Talisman Energy Inc.
TSX : TLM
NYSE : TLM

Talisman Energy Inc.

July 28, 2011 05:10 ET

Talisman Energy Reports Strong Financial Quarter

Cash Flow Up 14% to $897 Million

CALGARY, ALBERTA--(Marketwire - July 28, 2011) - Talisman Energy Inc. (TSX:TLM) (NYSE:TLM) reported its operating and financial results for the second quarter of 2011. The company is reporting under International Financial Reporting Standards (IFRS) and all values in this release are in US$ unless otherwise stated.

- Cash flow(1) was $897 million for the quarter, up 14% compared to $790 million a year ago and $811 million in the first quarter.

- Net income was $698 million versus $572 million in 2010 and a net loss of $326 million in the previous quarter.

- Earnings from operations(1) were $168 million, up 14% from the same period last year and up from $157 million in the prior quarter.

- Production for the quarter averaged 420,000 boe/d, compared to 411,000 boe/d in 2010. Production from ongoing operations was up 13%, compared to 372,000 boe/d a year ago.

- Net debt(1) at June 30, 2011 was $3 billion versus $2.5 billion at March 31, 2011.

- The company closed a second transaction with Sasol, selling a 50% interest in its Cypress A Montney shale properties for C$1.05 billion, including certain future development costs.

- Talisman acquired additional acreage in the Alberta Duvernay shale play, bringing its land position to 360,000 net acres.

- The company continues to deliver strong natural gas volumes in Southeast Asia, with price realizations of $9.78/mcf.

- Talisman plans to drill a number of important exploration wells in the second half of this year.

(1) The terms "cash flow", "earnings from operations" and "net debt" are non-GAAP measures. Please see the advisories and reconciliations elsewhere in this news release.

"Talisman achieved a strong financial performance this quarter" said John A. Manzoni, President & CEO. "We continue to grow and strengthen our shale portfolio in North America, and are looking forward to results from a number of significant exploration wells in the second half of the year.

"Total volumes in the quarter were 2% above the comparable number for 2010, although down from the first quarter, largely due to annual maintenance turnarounds. Excluding volumes from assets which have been sold, underlying growth in production is 13% year over year.

"We continue to see strong growth in North American shale volumes, which averaged approximately 470 mmcfe per day in the quarter, an increase of 178% over the same period last year and up 4% over the previous quarter. Our success in the Marcellus is continuing, with production averaging over 400 mmcf per day during the quarter.

"In the liquids-rich Eagle Ford shale play, we now have six rigs running and are planning to build to 10 by year-end. In the Montney shale, we are operating 10 rigs and closed the second transaction with Sasol during the quarter, for approximately C$1 billion, including certain future development costs.

"We are continuing to build our North American shale portfolio, with a sizeable land acquisition during the quarter, in what we hope will emerge as another successful liquids-rich play. Talisman now holds approximately 360,000 net acres in the Alberta Duvernay shale play, acquired at an average cost of about $2,000 per acre. We will begin drilling into the play in the second half of the year, with two rigs.

"In Southeast Asia, volumes continue to be strong, although down from a year ago, reflecting a one-time upward adjustment in the second quarter of last year and annual maintenance turnarounds. Natural gas prices in the region averaged about $9.80 per mcf during the quarter, reflecting strong regional demand and linkage to oil prices.

"North Sea volumes were down relative to both the previous year and the prior quarter, with annual maintenance turnarounds and natural production declines. Ongoing planned turnarounds will result in slightly lower North Sea production in the third quarter, with a return to higher volumes in the fourth quarter when work is completed. Work on future development projects continues and we have seen encouraging early test results at the Grosbeak discovery in Norway.

"The Yme project in Norway took a significant step forward with offshore installation completed at the end of the quarter; however there is still a significant amount of remaining work to commission the topsides. The amount of rework which is required on the platform has turned out to be substantial, and I believe we are now close to defining the full scope. In light of what we have found we are now moving our expectation for first production to the second quarter of 2012.

"In addition, we have seen a slight delay in the final stages of commissioning the non-operated Kitan project, and our Eagle Ford ramp-up was delayed by about three months.

"This combination of factors has led us to revise our current view of production for this year, including Colombia, to between 430,000 and 440,000 boe per day. Excluding Colombia, this represents only slight absolute growth over last year, although it represents between 7 - 10% organic growth from ongoing operations in 2010. It is, nonetheless, below our minimum expectation of 5% absolute growth for the year and I am very disappointed to miss our own target for the first time since I joined the company.

"The factors which have led to this reduction are specific and identifiable, and we remain confident in the underlying quality of the portfolio. Our growth target of 5 - 10% annually in the medium term remains firmly in place.

"There are continuing signs of success in the early testing phase of our international exploration portfolio, which has been largely focused on Colombia and Papua New Guinea to date. In the second half of the year, we plan to drill significant wells in Indonesia, Peru, Poland and the Kurdistan region of northern Iraq.

"Cash flow was $897 million during the quarter, up 14% year over year, reflecting higher oil prices. Similarly, earnings from operations, which adjust for non-operational impacts, were also up 14% to $168 million.

"Net income was $698 million compared to $572 million a year earlier and a loss of $326 million in the first quarter. This reflects the impact of changing commodity prices on the mark-to-market value of held-for-trading financial instruments and changes in the non-cash value of share based payments.

"We continue to expect that our cash exploration and development capital spending will be between $4 to $4.5 billion. In addition, we have spent $510 million on land purchases in the quarter.

"I am confident in the structure of our portfolio to deliver long-term, profitable growth of 5 - 10%. The project set-backs we have experienced are localized, but nevertheless, reinforce the need to continue the improvements we have begun across our business to address project execution and delivery. We can look forward to getting these issues behind us, and to drilling a number of important exploration wells through the second half. The underlying financial performance was strong this quarter, and we will continue to focus on effectively delivering against our strategy, with our strong portfolio of assets."


Financial Results
June 30                                 Three Months Ended Six Months Ended 
                                             2011     2010     2011    2010 
                                        ------------------------------------

                                        ------------------------------------
Cash flow ($ million)                         897      790    1,708   1,595 
                                        ------------------------------------
Cash flow per share(2)                       0.88     0.78     1.67    1.57 
                                        ------------------------------------

                                        ------------------------------------
Net income ($ million)                        698      572      372     943 
                                        ------------------------------------
Net income per share                         0.68     0.56     0.36    0.93 
                                        ------------------------------------

                                        ------------------------------------
Earnings from operations ($ million)          168      148      325     303 
                                        ------------------------------------
Earnings from operations per share (2)       0.16     0.15     0.32    0.30 
                                        ------------------------------------

                                        ------------------------------------
Average shares outstanding 
 - basic (million)                          1,025    1,018    1,024   1,018 


(2) The terms "cash flow per share" and "earnings from operations per share"
    are non-GAAP measures. For a reconciliation of non-GAAP measures to the
    corresponding GAAP measures and presentation of diluted cash flow per
    share and earnings from operations per share, please see the advisories
    and reconciliations elsewhere in this news release.

