for approximately 45% of our total capital program. Although there have been industry-wide cost pressures, we continue to take steps to mitigate them. All of our projects are economic and we have the rigs needed to carry out our programs.
"We have a $1.6 billion capital program in the North Sea, with the newly acquired Paladin properties accounting for about one-quarter of our North Sea spending this year. We have completed about 50% of the 45,000 bbls/d Tweedsmuir Project, with first production expected at the end of the first quarter of next year. Expansion of the Corridor gas project is underway in Indonesia, with first sales to West Java also commencing in the first quarter of 2007. In Malaysia/Vietnam, the Northern Fields development is underway, which will add incremental volumes in 2008. We expect to produce between 515,000-545,000 boe/d in 2006 prior to planned asset sales and deliver top line growth of about 10% annually through at least 2008.
"Our international exploration program saw discoveries in the North Sea, Malaysia/Vietnam, Peru and Tunisia in 2005. We have a very exciting program in 2006, with 16 high impact wells planned. In Alaska, the first well of the planned two well program spud in February and is currently drilling ahead. Our first onshore exploration well in Trinidad spud at the end of September 2005 and is expected to be completed in early March, with further drilling planned for 2006. We are evaluating options in Peru, including additional drilling, to follow on from the successful Situche Central well. A further well is also planned in Qatar in the fourth quarter. We also have continuous exploration drilling in both the UK and Norwegian sectors of the North Sea. The Paladin acquisition brought acreage with many additional drilling locations and exploration upside.
"Oil and gas prices were up approximately 40% last year; I continue to believe that we remain in a higher oil price environment. Even with WTI prices averaging US$56.70/bbl, oil demand increased again last year, reaching 83 mmbbls/d. The industry needs to add an estimated 4-6 mmbbls/d of new production capacity every year to offset declines from existing fields and political unrest in many petroleum exporting countries has also kept upward pressure on oil prices. Higher prices are required to ration demand and bring on new supplies.
Seven Consecutive Years of Record Cash Flow
Cash flow in 2005 was $4,672 million on gross sales of $9,554 million.
Three months ended Year ended
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December 31 2005 2004 % 2005 2004 %
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Cash flow ($mm)(1) 1,468 679 116 4,672 2,916 60
Cash flow ($/share)(1) 4.01 1.78 125 12.69 7.61 67
Net income ($mm) 533 121 340 1,561 654 139
Net income ($/share) 1.45 0.32 358 4.24 1.71 148
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Long term debt
($mm at year end) 4,263 2,457
Shares outstanding
(mm at year end) 366 375
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(1) non-GAAP measure
Cash flow was $1.8 billion above 2004 levels. Significant increases came from higher prices ($3,023 million), increased volumes ($377 million) and lower hedging losses ($403 million less than last year). These gains were offset by higher royalties and taxes ($1,076 million), the impact of a stronger Canadian dollar on realized prices ($720 million) and increased operating costs ($261 million).
Net income for the year totaled $1,561 million, approximately $900 million higher than last year. Increased cash flow was offset by non-cash items, including increased future tax ($322 million), depreciation, depletion and amortization ($193 million) and stock based compensation ($391 million) expense.
The Company no longer calculates a diluted cash flow per share amount. Since the introduction in mid-2003 of a cash payment feature attached to the outstanding stock options, approximately 97% of options have been exercised using the cash payment feature. Since the diluted per share calculation assumes all options will be exercised for shares, with no adjustment to account for the fact that actual options exercised for cash have resulted in a reduction of cash flow, management feels that the diluted cash flow per share figure is not relevant as the underlying assumptions are not a realistic view of expected results.
Talisman uses the successful efforts accounting method. The differences between the full cost and successful efforts methods of accounting make it difficult to compare net income between companies. In periods of growth and high exploration spending, it is likely that net income determined using the full cost method would be higher than net income determined using the more conservative successful efforts method.
Liquidity and Capital Resources
Talisman's long-term debt at year end was $4.3 billion, up from $2.5 billion at the end of last year. During 2005, the Company generated $4.9 billion of cash provided by operating activities and spent $3.2 billion on exploration and development and a net $3.1 billion on acquisitions. The Company repurchased 9,089,100 common shares under its normal course issuer bid (NCIB) during 2005, for a total of $355 million ($39.01/share).
Two common share dividends were paid in 2005 for a total of $125 million (an aggregate of $0.34/share). The Company's dividend is determined semi-annually by the Board of Directors. At year end, there were 366 million common shares outstanding, down from 375 million at December 31, 2004.
At the end of 2005, Talisman's ratio of debt to cash provided by operating activities was 0.88:1 and the ratio of debt to debt plus equity was 43%.
Earnings from Operations up 169%
In order to better illustrate Talisman's operating performance on an internally consistent basis, the Company has calculated an earnings from operations number. This metric adjusts for significant one-time events as well as other non-operational impacts on earnings such as the mark-to-market effect of changes in share prices on stock based compensation expense and changes to tax rates. This calculation does not reflect differing accounting policies and conventions between companies.
Earnings from operations were $2,058 million in 2005.
($ millions, except per share amounts)
Three months ended Year ended
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December 31 2005 2004 2005 2004
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Net income 533 121 1,561 654
Stock-based compensation (1,2) 88 5 446 119
Tax effects of unrealized
foreign exchange gains on
foreign denominated debt (2) (1) 15 49 37
Tax rate reductions and other (2) 2 6 2 (46)
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Earnings from operations (3) 621 147 2,058 764
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$ per share (3) 1.70 0.39 5.59 1.99
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(1) Stock-based compensation expense relates to the appreciated value
of the Company's outstanding stock options and cash units at
December 31, 2005, which was first expensed during the second
quarter of 2003. The Company's stock-based compensation expense
is based on the difference between the Company's share price and
its stock options or cash units exercise price.
(2) Tax adjustments include the impact of Canadian corporate tax rate
reductions in 2004, as well as future taxes relating in part to
unrealized foreign exchange gains associated with the impact of a
stronger Canadian dollar on foreign currency denominated debt and
insurance expenses.
(3) This is a non-GAAP measure.
In certain of Talisman's international operations, production is stored in tanks until there is sufficient quantity of oil to fill a tanker. As a result of an increase in unlifted oil volumes, which were previously insignificant, the Company has changed its practice for recording revenue. Unlifted oil volumes are now recorded as inventory, at cost. Had this change not been initiated net income in the fourth quarter would have been $43 million higher, $15 million of which relates to prior periods.
Cash Flow
Below is a reconciliation of cash provided by operating activities calculated in accordance with generally accepted accounting principles (GAAP) to cash flow (which is a non-GAAP measure of financial performance). Please refer to the section in this news release entitled Advisory - Non-GAAP Financial Measures for further explanation and details.
($ millions) Three months ended Year ended
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2005 2004 2005 2004
December 31 (Restated)
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Cash provided by
operating activities 1,699 725 4,871 3,119
Changes in non-cash
working capital (231) (46) (199) (203)
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Cash flow 1,468 679 4,672 2,916
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Stock-Based Compensation
Stock-based compensation expense relates to the appreciated value of the Company's outstanding stock options and cash units at December 31, 2005.
The Company's stock option plans were amended during 2003 to provide employees and directors who hold stock options with the choice upon exercise to purchase a share of the Company at the stated exercise price or to receive a cash payment in exchange for surrendering the option. The cash payment alternative is expected to result in reduced shareholder dilution in the future as it is anticipated that most holders of the stock options will elect to take a cash payment. Such cash payments made by the Company to stock option holders are deductible by the Company for income tax purposes, making these plans more cost effective. Since the introduction of the cash feature, approximately 97% of options have been exercised for cash.
The Company's stock-based compensation expense is based on the difference between the Company's share price and its stock options, or cash units exercise price. As a result of record high share prices throughout the year, $633 million was expensed in 2005, of which $480 million was non-cash and $153 million cash.
Additional stock-based compensation expense or recoveries in future periods is dependent on the movement of the Company's share price and the number of outstanding options and cash units.
Production per share up by 11%
Three months ended Year ended
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December 31 2005 2004 2005 2004
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Oil and liquids (bbls/d)
North America 57,108 57,322 56,304 57,392
North Sea 159,918 127,943 132,716 121,861
Southeast Asia
and Australia 49,111 35,018 35,476 35,644
North Africa 15,112 15,329 15,377 13,537
Trinidad and Tobago 10,790 - 10,111 -
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292,039 235,612 249,984 228,434
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Natural gas (mmcf/d)
North America 907 891 915 885
North Sea 151 121 120 114
Southeast Asia and Australia 286 280 284 260
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1,344 1,292 1,319 1,259
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000 boe/d 516 451 470 438
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000 boe/d (net of royalties) 430 379 390 365
boe per share (gross) 0.47 0.42
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Production for the year averaged 470,000 boe/d, an increase of 7% over 2004 and Talisman increased production per share by 11%. Fourth quarter volumes were 516,000 boe/d, an increase of 14% over the comparable period a year earlier. Production from the acquired Paladin properties averaged 5,650 boe/d for the year. Consolidation of the Paladin assets occurred on November 18, 2005.
Talisman increased its oil and liquids production by 9% over the prior year and 24% compared to the fourth quarter of 2004. North American liquids volumes were down slightly, reflecting declines from existing fields and the Company's focus on natural gas. The increase in North Sea liquids volumes reflects the Paladin acquisition as well as successful drilling programs at Clyde, Claymore, Tartan, Varg and Gyda. Liquids volumes in Southeast Asia and Australia were up 40% in the fourth quarter of 2005 with commencement of production from the South Angsi field in Malaysia. At year end, South Angsi was producing 17,244 bbls/d net to Talisman. Talisman also recorded its first oil volumes from Trinidad and Tobago in 2005 with the startup of the Greater Angostura Project.
