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Talisman Energy 2013 Results - Announced over $2 Billion in Asset Sales, Improved Operational Efficiency and Capital Discipline

CALGARY, ALBERTA -- (Marketwired) -- 02/12/14 -- Talisman Energy Inc. (TSX:TLM) (NYSE:TLM) reported its operating and unaudited financial results for 2013. All values are in US$ unless otherwise stated.

"We continue to build a strong foundation in our Americas and Asia-Pacific core businesses to deliver sustainable shareholder value and cash flow(1) growth," said Hal Kvisle, President and CEO. "In 2013, we set four priorities and built significant momentum behind each one. We reduced capital spending(1) by 20%, improved our operating efficiency and reduced costs, including an underlying 20% year-on-year reduction in net G&A. In addition, we announced over $2 billion in assets sales in 2013.

"In our Americas and Asia-Pacific businesses, we grew higher margin production and cash flow. Overall, we produced 373,000 boe/d and generated $2.2 billion of cash flow in 2013, including $580 million in the fourth quarter, building momentum throughout the year. In 2014, we will continue to focus on creating value in our two core areas by directing capital towards our highest quality opportunities and improving margins through better execution."

Year-end and Fourth Quarter Highlights:


--  Fourth quarter production was 387,000 boe/d, up from 371,000 boe/d in
    the third quarter. 
--  In 2013, production averaged 373,000 boe/d and cash flow was
    approximately $2.2 billion, growing by 12% from the first to fourth
    quarters. Fourth quarter cash flow was $580 million, up from $573
    million in the third quarter. 
--  Capital spending was $3.2 billion in 2013, down 20% from 2012. Fourth
    quarter capital spending was $744 million, down from $849 million in the
    third quarter. 

To view the graph associated with this release, please visit the following link: http://media3.marketwire.com/docs/211tlm_graph.jpg

(1) The terms "cash flow" and "capital spending" are non-GAAP measures. Please see the advisories and reconciliations elsewhere in this release.

Progress Against Priorities

Living within our means

Talisman reduced capital spending in 2013 by 20% to $3.2 billion, compared to $4 billion in 2012, reflecting a concentrated effort to reduce high risk, low return expenditures resulting in a 25% reduction in exploration spending. Talisman remains committed to capital discipline and will continue to focus on the Americas and Asia-Pacific. The company has ongoing material legacy capital obligations in non-core assets such as the North Sea until the company is able to dilute or exit its interests in those assets.

Focusing our capital program

In 2013, the company focused its capital program on oil and liquids opportunities that generate higher, more predictable returns, delivering 6% liquids production growth from the first quarter to the fourth quarter. Fourth quarter production was 387,000 boe/d, up from 371,000 boe/d in the third quarter. The company produced 358,000 boe/d in its Americas and Asia-Pacific core areas in the fourth quarter. In 2013, the company exited Poland, received government approval to transfer its interests in Sierra Leone and is in the process of exiting Peru.

Improving operational efficiency and reducing costs

Talisman continued to improve operational efficiency. In North America, year-over-year drilling and completion costs were down 16% in the Eagle Ford, 13% in the Duvernay and 9% in the Marcellus. Drilling cycle times were down 17% in the Montney and 25% in both the Eagle Ford and Marcellus. In Vietnam, Talisman achieved first oil production at its HST/HSD project ahead of schedule and under budget. The company made staffing reductions in its corporate centre and North American operations, resulting in an underlying 20% reduction (excluding certain one-off costs) in net G&A.

Unlocking value from our portfolio(2)

Talisman announced over $2 billion in asset sales in 2013 including the sale of 75% of its Montney assets in Canada for C$1.5 billion, and its equity interest in the Ocensa pipeline in Colombia for $595 million. In the fourth quarter, Talisman also entered into an agreement to sell its Southeast Sumatra asset in Indonesia. Following year-end 2013, the company entered into an agreement to sell its sour gas Foothills Monkman asset.

(2) See advisories for a discussion of this term.

Financial Results

The financial information contained in this release is unaudited. The company expects to file its audited Consolidated Financial Statements for the year ended December 31, 2013, along with the related Management Discussion and Analysis, Annual Information Form and Annual Report on Form 40-F on March 3, 2014. For operational purposes, Talisman has two core operating areas: the Americas (North America and Colombia) and Asia-Pacific (Southeast Asia and Algeria). For the purposes of financial reporting, Talisman's 2013 activities were conducted in four geographic segments: North America, Southeast Asia, North Sea and Other. See the advisories elsewhere in this release for more information or visit Talisman's website at www.talisman-energy.com.


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December 31                           Q4 13   Q3 13   Q4 12    2013     2012
----------------------------------------------------------------------------
Cash flow ($ million)                   580     573     675   2,196    3,022
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Cash flow per share(3)                 0.56    0.56    0.66    2.13     2.95
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Earnings (loss) from operations(3)                                          
 ($ million)                           (116)    (45)   (107)   (248)      95
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Earnings (loss) from operations per                                         
 share(3)                             (0.11)  (0.04)  (0.10)  (0.24)    0.09
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Net income (loss) ($ million)        (1,005)    (54)    376  (1,175)     132
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Net income (loss) per share           (0.98)  (0.05)   0.37   (1.15)    0.12
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Average shares outstanding - basic                                          
 (million)                            1,031   1,031   1,025   1,030    1,025
----------------------------------------------------------------------------

Table includes the company's proportionate results from Talisman Sinopec Energy UK Limited (TSEUK) and Equion Energia Limited (Equion). Table reflects 100% interest of UK business until December 2012.

Steady cash flow growth throughout 2013

Cash flow for the fourth quarter was $580 million, compared to $573 million in the previous quarter, due to increased gas production at PM-3 in Malaysia, successful Marcellus gas development, increased HST/HSD oil production volumes, increased production and higher realized gas prices in Greater Edson and lower cash taxes. This was partially offset by lower netbacks resulting from lower sales into the premium Singapore market and the widening of Western Canada Select differentials in Canada, as well as unexpected operational issues in the UK that resulted in the Piper and Claymore facilities being shut in for most of the quarter, incurring higher operating costs to address the issues. Cash flow for 2013 was $2.2 billion. Talisman delivered quarterly cash flow growth during the course of 2013 as the company focused on increasing liquids volumes production in the Americas and Asia-Pacific, reducing G&A spending and benefiting from lower cash taxes.

In the fourth quarter, the company recorded a loss from operations (which exclude non-operational items) of $116 million, compared to a loss of $45 million in the third quarter. Higher liquids volumes in North America, Norway and Vietnam, higher gas volumes from Marcellus and Malaysia, lower hedging settlements, lower current taxes and lower exploration expense were more than offset by lower netbacks in Southeast Asia and Canada and lower volumes from the UK.

(3) The terms "cash flow per share", "earnings (loss) from operations" and "earnings (loss) from operations per share" are non-GAAP measures. Please see advisories and reconciliations elsewhere in this news release.

The company recorded a net loss of approximately $1.2 billion in 2013 compared to net income of $132 million in 2012. This was due to lower production from the North Sea primarily as a result of the sale of 49% of Talisman's UK business, higher royalties and lower capitalized interest costs, partially offset by lower impairments, higher liquids production in the Eagle Ford and Vietnam, lower operating expenses, lower G&A spending, lower DD&A expense and lower dry hole expense. In addition, 2012 net income reflected a non-taxable gain of $860 million made on the sale of 49% of Talisman's UK business for $1.5 billion and a $365 million gain on the revaluation of the Ocensa pipeline. The company recorded a net loss of approximately $1 billion in the fourth quarter, compared to a loss of $54 million in the third quarter, primarily due to impairments.

DD&A expense in 2013 was $1.9 billion, compared to $2.4 billion in 2012, due primarily to the application of equity accounting to the TSEUK joint venture from December 17, 2012 onward and lower production in Canada, the Marcellus and Kitan. This was partially offset by higher production and unit rates in the Eagle Ford and new production at HST/HSD in Vietnam and Kinabalu in Malaysia. DD&A was $555 million in the fourth quarter, up from $482 million in the third quarter, primarily due to increased production in Indonesia, Malaysia, Vietnam and Norway.

Asset and goodwill impairments, including the company's share of joint venture results, were $1.6 billion pre-tax ($826 million after tax) in the fourth quarter. The company recorded a $651 million pre-tax ($277 million after tax) impairment in the TSEUK joint venture as a result of negative reserves revisions influenced by poor reservoir and asset performance, increased decommissioning cost estimates, and higher development and operating cost estimates.

The company recorded a net impairment expense of $358 million pre-tax ($79 million post-tax) in Norway. The impairments are a result of increased decommissioning costs on Gyda and Rev and negative reserves revisions at Varg.