Cash flow was $897 million for the quarter, compared to $790 million a year ago as a result of higher oil prices, which more than offset increased royalties, cash taxes and realized losses on held-for-trading financial instruments.

During the second quarter, net income increased to $698 million from $572 million a year ago, also due to higher prices. Talisman recorded a first quarter loss of $326 million but saw a substantial shift in both non-cash share based payments and the mark-to-market value of held-for-trading financial instruments.

Earnings from operations were up 14% to $168 million compared to $148 million a year earlier and $157 million in the previous quarter.

The company's depreciation, depletion and amortization (DD&A) expense was $479 million in the second quarter, up 17% over last year as a result of the Auk North field start-up, Equion acquisition, higher production volumes and the change in unlifted oil volumes. Dry hole expense was $36 million and includes an unsuccessful exploration well in Papua New Guinea. Exploration expense increased by $67 million relative to 2010 as a result of seismic activities in Indonesia, Papua New Guinea, Colombia and North America.

Net debt increased from $2.5 billion to $3 billion in the second quarter, reflecting a $510 million land acquisition in North America.


Gross production

June 30                                 Three Months Ended Six Months Ended 
                                             2011     2010     2011    2010 
                                        ------------------------------------

                                        ------------------------------------
Oil and liquids (bbls/d)                  175,000  182,000  186,000 195,000 
                                        ------------------------------------
Natural gas (mmcf/d)                        1,470    1,376    1,478   1,372 
                                        ------------------------------------
Total (boe/d)                             420,000  411,000  432,000 423,000 
                                        ------------------------------------

                                        ------------------------------------
Ongoing operations (boe/d)                420,000  372,000  432,000 381,000 
                                        ------------------------------------

Total production this quarter increased by 2% over the comparable period for 2010, but down by 5% over the first quarter as a result of annual maintenance turnarounds in the North Sea and Southeast Asia.

Production from ongoing operations increased by 13% over the same period last year, reflecting a 47% increase in underlying North American natural gas volumes, the Equion acquisition and the Auk North field start-up in the UK.


Netbacks

June 30                                 Three Months Ended Six Months Ended 
$/boe                                        2011     2010     2011    2010 
                                        ------------------------------------

                                        ------------------------------------
Sales                                       68.47    51.48    67.08   53.18 
                                        ------------------------------------
Royalties                                  (13.28)   (8.51)  (12.34)  (8.33)
                                        ------------------------------------
Transportation                              (1.35)   (1.47)   (1.38)  (1.49)
                                        ------------------------------------
Operating expenses                         (14.36)  (12.47)  (13.31) (12.60)
                                        ------------------------------------
Netback                                     39.48    29.03    40.05   30.76 
                                        ------------------------------------

                                        ------------------------------------
Oil & liquids netback ($/bbl)               61.97    40.82    63.39   42.55 
                                        ------------------------------------
Natural gas netback ($/mcf)                  3.90     3.28     3.74    3.46 
                                        ------------------------------------

Netbacks in the second quarter averaged $39.48/boe, up 36% from a year ago and 3% lower than the first quarter. Talisman's realized price (before hedging) of $68.47/boe was 33% higher than 2010, due principally to higher global oil and liquids prices. WTI oil prices averaged $103/bbl, up 31 % from the same period last year. NYMEX natural gas prices averaged $4.36/mmbtu, compared to $4.07/mmbtu a year ago.

Talisman's royalty rate averaged 18% during the quarter, up 1% from the same period last year. Unit operating expenses increased by 15% over the same period last year due to more expansive turnarounds in the North Sea, well maintenance in Southeast Asia, the change in unlifted oil volumes, additional operations in Colombia and the stronger British pound.

North America

In North America, production averaged 1,016 mmcfe/d (169,000 boe/d) for the second quarter, up 7% from a year ago. Capital spending was $433 million in the second quarter, including $388 million related to shale activities.

Production from shale averaged 470 mmcfe/d (78,000 boe/d) in the second quarter, an increase of 178% over the previous year, and an increase of 4% over the previous quarter. Conventional production averaged 546 mmcfe/d (91,000 boe/d) in the second quarter.

Talisman spent $510 million on land acquisitions in Alberta during the quarter. The company's position in the Duvernay shale now totals 360,000 net acres, with an average acquisition cost of approximately $2,000 per acre. Talisman plans drilling into the play in the second half of this year with two rigs.

In the Marcellus shale, Talisman USA drilled 39 gross wells (28 net) during the quarter for a total of 65 gross wells (49 net) for the first six months of 2011. Production averaged 406 mmcf/d for the quarter, up 16% from the previous quarter and up 184% from the second quarter of 2010. Talisman now expects to be at the upper end of its annual production guidance of 350 - 400 mmcf/d as it builds out new wells and infrastructure in the eastern part of the play.

In the Farrell Creek area of the Montney shale, Talisman drilled 12 gross (six net) development wells during the quarter for a total of 20 gross wells (10 net) in the first six months of 2011. Net production averaged 22 mmcf/d for the quarter. The company currently has 10 rigs running. Overall, in the Montney play, we continue to be on track to meet our production guidance for the year.

Talisman has closed a second deal with Sasol, selling a 50% working interest in its Cypress A properties for a total consideration of C$1.05 billion, consisting of $257 million in cash and funding certain future development costs. The two companies have commenced a feasibility study on a gas-to-liquids plant in Western Canada.

In the Eagle Ford shale, Talisman USA drilled 10 gross (four net) horizontal development wells during the quarter for a total of 19 gross wells (seven net) in the first six months of 2011. Production averaged 16 mmcfe/d for the quarter. The company has six rigs operating in the area, with plans to increase this to 10 by year-end.

Earlier this year, the partners agreed to use dedicated frac crews in the Eagle Ford rather than pay significantly higher spot rates. These crews are up and running; however, the result will be fewer wells and lower production for the year than anticipated. During the quarter, the partners also reached agreement to acquire additional acreage in the Eagle Ford.