Total natural gas volumes were up 5% for the year. Talisman increased its gas production in North America by 3% in 2005 on the strength of a successful natural gas drilling program. Natural gas sales in Southeast Asia and Australia were up 9% with higher demand for Corridor gas from Caltex and Singapore Power.
On December 19, 2005, the Company issued guidance for expected 2006 production volumes, with a range of 515,000-545,000 boe/d, before planned asset sales.
189% Production Replacement
Talisman Proved
Reserves Oil & NGLs(1) Natural Gas(1) BOE(1)
(excluding Syncrude) (million barrels) (billion cu ft) (millions)
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Dec 31, 2004 618 5,223 1,488
Discoveries, additions and
extensions 78 514 163
Net acquisitions 97 118 117
Revisions 33 38 40
Production (90) (476) (169)
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Total Proved
Dec 31, 2005 736 5,417 1,639
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Total Probable
Dec 31, 2005 493 2,704 943
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(1) Talisman working interest reserves before royalties payable, plus
royalty interests and net profits interest
Talisman replaced 189% of production from all sources in 2005 (proved reserves) and 120% through drilling and revisions. At year end, Talisman had 5.4 tcf of proved natural gas reserves (up 4%) and 736 mmbbls of proved oil and liquids reserves (up 19%). Talisman increased its total proved reserves by 10% to 1.6 billion boe. Net of royalties, Talisman had 1.3 billion boe of proved reserves (up 9%).
At year end, Talisman had a reserve life index of 9.7 years for proved reserves and 15.2 years for proved and probable reserves.
Approximately 45% of Talisman's reserves are high quality oil and liquids and 55% natural gas. North America accounts for 38% of the Company's total proved reserves, the North Sea 27% and Southeast Asia and Australia 30%. At year end, the Company had 943 mmboe of probable reserves, which comprise a large part of Talisman's development inventory.
Exploration and development spending during 2005 totalled $3,079 million, excluding Syncrude and midstream expenditures. Including the Paladin acquisition, $3.1 billion was spent on acquisitions (net of dispositions).
Talisman has an internal qualified reserves engineer who reviews all of the Company's reserves estimates. In addition, approximately 80% of Talisman's proved reserves have been reviewed by outside engineering firms over the past three years.
Over the past three years, Talisman has added 611 mmboe of proved reserves through discoveries, additions and extensions (including revisions) and 784 mmboe of proved reserves including net acquisitions. During this period, exploration and development spending was $7,405 million and $11,586 million including acquisitions and dispositions. Detailed reserves reconciliation tables are provided elsewhere in this news release.
The reserves replacement ratio of 120% (before acquisitions) was calculated by dividing the sum of changes (revisions of estimates, improved recovery and discoveries) to estimated proved oil and gas reserves during 2005 by the Company's 2005 conventional production. The reserves replacement ratio of 189% was calculated by dividing the sum of changes (revisions of estimates, improved recovery, discoveries, acquisitions and dispositions) to estimated proved oil and gas reserves during 2005 by the Company's 2005 conventional production.
The Company's management uses reserves replacement ratios, as described above, as an indicator of the Company's ability to replenish annual production volumes and grow its reserves. It should be noted that a reserves replacement ratio is a statistical indicator that has limitations. As an annual measure, the ratio is limited because it typically varies widely, based on the extent and timing of new discoveries, project sanctioning and property acquisitions. Its predictive and comparative value is also limited for the same reasons. In addition, since the ratio does not include the cost, value or timing of future production of new reserves, it cannot be used as a measure of value creation.
Netbacks up 73% in the Fourth Quarter
Total Company
Three Months Ended Year Ended
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December 31 2005 2004 2005 2004
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WTI oil price US$/bbl 60.05 48.29 56.70 41.40
NYMEX gas price US$/mcf 12.85 6.87 8.55 6.09
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Talisman netback ($/boe)
Sales price 64.26 43.88 56.67 42.75
Hedging Loss (0.43) (3.99) (0.46) (3.02)
Royalties 10.56 6.80 9.41 7.04
Operating cost 9.04 7.06 8.41 7.26
Transportation 1.26 1.20 1.21 1.20
------ ------ ------ ------
Netback ($/boe)(1) 42.97 24.83 37.18 24.23
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Oil and liquids netback ($/bbl) 41.93 24.04 40.62 23.99
Natural gas netback ($/mcf) 7.38 4.30 5.56 4.08
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(1) Netbacks do not include synthetic oil and pipeline operations.
Additional netback information by major product type and region
is contained elsewhere in this news release.
World oil prices continued to increase during 2005, up 37% over 2004 levels, with WTI reaching US$70.85 in August 2005. Oil demand continued to grow in 2005, reaching an estimated 83 mmbbls/d, an increase of 1.5%. Lack of significant spare production capacity, especially for higher quality crude oil, and continuing political unrest in a number of oil exporting regions contributed to higher prices.
NYMEX gas prices were up 40% on average, tracking oil prices. Gas prices have also weakened of late, reflecting "demand destruction" in the US from higher prices and growing inventory levels due to mild winter weather.
Hedging losses were down significantly with most of the remaining 2005 hedges entered into two to three years ago. The Company's average royalty rate increased from 16% in 2004 to 17% in 2005, reflecting higher prices.
Unit operating costs increased by 16% to $8.41/boe. Much of the increase in operating costs is due to higher energy prices, which also benefit Talisman. Additional increases were due to a change in production mix, specifically, increased volumes from Norway. The Company expects unit operating cost increases in the 5% range this year. However, Talisman anticipates bringing on a mix of low cost projects over the next two to three years which should result in lower average unit operating costs.
Talisman's netbacks averaged $37.18/boe in 2005, an increase of 53%. North Sea oil and liquids netbacks averaged $45.76/bbl, up 81%. North American natural gas netbacks averaged $6.16/mcf, up 39%.
Additional Information
Corporate and Other
(millions of dollars) 2005 2004(1)
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G & A expense 201 183
Interest expense 166 173
Capitalized interest 19 13
Stock-based compensation 633 171
Other revenue 165 85
Other expense 39 89
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(1) Effective January 1, 2005 the Company retroactively adopted
certain changes to the Canadian Institute of Chartered
Accountants ("CICA") accounting standard for financial
instruments. The change to this standard requires that the
Company's preferred securities, all of which were redeemed in
2004, be treated as debt rather than equity. See note 1 to the
abbreviated Notes to the
Consolidated Financial Statements.
General and administrative (G&A) expense increased due to additional personnel, salary increases and administrative costs. On a unit basis, G&A was $1.17/boe compared to $1.14/boe in 2004.
The sum of interest on long-term debt and capitalized interest remained relatively flat at $185 million during 2005. Interest capitalized over the last year is associated with the Tweedsmuir development project in the North Sea, which is scheduled to come on production late in the first quarter of 2007.
Other revenue includes pipeline and custom treating revenues of $141 million for 2005, compared to $73 million in 2004. Pipeline revenues in the North Sea increased $61 million.
Capital Spending(1),(3)
(millions of dollars) 2005 2004
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North America 1,763 1,500
North Sea 1,392 721
Southeast Asia and Australia 305 235
North Africa 27 8
Trinidad and Tobago 72 191
Other(2) 134 125
Corporate, IS and Administrative 28 26
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3,721 2,806
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(1) Includes expenditures for exploration, development and asset
acquisitions net of dispositions, but excludes corporate
acquisitions.
(2) Other includes Colombia, Peru, Qatar and Alaska.
(3) Includes interest costs which are capitalized on major
development projects until facilities are completed and ready
for use.
Natural gas continues to be the focus of the Company's capital investment activities in North America, supplemented by low risk oil projects. Of the $1.8 billion of capital spending in North America, $658 million related to exploration activities and development accounted for $951 million. The Company participated in 495 gross gas wells and 171 gross oil wells in North America with a success rate of 97%. Development spending was concentrated in the predominantly gas producing core areas in the Alberta Foothills, Greater Arch, Deep Basin, Monkman/BC Foothills, Edson and Appalachia regions. In addition, the Company spent $154 million on property acquisitions, net of dispositions.
Total capital spending in the North Sea was $1.4 billion, including $165 million for exploration, $867 million for development and $360 million for net property acquisitions. Development activity included ongoing development of the Tweedsmuir project, as well as drilling and recompletion activity within the Clyde, Tartan, Piper and Claymore fields in the UK and the Gyda and Varg fields in Norway. A total of 25 successful development wells and three successful exploration wells (including the 13/23b-5 well, adjacent to the Ross and Blake fields and 16/22-7 near the Balmoral field) were drilled in the North Sea during 2005. The corporate acquisition of Paladin added producing assets in both the UK and Norway in addition to exploration acreage.
Malaysia/Vietnam accounted for $250 million of the $305 million of total capital spending in Southeast Asia, with the South Angsi field development in PM-305 and the PM-3 CAA development. Talisman participated in 10 successful development wells and six successful exploration wells in Malaysia/Vietnam in 2005. A total of $55 million was spent in Indonesia, primarily on the Suban phase 2 development.
Capital spending in North Africa totaled $27 million in 2005, with Talisman participating in 10 successful wells. In Trinidad and Tobago, a total of $72 million was spent primarily on Angostura development and the Eastern Block onshore exploration activity. A potentially significant exploration discovery was made in northern Peru.
During 2005, the Company spent $49 million in Alaska on seismic and preparations for exploration drilling. Talisman spent $24 million in Colombia on exploration drilling during 2005, as well as $20 million on exploration drilling in Peru and $14 million on seismic and exploration drilling in Qatar.