The company recorded a non-taxable impairment of $185 million related to North Sea goodwill as a result of its view of the reduced value of the UK and Norway assets.

During 2013, the company recorded an impairment expense of $332 million pre-tax ($252 million post-tax) in North America. The majority of this impairment was recorded in conventional dry gas properties in Canada as a result of the company lowering its long-term gas price assumptions by 25% over last year as well as increased cost assumptions in certain conventional gas assets.

The company recorded $55 million pre-tax ($27 million post-tax) impairments in Kitan following negative reserves revisions driven by poor well performance.

Current taxes were $166 million in the fourth quarter and $623 million for the year, down from the third quarter and 2012 due to lower revenues in the North Sea and the sale of a 49% equity interest in Talisman's UK business in 2012.

The company's deferred tax recovery in 2013 was $770 million compared to a deferred tax recovery of $1.2 billion in 2012. This was principally due to lower impairments in the North Sea and the sale of Talisman's equity investment in the Ocensa pipeline.

Capital spending for the year was $3.2 billion, down 20% from 2012, reflecting the company's efforts to live within its means and shift capital towards oil and liquids opportunities. Exploration and development spending in the fourth quarter was $744 million, down from $849 million in the third quarter.

Net debt(4) at year-end was approximately $4.8 billion compared to approximately $3.7 billion at year-end 2012. The company will use proceeds from announced dispositions to continue to pay down debt.

(4)The term "net debt" is a non-GAAP measure. Please see advisories and reconciliations elsewhere in this release.

Commodity Pricing and Netbacks


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December 31                            Q4 13   Q3 13   Q4 12    2013    2012
----------------------------------------------------------------------------
Pricing                                                                     
----------------------------------------------------------------------------
WTI benchmark ($/bbl)                  97.45  105.83   88.18   97.97   94.22
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Brent benchmark ($/bbl)               109.27  110.36  110.02  108.66  111.61
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NYMEX benchmark ($/mmbtu)               3.62    3.60    3.36    3.67    2.80
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Netbacks                                                                    
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Oil and liquids netback ($/bbl)                                             
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North America                          39.67   47.68   44.17   40.65   44.85
                                    ----------------------------------------
Southeast Asia                         46.88   40.06   36.31   36.55   44.87
                                    ----------------------------------------
North Sea                               9.18   35.80   33.43   28.42   55.54
                                    ----------------------------------------
Other                                  53.17   53.43   58.72   57.15   61.21
                                    ----------------------------------------
Total oil and liquids ($/bbl)          37.99   43.17   40.09   38.96   51.96
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Natural gas netback ($/mcf)                                                 
----------------------------------------------------------------------------
North America                           1.54    1.35    1.50    1.45    0.87
                                    ----------------------------------------
Southeast Asia                          4.85    5.18    4.85    5.32    5.45
                                    ----------------------------------------
North Sea                               6.21    5.79    4.67    7.30    6.61
                                    ----------------------------------------
Other                                   1.43    1.97    1.36    1.86    1.84
                                    ----------------------------------------
Total natural gas ($/mcf)               2.72    2.72    2.69    2.88    2.52
----------------------------------------------------------------------------
Total company netback ($/boe)          23.93   25.98   24.82   24.93   29.13
----------------------------------------------------------------------------

North Sea results include Norway and the company's proportionate results from TSEUK; Other results include Colombia and the company's proportionate results from Equion and Algeria. The company's realized sales price includes the impact of physical commodity contracts, but does not include the impact of the financial commodity price derivatives.

Pricing

In 2013, Brent and WTI prices were largely flat compared to 2012; however, NYMEX natural gas prices were up 31% over the previous year. On a quarterly basis, Brent prices stayed flat over the previous quarter and WTI prices decreased 8% from the third quarter. NYMEX natural gas prices were flat from last quarter. Western Canada Select differentials widened between the third and fourth quarters of 2013, resulting in a marked reduction in North American liquids netbacks in the quarter.

Netbacks

In 2013, the company's average gross netback was $24.93/boe, down from $29.13/boe in 2012 due to lower realized prices, higher royalties and transportation costs, partially offset by lower operating costs. Talisman's gross oil and liquids netback was $38.96/boe, down 25% from 2012 due to decreased realized prices compared to 2012, higher royalties and transportation costs, partially offset by lower operating costs. Talisman's gross natural gas netback was $2.88/mcf in 2013, up from $2.52/mcf in 2012 due to higher realized prices partially offset by higher royalties and operating costs. The company's fourth quarter gross netback was $23.93/boe compared to $25.98/boe in the third quarter.

In North America, the company's 2013 average gross netback was $14.83/boe, up from $10.87/boe in 2012, due primarily to growing liquids production in the Eagle Ford and higher North American gas prices. The company's fourth quarter gross netback in North America was $15.48/boe, down from $16.07/boe in the third quarter.

In Southeast Asia, the company's 2013 netback was $33.51/boe, down from $36.58/boe in 2012 due in part to a change in production mix following the startup of production at HST/HSD, offset by higher royalties at PM-3 in Malaysia and higher operating cost per barrel at Kitan in Australia. The company's fourth quarter gross netback in Southeast Asia was $35.30/boe, up from $34.20/boe in the third quarter.

Production

Table includes Talisman's share of production from subsidiaries and equity-accounted entities. Talisman's UK North Sea equity interest was reduced to 51% in December 2012.


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December 31                            Q4 13   Q3 13   Q4 12    2013    2012
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Oil and liquids (mbbls/d)                                                   
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North America                             40      37      29      35      27
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Southeast Asia                            47      44      40      44      42
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North Sea                                 28      32      53      32      71
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Other (including Colombia and                                               
 Algeria)                                 22      21      21      21      22
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Total oil and liquids (mbbls/d)          137     134     143     132     162
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Natural gas (mmcf/d)                                                        
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North America                            928     882     924     883     985
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Southeast Asia                           524     491     511     516     524
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North Sea                                  8       6      20       9      31
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Other (including Colombia and                                               
 Algeria)                                 45      44      43      43      42
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Total natural gas (mmcf/d)             1,505   1,423   1,498   1,451   1,582
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Total mboe/d                             387     371     392     373     426
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Assets sold or held for sale (mboe/d)                                       
----------------------------------------------------------------------------
North America(1)                          25      22      26      24      31
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North Sea(2)                               -       -      17       -      25
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Southeast Asia(3)                          3       3       6       4       6
----------------------------------------------------------------------------
Total Assets sold or held for sale                                          
 (mboe/d)                                 28      25      49      28      62
----------------------------------------------------------------------------
Production from ongoing operations                                          
 (mboe/d)                                359     346     343     345     364
----------------------------------------------------------------------------
(1) Includes Montney (held for sale as at December 31, 2013), Monkman       
    (entered into an agreement to sell post year-end 2013), West Whitecourt 
    and Shaunavon (sold in 2012).                                           
(2) Includes UK (49% of interest in UK business sold December 2012).        
(3) Includes Northwest Java (sold in May 2013) and Southeast Sumatra (sales 
    agreement reached in December 2013).                                    

In 2013, production was 373,000 boe/d. Fourth quarter production was 387,000 boe/d, up from 371,000 boe/d in the third quarter due in part to increased development activity in the Marcellus, completion of planned maintenance at PM-3 in Malaysia and completion of project tie-in work at Corridor in Indonesia. These increases were partially offset by planned and unplanned outages in the North Sea. Total oil and liquids production was 137,000 bbls/d in the fourth quarter compared to 134,000 bbls/d in the third quarter. Dispositions agreed in 2013 and early 2014 reduce annual production from ongoing operations to 345,000 boe/d.

Replaced 110% of production on proved (1P) basis

In 2013, the company recorded positive additions and revisions of approximately 166 million boe of 1P reserves and approximately 144 million boe proved plus probable (2P) reserves in its Americas core area against production of approximately 73 million boe. The reserve additions are primarily a result of successful development programs and improving well performance. In its Americas and Asia-Pacific core areas, the company replaced over 110% of production with 2P reserves increases on a company gross share basis.

The company recorded negative additions and revisions of approximately 21 million boe of 1P reserves in 2013 associated with the company's non-core North Sea (UK and Norway) business. A key factor in these negative reserve changes was Talisman's decision to limit capital investments in non-core regions.

At year-end 2013, Talisman's 1P reserves totaled 1.1 billion boe, which equates to a reserve life index of 8.1 years. Talisman's 2P reserves totaled 1.6 billion boe at year-end 2013, down 4% primarily due to production and revisions. The company's 1P reserves replacement ratio was 110%.

Acquisitions and divestures increased 1P reserves by 3.5 million boe and 2P reserves by 8.4 million boe and are included in the totals above, but not in the table below.