Production from Talisman's conventional properties averaged 417 mmcf/d of natural gas and 21,600 bbls/d of liquids for the second quarter.

North Sea

North Sea production averaged 105,500 boe/d, compared to 136,000 boe/d in the previous quarter and 114,960 boe/d a year ago. Production was lower due to planned annual maintenance in both the UK and Norway, and natural field declines.

Production in the UK averaged 73,200 boe/d, a 20% reduction from the previous quarter and an increase of 14% over the previous year, primarily driven by the start-up of Auk North. Against the previous quarter, production was reduced by a turnaround, completed as planned at Piper/Tweedsmuir, as well as natural declines at Tweedsmuir. Production is expected to be impacted further in the third quarter with shutdowns planned at Claymore, Tartan, Buchan and Ross/Blake.

Production in Norway averaged 32,300 boe/d, a 36% decrease over the same period in 2010 and a 27% decrease from the previous quarter. Volumes decreased quarter on quarter due to completion of maintenance turnarounds at Brage and Veslefrikk, with similar impacts expected in the third quarter due to a planned turnaround at Rev. Production also continues to be impacted by natural declines at Rev.

Work on future developments continued in the quarter, with Talisman spending $307 million in the North Sea. A fourth production well in the UK Auk North field was successfully completed in early July, and development wells at Gyda and Veslefrikk were also successfully completed in Norway. A gaslift project has increased production potential from Gyda by approximately 20%. A sidetrack is planned in early 2012 at Rev to mitigate the natural decline in the field.

The Yme project took a significant step forward with offshore installation at the end of the quarter. During the quarter, Talisman completed some required rework onshore; however, there is still a significant amount of remaining work to commission the topsides. The company now expects first production from Yme will commence in the second quarter of 2012.

Southeast Asia

Production for the second quarter was 116,200 boe/d, 1% higher than the previous period and 7% lower than same period last year. During the quarter, natural gas prices averaged $9.78/mcf. The company invested $22 million in development activities.

In Malaysia, production averaged 37,500 boe/d, 4% higher than last quarter, and 10% lower than the same period last year. Liquids were higher in 2010, largely due to a one-time redetermination of the company's working interest in the South Angsi field, with an associated increase of 7,000 boe/d in that period. Gas sales averaged 119 mmcf/d, 4% higher than the previous quarter, reflecting optimization initiatives at the PM3 facilities and strong regional demand. To meet fast growing gas demand across Malaysia, Talisman is working closely with its joint venture partners to develop further initiatives at PM3 to increase gas production over the coming months.

In Indonesia, production was 74,200 boe/d, 1% higher than last quarter and 5% lower than the same period last year, reflecting increased maintenance activities and planned plant shutdowns at Corridor and Tangguh during the current period. The Jambi Merang project delivered first gas sales in April, three months ahead of schedule, and attained a daily production of 76 mmcf/d gross sales gas (19 mmcf/d net sales) by the end of second quarter. Volumes are expected to reach 120 mmcf/d gross sales gas (30 mmcf/d net sales gas) in the third quarter. The first of two planned Corridor infill wells was drilled, completed and brought on production. The Sumpal 6 well was brought on stream and is currently flowing at 35 mmcf/d gross raw gas (8 mmcf/d net sales gas) and it is expected to ramp up to 120 mmcf/d gross raw gas (28 mmcf/d net sales gas) by the end of next quarter.

At Corridor, the Letang Tengah Rawa optimization project was sanctioned during the quarter and is expected to deliver 45 mmcf/d gross sales gas (16 mmcf/d net sales gas) to the premium priced Caltex/Duri gas sales contract from the beginning of 2013.

Following maintenance turnarounds in the first half of the year, the two Tangguh production trains are now operating at close to nameplate capacity.

In Vietnam, production averaged 1,800 bbls/d. The Hai Su Trang and Hai Su Den development is progressing and is expected to be sanctioned in the fourth quarter of this year.

Production averaged 2,600 bbls/d in Australia. The company expects a slight delay in commissioning the non-operated Kitan project, which is still anticipated in the fourth quarter.

International Exploration

International exploration spending in the second quarter of $282 million was focused on exploration and appraisal wells in Papua New Guinea (PNG), Colombia and the North Sea, and active seismic programs in Southeast Asia and Latin America.

Talisman is on target to participate in seven exploration and appraisal wells in the PNG Foreland Basin in 2011. Seismic acquisition for the current program was completed at the end of June. The Stanley-2 and Stanley-4 appraisal wells and the Ubuntu-1 and Awapa-1 exploration wells have been drilled, and the Siphon-1 exploration well was spudded at the end of June. The Awapa well was dry; however, this was a commitment well which was not part of the gas aggregation strategy, and we remain confident in our objective of successfully aggregating 2-4 tcf.

In Malaysia, the Sabah 3D seismic acquisition program commenced in the second quarter, and the drilling program is expected to begin in 2012. In Vietnam, 3D seismic in Blocks 135 and 136 concluded in early July, and a 2D seismic program is on target to commence in the third quarter. A Production Sharing Contract for Blocks 135 and 136 was signed in April with PetroVietnam; Talisman is the operator and has a 40% working interest.

In Indonesia, the South Makassar seismic acquisition program was completed in the second quarter, and the company is on target to spud the Lempuk well in the third quarter. Talisman signed a farmout agreement with Total E&P in three of Talisman's blocks in South Makassar (33 - 50% equity). Total is the largest gas producer in Indonesia and brings significant deepwater experience and potential access to markets. The farmout agreement is subject to government approval.

In Colombia, Talisman completed drilling the sixth stratigraphic well in Block 6. The partners in the block are in the process of converting Block 6 to an Exploration and Production Contract and finalizing plans to fully appraise the Guairuro discovery, with a possible 3D seismic acquisition program in late 2011.

In the Niscota block, the Huron-2 appraisal well spudded on June 30, 2011 and is currently drilling. The Huron-3 appraisal well is expected to spud by mid-year 2012.

In Block 8, Talisman completed the first phase (245 kilometers) of seismic data acquisition and a two-well stratigraphic drilling program is expected to commence in the fourth quarter.

In Block 9, a six month production test of the Akacias-1 discovery commenced in late May and is currently producing approximately 1,600 bbls/d (gross) of oil. The company is looking to acquire 200 kilometers of 2D seismic data and initiate a four-well appraisal well program later this year. A re-entry and test of the Humadea discovery well and a Humadea exploration well are scheduled in the first quarter 2012.