Spending plans for 2006 were provided on December 19, 2005. Talisman expects to spend approximately $4.4 billion on exploration and development this year.
Depreciation, Depletion and Amortization Expense
2005 2004
$/boe $millions $/boe $millions
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North America 12.42 946 10.47 785
North Sea 12.23 670 12.83 661
Southeast Asia and
Australia 4.98 144 6.02 174
North Africa 6.80 36 5.99 30
Trinidad and Tobago 13.11 47 - -
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10.88 1,843 10.29 1,650
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The Company's 2005 depreciation, depletion and amortization expense increased 6% to $10.88/boe. DD&A rates in North America increased to $12.42/boe with higher drilling costs, increased spending on infrastructure projects and increased land costs. In the North Sea, unit DD&A rates fell by 5% due to 2004 reserves additions and a lower pound sterling exchange rate. Unit DD&A rates in Southeast Asia decreased by 17% as a result of increased reserves in Malaysia/Vietnam and the expiry of the Tanjung concession.
Income Taxes
The Company's effective tax rate for 2005, after deducting Petroleum Revenue Tax (PRT), was 44% compared to 36% in 2004.
Effective Income Tax Rate
(millions of dollars) 2005 2004(1)
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Income before tax 2,984 1,150
Less PRT
Current 150 124
Future 39 5
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189 129
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2,795 1,021
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Income tax expense / (recovery)
Current 1,058 478
Future 176 (111)
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1,234 367
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Effective income tax rate (%) 44 36
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(1) Effective January 1, 2005 the Company retroactively adopted
certain changes to the Canadian Institute of Chartered
Accountants ("CICA") accounting standard for financial
instruments. The change to this standard requires that the
Company's preferred securities, all of which were redeemed in
2004, be treated as debt rather than equity. See note 1 of the
abbreviated notes to the Consolidated Financial Statements.
A normalized effective tax rate after removing the impact of the Canadian and UK tax rate changes and the tax on unrealized foreign exchange gains on foreign denominated debt would have been 42% in 2005 and 38% in 2004. The increase in the 2005 effective tax rate results in part from a higher proportion of income from Norway in addition to the impact of increased taxable income in North America, the UK and Southeast Asia and Australia at higher marginal rates of tax. Foreign exchange rate fluctuations over the past two years have resulted in taxes on gains related to inter-company loans and non-Canadian dollar denominated debt, for which there is no corresponding component of the unrealized gain reflected in income before taxes.
Current income tax expense increased to $1,058 million in 2005, due primarily to higher commodity prices and volumes, which resulted in increases in current taxes of $222 million in Norway, $157 million in Southeast Asia, $67 million in the UK, $53 million in North America and $14 million in North Africa. In Trinidad and Tobago, production first came onstream during 2005 and current income tax expense was $64 million.
In December 2005, the UK government announced an income tax rate increase on petroleum profits from 40% to 50%, which will be effective during the second quarter of 2006 and includes a one time non-cash "catch-up" expense estimated to be approximately $300 million.
The UK government levies PRT on North Sea fields which received development approval before April 1993, based on gross profit after allowable deductions, including capital and operating expenditures. PRT, which is deductible for purposes of calculating corporate income tax, increased as a result of both higher prices and volumes on fields in the UK subject to PRT. During 2005, $14 million of PRT was recorded in countries other than the UK.
Talisman Energy Inc. is a large, independent upstream oil and gas company headquartered in Calgary, Alberta, Canada. Talisman has operations in Canada and its subsidiaries operate in the North Sea, Southeast Asia, Australia, North Africa, the United States and Trinidad and Tobago. Talisman's subsidiaries are also active in a number of other international areas, including Colombia, Gabon, Peru, Romania and Qatar. Talisman is committed to conducting its business in an ethically, socially and environmentally responsible manner and is a participant 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 in Canada and the New York Stock Exchange in the United States under the symbol TLM.
Advisory - forward-looking statements
This news release contains statements that constitute forward-looking statements and forward-looking information (collectively, "forward-looking statements") within the meaning of applicable securities legislation.
Forward-looking statements are included throughout this news release, which include, among others, statements regarding:
- estimates of future sales, production and production per share and operations or financial performance;
- business plans for drilling, exploration and development;
- the estimated amounts and timing of capital expenditures;
- the estimated timing of development, including new production;
- estimates of operating costs;
- business strategy and plans or budgets;
- outlook for oil and gas prices;
- anticipated liquidity, capital resources and debt levels;
- royalty rates and exchange rates; and
- other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance.
Statements concerning oil and gas reserves contained in this news release may be deemed to be forward-looking statements as they involve the implied assessment that the resources described can be profitably produced in the future, based on certain estimates and assumptions.
Often, but not always, forward-looking statements use words or phrases such as: "expects", "does not expect" or "is expected", "anticipates" or "does not anticipate", "plans" or "planned", "estimates" or "estimated", "projects" or "projected", "forecasts" or "forecasted", "believes", "intends", "likely", "possible", "probable", "scheduled" , "positioned", "goal" , "objective" or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.
Various assumptions were used in drawing the conclusions or making the forecasts and projections contained in the forward-looking statements throughout this news release. Statements which discuss business plans for drilling, exploration and development in 2006 assume that the extraction of crude oil, natural gas and natural gas liquids remains economic. In preparing its 2006 budget Talisman assumed a US$57/bbl West Texas Intermediate oil price, a US$9.00/mmbtu New York Mercantile Exchange natural gas price, a US$/Canadian$ exchange rate of $0.84 and a Canadian$/British Pounds Sterling rate of 2.10 in determining the 2006 planned operations described in this news release.
Forecasted production volumes are based on the mid-point of the estimated production range. Statements regarding estimated future production and production growth, as well as estimated financial results which are derived from or depend upon future production estimates do not reflect the impact of any potential asset acquisitions or dispositions. The completion of any contemplated asset dispositions is contingent on various factors including favorable market conditions, the ability of the Company to negotiate acceptable terms of sale and receipt of any required approvals for such dispositions. The amount of taxes and cash payments made upon surrender of existing stock options is inherently difficult to predict.
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 Talisman 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 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;
- the outcome and effects of completed acquisitions, as well as any future acquisitions or dispositions;
- the ability of the Company to integrate any assets it has acquired or may acquire or the performance of those assets;
- health, safety and environmental risks;
- uncertainties as to the availability and cost of financing and changes in capital markets;
- uncertainties related to the litigation process, such as possible discovery of new evidence or acceptance of novel legal theories and difficulties in predicting the decisions of judges and juries;
- risks in conducting foreign operations (for example, political and fiscal instability or the possibility of civil unrest or military action);
- changes in general economic and business conditions;
- the effect of acts of, or actions against, international terrorism;
- the possibility that government policies or laws may change or governmental approvals may be delayed or withheld;
- results of the Company's risk mitigation strategies, including insurance and any hedging programs; and
- the Company's ability to implement its business strategy.
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: (1) under the heading "Risk Factors" in the Company's Annual Information Form; and (2) under the headings "Management's Discussion and Analysis - Risks and Uncertainties" and elsewhere in the Company's 2004 Annual Report Financial Review. Additional information may also be found in the Company's other reports on file with Canadian securities regulatory authorities 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 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 granted to Talisman by Canadian securities regulatory authorities, which permits Talisman to provide disclosure in accordance 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). Talisman's proved reserves have been calculated using the standards contained in Regulation S-X of the US Securities and Exchange Commission. US practice is to disclose net proved reserves after deduction of estimated royalty burdens, including net profits interests. Talisman makes additional voluntary disclosure of gross proved reserves. Probable reserves which Talisman also discloses voluntarily have been calculated using the definition for probable reserves set out by the Society of Petroleum Engineers/World Petroleum Congress. Further information on 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 Information" in Talisman's Annual Information Form.
The exemption granted to Talisman also permits it to disclose internally evaluated reserves data. All reserves data in this news release reflects Talisman's estimates of its reserves. While Talisman annually obtains an independent audit of a portion of its reserves, no independent qualified reserves evaluator or auditor was involved in the preparation of the reserves data disclosed in this report.
Throughout this press 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 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 tip and does not represent a value equivalence at the wellhead.
Throughout this press release, Talisman makes reference to production volumes. Where not otherwise indicated, such production volumes are stated on a gross basis, which means they are stated prior to the deduction of royalties and similar payments. In the United States, net production volumes are reported after the deduction of these amounts.
The reserves life index of 9.7 years for proved reserves was calculated by dividing the year end proved reserves by the Company's 2005 conventional production. The reserves life index of 15.2 years for proved and probable reserves was calculated by dividing the year end proved and probable reserves by the Company's 2005 conventional production.
Advisory - non-GAAP financial measures
Included in this news release are references to financial measures commonly used in the oil and gas industry such as cash flow and cash flow per share and earnings from operations. These terms are not defined by Generally Accepted Accounting Principles (GAAP) in either Canada or the US. Consequently these are referred to as non-GAAP measures. Cash flow, as commonly used in the oil and gas industry, represents net income before exploration costs, DD&A, future taxes and other non-cash expenses. Cash flow is used by the Company to assess operating results between years and with peer companies using different accounting policies. Cash flow should not be considered an alternative to, or more meaningful than, cash provided by operating, investing and financing activities or net income as determined in accordance with Canadian GAAP as an indicator of the Company's performance or liquidity. Cash flow per share is cash flow divided by the average number of common shares outstanding during the period. Debt to cash flow is a non-GAAP measure. Earnings from operations is calculated by adjusting the Company's net income per the financial statements, for certain items of a non-operational nature, on an after-tax basis. This term is not defined by Generally Accepted Accounting Principles in either Canada or the United States. The Company uses this information to evaluate performance of core operational activities on a comparable basis between periods. Our reported results of cash flow, cash flow per share and earnings from operations may not be comparable to similarly titled measures reported by other companies.