Talisman will release complete year-end reserves disclosure as part of its Annual Information Form on March 3, 2014.


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                                    1P Additions &           2P Additions & 
                Production               Revisions                Revisions 
----------------------------------------------------------------------------
               million boe             million boe              million boe 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Americas              72.7                   165.6                    143.5 
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Asia-Pacific          50.5                     1.1                     (7.2)
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Core Total           123.2                   166.7                    136.3 
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North Sea             12.4                   (20.8)                   (78.8)
----------------------------------------------------------------------------
Total                135.6                   145.9                     57.5 
----------------------------------------------------------------------------

All of the reserves estimates in this document are provided in accordance with National Instrument 51-101 (Canadian regulations), which utilize forecast pricing and costs. The company also estimates proved reserves in accordance with US disclosure standards, utilizing historic 12-month average pricing. The difference between the results of the two methods is less than 1%, or approximately 10 million boe.

Strong liquids growth and improved operating efficiency in North America


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December 31                            Q4 13   Q3 13   Q4 12    2013    2012
----------------------------------------------------------------------------
Gas                                                                         
----------------------------------------------------------------------------
  Edson-Duvernay-Montney                 219     216     226     214     229
----------------------------------------------------------------------------
  Marcellus                              475     443     475     446     514
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  Eagle Ford                              68      66      48      59      40
----------------------------------------------------------------------------
  Other                                   21      24      19      23      29
----------------------------------------------------------------------------
Gas from ongoing operations (mmcf/d)     783     749     768     742     812
----------------------------------------------------------------------------
Liquids                                                                     
----------------------------------------------------------------------------
  Edson-Duvernay-Montney                   9       5       6       6       5
----------------------------------------------------------------------------
  Eagle Ford                              20      21      11      18       9
----------------------------------------------------------------------------
  Chauvin                                 11      11      12      11      12
----------------------------------------------------------------------------
Liquids from ongoing operations                                             
 (mbbls/d)                                40      37      29      35      26
----------------------------------------------------------------------------
Total production from ongoing                                               
 operations (mboe/d)                     171     162     157     159     161
----------------------------------------------------------------------------
Assets sold or held for sale                                                
 (mmcfe/d)(1)                            147     133     157     143     186
----------------------------------------------------------------------------
Total North America production                                              
 (mboe/d)                                195     184     183     182     192
----------------------------------------------------------------------------
                                                                            
(1) Includes Montney (held for sale as at December 31, 2013), Monkman       
    (entered into an agreement to sell post year-end 2013), West Whitecourt 
    and Shaunavon (sold in 2012).                                           

In North America, production in the fourth quarter averaged 195,000 boe/d, up 6% from the previous quarter due to increased production in the Eagle Ford, gas development activity in the Marcellus and increased liquids production via a third party deep cut processing plant in Wild River, partially offset by natural declines. Full-year North American production from ongoing operations averaged 159,000 boe/d, with liquids production of 35,000 bbls/d.

In the Eagle Ford, production was 32,000 boe/d in the fourth quarter, up 68% over the same period last year. Liquids volumes were up 82% to 20,000 boe/d in the fourth quarter compared to the same period last year. In 2013, Talisman brought onstream 121 gross operated wells compared to 66 in 2012, as activity shifted from drilling single land retention wells to higher value acreage and pad drilling. The company continues to make improvements to cost and operational efficiency, reducing average drilling and completion costs to $8.5 million per well, down 16% from the previous year.

In the Marcellus, production increased by 7% in the fourth quarter to 475 mmcf/d, as a result of increased capital spending mid-year to complete and tie-in 23 additional wells from the company's inventory of 70 drilled but uncompleted wells. Drilling cycle times were reduced by 25% versus the previous year to an average of 13 days, and drilling costs were reduced by 9%. Optimization of compression costs and the short-term sale of excess transportation capacity lowered operating costs by $40 million for the year. The company also drilled six wells of a seven-well program in the Friendsville area, with the seventh well to be drilled in early 2014.

In the Greater Edson area, the third party deep cut processing plant at Wild River came onstream in late October. Natural gas liquids volumes were approximately 5,000 bbls/d net to Talisman (approximately 70% ethane), once the plant reached full operating efficiency in mid-November. In the Wilrich play, three wells were brought onstream during the quarter, with 30-day average sales rates ranging from 5.6 to 5.9 mmcf/d with 170 to 525 bbls/d of liquids.

In the Duvernay, Talisman has drilled eight appraisal wells to date and continues to evaluate its extensive acreage position. The two most recent wells drilled had seven-day average rates of 2.2 mmcf/d of gas and 550 bbls/d of condensate.

As part of its commitment to realize value from its portfolio, during the fourth quarter Talisman announced it had reached an agreement to sell 75% of its Montney acreage in northeast British Columbia for a total cash consideration of C$1.5 billion. The transaction is expected to close during the first quarter of 2014 following receipt of regulatory approvals. Also, following year-end 2013, the company entered into an agreement to sell its sour gas Foothills Monkman asset.

Building liquids momentum in Blocks CP0-9 and CPE-6 in Colombia

In Colombia, production increased slightly quarter-over-quarter to 18,000 boe/d. In mid-December, the company produced a record 20,000 boe/d net.

In Block CPO-9, Talisman and its partner successfully completed drilling the ninth and final well of the current appraisal program in the Akacias field. As of the first week of February, six wells have been put on long-term test including Akacais-1, producing approximately 8,000 bbls/d (gross) of 8 degree API oil. Based on these results, the company is moving forward with field development planning. Talisman expects to begin long-term testing operations on the four remaining wells, which are expected to be onstream in the first half of 2014.

In Block CPE-6, Talisman and its partner secured the necessary environmental permits in November to begin drilling operations. Two vertical wells are on long-term test and have proven the presence of movable oil. An additional two vertical wells, one horizontal well and one water injector have been drilled with results pending. Appraisal drilling and testing will continue into the second quarter of 2014.

Talisman completed the sale of its 12% equity stake in the Ocensa pipeline during the quarter for $595 million. The company has retained its full rights to shipping capacity on the pipeline and continues to build a strong revenue-generating marketing business in Colombia, loading its first vessel for export in December. The company retained its ability to market unused capacity, which can be contracted out at a premium to other shippers.

Continued growth in the company's high netback Southeast Asia core area


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December 31                            Q4 13   Q3 13   Q4 12    2013    2012
----------------------------------------------------------------------------
Malaysia liquids (mbbls/d)                19      18      17      19      17
----------------------------------------------------------------------------
Malaysia gas (mmcf/d)                    112      98     132     117     122
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Malaysia (mboe/d)                         37      34      39      38      37
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Indonesia liquids (mbbls/d)                6       7       7       7       7
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Indonesia gas (mmcf/d)                   400     381     366     387     389
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Indonesia (mboe/d)                        73      70      68      72      72
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Vietnam liquids (mbbls/d)                 15      13       2       9       2
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Vietnam gas (mmcf/d)                       8       8       -       5       -
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Vietnam (mboe/d)                          17      14       2      10       2
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Australia (mboe/d)                         4       4      10       6      12
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Total production from ongoing                                               
 operations (mboe/d)                     131     122     119     126     123
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Assets sold or held for sale                                                
 (mboe/d)(1)                               3       3       6       4       6
----------------------------------------------------------------------------
Southeast Asia total (mboe/d)            134     125     125     130     129
----------------------------------------------------------------------------
                                                                            
(1) Includes Northwest Java (sold in May 2013) and Southeast Sumatra (sales 
    agreement reached in December 2013).                                    

Production in Southeast Asia averaged 134,000 boe/d in the fourth quarter, up 7% over both the prior quarter and the same period last year. Completion of project tie-in work at Corridor in Indonesia and higher production in Vietnam was offset by the impact of temporary fluctuations in gas demand at Corridor and PM-3 in Malaysia. For the year, production was up slightly from 2012 on additional volumes from Vietnam and Malaysia, and the completion of tie-in work at Corridor.

In Malaysia, production averaged 38,000 boe/d in 2013, up slightly from 2012 with the addition of volumes from Kinabalu partly offset by slightly lower volumes at PM-3. Production for the quarter averaged 37,000 boe/d, up 9% over the previous quarter following the completion of planned maintenance. This was partially offset by well tie-in work and process interruptions at Kinabalu. The company successfully drilled and tied-in the first well of a multi-well infill drilling program at Kinabalu. A second well was drilled in December and was completed in January. The company expects to add additional wells to the Kinabalu drilling program as technical work progresses.