Since the closing of the acquisition of Equion Energia (49% net Talisman), production has averaged 12,000 boe/d (net Talisman). Equion is planning to drill two development wells in the Piedemonte field in the second half of 2011. These wells are part of a full-scale expansion of the Piedemonte complex, with project sanction planned for the first half of 2012.

In Peru, Talisman is progressing towards a fourth quarter spud of the Situche Norte exploration well. This is a follow-up well to the successful Situche Central 3X exploration well which was drilled in 2010.

In Norway, the Grosbeak appraisal well on PL378 reached target depth in the second quarter and the Brent formation has been successfully tested at 4,800 boe/d (gross). Talisman is also participating in the Skalle and Peking Duck exploration wells, both of which are expected to reach target depth in the third quarter.

In Poland, seismic acquisition is complete and Talisman remains on target to spud its first two shale gas wells later this year.

In the Kurdistan region of northern Iraq, the Topkhana-1 exploration well in Block K39 is drilling ahead and the Kurdamir-2 well in Block K44 is expected to spud in the fourth quarter.

Talisman Energy Inc. is a global, diversified, upstream oil and gas company, headquartered in Canada. Talisman's three main operating areas are North America, the North Sea and Southeast Asia. The company also has a portfolio of international exploration opportunities. Talisman is committed to conducting business safely, in a socially and environmentally responsible manner, and is included in the Dow Jones Sustainability (North America) Index. Talisman is listed on the Toronto and New York stock exchanges under the symbol TLM. Please visit our website at www.talisman-energy.com.

Forward-Looking Information

This news release contains information that constitutes "forward-looking information" or "forward-looking statements" (collectively "forward-looking information") within the meaning of applicable securities legislation. This forward-looking information includes, among others, statements regarding:

- expected timing of first production of the Yme field;

- management's expectation for annual production growth and organic growth;

- expected cash exploration and development spending;

- planned drilling in Talisman's conventional properties in North America, and in the UK, Norway, Indonesia, Malaysia, Papua New Guinea, Peru, Poland and the Kurdistan region of Northern Iraq;

- planned drilling program in the Alberta Duvernay;

- expected drilling, rigs and production in the Eagle Ford shale;

- expected annual production in the Marcellus and Montney shale;

- expected closing of the Eagle Ford transaction;

- planned turnarounds and expected impacts on production in the North Sea;

- planned Gyda infill drilling

- expected production in Indonesia, including production from the Sumpal 6 well and Letang Tengah Rawa optimization project;

- expected seismic program in Vietnam;

- expected sanctioning of the Hai Su Trang and Hai Su Den development;

- potential initiatives at PM3;

- expected timing of the Skalle and Peking Duck wells;

- expected commissioning of the Kitan project;

- the expected spud of the Lempuk well, the Situche Norte exploration well, the Kurdamir-2 well, the Huron-3 appraisal well, and shale gas wells in Poland;

- expected appraisal, seismic acquisition, exploration, testing, drilling, and development in Colombia;

- Equion's expected drilling and project sanctioning in the Piedemonte complex; and

- other business strategy, plans and priorities.

The forward-looking information contained herein assumes production will be between 430,000 and 440,000 boe/d in 2011, a WTI oil price of approximately US$95/bbl, a NYMEX natural gas price of approximately US$4/mmbtu and 2011 cash exploration and development capital spending of $4 to $4.5 billion. Information regarding business plans generally assumes that the extraction of crude oil, natural gas and natural gas liquids remains economic. Closing of any transactions will be subject to receipt of all necessary regulatory approvals and completion of definitive agreements.

Undue reliance should not be placed on forward-looking information. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Talisman and described in the forward-looking information contained in this news release. The material risk factors include, but are not limited to:

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

- risks and uncertainties involving geology of oil and gas deposits;

- uncertainty related to securing sufficient egress and markets to meet shale gas production;

- the uncertainty of reserves and resources estimates, reserves life and underlying reservoir risk;

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

- the impact of the economy on the ability of the counterparties to the company's commodity price derivative contracts to meet their obligations under the contracts;

- 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 any future acquisitions and dispositions;

- health, safety and environmental risks;

- uncertainties as to the availability and cost of financing and changes in capital markets;

- 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 possibility that government policies or laws may change or governmental approvals may be delayed or withheld, including with respect to share gas drilling; and

- results of the company's risk mitigation strategies, including insurance and any hedging activities.

The foregoing list of risk factors is not exhaustive. Additional information on these and other factors, which could affect the company's operations or financial results, are included in the company's most recent Annual Information Form. In addition, information is available in the company's other reports on file with Canadian securities regulatory authorities and the United States Securities and Exchange Commission (SEC). Forward-looking information is based on the estimates and opinions of the company's management at the time the information is presented. The company assumes no obligation to update forward-looking information should circumstances or management's estimates or opinions change, except as required by law.

Unless the context indicates otherwise, references in this news release to "Talisman" or the "company" include, for reporting purposes only, the direct or indirect subsidiaries of Talisman Energy Inc. and the partnership interests held by Talisman Energy Inc. and its subsidiaries. Such use of "Talisman" or the "company" to refer to these other legal entities and partnership interests does not constitute waiver by Talisman Energy Inc. or such entities or partnerships of their separate legal status, for any purpose.

The completion of any contemplated disposition or acquisition 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 disposition.

Oil and Gas Information

Throughout this news release, Talisman makes reference to production volumes. Unless otherwise stated, 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 US, net production volumes are reported after the deduction of these amounts.

Barrel of oil equivalent (boe) throughout this news release is calculated at a conversion rate of six thousand cubic feet (mcf) of natural gas for one barrel of oil (bbl). This news release also includes reference to mcf equivalents (mcfes) which are calculated at a conversion rate of one barrel of oil to 6,000 cubic feet of gas. Boes and mcfes may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf:1 bbl and an mcfe conversion ration of 1 bbl: 6 mcf are based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

Talisman also discloses its company netbacks in this news release. Netbacks per boe are calculated by deducting from sales price associated royalties, operating and transportation costs.

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, earnings from operations, net debt and capital expenditure including exploration expensed. These terms are not defined by International Financial Reporting Standards (IFRS). Consequently, these are referred to as non-GAAP measures. Talisman's reported results of cash flow, earnings from operations, net debt and capital expenditure including exploration expensed may not be comparable to similarly titled measures reported by other companies.