Talisman Energy Inc.
Highlights
(unaudited)
Three months ended Years ended
December 31 December 31
2005 2004 2005 2004
---------------------------------------------------------------------
Financial (restated
(1))
(millions of Canadian dollars
unless otherwise stated)
Cash flow 1,468 679 4,672 2,916
Net income 533 121 1,561 654
Exploration and development
expenditures 980 728 3,179 2,538
Per common share (Canadian dollars)
Cash flow 4.01 1.78 12.69 7.61
Net income 1.45 0.32 4.24 1.71
---------------------------------------------------------------------
Production
(daily average)
Oil and liquids (bbls/d)
North America 54,254 54,464 53,611 54,393
North Sea 159,918 127,943 132,716 121,861
Southeast Asia & Australia 49,111 35,018 35,476 35,644
North Africa 15,112 15,329 15,377 13,537
Trinidad & Tobago 10,790 - 10,111 -
Synthetic oil 2,854 2,858 2,693 2,999
---------------------------------------------------------------------
Total oil and liquids 292,039 235,612 249,984 228,434
---------------------------------------------------------------------
Natural gas (mmcf/d)
North America 907 891 915 885
North Sea 151 121 120 114
Southeast Asia & Australia 286 280 284 260
---------------------------------------------------------------------
Total natural gas 1,344 1,292 1,319 1,259
---------------------------------------------------------------------
Total mboe/d 516 451 470 438
---------------------------------------------------------------------
---------------------------------------------------------------------
Prices (2)
Oil and liquids ($/bbl)
North America 54.84 44.05 52.62 42.11
North Sea 66.53 50.26 64.78 48.29
Southeast Asia & Australia 68.30 53.81 68.79 51.29
North Africa 68.02 46.50 66.71 51.17
Trinidad & Tobago 63.78 - 63.40 -
---------------------------------------------------------------------
Crude oil and natural gas liquids 64.62 49.10 62.78 47.45
Synthetic oil 71.42 61.61 69.88 52.19
---------------------------------------------------------------------
Total oil and liquids 64.68 49.24 62.86 47.51
---------------------------------------------------------------------
Natural gas ($/mcf)
North America 12.25 6.99 9.05 6.83
North Sea 8.35 6.08 7.08 5.55
Southeast Asia & Australia 6.72 4.55 6.40 4.74
---------------------------------------------------------------------
Total natural gas 10.63 6.38 8.30 6.28
---------------------------------------------------------------------
Total ($/boe) (includes synthetic) 64.30 44.00 56.74 42.81
---------------------------------------------------------------------
---------------------------------------------------------------------
(1) Effective January 1, 2005 the Company retroactively adopted
certain changes to the Canadian Institute of Chartered
Accountants ("CICA") accounting standard for financial
instruments. The changes to this standard required the Company's
preferred securities, all of which were redeemed in 2004, to be
treated as debt rather than equity. See note 1 to the abbreviated
notes to the Consolidated Financial Statements.
(2) Prices are before hedging.
(3) Includes unlisted oil volumes as at December 31, 2005 of 3,670
bbls/d, 1,400 bbls/d, 650 bbls/d for the North Sea, Southeast
Asia and Australia, North Africa and Trinidad and Tobago
respectively.
(4) Includes gas acquired for injection and subsequent resale of 23
mmcf/d and 3 mmcf/d for the three months ended December 31, 2005
and 2004 respectively and 15 mmcf/d and 5 mmcf/d in the full
years 2005 and 2004 respectively.
Talisman Energy Inc.
Consolidated Balance Sheets
(unaudited)
December 31 (millions of Canadian dollars) 2005 2004
---------------------------------------------------------------------
Assets (restated
Current note 1)
Cash and cash equivalents 130 38
Accounts receivable 1,311 836
Inventories 170 78
Prepaid expenses 20 18
---------------------------------------------------------------------
1,631 970
---------------------------------------------------------------------
Accrued employee pension benefit asset 57 61
Other assets 74 64
Goodwill 1,504 466
Property, plant and equipment 15,073 10,847
---------------------------------------------------------------------
16,708 11,438
---------------------------------------------------------------------
Total assets 18,339 12,408
---------------------------------------------------------------------
---------------------------------------------------------------------
Liabilities
Current
Accounts payable and accrued liabilities 2,383 1,302
Income and other taxes payable 649 341
---------------------------------------------------------------------
3,032 1,643
---------------------------------------------------------------------
Deferred credits 74 70
Asset retirement obligations 1,320 1,272
Other long-term obligations 217 35
Long-term debt 4,263 2,457
Future income taxes 3,638 2,100
---------------------------------------------------------------------
9,512 5,934
---------------------------------------------------------------------
---------------------------------------------------------------------
Non-controlling interest 66 -
---------------------------------------------------------------------
Contingencies and commitments
Shareholders' equity
Common shares 2,609 2,666
Contributed surplus 69 71
Cumulative foreign currency translation (265) (76)
Retained earnings 3,316 2,170
---------------------------------------------------------------------
5,729 4,831
---------------------------------------------------------------------
Total liabilities and shareholders' equity 18,339 12,408
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes.
Talisman Energy Inc.
Consolidated Statements of Income
(unaudited)
Three months ended Years ended
(millions of Canadian dollars December 31 December 31
except as otherwise noted) 2005 2004 2005 2004
---------------------------------------------------------------------
(restated
Revenue note 1)
Gross sales 2,891 1,828 9,554 6,874
Less hedging loss 20 165 77 480
---------------------------------------------------------------------
Gross sales, net of hedging 2,871 1,663 9,477 6,394
Less royalties 488 281 1,595 1,124
---------------------------------------------------------------------
Net sales 2,383 1,382 7,882 5,270
Other 50 20 165 85
---------------------------------------------------------------------
Total revenue 2,433 1,402 8,047 5,355
---------------------------------------------------------------------
Expenses
Operating 416 302 1,459 1,198
Transportation 60 50 206 192
General and administrative 58 64 201 183
Depreciation, depletion and
amortization 511 447 1,843 1,650
Dry hole 77 89 241 311
Exploration 96 71 275 238
Interest on long-term debt 45 38 166 173
Stock-based compensation 121 7 633 171
Other 30 74 39 89
---------------------------------------------------------------------
Total expenses 1,414 1,142 5,063 4,205
---------------------------------------------------------------------
Income before taxes 1,019 260 2,984 1,150
---------------------------------------------------------------------
Taxes
Current income tax 315 204 1,058 478
Future income tax (recovery) 107 (99) 176 (111)
Petroleum revenue tax 64 34 189 129
---------------------------------------------------------------------
486 139 1,423 496
---------------------------------------------------------------------
Net income 533 121 1,561 654
---------------------------------------------------------------------
---------------------------------------------------------------------
Per common share (Canadian dollars)
Net income 1.45 0.32 4.24 1.71
Diluted net income 1.42 0.31 4.14 1.68
---------------------------------------------------------------------
---------------------------------------------------------------------
Average number of common shares
outstanding (millions) 366 381 368 383
Diluted number of common shares
outstanding (millions) 376 387 377 390
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes.
Consolidated Statements of Retained Earnings
(unaudited)
Three months ended Years ended
December 31 December 31
(millions of Canadian dollars) 2005 2004 2005 2004
---------------------------------------------------------------------
(restated (restated
note 1) note 1)
Retained earnings,
beginning of period 2,894 2,327 2,170 1,852
Net income 533 121 1,561 654
Common share dividends (63) (56) (125) (114)
Purchase of common shares (48) (222) (290) (222)
---------------------------------------------------------------------
Retained earnings, end of period 3,316 2,170 3,316 2,170
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes.
Talisman Energy Inc.
Consolidated Statements of Cash Flows
(unaudited)
Three months ended Years ended
December 31 December 31
(millions of Canadian dollars) 2005 2004 2005 2004
---------------------------------------------------------------------
(restated
Operating note 1)
Net income 533 121 1,561 654
Items not involving cash 839 487 2,836 2,024
Exploration 96 71 275 238
---------------------------------------------------------------------
1,468 679 4,672 2,916
Changes in non-cash working
capital 231 46 199 203
---------------------------------------------------------------------
Cash provided by operating
activities 1,699 725 4,871 3,119
---------------------------------------------------------------------
Investing
Corporate acquisitions (2,549) - (2,549) -
Capital expenditures
Exploration, development
and corporate (988) (735) (3,206) (2,565)
Acquisitions (7) (18) (544) (317)
Proceeds of resource property
dispositions 6 70 17 75
Investments - 4 (4) -
Changes in non-cash working
capital 136 110 142 50
---------------------------------------------------------------------
Cash used in investing
activities (3,402) (569) (6,144) (2,757)
---------------------------------------------------------------------
Financing
Long-term debt repaid (285) (99) (1,294) (1,069)
Long-term debt issued 1,848 330 3,129 912
Short-term borrowings - -
Common shares issued (purchased) (55) (286) (352) (284)
Common share dividends (63) (56) (125) (114)
Deferred credits and other (12) (29) (9) 164
Changes in non-cash working
capital - (2) (3) (10)
---------------------------------------------------------------------
Cash provided by (used in)
financing activities 1,433 (142) 1,346 (401)
---------------------------------------------------------------------
Effect of translation on
foreign currency cash and
cash equivalents 25 (4) 19 (21)
---------------------------------------------------------------------
Net (decrease) increase in cash
and cash equivalents (245) 10 92 (60)
Cash and cash equivalents,
beginning of period 375 28 38 98
---------------------------------------------------------------------
Cash and cash equivalents,
end of period 130 38 130 38
---------------------------------------------------------------------
---------------------------------------------------------------------
See accompanying notes.