In Indonesia, fourth quarter production from ongoing operations averaged 73,000 boe/d, up over the third quarter and same period last year due to completion of project tie-in work, offset by a planned shutdown and lower than expected seasonal demand near the end of the year. A sales agreement was signed in December to dispose of the Southeast Sumatra assets and is pending government approval.

In Vietnam, fourth quarter production averaged 17,000 boe/d, up 21% from the previous quarter. For the year, production averaged 10,000 boe/d, up significantly over 2012 due to production from HST/HSD following the successful startup of the project in May, ahead of schedule and under budget. On Block 07/03, the company successfully completed the CRD-3X well, including a sidetrack, and is encouraged by the preliminary results. The company began drilling the 07/03-CD-1X exploration well in January 2014, the final commitment well on Block 07/03.

Algeria

Fourth quarter production averaged 12,000 boe/d, up from the previous quarter as the EMK facility commissioning progressed and production restrictions were partially lifted. Full-year production is down slightly from the previous year due to temporary production restrictions imposed by the regulator. Discussions with the regulator are ongoing and restrictions are expected to be lifted progressively through 2014.

Other Operating Areas

North Sea

Talisman's share of UK production in the fourth quarter averaged 14,000 boe/d, down 33% from the previous quarter with operations affected by scheduled turnarounds and continued reliability issues resulting in higher operating costs. The Claymore platform remained shut down for the entire quarter due to unexpected repairs; production is expected to resume by the end of the first quarter 2014. A planned turnaround at the Piper platform was extended by a month, but has since returned to production. The company is working to improve operational efficiency and reliability in 2014, but the results of this work will take time.

In Norway, fourth quarter average daily production was 15,000 boe/d, 15% higher than the third quarter, primarily due to reduced downtime for maintenance. The Varg gas export project saw first gas in early February after a slight delay due to issues at the third party host platform.

Kurdistan Region of Iraq

In the Topkhana Block, the Topkhana-2 well was spud in early December and is currently ahead of schedule, with results expected early in the second quarter 2014. In the Kurdamir Block, the company plans to put the Kurdamir-2 well on a month-long extended test at the end of March.

Common Share and Preferred Share Dividend Declaration

The company has declared a quarterly dividend on the company's common shares of US$0.0675 per share. The dividend will be paid on March 31, 2014 to shareholders of record at the close of business on March 10, 2014.

The company has also declared a quarterly dividend of C$0.2625 on its Cumulative Redeemable Rate Reset First Preferred Shares, Series 1. The dividend will be paid on March 31, 2014 to shareholders of record at the close of business on March 10, 2014.

Conference Call

A conference call and webcast for investors, analysts and media will be held at 11:00 a.m. MT (1:00 p.m. ET), February 12, 2014 to discuss results. Participants will include Hal Kvisle, President and Chief Executive Officer, and members of senior management. A transcript of this call will be available on the Talisman Energy website at www.talisman-energy.com.

Talisman Energy Inc. is a global upstream oil and gas company, headquartered in Canada. Talisman has two core operating areas: the Americas (North America and Colombia) and Asia-Pacific. 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: business strategy, priorities and plans; continued focus on the Americas and Asia-Pacific; expected drilling activity in the Americas and Asia-Pacific; expected balance sheet strength; expected closing of the sale of the Montney acreage; expected drilling and test results in Colombia; expected production from infill drilling at Kinabalu; expected drilling, testing and results in the Kurdistan Region of Iraq; expected lifting of restrictions in Algeria; and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. The Company's priorities and goals disclosed in this news release are objectives only and their achievement cannot be guaranteed.

The factors or assumptions on which the forward-looking information is based include: assumptions inherent in current guidance; projected capital investment levels; the flexibility of capital spending plans and the associated sources of funding; the successful and timely implementation of capital projects; the continuation of tax, royalty and regulatory regimes; ability to obtain regulatory and partner approval; commodity price and cost assumptions; and other risks and uncertainties described in the filings made by the Company with securities regulatory authorities. The Company believes the material factors, expectations and assumptions reflected in the forward-looking information are reasonable but no assurance can be given that these factors, expectations and assumptions will prove to be correct. Forward-looking information for periods past 2014 assumes escalating commodity prices. 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; risks and uncertainties involving geology of oil and gas deposits; risks associated with project management, project delays and/or cost overruns; uncertainty related to securing sufficient egress and access to markets; 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, including decommissioning liabilities; risks related to strategic and capital allocation decisions, including 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, interest rates and tax or royalty rates; the outcome and effects of any future acquisitions and dispositions; health, safety, security and environmental risks, including risks related to the possibility of major accidents; environmental regulatory and compliance risks, including with respect to greenhouse gases and hydraulic fracturing; uncertainties as to the availability and cost of credit and other financing and changes in capital markets; risks in conducting foreign operations (for example, civil, political and fiscal instability and corruption); risks related to the attraction, retention and development of personnel; changes in general economic and business conditions; the possibility that government policies, regulations or laws may change or governmental approvals may be delayed or withheld; 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 or strategy are included in Talisman'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. 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.

Throughout this news release, Talisman uses the term "unlocking value" to describe the realization of the value of an asset within Talisman's portfolio that, prior to its full or partial disposition, was not valued at its full market value, as reflected in Talisman's share price and enterprise value. By monetizing the asset through a disposition or joint venture, the company is able to attribute a market value to the asset that can quantifiably be reflected in Talisman's share price and enterprise value.

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 and also include Equion Energia Limited ("Equion") and Talisman Sinopec Energy UK Limited ("TSEUK") unless stated otherwise. 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.

Oil and Gas Information

Reserves

National Instrument 51-101 ("NI 51-101") of the Canadian Securities Administrators imposes oil and gas disclosure standards for Canadian public companies engaged in oil and gas activities.

An exemption granted to Talisman also permits it to disclose internally evaluated reserves data. Any reserves data contained in this news release reflect Talisman's estimates of its reserves. While Talisman annually obtains an independent audit of a portion of its proved and probable reserves, no independent qualified reserves evaluator or auditor was involved in the preparation of the reserves data disclosed in this news release.

The reserve life index ("RLI") of 8.1 years for 2013 production was calculated by dividing the year-end proved reserves by 2013 production.

The reserves replacement ratio (before net acquisitions and dispositions) was calculated by dividing the sum of yearly changes (additions, discoveries, non-price revisions) to estimated proved reserves during the year by the Company's production for that year. The Company uses reserves replacement ratios 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 cost, value or timing of future production of new reserves, it cannot be used as a measure of created value.

Throughout this news release, Talisman makes reference to production and reserves volumes. Unless otherwise stated, such production volumes are stated on a gross basis, which means they are stated on a Company interest basis prior to the deduction of royalties and similar payments. In the US, net production volumes and reserves estimates 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 (mcfe) which are calculated at a conversion rate of one barrel of oil to 6,000 cubic feet of gas. Boe and mcfe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 mcf: 1 bbl and a mcfe conversion ratio 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.

In this news release, all references to "core" and "non-core" assets, properties, areas and regions align with the Company's current public disclosure regarding its assets and properties.

Talisman also discloses netbacks in this news release. Netbacks per boe are calculated by deducting from the 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 (loss) from operations, capital spending and net debt. 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 such measures may not be comparable to similarly titled measures reported by other companies.

Cash Flow


                            Three Months Ended                              
----------------------------------------------------------------------------
                    December 31, September 30, December 31,     YTD     YTD 
                            2013          2013         2012    2013    2012 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Cash provided by                                                            
 operating                                                                  
 activities                  442           637          408   1,767   2,396 
----------------------------------------------------------------------------
Changes in non-cash                                                         
 working capital              80          (166)         101      (4)    160 
----------------------------------------------------------------------------
Add: Exploration                                                            
 expenditure                  52            66          118     260     346 
----------------------------------------------------------------------------
Add: Pennsylvania                                                           
 impact fee(1)                 -             -            -       -      25 
----------------------------------------------------------------------------
Add: Restructuring                                                          
 costs                        10             6            -      44       - 
----------------------------------------------------------------------------
Add: Income tax                                                             
 adjustments(2)                -             -            -      15       - 
----------------------------------------------------------------------------
Add: Current tax on                                                         
 disposal(3)                  51             -            -      51       - 
----------------------------------------------------------------------------
Less: Dividends and                                                         
 distributions                                                              
 received from                                                              
 equity-accounted                                                           
 entities                    (21)          (37)           -     (58)      - 
----------------------------------------------------------------------------
Less: Finance costs                                                         
 (cash)                      (77)          (77)         (45)   (295)   (190)
----------------------------------------------------------------------------
Cash flow from                                                              
 subsidiaries                537           429          582   1,780   2,737 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Add: Cash provided                                                          
 by operating                                                               
 activities from                                                            
 equity-accounted                                                           
 entities                     58            86          138     416     320 
----------------------------------------------------------------------------
Change in non-cash                                                          
 working capital                                                            
 from equity-                                                               
 accounted entities           (9)           54          (46)      3     (35)
----------------------------------------------------------------------------
Add: Exploration                                                            
 expenditure from                                                           
 equity-accounted                                                           
 entities                      -            11            -      18       - 
----------------------------------------------------------------------------
Less: Finance costs                                                         
 (cash) from equity-                                                        
 accounted entities           (6)           (7)           1     (21)      - 
----------------------------------------------------------------------------
Cash flow from                                                              
 equity- accounted                                                          
 entities                     43           144           93     416     285 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Cash Flow(4)                 580           573          675   2,196   3,022 
----------------------------------------------------------------------------
Cash flow per share         0.56          0.56         0.66    2.13    2.95 
----------------------------------------------------------------------------
Diluted cash flow                                                           
 per share                  0.56          0.55         0.65    2.13    2.93 
----------------------------------------------------------------------------