Cash Flow
US$ million, except per share amounts

                                   Three months ended      Six months ended 
                                  ------------------------------------------
                                   June 30,   June 30,   June 30,   June 30,
                                      2011       2010       2011       2010 
----------------------------------------------------------------------------
Cash provided by operating 
 activities                            896        860      1,779      1,892 
Changes in non-cash working capital    (94)       (91)      (221)      (363)
Add: Exploration expenditure           136         69        248        162 
Less:  Finance costs (cash)            (41)       (48)       (98)       (96)
----------------------------------------------------------------------------
Cash flow                              897        790      1,708      1,595 
----------------------------------------------------------------------------
Cash flow per share                   0.88       0.78       1.67       1.57 
----------------------------------------------------------------------------
Diluted cash flow per share           0.86       0.77       1.63       1.53 
----------------------------------------------------------------------------

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 between 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 IFRS 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. Diluted cash flow per share is cash flow divided by the diluted number of common shares outstanding during the period, as reported in the interim condensed consolidated financial statements filed on July 28, 2011. A reconciliation of cash provided by operating activities to cash flow is provided above.


Earnings from Operations
US$ million, except per share amounts

                                   Three months ended      Six months ended 
                                  ------------------------------------------
                                   June 30,   June 30,   June 30,   June 30,
                                      2011       2010       2011       2010 
----------------------------------------------------------------------------
Net income                             698        572        372        943
----------------------------------------------------------------------------
Gain on disposal and income from 
 assets sold (tax adjusted)            (89)      (295)      (157)      (370)
Unrealized (gain) loss on financial 
 instruments (tax adjusted)(1)        (181)       (95)        82       (230)
Share-based payments(2)(tax adjusted) (179)       (51)       (71)      (100)
Foreign exchange on debt                 -          -          8          -
Impairment losses (tax adjusted)         -          3         39         32
Deferred tax adjustments(3)            (81)        14         52         28
----------------------------------------------------------------------------
Earnings from operations(4)            168        148        325        303
----------------------------------------------------------------------------
Earnings from operations per share(4) 0.16       0.15       0.32       0.30
----------------------------------------------------------------------------
Diluted earnings from operations 
 per share(4)                         0.16       0.14       0.31       0.29
----------------------------------------------------------------------------

1.  Unrealized (gain) loss on financial instruments relates to the change 
    in the period of the mark-to-market value of the company's outstanding
    commodity derivatives that are classified as held-for-trading financial
    instruments.
2.  Share-based payments relate principally to the mark-to-market value of
    the company's outstanding stock options and cash units at June 30. The
    company uses the Black-Scholes option pricing model to estimate the 
    fair value of its share-based payment plans.
3.  Deferred tax adjustments include deferred taxes relating to unrealized
    foreign exchange gains and losses associated with the impact of
    fluctuations in the Canadian dollar on foreign denominated debt,
    intercompany loans and tax pool balances, as well as a remeasurement of
    UK deferred tax assets and liabilities in response to a statutory rate
    change. 
4.  This is a non-GAAP measure. 

Earnings from operations are 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. The company uses this information to evaluate performance of core operational activities on a comparable basis between periods. Earnings from operations per share are earnings from operations divided by the average number of common shares outstanding during the period. Diluted earnings from operations per share are earnings from operations divided by the diluted number of common shares outstanding during the period, as reported in the interim condensed consolidated financial statements filed on July 28, 2011. A reconciliation of net income to earnings from operations is provided above.


Net Debt
US$ million

                                              June 30, 2011  March 31, 2011
----------------------------------------------------------------------------
Long-term debt                                        3,858           3,859
Bank indebtedness                                         2               8
Cash and cash equivalents                              (860)         (1,327)
----------------------------------------------------------------------------
Net debt                                              3,000           2,540
----------------------------------------------------------------------------

Net debt is calculated by adjusting the company's long-term debt per the financial statements for bank indebtedness, cash and cash equivalents. The company uses this information to assess its true debt position and eliminate the impact of timing differences.


Capital Expenditure Including Exploration Expensed
US$ million
                                       Three Months Ended  Six Months Ended
                                         June 30, June 30, June 30, June 30,
                                            2011     2010     2011     2010
----------------------------------------------------------------------------
Exploration, development and other           997      863    1,907    1,497
Exploration expensed                         136       69      248      162
----------------------------------------------------------------------------
Total capital expenditures                 1,133      932    2,155    1,659
----------------------------------------------------------------------------

Capital expenditure including exploration expensed is calculated by
adjusting the capital expenditure per the financial statements for
exploration costs that were expensed as incurred.

Talisman Energy Inc.
Highlights
(unaudited)

                               Three months ended          Six months ended
                                          June 30                   June 30
                                  2011       2010           2011       2010
----------------------------------------------------------------------------
Financial
(millions of US$ unless 
 otherwise stated)
Cash flow (1)                      897        790          1,708      1,595
Net income                         698        572            372        943
Capital expenditure including    1,133        932          2,155      1,659
Exploration expensed (1)
Per common share (US$)
 Cash flow (1)                    0.88       0.78           1.67       1.57
 Net income                       0.68       0.56           0.36       0.93
----------------------------------------------------------------------------
Production
(Daily Average - Gross)
Oil and liquids (bbls/d)
 North America                  22,730     25,165         21,911     25,480
 North Sea                      96,186     99,851        109,200    113,533
 Southeast Asia                 32,832     43,421         32,845     41,501
 Other                          22,983     13,470         21,578     13,821
----------------------------------------------------------------------------
Total oil and liquids          174,731    181,907        185,534    194,335
----------------------------------------------------------------------------
Natural gas (mmcf/d)
 North America                     875        797            880        792
 North Sea                          56         91             69        100
 Southeast Asia                    500        488            497        480
 Other                              39          -             32          -
----------------------------------------------------------------------------
Total natural gas                1,470      1,376          1,478      1,372
----------------------------------------------------------------------------
Total mboe/d (2)                   420        411            432        423
----------------------------------------------------------------------------
Prices 
Oil and liquids (US$/bbl)
 North America                   79.33      60.77          74.29      63.92
 North Sea                      117.04      78.07         110.28      77.62
 Southeast Asia                 118.74      79.29         118.01      77.86
 Other                          112.67      75.39         113.46      75.30
----------------------------------------------------------------------------
Total oil and liquids           111.88      75.77         107.77      75.71
----------------------------------------------------------------------------
Natural gas (US$/mcf)
 North America                    4.22       4.62           4.14       5.10
 North Sea                        8.82       5.28           8.66       5.44
 Southeast Asia                   9.78       6.60           9.26       6.65
 Other                            3.04          -           4.03          -
----------------------------------------------------------------------------
Total natural gas                 6.25       5.37           6.07       5.67
----------------------------------------------------------------------------
Total (US$/boe) (2)              68.47      51.48          67.08      53.18
----------------------------------------------------------------------------

(1) Cash flow, capital expenditure including exploration expensed and cash
    flow per share are non-GAAP measures.