ABBREVIATED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
The 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 or omitted.
1. Change in accounting policy
Preferred securities
Effective January 1, 2005 the Company retroactively adopted certain changes to the Canadian Institute of Chartered Accountants ("CICA") accounting standard for financial instruments. The change to this standard requires that the Company's preferred securities, all of which were redeemed in 2004, be treated as debt rather than equity. Previously preferred securities charges were charged directly to retained earnings but under these changes to the accounting standard they would have been charged to interest expense. In addition, since the preferred securities would have been treated as debt, the balance would have been revalued at each balance sheet date with the offsetting movement reflected in the cumulative foreign currency translation account. As a result there would not have been a gain on the redemption of the preferred securities. There was no impact to the 2005 results as the preferred securities were fully redeemed by the end of the second quarter in 2004.
The adjustment required to the December 31, 2004 Consolidated Balance
Sheet to implement this change in accounting is as follows:
---------------------------------------------------------------------
As
previously As
reported Adjustments restated
---------------------------------------------------------------------
Cumulative foreign currency translation (150) 74 (76)
Retained earnings 2,244 (74) 2,170
---------------------------------------------------------------------
---------------------------------------------------------------------
The adjustment to the Consolidated Statement of Income for the year
ended December 31, 2004 is as follows:
---------------------------------------------------------------------
As
previously As
reported Adjustments restated
---------------------------------------------------------------------
Interest on long-term debt 158 15 173
Future income tax (recovery) (105) (6) (111)
---------------------------------------------------------------------
Net income 663 (9) 654
Preferred securities charges,
net of tax (9) 9 -
Gain on redemption of preferred
securities, net of tax 23 (23) -
---------------------------------------------------------------------
Net income available to common
shareholders 677 (23) 654
---------------------------------------------------------------------
Per common share (Canadian dollars)
Net income 1.77 (.06) 1.71
Diluted net income 1.74 (.06) 1.68
---------------------------------------------------------------------
---------------------------------------------------------------------
The adjustment to the Consolidated Statement of Income for the year
ended December 31, 2003 is as follows:
---------------------------------------------------------------------
As
previously As
reported Adjustments restated
---------------------------------------------------------------------
Interest on long-term debt 137 41 178
Future income tax (recovery) (48) (5) (53)
---------------------------------------------------------------------
Net income 1,012 (36) 976
Preferred securities charges,
net of tax (22) 22 -
---------------------------------------------------------------------
Net income available to common
shareholders 990 (14) 976
---------------------------------------------------------------------
Per common share (Canadian dollars)
Net income 2.56 (.03) 2.53
Diluted net income 2.53 (.03) 2.50
---------------------------------------------------------------------
---------------------------------------------------------------------
2. Selected Cash Flow Information
---------------------------------------------------------------------
Three months ended Years ended
December 31 December 31
2005 2004 2005 2004
---------------------------------------------------------------------
(restated
note 1)
---------------------------------------------------------------------
Net income 533 121 1,561 654
---------------------------------------------------------------------
Items not involving cash
Depreciation, depletion
and amortization 511 447 1,843 1,650
Property impairments 6 31 31 31
Dry hole 77 89 241 311
Net loss (gain) on asset
disposals (1) 28 (3) 30
Stock-based compensation 91 (10) 480 89
Future taxes and deferred
petroleum revenue tax 137 (84) 215 (106)
Other 18 (14) 29 19
---------------------------------------------------------------------
839 487 2,836 2,024
---------------------------------------------------------------------
Exploration 96 71 275 238
---------------------------------------------------------------------
1,468 679 4,672 2,916
---------------------------------------------------------------------
Changes in non-cash working
capital 231 46 199 203
---------------------------------------------------------------------
---------------------------------------------------------------------
Cash provided by operating
activities 1,699 725 4,871 3,119
---------------------------------------------------------------------
---------------------------------------------------------------------
3. Segmented Information
North America (1) North Sea (2)
-----------------------------------------------
Three Three
months Years months Years
ended ended ended ended
December December December December
(millions of 31 31 31 31
Canadian dollars) 2005 2004 2005 2004 2005 2004 2005 2004
---------------------------------------------------------------------
Revenue
Gross sales 1,317 812 4,129 3,115 988 659 3,320 2,385
Hedging 21 47 78 151 (1) 118 (1) 329
Royalties 261 143 816 599 19 10 56 37
---------------------------------------------------------------------
Net sales 1,035 622 3,235 2,365 970 531 3,265 2,019
Other 14 14 76 62 35 6 88 23
---------------------------------------------------------------------
Total revenue 1,049 636 3,311 2,427 1,005 537 3,353 2,042
---------------------------------------------------------------------
Segmented expenses
Operating 131 114 478 421 247 159 859 662
Transportation 24 18 75 75 24 18 79 66
DD&A 242 227 946 785 206 179 670 661
Dry hole 46 38 122 128 15 14 53 109
Exploration 36 36 128 123 19 6 53 28
Other (1) 34 (10) 18 14 16 54 30
---------------------------------------------------------------------
Total segmented
expenses 478 467 1,739 1,550 525 392 1,768 1,556
---------------------------------------------------------------------
Segmented income
before taxes 571 169 1,572 877 480 145 1,585 486
---------------------------------------------------------------------
Non-segmented
expenses
General and
administrative
Interest
Stock-based
compensation
Currency
translation
---------------------------------------------------------------------
Total non-segmented
expenses
---------------------------------------------------------------------
Income before
taxes
---------------------------------------------------------------------
Capital
expenditures
Exploration 212 181 658 590 50 11 165 150
Development 261 246 879 821 253 101 867 357
Midstream 42 34 72 41 - - - -
---------------------------------------------------------------------
Exploration and
development 515 461 1,609 1,452 303 112 1,032 507
Property
acquisitions
Midstream
acquisitions
Proceeds on
dispositions
Other
non-segmented
---------------------------------------------------------------------
Net capital
expenditures
---------------------------------------------------------------------
Property, plant
and equipment 6,985 6,214 6,072 3,074
Goodwill 291 291 1,086 75
Other 663 419 614 347
---------------------------------------------------------------------
Segmented assets 7,939 6,924 7,772 3,496
Non-segmented
assets
---------------------------------------------------------------------
Total assets
---------------------------------------------------------------------
---------------------------------------------------------------------
Southeast Asia
and Australia (3) North Africa (4)
-----------------------------------------------
Three Three
months Years months Years
ended ended ended ended
December December December December
(millions of 31 31 31 31
Canadian dollars) 2005 2004 2005 2004 2005 2004 2005 2004
---------------------------------------------------------------------
Revenue
Gross sales 459 291 1,527 1,120 69 66 349 254
Hedging - - - - - - - -
Royalties 174 102 553 391 25 26 135 97
---------------------------------------------------------------------
Net sales 285 189 974 729 44 40 214 157
Other 1 - 1 - - - - -
---------------------------------------------------------------------
Total revenue 286 189 975 729 44 40 214 157
---------------------------------------------------------------------
Segmented expenses
Operating 29 24 87 98 6 5 24 17
Transportation 10 11 43 42 2 3 9 9
DD&A 45 32 144 174 7 9 36 30
Dry hole 4 12 11 25 - 4 - 4
Exploration 20 3 40 20 - - - -
Other 1 (12) 1 (9) - - - -
---------------------------------------------------------------------
Total segmented
expenses 109 70 326 350 15 21 69 60
---------------------------------------------------------------------
Segmented income
before taxes 177 119 649 379 29 19 145 97
---------------------------------------------------------------------
Non-segmented
expenses
General and
administrative
Interest
Stock-based
compensation
Currency
translation
---------------------------------------------------------------------
Total non-segmented
expenses
---------------------------------------------------------------------
Income before
taxes
---------------------------------------------------------------------
Capital
expenditures
Exploration 32 16 74 54 2 - 2 -
Development 45 62 231 201 13 1 25 8
Midstream - - - - - - - -
---------------------------------------------------------------------
Exploration
and development 77 78 305 255 15 1 27 8
Property
acquisitions
Midstream
acquisitions
Proceeds on
dispositions
Other non-segmented
---------------------------------------------------------------------
Net capital
expenditures
---------------------------------------------------------------------
Property, plant
and equipment 1,465 1,050 177 178
Goodwill 123 100 4 -
Other 348 221 43 36
---------------------------------------------------------------------
Segmented assets 1,936 1,371 224 214
Non-segmented
assets
---------------------------------------------------------------------
Total assets
---------------------------------------------------------------------
---------------------------------------------------------------------
Trinidad and Tobago Other
-----------------------------------------------
Three Three
months Years months Years
ended ended ended ended
December December December December
(millions of 31 31 31 31
Canadian dollars) 2005 2004 2005 2004 2005 2004 2005 2004
---------------------------------------------------------------------
Revenue
Gross sales 58 - 229 - - - - -
Hedging - - - - - - - -
Royalties 9 - 35 - - - - -
---------------------------------------------------------------------
Net sales 49 - 194 - - - - -
Other - - - - - - - -
---------------------------------------------------------------------
Total revenue 49 - 194 - - - - -
---------------------------------------------------------------------
Segmented expenses
Operating 3 - 11 - - - - -
Transportation - - - - - - - -
DD&A 11 - 47 - - - - -
Dry hole 2 12 21 12 10 9 34 33
Exploration 1 3 5 21 20 23 49 46
Other - 1 - 1 4 19 1 19
---------------------------------------------------------------------
Total segmented
expenses 17 16 84 34 34 51 84 98
---------------------------------------------------------------------
Segmented income
before taxes 32 (16) 110 (34) (34) (51) (84) (98)
---------------------------------------------------------------------
Non-segmented expenses
General and
administrative
Interest
Stock-based
compensation
Currency translation