1.  Pennsylvania impact fee amount represents the one-time impact of the
    retrospective application of the legislation to wells drilled pre-2012. 
2.  A court ruling in Southeast Asia indicated an additional current income
    tax of $31 million be charged during Q2 2013. In addition, the company
    recorded a $16 million benefit from the resolution of a tax position in
    North America in Q2. 
3.  Current tax on the gain on disposal of Talisman's equity interest in the
    Ocensa pipeline in Colombia. 
4.  Includes cash flow from subsidiaries and Talisman's share of equity-
    accounted entities' cash flow. 

Cash flow, as commonly used in the oil and gas industry, represents net income before exploration costs, DD&A, deferred taxes and other non-cash expenses, including Talisman's share of cash flow from equity- accounted entities. 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 annual Consolidated Financial Statements that will be filed on March 3, 2014. A reconciliation of cash provided by operating activities to cash flow is provided above.

Earnings (loss) from Operations


                             Three Months Ended                             
----------------------------------------------------------------------------
                    December 31, September 30, December 31,     YTD     YTD 
                            2013          2013         2012    2013    2012 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Net income (loss)         (1,005)          (54)         376  (1,175)    132 
----------------------------------------------------------------------------
Loss (gain) on                                                              
 disposals (tax                                                             
 adjusted)                  (163)            1         (862)   (207) (1,427)
----------------------------------------------------------------------------
Unrealized (gain)                                                           
 loss on financial                                                          
 instruments (tax                                                           
 adjusted)(1)                149            91          (46)     90      49 
----------------------------------------------------------------------------
Share-based payments                                                        
 (tax adjusted)(2)            16             1          (40)     37     (64)
----------------------------------------------------------------------------
Foreign exchange on                                                         
 debt (tax adjusted)           8            21            3      10      25 
----------------------------------------------------------------------------
Impairment (tax                                                             
 adjusted)                   822             1          278     874   1,096 
----------------------------------------------------------------------------
Pennsylvania impact                                                         
 fee (tax                                                                   
 adjusted)(3)                  -             -            -       -      16 
----------------------------------------------------------------------------
Restructuring costs                                                         
 (tax adjusted)               12             5            -      38       - 
----------------------------------------------------------------------------
Gain on revaluation                                                         
 of investment (tax                                                         
 adjusted)(4)                  -             -         (245)      -    (245)
----------------------------------------------------------------------------
Income tax                                                                  
 adjustments(5)                -             -            -      41       - 
----------------------------------------------------------------------------
Recognition of                                                              
 deferred tax                                                               
 asset(6)                     34           (92)         429     (58)    429 
----------------------------------------------------------------------------
Deferred tax                                                                
 adjustments(7)               11           (19)           -     102      84 
----------------------------------------------------------------------------
Earnings (loss) from                                                        
 operations(8)              (116)          (45)        (107)   (248)     95 
----------------------------------------------------------------------------
Earnings (loss) from                                                        
 operations per                                                             
 share                     (0.11)        (0.04)       (0.10)  (0.24)   0.09 
----------------------------------------------------------------------------
Diluted earnings                                                            
 (loss) from                                                                
 operations per                                                             
 share                     (0.11)        (0.04)       (0.10)  (0.24)   0.09 
----------------------------------------------------------------------------

1.  Unrealized (gain) loss on financial instruments relates to the change in
    the period of the mark-to-market value of the company's 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 December 31.
    The company uses the Black-Scholes option pricing model to estimate the
    fair value of its share-based payment plans. 
3.  Pennsylvania impact fee amount represents the one-time impact of the
    retrospective application of the legislation to wells drilled pre-2012. 
4.  Gain on revaluation of investment represents the fair value adjustment
    recorded upon the restructuring of Talisman's investment in Oleoducto
    Central S.A. 
5.  A court ruling in Southeast Asia indicated an additional income tax of
    $57 million be charged during Q2 2013. In addition, the company recorded
    a $16 million benefit from the resolution of a tax position in North
    America in Q2. 
6.  During Q4 2013, the company derecognized deferred tax assets in Vietnam
    as a result of Block 46/02 relinquishment. During Q3 2013, the company
    recognized deferred tax assets in Vietnam based on startup of HST/HSD.
    In Q4 2012, the company derecognized deferred tax assets from US
    operations. 
7.  Deferred tax adjustments largely comprise tax on foreign exchange on tax
    pools. 
8.  Earnings (loss) from operations include results and adjustments from
    subsidiaries and Talisman's share of equity-accounted entities. 

Earnings (loss) from operations are calculated by adjusting the company's net income (loss) per the financial statements for certain items of a non-operational nature, on an after-tax basis. The adjustments include items from subsidiaries and Talisman's share of equity-accounted entities. The company uses this information to evaluate performance of core operational activities on a comparable basis between periods. Earnings (loss) from operations per share are earnings (loss) from operations divided by the average number of common shares outstanding during the period. Diluted earnings (loss) from operations per share are earnings (loss) from operations divided by the diluted number of common shares outstanding during the period, as reported in the annual Consolidated Financial Statements that will be filed on March 3, 2014. A reconciliation of net income (loss) to earnings (loss) from operations is provided above.

Capital Spending


                             Three Months Ended                             
----------------------------------------------------------------------------
                     December 31, September 30, December 31,     YTD     YTD
                             2013          2013         2012    2013    2012
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Subsidiaries                                                                
----------------------------------------------------------------------------
Exploration,                                                                
 development and                                                            
 other                        537           608          836   2,363   3,509
----------------------------------------------------------------------------
Exploration expensed           52            66          118     260     346
----------------------------------------------------------------------------
Exploration and                                                             
 development                                                                
 spending -                                                                 
 subsidiaries                 589           674          954   2,623   3,855
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Talisman's share of                                                         
 equity- accounted                                                          
 entities                                                                   
----------------------------------------------------------------------------
Exploration,                                                                
 development and                                                            
 other                        154           164           63     577     149
----------------------------------------------------------------------------
Exploration expensed            1            11            -      19       -
----------------------------------------------------------------------------
Exploration and                                                             
 development                                                                
 spending - joint                                                           
 ventures                     155           175           63     596     149
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Capital spending for                                                        
 subsidiaries and                                                           
 joint ventures               744           849        1,017   3,219   4,004
----------------------------------------------------------------------------

Capital spending (or run rate or exploration and development spending) is calculated by adjusting the capital expenditure per the financial statements for exploration costs that were expensed as incurred and adding Talisman's share of joint ventures.

Net Debt


                                   As at                                    
----------------------------------------------------------------------------
                                 December 31,  September 30,   December 31, 
                                         2013           2013           2012 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Long-term debt                          5,239          5,504          4,442 
----------------------------------------------------------------------------
Cash and cash equivalents, net                                              
 of bank indebtedness                    (351)          (405)          (553)
----------------------------------------------------------------------------
Subtotal                                4,888          5,099          3,889 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Cash and cash equivalents from                                              
 equity- accounted entities(1)                                              
----------------------------------------------------------------------------
  TSEUK                                   (21)           (55)           (64)
----------------------------------------------------------------------------
  Equion                                  (34)           (78)          (104)
----------------------------------------------------------------------------
Total net debt                          4,833          4,966          3,721 
----------------------------------------------------------------------------

1.  Includes Talisman's share of equity-accounted entities' cash and cash
    equivalents. 

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

Sensitivities

Talisman's financial performance is affected by factors such as changes in production volumes, commodity prices and exchange rates. The estimated annualized impact of these factors for 2014 (excluding the effect of derivative contracts) is summarized in the following table, based on a Dated Brent oil price of approximately $100/bbl, a NYMEX natural gas price of approximately $4.00/mmbtu and exchange rates of US$1=C$1 and UKGBP 1=US$1.55.