(2) 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.


Talisman Energy Inc.
Condensed Consolidated Balance Sheets
(unaudited)
                                            June 30, December 31, January 1,
(millions of US$)                              2011         2010       2010
----------------------------------------------------------------------------
Assets
Current
 Cash and cash equivalents                      860        1,655      1,628
 Accounts receivable                          1,540        1,287      1,216
 Risk management                                 49          119         29
 Inventories                                    187          144        141
 Prepaid expenses                                33           20          8
 Assets held for sale                             -            -         22
----------------------------------------------------------------------------
                                              2,669        3,225      3,044
----------------------------------------------------------------------------
Other assets                                    425          788        108
Risk management                                  34           25         40
Goodwill                                      1,252        1,164      1,183
Property, plant and equipment                14,434       13,266     13,254
Exploration and evaluation assets             4,017        3,442      2,212
Deferred tax assets                             206          184        147
----------------------------------------------------------------------------
                                             20,368       18,869     16,944
----------------------------------------------------------------------------
Total assets                                 23,037       22,094     19,988
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Liabilities
Current
 Bank indebtedness                                2            2         35
 Accounts payable and accrued liabilities     3,014        2,722      2,040
 Risk management                                155          117        266
 Income and other taxes payable                 785          513        341
 Current portion of long-term debt                7          359         10
 Liabilities associated with assets held 
  for sale                                        -            -          7
----------------------------------------------------------------------------
                                              3,963        3,713      2,699
----------------------------------------------------------------------------
Deferred credits                                 33           46         47
Decommissioning liabilities                   2,636        2,580      2,003
Other long-term obligations                     234          280        269
Risk management                                   -            -          6
Long-term debt                                3,851        3,845      3,601
Deferred tax liabilities                      2,712        2,435      2,516
----------------------------------------------------------------------------
                                              9,466        9,186      8,442
----------------------------------------------------------------------------
Shareholders' equity
Common shares, no par value
 Authorized: unlimited
 Issued and outstanding:
 June 30, 2011 - 1,024,656,352 
 (December 31, 2010 -
 1,019,290,939; January 1, 2010 
 - 1,014,876,564)                             1,610        1,480      1,401
Contributed surplus                             154          108        117
Retained earnings                             7,065        6,831      6,135
Accumulated other comprehensive income          779          776      1,194
----------------------------------------------------------------------------
                                              9,608        9,195      8,847
----------------------------------------------------------------------------
Total liabilities and shareholders' equity   23,037       22,094     19,988
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Talisman Energy Inc.
 Condensed Consolidated Statements of Income
 (unaudited)
                                        Three months ended Six months ended
                                                   June 30          June 30
(millions of US$)                           2011      2010     2011    2010
----------------------------------------------------------------------------
Revenue
 Sales                                     2,216     1,574    4,188   3,382
 Other income                                 18        26       46      54
----------------------------------------------------------------------------
Total revenue and other income             2,234     1,600    4,234   3,436
----------------------------------------------------------------------------
Expenses
 Operating                                   555       459    1,007     960
 Transportation                               52        55      108     114
 General and administrative                  108        81      206     158
 Depreciation, depletion and amortization    479       408      948     889
 Impairment                                    -         4      102      93
 Dry hole                                     36        30      140      36
 Exploration                                 136        69      248     162
 Finance costs                                60        68      136     137
 Share-based payments recovery              (176)      (61)     (60)   (131)
 (Gain) loss on held-for-trading financial 
  instruments                                (68)      (64)     251    (162)
 Gain on asset disposals                    (122)     (262)    (214)   (315)
 Other, net                                   23        (6)      81      15
----------------------------------------------------------------------------
Total expenses                             1,083       781    2,953   1,956
----------------------------------------------------------------------------
Income before taxes                        1,151       819    1,281   1,480
----------------------------------------------------------------------------
Taxes
 Current income tax                          436       181      879     445
 Deferred income tax                          17        66       30      92
----------------------------------------------------------------------------
                                             453       247      909     537
----------------------------------------------------------------------------
Net income                                   698       572      372     943
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Per common share (US$):
 Net income                                 0.68      0.56     0.36    0.93
 Diluted net income                         0.50      0.50     0.26    0.79
----------------------------------------------------------------------------
Weighted average number of common shares 
 outstanding (millions)
 Basic                                     1,025     1,018    1,024   1,018
 Diluted                                   1,044     1,029    1,047   1,042
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Talisman Energy Inc.
 Condensed Consolidated Statements of Cash Flows
 (unaudited)
                                        Three months ended Six months ended
                                                   June 30          June 30
(millions of US$)                           2011      2010     2011    2010
----------------------------------------------------------------------------
Operating activities
Net income                                   698       572      372     943
Add: Finance costs (cash and non-cash)        60        68      136     137
Items not involving cash                      44       129    1,050     449
----------------------------------------------------------------------------
                                             802       769    1,558   1,529
Changes in non-cash working capital           94        91      221     363
----------------------------------------------------------------------------
Cash provided by operating activities        896       860    1,779   1,892
----------------------------------------------------------------------------
Investing activities
Capital expenditures
 Exploration, development and other         (997)     (863)  (1,907) (1,497)
 Corporate acquisitions, net of cash 
  acquired                                    19         -     (156)   (183)
 Property acquisitions                      (542)     (346)    (573)   (372)
Proceeds of resource property dispositions   290     1,193      539   1,318
Acquisition deposit                            -         -       18       -
Investments                                    -         -       54       -
Changes in non-cash working capital           53       (25)     (87)    (78)
----------------------------------------------------------------------------
Cash used in investing activities         (1,177)      (41)  (2,112)   (812)
----------------------------------------------------------------------------
Financing activities
Long-term debt repaid                         (2)      (10)    (310)    (10)
Common shares issued                          35         5      114      10
Common shares purchased                      (24)      (26)     (42)    (26)
Finance costs (cash)                         (41)      (48)     (98)    (96)
Common share dividends                      (138)     (122)    (138)   (122)
Deferred credits and other                   (17)       (4)     (20)    (10)
Changes in non-cash working capital            -         1       (1)     (1)
----------------------------------------------------------------------------
Cash used in financing activities           (187)     (204)    (495)   (255)
----------------------------------------------------------------------------
Effect of translation on foreign 
 currency cash and cash equivalents            7       (61)      33     (34)
----------------------------------------------------------------------------
Net increase (decrease) in cash and 
 cash equivalents                           (461)      554     (795)    791
Cash and cash equivalents net of bank 
 indebtedness, beginning of period         1,319     1,830    1,653   1,593
----------------------------------------------------------------------------
Cash and cash equivalents net of bank 
 indebtedness, end of period                 858     2,384      858   2,384
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash and cash equivalents                    860     2,417      860   2,417
Bank indebtedness                             (2)      (33)      (2)    (33)
----------------------------------------------------------------------------
Cash and cash equivalents net of bank 
 indebtedness, end of period                 858     2,384      858   2,384
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Talisman Energy Inc.
Segmented Information
(unaudited)