---------------------------------------------------------------------
Total non-segmented
expenses
---------------------------------------------------------------------
Income before taxes
---------------------------------------------------------------------
Capital expenditures
Exploration 15 5 51 33 47 37 134 125
Development 8 34 21 158 - - - -
Midstream - - - - - - - -
---------------------------------------------------------------------
Exploration and
development 23 39 72 191 47 37 134 125
Property acquisitions
Midstream
acquisitions
Proceeds on
dispositions
Other non-segmented
---------------------------------------------------------------------
Net capital
expenditures
---------------------------------------------------------------------
Property, plant and
equipment 275 182 99 149
Goodwill - - - -
Other 24 11 13 -
---------------------------------------------------------------------
Segmented assets 299 193 112 149
Non-segmented assets
---------------------------------------------------------------------
Total assets
---------------------------------------------------------------------
---------------------------------------------------------------------
Total
-----------------------------------------------
Three months Years
ended ended
December 31 December 31
(millions of Canadian dollars) 2005 2004 2005 2004
---------------------------------------------------------------------
Revenue
Gross sales 2,891 1,828 9,554 6,874
Hedging 20 165 77 480
Royalties 488 281 1,595 1,124
---------------------------------------------------------------------
Net sales 2,383 1,382 7,882 5,270
Other 50 20 165 85
---------------------------------------------------------------------
Total revenue 2,433 1,402 8,047 5,355
---------------------------------------------------------------------
Segmented expenses
Operating 416 302 1,459 1,198
Transportation 60 50 206 192
DD&A 511 447 1,843 1,650
Dry hole 77 89 241 311
Exploration 96 71 275 238
Other 18 58 46 59
---------------------------------------------------------------------
Total segmented expenses 1,178 1,017 4,070 3,648
---------------------------------------------------------------------
Segmented income before taxes 1,255 385 3,977 1,707
---------------------------------------------------------------------
Non-segmented expenses
General and administrative 58 64 201 183
Interest 45 38 166 173
Stock-based compensation 121 7 633 171
Currency translation 12 16 (7) 30
---------------------------------------------------------------------
Total non-segmented expenses 236 125 993 557
---------------------------------------------------------------------
Income before taxes 1,019 260 2,984 1,150
---------------------------------------------------------------------
Capital expenditures
Exploration 358 250 1,084 952
Development 580 444 2,023 1,545
Midstream 42 34 72 41
---------------------------------------------------------------------
Exploration and development 980 728 3,179 2,538
Property acquisitions 3 36 536 330
Midstream acquisitions - - - -
Proceeds on dispositions (7) (74) (22) (88)
Other non-segmented 9 6 28 26
---------------------------------------------------------------------
Net capital expenditures 985 696 3,721 2,806
---------------------------------------------------------------------
Property, plant and equipment 15,073 10,847
Goodwill 1,504 466
Other 1,705 1,034
---------------------------------------------------------------------
Segmented assets 18,282 12,347
Non-segmented assets 57 61
---------------------------------------------------------------------
Total assets 18,339 12,408
---------------------------------------------------------------------
---------------------------------------------------------------------
Three months Years
ended ended
December 31 December 31
(1) North America 2005 2004 2005 2004
---------------------------------------------------------------------
Canada 938 568 2,965 2,199
US 111 68 346 228
---------------------------------------------------------------------
Total revenue 1,049 636 3,311 2,427
---------------------------------------------------------------------
Canada 6,551 5,738
US 434 476
---------------------------------------------------------------------
Property, plant and equipment 6,985 6,214
---------------------------------------------------------------------
---------------------------------------------------------------------
Three months Years
ended ended
December 31 December 31
(2) North Sea 2005 2004 2005 2004
---------------------------------------------------------------------
United Kingdom 775 492 2,683 1,897
Netherlands 18 11 56 36
Norway 202 34 604 109
Denmark 10 - 10 -
---------------------------------------------------------------------
Total revenue 1,005 537 3,353 2,042
---------------------------------------------------------------------
United Kingdom 4,620 2,858
Netherlands 45 41
Norway 1,149 175
Denmark 258 -
---------------------------------------------------------------------
Property, plant and equipment 6,072 3,074
---------------------------------------------------------------------
---------------------------------------------------------------------
Three months Years
ended ended
December 31 December 31
(3) Southeast Asia and Australia 2005 2004 2005 2004
---------------------------------------------------------------------
Indonesia 115 80 408 346
Malaysia 165 106 539 363
Vietnam 6 3 28 20
Australia - - - -
---------------------------------------------------------------------
Total revenue 286 189 975 729
---------------------------------------------------------------------
Indonesia 371 327
Malaysia 818 701
Vietnam 23 22
Australia 253 -
---------------------------------------------------------------------
Property, plant and equipment 1,465 1,050
---------------------------------------------------------------------
---------------------------------------------------------------------
Three months Years
ended ended
December 31 December 31
(4) North Africa 2005 2004 2005 2004
---------------------------------------------------------------------
Algeria 42 40 212 157
Tunisia 2 - 2 -
---------------------------------------------------------------------
Total Revenue 44 40 214 157
---------------------------------------------------------------------
---------------------------------------------------------------------
Algeria 162 178
Tunisia 15 -
---------------------------------------------------------------------
Property, plant and equipment 177 178
---------------------------------------------------------------------
---------------------------------------------------------------------
Talisman Energy Inc.
Product Netbacks
(unaudited)
Three months ended December 31
---------------------------------------------------------------------
(C$ - production
before royalties) 2005 2004(1) 2005 2004
---------------------------------------------------------------------
Oil and liquids Natural gas
($/bbl) ($/mcf)
---------------------------------------------------------------------
North Sales price 54.84 44.05 12.25 6.99
America Hedging (gain) 4.28 8.64 - 0.04
Royalties 10.69 8.76 2.46 1.20
Transportation 0.51 0.46 0.23 0.21
Operating costs 8.33 7.79 0.95 0.80
-------------------------------------------------------
31.03 18.40 8.61 4.74
---------------------------------------------------------------------
---------------------------------------------------------------------
North Sea Sales price 66.53 50.26 8.35 6.08
Hedging (gain) (0.07) 10.02 - -
Royalties 0.84 0.52 0.48 0.37
Transportation 1.27 1.09 0.40 0.38
Operating costs 17.14 12.61 0.96 0.72
-------------------------------------------------------
47.35 26.02 6.51 4.61
---------------------------------------------------------------------
---------------------------------------------------------------------
Southeast Sales price 68.30 53.81 6.72 4.55
Asia & Royalties 27.27 21.94 1.98 1.20
Australia Transportation (0.12) 0.18 0.43 0.38
Operating costs 5.04 5.60 0.30 0.25
-------------------------------------------------------
36.11 26.09 4.01 2.72
---------------------------------------------------------------------
---------------------------------------------------------------------
North Africa Sales price 68.02 46.50 5.80 -
Royalties 25.00 18.48 - -
Transportation 1.65 1.64 - -
Operating costs 5.06 3.77 - -
-------------------------------------------------------
36.31 22.61 5.80 -
---------------------------------------------------------------------
---------------------------------------------------------------------
Trinidad Sales price 63.78 -
& Tobago Royalties 10.73 -
Operating costs 2.45 -
-------------------------------------------------------
50.60 -
---------------------------------------------------------------------
---------------------------------------------------------------------
Total Sales price 64.62 49.10 10.63 6.38
Company Hedging (gain) 0.77 7.53 - 0.03
Royalties 8.81 6.85 2.14 1.12
Transportation 0.86 0.84 0.29 0.26
Operating costs 12.25 9.84 0.82 0.67
-------------------------------------------------------
41.93 24.04 7.38 4.30
---------------------------------------------------------------------
---------------------------------------------------------------------
Twelve months ended December 31
---------------------------------------------------------------------
(C$ - production
before royalties) 2005 2004(1) 2005 2004
---------------------------------------------------------------------
Oil and liquids Natural gas
($/bbl) ($/mcf)
---------------------------------------------------------------------
North Sales price 52.62 42.11 9.05 6.83
America Hedging (gain) 3.99 5.95 - 0.10
Royalties 10.79 8.59 1.80 1.31
Transportation 0.50 0.49 0.19 0.20
Operating costs 7.24 6.75 0.90 0.79
-------------------------------------------------------
30.10 20.33 6.16 4.43
---------------------------------------------------------------------
---------------------------------------------------------------------
North Sea Sales price 64.78 48.29 7.08 5.55
Hedging (gain) (0.02) 7.36 - -
Royalties 0.71 0.43 0.49 0.42
Transportation 1.19 1.14 0.50 0.35
Operating costs 17.14 14.06 0.82 0.55
-------------------------------------------------------
45.76 25.30 5.27 4.23
---------------------------------------------------------------------
---------------------------------------------------------------------
Southeast Sales price 68.79 51.29 6.40 4.74
Asia Royalties 27.28 21.24 1.95 1.19
& Australia Transportation 0.09 0.23 0.41 0.41
Operating costs 4.48 5.57 0.30 0.27
-------------------------------------------------------
36.94 24.25 3.74 2.87
---------------------------------------------------------------------
---------------------------------------------------------------------
North Africa Sales price 66.71 51.17 5.80 -
Royalties 25.72 19.65 - -
Transportation 1.65 1.76 - -
Operating costs 4.52 3.51 - -
-------------------------------------------------------
34.82 26.25 5.80 -
---------------------------------------------------------------------
---------------------------------------------------------------------
Trinidad Sales price 63.40 -
& Tobago Royalties 9.82 -
Operating costs 2.94 -
-------------------------------------------------------
50.64 -
---------------------------------------------------------------------
---------------------------------------------------------------------
Total Sales price 62.78 47.45 8.30 6.28
Company Hedging (gain) 0.85 5.42 - 0.07
Royalties 8.64 6.84 1.71 1.21
Transportation 0.86 0.88 0.27 0.26
Operating costs 11.81 10.32 0.76 0.66
-------------------------------------------------------
40.62 23.99 5.56 4.08
---------------------------------------------------------------------
---------------------------------------------------------------------
(1) Unit operating costs include pipeline operations for the North
Sea. Prior years have been restated accordingly. Netbacks do not
include synthetic oil.