----------------------------------------------------------------------------
                                               Cash Provided                
                                                by Operating                
                                                  Activities      Cash Flow 
(millions of $)                 Net Income(1)       (GAAP(2))  (Non-GAAP(3))
----------------------------------------------------------------------------
Volume changes                                                              
----------------------------------------------------------------------------
 Oil - 10,000 bbls/d                       60            130            175 
----------------------------------------------------------------------------
 Natural gas - 60 mmcf/d                   10             55             60 
----------------------------------------------------------------------------
Price changes(4)                                                            
----------------------------------------------------------------------------
 Oil - $1.00/bbl                           20             25             30 
----------------------------------------------------------------------------
 Natural gas (North America)(5)                                             
  - $0.10/mcf                              15             25             25 
----------------------------------------------------------------------------
Exchange rate changes                                                       
----------------------------------------------------------------------------
 US$/C$ decreased by US$0.01               (5)            (5)            (5)
----------------------------------------------------------------------------
 US$/UKGBP  increased by                                                    
  US$0.02                                   -              -              5 
----------------------------------------------------------------------------
                                                                            
1. Net income includes Talisman's share of net income (loss) from TSEUK and 
   Equion, after tax.                                                       
2. Changes in cash flow provided by operating activities (GAAP) exclude     
   TSEUK and Equion due to the application of equity accounting.            
3. Changes in cash flow (Non-GAAP) include TSEUK and Equion and is included 
   for comparative purposes only.                                           
4. The impact of price changes excludes the effect of commodity derivatives.
   See specific commodity derivative terms in the "Risk Management" section 
   of the MD&A, and note 23 to the Annual Consolidated Financial Statements 
   that will be filed on March 3, 2014.                                     
5. Price sensitivity on natural gas relates to North American natural gas   
   only. The company's exposure to changes in the natural gas prices in the 
   UK, Norway and Malaysia/Vietnam and Colombia is not material. Most of the
   natural gas price in Indonesia is based on the price of crude oil and,   
   accordingly, has been included in the price sensitivity for oil except   
   for a small portion which is sold at a fixed price.                      
                                                                            
                            Talisman Energy Inc.                            
                                 Highlights                                 
                                 (unaudited)                                
                                                                            
                                    Three months ended            Year ended
                                           December 31           December 31
                                      2013        2012      2013        2012
----------------------------------------------------------------------------
Financial                                                                   
(millions of US$ unless                                                     
 otherwise stated)                                                          
Cash flow (1)                          580         675     2,196       3,022
Net income (loss)                   (1,005)        376    (1,175)        132
Exploration and development                                                 
 spending (1)                          744       1,017     3,219       4,004
Per common share (US$)                                                      
  Cash flow (1)                       0.56        0.66      2.13        2.95
  Net income (loss)                  (0.98)       0.37     (1.15)       0.12
----------------------------------------------------------------------------
Production (3)                                                              
(Daily Average - Gross)                                                     
Oil and liquids (bbls/d)                                                    
  North America                     39,812      28,889    34,616      27,562
  Southeast Asia                    46,582      40,158    43,658      41,296
  North Sea                         28,240      53,238    31,939      70,726
  Other                             21,793      20,464    21,116      22,715
----------------------------------------------------------------------------
Total oil and liquids              136,427     142,749   131,329     162,299
----------------------------------------------------------------------------
Natural gas (mmcf/d)                                                        
  North America                        928         924       883         985
  Southeast Asia                       524         511       516         524
  North Sea                              8          20         9          31
  Other                                 45          43        43          42
----------------------------------------------------------------------------
Total natural gas                    1,505       1,498     1,451       1,582
----------------------------------------------------------------------------
Total mboe/d (2)                       387         392       373         426
----------------------------------------------------------------------------
Prices (3)                                                                  
Oil and liquids (US$/bbl)                                                   
  North America                      62.73       67.23     66.70       69.39
  Southeast Asia                    111.74      106.53    108.56      111.69
  North Sea                         111.12      109.34    109.55      111.83
  Other                             106.67      109.56    106.86      113.52
----------------------------------------------------------------------------
Total oil and liquids                96.50      100.05     97.49      104.82
----------------------------------------------------------------------------
Natural gas (US$/mcf)                                                       
  North America                       3.45        3.26      3.49        2.63
  Southeast Asia                      8.64        8.86      9.44        9.28
  North Sea                          12.67       10.23     13.24        9.77
  Other                               4.13        3.94      4.26        4.30
----------------------------------------------------------------------------
Total natural gas                     5.33        5.28      5.69        5.01
----------------------------------------------------------------------------
Total (US$/boe) (2)                  54.71       56.56     56.44       58.56
----------------------------------------------------------------------------
(1) Cash flow, exploration and development spending 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.     
(3) Production and realized prices include Talisman's proportionate results 
    from Talisman Sinopec Energy UK Limited (TSEUK) and Equion Energia      
    Limited (Equion).                                                       
                                                                            
                            Talisman Energy Inc.                            
                         Consolidated Balance Sheets                        
                                 (unaudited)                                
                                                                            
                                                                            
December 31 (millions of US$)                            2013           2012
----------------------------------------------------------------------------
                                                               (restated)(1)
Assets                                                                      
Current                                                                     
  Cash and cash equivalents                               364            553
  Accounts receivable                                   1,117            884
  Risk management                                          17             48
  Income and other taxes receivable                        52             10
  Restricted cash                                         121              -
  Inventories                                             137            122
  Prepaid expenses                                         14             19
  Assets held for sale                                    776              -
----------------------------------------------------------------------------
                                                        2,598          1,636
----------------------------------------------------------------------------
                                                                            
Other assets                                              160             55
Restricted cash                                            94              -
Investments                                             1,204          1,791
Risk management                                            20             26
Goodwill                                                  575            775
Property, plant and equipment                           9,752         10,462
Exploration and evaluation assets                       3,165          3,319
Deferred tax assets                                     1,593          1,273
----------------------------------------------------------------------------
                                                       16,563         17,701
----------------------------------------------------------------------------
Total assets                                           19,161         19,337
----------------------------------------------------------------------------
                                                                            
Liabilities                                                                 
Current                                                                     
  Bank indebtedness                                        13              -
  Accounts payable and accrued liabilities              1,835          1,744
  Current portion of Yme removal obligation               121              -
  Risk management                                         101             81
  Income and other taxes payable                          155             84
  Loans from joint ventures                               288            148
  Current portion of long-term debt                       882              8
  Liabilities associated with assets held for                               
   sale                                                   160              -
----------------------------------------------------------------------------
                                                        3,555          2,065
----------------------------------------------------------------------------
                                                                            
Decommissioning liabilities                             1,727          1,514
Yme removal obligation                                    131              -
Other long-term obligations                               246            256
Risk management                                            37              1
Long-term debt                                          4,357          4,434
Deferred tax liabilities                                  553          1,157
----------------------------------------------------------------------------
                                                        7,051          7,362
----------------------------------------------------------------------------
                                                                            
Shareholders' equity                                                        
Common shares                                           1,723          1,639
Preferred shares                                          191            191
Contributed surplus                                       135            121
Retained earnings                                       5,695          7,148
Accumulated other comprehensive income                    811            811
----------------------------------------------------------------------------
                                                        8,555          9,910
----------------------------------------------------------------------------
Total liabilities and shareholders' equity             19,161         19,337
----------------------------------------------------------------------------
(1) 2012 Consolidated Balance Sheet was restated to reflect the change to   
    equity accounting of TSEUK and Equion on adoption of IFRS 11. TSEUK     
    deconsolidation effective December 17, 2012. Equion deconsolidation     
    effective January 1, 2012.                                              


                            Talisman Energy Inc.                            
                  Consolidated Statements of Income (Loss)                  
                                (unaudited)                                 
                                                                            
                                                                            
                                   Three months ended            Year ended 
                                          December 31           December 31 
(millions of US$)                     2013       2012       2013       2012 
----------------------------------------------------------------------------
                                           (restated)            (restated) 
                                                  (1)                   (1) 
Revenue                                                                     
  Sales                              1,243      1,432      4,652      6,767 
  Other income                          26         25        109         84 
  Income (loss) from joint                                                  
   ventures and associates,                                                 
   after tax                          (340)       206       (275)       315 
----------------------------------------------------------------------------
Total revenue and other income         929      1,663      4,486      7,166 
----------------------------------------------------------------------------
                                                                            