                                                  North America (1)
----------------------------------------------------------------------------
                                      Three months ended   Six months ended
                                                 June 30            June 30
(millions of US$)                        2011       2010    2011       2010
----------------------------------------------------------------------------
Revenue
Sales                                     448        442     852        919
Other income                               13         22      36         45
----------------------------------------------------------------------------
Total revenue and other income            461        464     888        964
----------------------------------------------------------------------------
Segmented expenses
Operating                                 100        130     211        257
Transportation                             14         15      30         34
DD&A                                      203        176     404        360
Impairment                                  -          4       -         28
Dry hole                                    1        (14)      3        (13)
Exploration                                12          2      39         31
Other                                      (1)       (31)      6        (33)
----------------------------------------------------------------------------
Total segmented expenses                  329        282     693        664
----------------------------------------------------------------------------
Segmented income (loss) before taxes      132        182     195        300
----------------------------------------------------------------------------
Non-segmented expenses
General and administrative
Finance costs
Share-based payments recovery
Currency translation
(Gain) loss on held-for-trading 
  financial instruments
Gain on asset disposals
----------------------------------------------------------------------------
Total non-segmented expenses
----------------------------------------------------------------------------
Income before taxes
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditures
Exploration                                55         83     138        167
Development                               378        291     729        447
Midstream                                   -          1       -          -
----------------------------------------------------------------------------
Exploration and development               433        375     867        614
----------------------------------------------------------------------------
Acquisitions
Proceeds on dispositions
Other non-segmented
----------------------------------------------------------------------------
Net capital expenditures
----------------------------------------------------------------------------
Property, plant and equipment                              5,661      5,351
Exploration and evaluation assets                          2,331      1,886
Goodwill                                                     140        149
Other                                                      1,024      2,389
----------------------------------------------------------------------------
Segmented assets                                           9,156      9,775
Non-segmented assets
----------------------------------------------------------------------------
Total assets (5)
----------------------------------------------------------------------------
Decommissioning liabilities (5)           203        210
----------------------------------------------------------------------------

                                                    North Sea (2)
----------------------------------------------------------------------------
                                      Three months ended   Six months ended
                                                 June 30            June 30
(millions of US$)                        2011       2010    2011       2010
----------------------------------------------------------------------------
Revenue
Sales                                   1,167        717   2,255      1,658
Other income                                5          3      10          8
----------------------------------------------------------------------------
Total revenue and other income          1,172        720   2,265      1,666
----------------------------------------------------------------------------
Segmented expenses
Operating                                 357        259     617        567
Transportation                             23         23      46         47
DD&A                                      181        157     367        385
Impairment                                  -          -     102         65
Dry hole                                    2         43      77         43
Exploration                                 7          8      18         23
Other                                       5         15      14         21
----------------------------------------------------------------------------
Total segmented expenses                  575        505   1,241      1,151
----------------------------------------------------------------------------
Segmented income (loss) before taxes      597        215   1,024        515
----------------------------------------------------------------------------
Non-segmented expenses
General and administrative
Finance costs
Share-based payments recovery
Currency translation
(Gain) loss on held-for-trading 
  financial instruments
Gain on asset disposals
----------------------------------------------------------------------------
Total non-segmented expenses
----------------------------------------------------------------------------
Income before taxes
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditures
Exploration                                54         63     105         67
Development                               307        244     552        506
Midstream                                   -          -       -          -
----------------------------------------------------------------------------
Exploration and development               361        307     657        573
----------------------------------------------------------------------------
Acquisitions
Proceeds on dispositions
Other non-segmented
----------------------------------------------------------------------------
Net capital expenditures
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Property, plant and equipment                              5,462      5,368
Exploration and evaluation assets                            555        540
Goodwill                                                     866        866
Other                                                        897        920
----------------------------------------------------------------------------
Segmented assets                                           7,780      7,694
Non-segmented assets
----------------------------------------------------------------------------
Total assets (5)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Decommissioning liabilities (5)                            2,227      2,196
----------------------------------------------------------------------------
----------------------------------------------------------------------------


1. North America                         2011       2010    2011       2010
----------------------------------------------------------------------------
Canada                                    300        394     590        840
US                                        161         70     298        124
----------------------------------------------------------------------------
Total revenue and other income            461        464     888        964
----------------------------------------------------------------------------
Canada                                                     3,807      3,920
US                                                         1,854      1,431
----------------------------------------------------------------------------
Property, plant and equipment (5)                          5,661      5,351
----------------------------------------------------------------------------
Canada                                                     1,117        685
US                                                         1,214      1,201
----------------------------------------------------------------------------
Exploration and evaluation assets (5)                      2,331      1,886
----------------------------------------------------------------------------

2. North Sea                             2011       2010    2011       2010
----------------------------------------------------------------------------
UK                                        866        449   1,602      1,035
Norway                                    306        271     663        631
----------------------------------------------------------------------------
Total revenue and other income          1,172        720   2,265      1,666
----------------------------------------------------------------------------
UK                                                         3,705      3,763
Norway                                                     1,757      1,605
----------------------------------------------------------------------------
Property, plant and equipment (5)                          5,462      5,368
----------------------------------------------------------------------------
UK                                                           217        260
Norway                                                       338        280
----------------------------------------------------------------------------
Exploration and evaluation assets (5)                        555        540
----------------------------------------------------------------------------