Talisman Energy Inc.
Product Netbacks (1)
(unaudited)
Three months ended Twelve months ended
(US$ - production net of December 31 December 31
royalties) 2005 2004(2) 2005 2004(2)
---------------------------------------------------------------------
North Oil and liquids
America (US$/bbl)
Sales price 46.75 36.05 43.55 32.44
Hedging (gain) 4.53 8.81 4.16 5.81
Transportation 0.54 0.47 0.52 0.48
Operating costs 8.82 7.96 7.54 6.55
--------------------------------------------------------
32.86 18.81 31.33 19.60
--------------------------------------------------------
Natural gas
(US$/mcf)
Sales price 10.44 5.74 7.51 5.26
Hedging (gain) - 0.04 - 0.10
Transportation 0.25 0.21 0.20 0.19
Operating costs 1.02 0.79 0.93 0.76
--------------------------------------------------------
9.17 4.70 6.38 4.21
---------------------------------------------------------------------
North Sea Oil and liquids
(US$/bbl)
Sales price 56.74 41.14 53.74 37.23
Hedging (gain) (0.06) 8.27 (0.02) 5.77
Transportation 1.10 0.90 1.00 0.89
Operating costs 14.83 10.40 14.37 10.89
--------------------------------------------------------
40.87 21.57 38.39 19.68
--------------------------------------------------------
Natural gas
(US$/mcf)
Sales price 7.13 4.99 5.88 4.29
Transportation 0.36 0.33 0.44 0.29
Operating costs 0.87 0.63 0.73 0.47
--------------------------------------------------------
5.90 4.03 4.71 3.53
---------------------------------------------------------------------
Southeast Oil and liquids
Asia & (US$/bbl)
Australia Sales price 58.25 43.93 57.24 39.49
Transportation (0.16) 0.25 0.12 0.30
Operating costs 7.16 7.72 6.18 7.32
--------------------------------------------------------
51.25 35.96 50.94 31.87
--------------------------------------------------------
Natural gas
(US$/mcf)
Sales price 5.73 3.72 5.29 3.65
Transportation 0.52 0.43 0.49 0.42
Operating costs 0.37 0.28 0.35 0.27
--------------------------------------------------------
4.84 3.01 4.45 2.96
---------------------------------------------------------------------
North Oil
Africa (US$/bbl)
Sales price 58.04 38.06 55.16 39.48
Transportation 2.22 2.22 2.22 2.20
Operating costs 6.82 5.10 6.09 4.41
--------------------------------------------------------
49.00 30.74 46.85 32.87
--------------------------------------------------------
Natural gas
(US$/mcf)
Sales price 4.97 - 4.97 -
--------------------------------------------------------
4.97 - 4.97 -
---------------------------------------------------------------------
Trinidad Oil (US$/bbl)
& Tobago Sales price 54.35 - 52.44 -
Operating costs 2.49 - 2.86 -
--------------------------------------------------------
51.86 - 49.58 -
---------------------------------------------------------------------
Total Oil and liquids
Company (US$/bbl)
Sales price 55.10 40.16 52.07 36.57
Hedging (gain) 0.76 7.15 0.82 4.90
Transportation 0.85 0.80 0.83 0.79
Operating costs 12.12 9.34 11.36 9.25
--------------------------------------------------------
41.37 22.87 39.06 21.63
--------------------------------------------------------
Natural gas
(US$/mcf)
Sales price 9.07 5.23 6.89 4.84
Hedging (gain) - 0.03 - 0.07
Transportation 0.32 0.26 0.28 0.25
Operating costs 0.88 0.67 0.80 0.63
--------------------------------------------------------
7.87 4.27 5.81 3.89
---------------------------------------------------------------------
(1) Per US reporting practice, netbacks calculated using US$ and
production after deduction of royalty volumes.
(2) Unit operating costs include pipeline operations for the North
Sea. Prior years have been restated accordingly.
Netbacks do not include synthetic oil.
Talisman Energy Inc.
Production net of royalties (1)
(unaudited)
Three Twelve
months ended months ended
December 31 December 31
2005 2004 2005 2004
---------------------------------------------------------------------
Oil and liquids (bbls/d)
North America 43,676 43,636 42,613 43,303
North Sea 157,888 126,622 131,258 120,768
Southeast Asia & Australia 29,505 20,738 21,406 20,884
North Africa 9,558 9,235 9,449 8,338
Trinidad & Tobago 8,975 - 8,545 -
Synthetic oil (Canada) 2,743 2,748 2,587 2,868
---------------------------------------------------------------------
Total oil and liquids 252,345 202,979 215,858 196,161
---------------------------------------------------------------------
Natural gas (mmcf/d)
North America 725 738 733 715
North Sea 142 113 112 105
Southeast Asia & Australia 202 206 198 194
North Africa - - - -
---------------------------------------------------------------------
Total natural gas 1,069 1,057 1,043 1,014
---------------------------------------------------------------------
Total mboe/d 430 379 390 365
---------------------------------------------------------------------
---------------------------------------------------------------------
(1) Information provided per US reporting practice of calculating
production after deduction of royalty volumes.
Continuity of Gross Proved Reserves (1)
Southeast
North North Asia and
America Sea Australia
(2) (3) (4)
---------------------------------------------------------------------
Crude Oil and Liquids (mmbbls)
Total proved
Proved reserves at December 31, 2002 199.1 249.7 60.6
Discoveries, additions, and extensions 16.0 8.2 25.2
Purchase of reserves 1.3 21.1 -
Sale of reserves (5.3) - -
Net revisions and transfers (0.1) 18.7 7.6
2003 Production (20.8) (41.3) (9.0)
---------------------------------------------------------------------
Proved reserves at December 31, 2003 190.2 256.4 84.4
Discoveries, additions, and extensions 17.3 29.8 13.0
Purchase of reserves 0.2 34.1 1.3
Sale of reserves (2.6) (3.3) -
Net revisions and transfers (2.2) 24.6 3.4
2004 Production (19.9) (44.6) (13.0)
---------------------------------------------------------------------
Proved Reserves at December 31, 2004 183.0 297.0 89.1
Discoveries, additions, and extensions 12.6 43.9 12.7
Purchase of reserves 0.2 74.9 22.1
Sale of reserves (0.0) (0.9) -
Net revisions and transfers (2.8) 34.3 (1.3)
2005 Production (19.6) (48.4) (12.9)
---------------------------------------------------------------------
Proved reserves at December 31, 2005 173.4 400.8 109.7
Proved Developed
December 31, 2002 190.0 212.6 19.7
December 31, 2003 186.4 213.0 29.5
December 31, 2004 171.0 254.0 39.9
December 31, 2005 161.0 312.3 67.7
---------------------------------------------------------------------
Natural Gas (bcf)
Total proved
Proved reserves at December 31, 2002 2,593.4 262.1 1,528.3
Discoveries, additions, and extensions 351.5 1.0 107.0
Purchase of reserves 107.1 14.4 -
Sale of reserves (14.3) - -
Net revisions and transfers (77.0) 17.5 (20.6)
2003 Production (315.8) (39.9) (42.7)
---------------------------------------------------------------------
Proved reserves at December 31, 2003 2,644.9 255.1 1,572.0
Discoveries, additions, and extensions 478.5 8.0 765.3
Purchase of reserves 22.8 0.1 -
Sale of reserves (72.7) (0.5) -
Net revisions and transfers (113.2) (33.2) (58.7)
2004 Production (324.9) (41.6) (95.2)
---------------------------------------------------------------------
Proved reserves at December 31, 2004 2,635.4 187.9 2,183.4
Discoveries, additions, and extensions 361.0 24.0 129.1
Purchase of reserves 16.8 61.3 38.9
Sale of reserves (1.2) - -
Net revisions and transfers 28.6 14.1 (3.4)
2005 Production (333.8) (38.5) (103.6)
---------------------------------------------------------------------
Proved reserves at December 31, 2005 2,706.8 248.8 2,244.4
Proved Developed
December 31, 2002 2,278.7 232.8 723.8
December 31, 2003 2,404.0 220.1 920.9
December 31, 2004 2,207.3 160.6 858.2
December 31, 2005 2,226.5 189.7 793.2
North Trinidad
Africa and
(5) Tobago Sudan Total
---------------------------------------------------------------------
Crude Oil and Liquids (mmbbls)
Total proved
Proved reserves at December 31, 2002 27.4 19.2 160.9 716.9
Discoveries, additions, and extensions 3.9 - - 53.3
Purchase of reserves - - - 22.4
Sale of reserves - - (156.1) (161.4)
Net revisions and transfers 0.1 - - 26.3
2003 Production (2.4) - (4.8) (78.3)
---------------------------------------------------------------------
Proved reserves at December 31, 2003 29.0 19.2 - 579.2
Discoveries, additions, and extensions 13.9 - - 74.0
Purchase of reserves - - - 35.6
Sale of reserves - - - (5.9)
Net revisions and transfers (0.7) (7.8) - 17.3
2004 Production (5.0) - - (82.5)
---------------------------------------------------------------------
Proved Reserves at December 31, 2004 37.2 11.4 - 617.7
Discoveries, additions, and extensions 8.6 (0.1) - 77.7
Purchase of reserves 0.8 - - 98.0
Sale of reserves - - - (0.9)
Net revisions and transfers 2.7 0.9 - 33.8
2005 Production (5.6) (3.7) - (90.2)
---------------------------------------------------------------------
Proved reserves at December 31, 2005 43.7 8.5 - 736.1
Proved Developed
December 31, 2002 4.8 - 143.4 570.5
December 31, 2003 25.5 - - 454.4
December 31, 2004 27.9 11.0 - 503.8
December 31, 2005 26.2 8.5 - 575.7
---------------------------------------------------------------------
Natural Gas (bcf)
Total proved
Proved reserves at December 31, 2002 - 223.5 - 4,607.3
Discoveries, additions, and extensions - - - 459.5
Purchase of reserves - - - 121.5
Sale of reserves - - - (14.3)
Net revisions and transfers - - - (80.1)
2003 Production - - - (398.4)
---------------------------------------------------------------------
Proved reserves at December 31, 2003 - 223.5 - 4,695.5
Discoveries, additions, and extensions - - - 1,251.8
Purchase of reserves - - - 22.9
Sale of reserves - - - (73.2)
Net revisions and transfers - (7.0) - (212.1)
2004 Production - - - (461.7)
---------------------------------------------------------------------
Proved reserves at December 31, 2004 - 216.5 - 5,223.2
Discoveries, additions, and extensions - - - 514.1
Purchase of reserves 1.4 - - 118.4
Sale of reserves - - - (1.2)
Net revisions and transfers - (1.3) - 38.0
2005 Production - - - (475.9)
---------------------------------------------------------------------
Proved reserves at December 31, 2005 1.4 215.2 - 5,416.6
Proved Developed
December 31, 2002 - - - 3,235.3
December 31, 2003 - - - 3,545.0
December 31, 2004 - - - 3,226.1
December 31, 2005 0.9 - - 3,210.3
Notes:
(1) See oil and gas advisory.