Expenses                                                                    
  Operating                            384        578      1,432      2,361 
  Transportation                        44         44        192        221 
  General and administrative           114        128        434        510 
  Depreciation, depletion and                                               
   amortization                        555        708      1,922      2,371 
  Impairment                           946        426        946      2,589 
  Dry hole                               7         72         89        238 
  Exploration                           52        118        260        346 
  Finance costs                         87         61        331        272 
  Share-based payments expense                                              
   (recovery)                           19        (52)        49        (63)
  (Gain) loss on held-for-                                                  
   trading financial instruments       161        (35)       140         93 
  Gain on disposals                    (42)      (865)      (100)    (1,624)
  Other, net                            42         33        113        124 
----------------------------------------------------------------------------
Total expenses                       2,369      1,216      5,808      7,438 
----------------------------------------------------------------------------
Income (loss) before taxes          (1,440)       447     (1,322)      (272)
----------------------------------------------------------------------------
Income taxes                                                                
  Current income tax                   166         70        623        792 
  Deferred income tax (recovery)                                            
   expense                            (601)         1       (770)    (1,196)
----------------------------------------------------------------------------
                                      (435)        71       (147)      (404)
----------------------------------------------------------------------------
Net income (loss)                   (1,005)       376     (1,175)       132 
----------------------------------------------------------------------------
                                                                            
                                                                            
Per common share (US$):                                                     
  Net income (loss)                  (0.98)      0.37      (1.15)      0.12 
  Diluted net income (loss)          (0.98)      0.31      (1.21)      0.01 
----------------------------------------------------------------------------
Weighted average number of common shares                                    
 outstanding (millions)                                                     
  Basic                              1,031      1,025      1,030      1,025 
  Diluted                            1,032      1,033      1,032      1,033 
----------------------------------------------------------------------------
(1) 2012 Consolidated Statements of Income (Loss) were restated to reflect  
    the change to equity accounting of TSEUK and Equion on adoption of IFRS 
    11. TSEUK deconsolidation effective December 17, 2012. Equion           
    deconsolidation effective January 1, 2012.                              


                            Talisman Energy Inc.                            
                   Consolidated Statements of Cash Flows                    
                                (unaudited)                                 
                                                                            
                                                                            
                                   Three months ended            Year ended 
                                          December 31           December 31 
(millions of US$)                     2013       2012       2013       2012 
----------------------------------------------------------------------------
                                           (restated)            (restated) 
                                                  (1)                   (1) 
Operating activities                                                        
Net income (loss)                   (1,005)       376     (1,175)       132 
Add: Finance costs (cash and                                                
 non-cash)                              87         61        331        272 
Dividends from associates               21          -         58          - 
Items not involving cash             1,419         72      2,549      2,152 
----------------------------------------------------------------------------
                                       522        509      1,763      2,556 
Changes in non-cash working                                                 
 capital                               (80)      (101)         4       (160)
----------------------------------------------------------------------------
Cash provided by operating                                                  
 activities                            442        408      1,767      2,396 
----------------------------------------------------------------------------
                                                                            
Investing activities                                                        
Capital expenditures                                                        
  Exploration, development and                                              
   other                              (537)      (836)    (2,363)    (3,509)
  Property acquisitions                 (6)       (50)      (100)      (109)
Proceeds of resource property                                               
 dispositions                           43         24        146        964 
Yme removal obligation, net of                                              
 settlement                             (9)         -        252          - 
Restricted cash, net of                                                     
 settlement                              9          -       (215)         - 
Investments                             (4)        (9)       (13)       (20)
Proceeds on disposition of                                                  
 associate                             590          -        590          - 
Loan to joint venture, net of                                               
 repayments                           (183)         -       (398)         - 
Proceeds on reduction of UK                                                 
 investment, net of cash                                                    
 disposed                                -      1,349          -      1,349 
Changes in non-cash working                                                 
 capital                               (42)        98       (231)       113 
----------------------------------------------------------------------------
Cash provided by (used in)                                                  
 investing activities                 (139)       576     (2,332)    (1,212)
----------------------------------------------------------------------------
                                                                            
Financing activities                                                        
Long-term debt repaid                 (304)      (816)      (308)    (1,807)
Long-term debt issued                   28        240      1,094      1,336 
Loans from joint ventures, net                                              
 of repayments                          91         (1)       141        109 
Common shares issued                     7          4         28         13 
Common shares purchased                 (1)        (1)        (1)       (25)
Finance costs (cash)                   (77)       (45)      (295)      (190)
Common share dividends                 (69)       (70)      (277)      (277)
Preferred share dividends               (2)        (2)        (8)        (9)
Deferred credits and other               4        (18)        (8)        (3)
Changes in non-cash working                                                 
 capital                               (33)       (34)        (2)        (6)
----------------------------------------------------------------------------
Cash provided by (used in)                                                  
 financing activities                 (356)      (743)       364       (859)
----------------------------------------------------------------------------
Effect of translation on foreign                                            
 currency cash and cash                                                     
 equivalents                            (1)        (1)        (1)         9 
----------------------------------------------------------------------------
Net increase (decrease) in cash                                             
 and cash equivalents                  (54)       240       (202)       334 
Cash and cash equivalents net of                                            
 bank indebtedness, beginning of                                            
 period                                405        313        553        219 
----------------------------------------------------------------------------
Cash and cash equivalents net of                                            
 bank indebtedness, end of                                                  
 period                                351        553        351        553 
----------------------------------------------------------------------------
                                                                            
Cash and cash equivalents              364        553        364        553 
Bank indebtedness                      (13)         -        (13)         - 
----------------------------------------------------------------------------
Cash and cash equivalents net of                                            
 bank indebtedness, end of                                                  
 period                                351        553        351        553 
----------------------------------------------------------------------------
(1) 2012 Consolidated Statements of Cash Flows were restated to reflect the 
    change to equity accounting of TSEUK and Equion on adoption of IFRS 11. 
    TSEUK deconsolidation effective December 17, 2012. Equion               
    deconsolidation effective January 1, 2012.                              


Items not involving cash are as                                             
 follows:                                                                   
                                  Three months ended        Year ended      
                                     December 31           December 31      
(millions of US$)                     2013       2012       2013       2012 
----------------------------------------------------------------------------
Depreciation, depletion and                                                 
 amortization                          555        708      1,922      2,371 
Impairment, net of reversals           946        426        946      2,589 
Dry hole                                 7         72         89        238 
Share-based payments expense                                                
 (recovery)                             19        (52)        45        (66)
Gain on disposals                      (42)      (865)      (100)    (1,624)
Unrealized (gain) loss on held-                                             
 for-trading financial                                                      
 instruments                           154        (51)        93         48 
Deferred income tax (recovery)        (601)         1       (770)    (1,196)
Foreign exchange                        15         30         18         39 
PP&E derecognition                       -          -          -         20 
(Income) loss from joint                                                    
 ventures and associates, after                                             
 tax                                   340       (206)       275       (315)
Other                                   26          9         31         48 
----------------------------------------------------------------------------
                                     1,419         72      2,549      2,152 
----------------------------------------------------------------------------


                            Talisman Energy Inc.                            
                           Segmented Information                            
                                (unaudited)                                 
                                                                            
                                                                            
                         North America (1)           Southeast Asia (2)     
                    --------------------------------------------------------
                                                                            