5. Current year represents balances at June 30. Prior year represents 
   balances at December 31.

                              Southeast Asia (3)            Other (4)
                    --------------------------------------------------------
                         Three months  Six months  Three months  Six months 
                                ended       ended         ended       ended
                              June 30     June 30       June 30     June 30
(millions of US$)         2011   2010 2011   2010   2011   2010 2011   2010
----------------------------------------------------------------------------
Revenue
Sales                      442    360  828    719    159     55  253     86
Other income                 -      1    -      1      -      -    -      -
----------------------------------------------------------------------------
Total revenue and other 
 income                    442    361  828    720    159     55  253     86
----------------------------------------------------------------------------
Segmented expenses
Operating                   75     62  147    123     23      8   32     13
Transportation              13     15   28     29      2      2    4      4
DD&A                        63     67  125    131     32      8   52     13
Impairment                   -      -    -      -      -      -    -      -
Dry hole                    33      1   57     (7)     -      -    3     13
Exploration                 83     21  135     44     34     38   56     64
Other                        1      9    4     18     12     (6)  12      4
----------------------------------------------------------------------------
Total segmented expenses   268    175  496    338    103     50  159    111
----------------------------------------------------------------------------
Segmented income (loss) 
 before taxes              174    186  332    382     56      5   94    (25)
----------------------------------------------------------------------------
Non-segmented expenses
General and administrative
Finance costs
Share-based payments recovery
Currency translation
(Gain) loss on held-for-
 trading financial 
 instruments
Gain on asset disposals
----------------------------------------------------------------------------
Total non-segmented expenses
----------------------------------------------------------------------------
Income before taxes
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditures
Exploration                 79     11  128     36     25     14   41     47
Development                 22    109   93    149     45     29   73     49
Midstream                    -      -    -      -      -      -    -      -
----------------------------------------------------------------------------
Exploration and 
 development               101    120  221    185     70     43  114     96
----------------------------------------------------------------------------
Acquisitions
Proceeds on dispositions
Other non-segmented
----------------------------------------------------------------------------
Net capital expenditures
----------------------------------------------------------------------------
Property, plant and 
 equipment                           2,272  2,296              1,039    251
Exploration and evaluation 
 assets                                705    627                426    389
Goodwill                               149    149                 97      -
Other                                  578    628                752    141
----------------------------------------------------------------------------
Segmented assets                     3,704  3,700              2,314    781
Non-segmented assets
----------------------------------------------------------------------------
Total assets (5)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Decommissioning liabilities (5)        195    189                 46     15
----------------------------------------------------------------------------


                                                        Total
                                  ------------------------------------------
                                        Three months ended Six months ended
                                                   June 30          June 30
(millions of US$)                           2011      2010     2011    2010
----------------------------------------------------------------------------
Revenue
Sales                                      2,216     1,574    4,188   3,382
Other income                                  18        26       46      54
----------------------------------------------------------------------------
Total revenue and other income             2,234     1,600    4,234   3,436
----------------------------------------------------------------------------
Segmented expenses
Operating                                    555       459    1,007     960
Transportation                                52        55      108     114
DD&A                                         479       408      948     889
Impairment                                     -         4      102      93
Dry hole                                      36        30      140      36
Exploration                                  136        69      248     162
Other                                         17       (13)      36      10
----------------------------------------------------------------------------
Total segmented expenses                   1,275     1,012    2,589   2,264
----------------------------------------------------------------------------
Segmented income (loss) before taxes         959       588    1,645   1,172
----------------------------------------------------------------------------
Non-segmented expenses
General and administrative                   108        81      206     158
Finance costs                                 60        68      136     137
Share-based payments recovery               (176)      (61)     (60)   (131)
Currency translation                           6         7       45       5
(Gain) loss on held-for-trading financial 
 instruments                                 (68)      (64)     251    (162)
Gain on asset disposals                     (122)     (262)    (214)   (315)
----------------------------------------------------------------------------
Total non-segmented expenses                (192)     (231)     364    (308)
----------------------------------------------------------------------------
Income before taxes                        1,151       819    1,281   1,480
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditures
Exploration                                  213       171      412     317
Development                                  752       673    1,447   1,151
Midstream                                      -         1        -       -
----------------------------------------------------------------------------
Exploration and development                  965       845    1,859   1,468
----------------------------------------------------------------------------
Acquisitions                                 564       350    1,357     570
Proceeds on dispositions                    (290)   (1,193)    (539) (1,352)
Other non-segmented                           28        19       44      28
----------------------------------------------------------------------------
Net capital expenditures                   1,267        21    2,721     714
----------------------------------------------------------------------------
Property, plant and equipment                                14,434  13,266
Exploration and evaluation assets                             4,017   3,442
Goodwill                                                      1,252   1,164
Other                                                         3,251   4,078
----------------------------------------------------------------------------
Segmented assets                                             22,954  21,950
Non-segmented assets                                             83     144
----------------------------------------------------------------------------
Total assets (5)                                             23,037  22,094
----------------------------------------------------------------------------
Decommissioning liabilities (5)                               2,671   2,610
----------------------------------------------------------------------------


3. Southeast Asia                           2011      2010     2011    2010
----------------------------------------------------------------------------
Indonesia                                    226       219      450     427
Malaysia                                     121       119      244     232
Vietnam                                       66        15      103      30
Australia                                     29         8       31      31
----------------------------------------------------------------------------
Total revenue and other income               442       361      828     720
----------------------------------------------------------------------------
Indonesia                                                     1,011     986
Malaysia                                                        960   1,053
Vietnam                                                          29      19
Papua New Guinea                                                 27      26
Australia                                                       245     212
----------------------------------------------------------------------------
Property, plant and equipment (5)                             2,272   2,296
----------------------------------------------------------------------------
Indonesia                                                        24      27
Malaysia                                                         32      29
Vietnam                                                         253     253
Papua New Guinea                                                396     318
----------------------------------------------------------------------------
Exploration and evaluation assets (5)                           705     627
----------------------------------------------------------------------------

4. Other                                    2011      2010     2011    2010
----------------------------------------------------------------------------
Algeria                                       90        55      134      86
Colombia                                      69         -      119       -
----------------------------------------------------------------------------
Total revenue and other income               159        55      253      86
----------------------------------------------------------------------------
Algeria                                                         270     251
Colombia                                                        769       -
----------------------------------------------------------------------------
Property, plant and equipment (5)                             1,039     251
----------------------------------------------------------------------------
Colombia                                                         56      49
Kurdistan                                                       264     239
Other                                                           106     101
----------------------------------------------------------------------------
Exploration and evaluation assets (5)                           426     389
----------------------------------------------------------------------------
5. Current year represents balances at June 30. Prior year represents 
   balances at December 31.

 

Contact Information