(2) North American net proved reserves exclude synthetic crude oil
reserves: 2002 - 43.2 mmbbls; 2003 - 42.3 mmbbls; 2004 - 41.2
mmbbls; and 2005 - 40.2 mmbbls.
(3) North Sea for 2002 includes the UK and the Netherlands; for 2003
and 2004 the North Sea includes the UK, the Netherlands and
Norway, but excludes Denmark.
(4) Southeast Asia and Australia for 2002, 2003 and 2004 includes
Indonesia and Malaysia/Vietnam, but excludes Australia.
(5) North Africa for 2002, 2003 and 2004 includes Algeria, but
excludes Tunisia.
Continuity of Net Proved Reserves (1)
Southeast
North North Asia and
America Sea Australia
(2) (3) (4)
---------------------------------------------------------------------
Crude Oil and Liquids (mmbbls)
Total proved
Proved reserves at December 31, 2002 164.1 247.6 36.1
Discoveries, additions and extensions 13.1 8.3 17.0
Purchase of reserves 1.1 21.1 -
Sale of reserves (4.6) - -
Net revisions and transfers 1.1 19.4 4.8
2003 Production (16.4) (41.4) (5.4)
---------------------------------------------------------------------
Proved reserves at December 31, 2003 158.4 255.0 52.5
Discoveries, additions and extensions 14.0 29.7 2.0
Purchase of reserves 0.2 34.0 0.9
Sale of reserves (2.1) (3.3) -
Net revisions and transfers (2.5) 24.0 (1.3)
2004 Production (15.8) (44.3) (7.9)
---------------------------------------------------------------------
Proved Reserves at December 31, 2004 152.2 295.1 46.2
Discoveries, additions and extensions 10.6 44.4 16.4
Purchase of reserves 0.1 74.7 17.0
Sale of reserves (0.0) (0.9) -
Net revisions and transfers (5.2) 31.7 (16.0)
2005 Production (15.5) (47.9) (7.7)
---------------------------------------------------------------------
Proved Reserves at December 31, 2005 142.2 397.1 55.9
Proved Developed
December 31, 2002 157.2 210.8 11.9
December 31, 2003 155.4 211.8 18.6
December 31, 2004 142.6 252.3 19.2
December 31, 2005 132.0 309.0 35.8
---------------------------------------------------------------------
Natural Gas (bcf)
Total proved
Proved reserves at December 31, 2002 1,986.1 237.9 968.9
Discoveries, additions and extensions 276.3 1.0 64.0
Purchase of reserves 92.2 14.4 -
Sale of reserves (11.4) - -
Net revisions and transfers (14.9) 19.8 (6.1)
2003 Production (247.6) (37.5) (40.1)
---------------------------------------------------------------------
Proved reserves at December 31, 2003 2,080.7 235.6 986.7
Discoveries, additions and extensions 370.6 8.0 521.9
Purchase of reserves 19.1 0.1 -
Sale of reserves (57.1) (0.5) -
Net revisions and transfers (19.2) (26.4) 93.5
2004 Production (260.6) (39.5) (47.3)
---------------------------------------------------------------------
Proved reserves at December 31, 2004 2,133.5 177.3 1,554.8
Discoveries, additions and extensions 274.9 23.4 81.7
Purchase of reserves 11.7 61.3 30.8
Sale of reserves (1.1) - -
Net revisions and transfers 2.5 13.5 (94.0)
2005 Production (265.6) (36.2) (73.1)
---------------------------------------------------------------------
Proved reserves at December 31, 2005 2,155.9 239.3 1,500.2
Proved Developed
December 31, 2002 1,746.9 210.0 471.6
December 31, 2003 1,890.4 200.7 593.9
December 31, 2004 1,788.2 150.0 624.0
December 31, 2005 1,771.8 181.1 548.8
North Trinidad
Africa and
(5) Tobago Sudan Total
---------------------------------------------------------------------
Crude Oil and Liquids (mmbbls)
Total proved
Proved reserves at December 31, 2002 13.9 18.9 94.3 574.9
Discoveries, additions and extensions 2.3 - - 40.7
Purchase of reserves - - - 22.2
Sale of reserves - - (91.7) (96.3)
Net revisions and transfers 0.5 (0.8) - 25.0
2003 Production (0.1) (2.6) (65.9)
---------------------------------------------------------------------
Proved reserves at December 31, 2003 16.6 18.1 - 500.6
Discoveries, additions and extensions 8.1 - - 53.8
Purchase of reserves - - - 35.1
Sale of reserves - - - (5.4)
Net revisions and transfers 0.3 (7.2) - 13.3
2004 Production (3.1) - - (71.1)
---------------------------------------------------------------------
Proved Reserves at December 31, 2004 21.9 10.9 - 526.3
Discoveries, additions and extensions 4.7 (0.9) - 75.2
Purchase of reserves 0.7 - - 92.5
Sale of reserves - - - (0.9)
Net revisions and transfers 0.3 0.8 - 11.6
2005 Production (3.5) (3.1) - (77.7)
---------------------------------------------------------------------
Proved Reserves at December 31, 2005 24.1 7.7 - 627.0
Proved Developed
December 31, 2002 2.4 - 84.1 466.4
December 31, 2003 14.6 - - 400.4
December 31, 2004 16.5 10.5 - 441.1
December 31, 2005 14.6 7.7 - 499.1
---------------------------------------------------------------------
Natural Gas (bcf)
Total proved
Proved reserves at December 31, 2002 - 220.0 - 3,412.9
Discoveries, additions and extensions - - - 341.3
Purchase of reserves - - - 106.6
Sale of reserves - - - (11.4)
Net revisions and transfers - (9.0) - (10.2)
2003 Production - - - (325.2)
---------------------------------------------------------------------
Proved reserves at December 31, 2003 - 211.0 - 3,514.0
Discoveries, additions and extensions - - - 900.5
Purchase of reserves - - - 19.2
Sale of reserves - - - (57.6)
Net revisions and transfers - 5.5 - 53.4
2004 Production - - - (347.4)
---------------------------------------------------------------------
Proved reserves at December 31, 2004 - 216.5 - 4,082.1
Discoveries, additions and extensions - - - 380.0
Purchase of reserves 1.2 - - 105.0
Sale of reserves - - - (1.1)
Net revisions and transfers - (2.9) - (80.9)
2005 Production - - - (374.9)
---------------------------------------------------------------------
Proved reserves at December 31, 2005 1.2 213.6 - 4,110.2
Proved Developed
December 31, 2002 - - - 2,428.5
December 31, 2003 - - - 2,685.0
December 31, 2004 - - - 2,562.2
December 31, 2005 0.8 - - 2,502.5
Notes:
(1) See oil and gas advisory.
(2) North American net proved reserves exclude synthetic crude oil
reserves: 2002 - 36.7 mmbbls; 2003 - 35.8 mmbbls; 2004 - 35.2
mmbbls; and 2005 - 34.3 mmbbls.
(3) North Sea for 2002 includes the UK and the Netherlands; for 2003
and 2004 the North Sea includes the UK, the Netherlands and
Norway, but excludes Denmark.
(4) Southeast Asia and Australia for 2002, 2003 and 2004 includes
Indonesia and Malaysia/Vietnam, but excludes Australia.
(5) North Africa for 2002, 2003 and 2004 includes Algeria, but
excludes Tunisia.
FOR FURTHER INFORMATION PLEASE CONTACT:
Talisman Energy Inc.
David Mann, Senior Manager,
Corporate & Investor Communications
(403) 237-1196
(403) 237-1210 (FAX)
Email: tlm@talisman-energy.com
Website: www.talisman-energy.com