                     Three months                Three months               
                         ended      Year ended      ended       Year ended  
                     December 31   December 31   December 31   December 31  
                    --------------------------------------------------------
(millions of US$)     2013   2012   2013   2012   2013   2012    2013  2012 
----------------------------------------------------------------------------
Revenue                                                                     
Sales                  430    399  1,643  1,435    609    494   2,202 2,190 
Other income             2     21     45     72      -      3       1     3 
Income (loss) from                                                          
 joint ventures and                                                         
 associates, after                                                          
 tax                     -      -      -      -      -      -       -     - 
----------------------------------------------------------------------------
Total revenue and                                                           
 other income          432    420  1,688  1,507    609    497   2,203 2,193 
----------------------------------------------------------------------------
Segmented expenses                                                          
Operating              142    135    568    564    148    112     532   418 
Transportation          24     16    103     92     12     11      56    53 
DD&A                   316    312  1,211  1,140    160    101     486   427 
Impairment             329    179    332    363     54      -      55     - 
Dry hole                 -      -      -     22     (6)    11      60    77 
Exploration             10      5     39     29      9     22      59    92 
Other                   23     38     69     81      -     (9)      8   (19)
----------------------------------------------------------------------------
Total segmented                                                             
 expenses              844    685  2,322  2,291    377    248   1,256 1,048 
----------------------------------------------------------------------------
Segmented income                                                            
 (loss) before taxes  (412)  (265)  (634)  (784)   232    249     947 1,145 
----------------------------------------------------------------------------
Non-segmented                                                               
 expenses                                                                   
General and                                                                 
 administrative                                                             
Finance costs                                                               
Share-based payments                                                        
 expense (recovery)                                                         
Currency translation                                                        
(Gain) loss on held-                                                        
 for-trading                                                                
financial                                                                   
 instruments                                                                
Gain on disposals                                                           
----------------------------------------------------------------------------
Total non-segmented                                                         
 expenses                                                                   
----------------------------------------------------------------------------
Income (loss) before                                                        
 taxes                                                                      
----------------------------------------------------------------------------
Capital expenditure                                                         
 (5)                                                                        
Exploration             19     53     76    157     37     (5)    129    59 
Development            249    257  1,207  1,404     93    119     353   362 
Midstream                -      1      -      1      -      -       -     - 
----------------------------------------------------------------------------
Exploration and                                                             
 development           268    311  1,283  1,562    130    114     482   421 
----------------------------------------------------------------------------
Acquisitions                                                                
Proceeds on                                                                 
 dispositions                                                               
Other non-segmented                                                         
----------------------------------------------------------------------------
Net capital                                                                 
 expenditures                                                               
----------------------------------------------------------------------------
Property, plant and                                                         
 equipment                         6,636  7,145                 2,318 2,582 
Exploration and                                                             
 evaluation assets                 1,579  2,078                   717   527 
Goodwill                             118    133                   170   170 
Investments in joint                                                        
 ventures and                                                               
 associates                            -      -                     -     - 
Other                                677    685                   740   637 
Asset held for sale                  776      -                     -     - 
----------------------------------------------------------------------------
Segmented assets                   9,786 10,041                 3,945 3,916 
Non-segmented assets                                                        
----------------------------------------------------------------------------
Total assets (5)                                                            
----------------------------------------------------------------------------
Decommissioning                                                             
 Liabilities (5)                     450    476                   280   347 
----------------------------------------------------------------------------
                                                                            
                                   Three months ended       Year ended      
                                      December 31           December 31     
                                --------------------------------------------
1. North America                       2013       2012       2013       2012
----------------------------------------------------------------------------
Canada                                  202        224        810        853
US                                      230        196        878        654
----------------------------------------------------------------------------
Total revenue and other income          432        420      1,688      1,507
----------------------------------------------------------------------------
Canada                                                      2,544      3,588
US                                                          4,092      3,557
----------------------------------------------------------------------------
Property, plant and equipment                               6,636      7,145
----------------------------------------------------------------------------
Canada                                                        905      1,070
US                                                            674      1,008
----------------------------------------------------------------------------
Exploration and evaluation                                                  
 assets                                                     1,579      2,078
----------------------------------------------------------------------------
                                                                            
                                   Three months ended       Year ended      
                                      December 31           December 31     
                                --------------------------------------------
2. Southeast Asia                      2013       2012       2013       2012
----------------------------------------------------------------------------
Indonesia                               275        266      1,175      1,157
Malaysia                                153        127        534        549
Vietnam                                 141         13        322         72
Australia                                40         91        172        415
----------------------------------------------------------------------------
Total revenue and other income          609        497      2,203      2,193
----------------------------------------------------------------------------
Indonesia                                                   1,023      1,040
Malaysia                                                      707        852
Vietnam                                                       460        494
Papua New Guinea                                               40         44
Australia                                                      88        152
----------------------------------------------------------------------------
Property, plant and equipment                               2,318      2,582
----------------------------------------------------------------------------
Indonesia                                                      19         11
Malaysia                                                       83         72
Vietnam                                                       145         14
Papua New Guinea                                              470        430
----------------------------------------------------------------------------
Exploration and evaluation                                                  
 assets                                                       717        527
----------------------------------------------------------------------------


                            Talisman Energy Inc.                            
                            Segmented Information                           
                               (unaudited)                                  
                                                                            
                                               North Sea (3)                
                                --------------------------------------------
                                  Three months ended        Year ended      
                                     December 31           December 31      
                                --------------------------------------------
(millions of US$)                     2013       2012       2013       2012 
----------------------------------------------------------------------------
Revenue                                                                     
Sales                                  151        493        577      2,922 
Other income                             5          4         23          9 
Income (loss) from joint                                                    
 ventures and associates, after                                             
 tax                                  (377)       (46)      (450)       (46)
----------------------------------------------------------------------------
Total revenue and other income        (221)       451        150      2,885 
----------------------------------------------------------------------------
Segmented expenses                                                          
Operating                               88        324        302      1,350 
Transportation                           5         14         25         69 
DD&A                                    72        291        195        774 
Impairment                             557        217        543      1,942 
Dry hole                                 -         24         18         45 
Exploration                              6         14         39         46 
Other                                    7          1         16         41 
----------------------------------------------------------------------------
Total segmented expenses               735        885      1,138      4,267 
----------------------------------------------------------------------------
Segmented income (loss) before                                              
 taxes                                (956)      (434)      (988)    (1,382)
----------------------------------------------------------------------------
Non-segmented expenses                                                      
General and administrative                                                  
Finance costs                                                               
Share-based payments expense                                                
 (recovery)                                                                 
Currency translation                                                        
(Gain) loss on held-for-trading                                             
 financial instruments                                                      
Gain on disposals                                                           
----------------------------------------------------------------------------
Total non-segmented expenses                                                
----------------------------------------------------------------------------
Income (loss) before taxes                                                  
----------------------------------------------------------------------------
Capital expenditure (5)                                                     
Exploration                             11         21         49         85 
Development                             63        278        332      1,064 
Midstream                                -          -          -          - 
----------------------------------------------------------------------------
Exploration and development             74        299        381      1,149 
----------------------------------------------------------------------------
Acquisitions                                                                
Proceeds on dispositions                                                    
Other non-segmented                                                         
----------------------------------------------------------------------------
Net capital expenditures                                                    
----------------------------------------------------------------------------
Property, plant and equipment                                537        460 
Exploration and evaluation                                                  
 assets                                                      289        254 
Goodwill                                                     287        472 
Investments in joint ventures                                               
 and associates                                              206        259 
Other                                                      1,911      1,418 
Asset held for sale                                            -          - 
----------------------------------------------------------------------------
Segmented assets                                           3,230      2,863 
Non-segmented assets                                                        
----------------------------------------------------------------------------
Total assets (5)                                                            
----------------------------------------------------------------------------
Decommissioning liabilities (5)                            1,009        688 
----------------------------------------------------------------------------

                                                 Other (4)                  
                                --------------------------------------------
                                  Three months ended        Year ended      
                                     December 31           December 31      
                                --------------------------------------------
(millions of US$)                      2013      2012        2013      2012 
----------------------------------------------------------------------------
Revenue                                                                     
Sales                                    53        46         230       220 
Other income                             19        (3)         40         - 
Income (loss) from joint                                                    
 ventures and associates, after                                             
 tax                                     37       252         175       361 
----------------------------------------------------------------------------
Total revenue and other income          109       295         445       581 
----------------------------------------------------------------------------
Segmented expenses                                                          
Operating                                 6         7          30        29 
Transportation                            3         3           8         7 
DD&A                                      7         4          30        30 
Impairment                                6        30          16       284 
Dry hole                                 13        37          11        94 
Exploration                              27        77         123       179 
Other                                     -        (9)          2       (12)
----------------------------------------------------------------------------
Total segmented expenses                 62       149         220       611 
----------------------------------------------------------------------------
Segmented income (loss) before                                              
 taxes                                   47       146         225       (30)
----------------------------------------------------------------------------
Non-segmented expenses                                                      
General and administrative                                                  
Finance costs                                                               
Share-based payments expense                                                
 (recovery)                                                                 
Currency translation                                                        
(Gain) loss on held-for-trading                                             
 financial instruments                                                      
Gain on disposals                                                           
----------------------------------------------------------------------------
Total non-segmented expenses                                                
----------------------------------------------------------------------------
Income (loss) before taxes                                                  
----------------------------------------------------------------------------
Capital expenditure (5)                                                     
Exploration                              47        48         144       223 
Development                               2        (8)         17         7 
Midstream                                 -         -           -         - 
----------------------------------------------------------------------------
Exploration and development              49        40         161       230 
----------------------------------------------------------------------------
Acquisitions                                                                
Proceeds on dispositions                                                    
Other non-segmented                                                         
----------------------------------------------------------------------------
Net capital expenditures                                                    
----------------------------------------------------------------------------
Property, plant and equipment                                 261       275 
Exploration and evaluation                                                  
 assets                                                       580       460 
Goodwill                                                        -         - 
Investments in joint ventures                                               
 and associates                                               920       803 
Other                                                         402       905 
Asset held for sale                                             -         - 
----------------------------------------------------------------------------
Segmented assets                                            2,163     2,443 
Non-segmented assets                                                        
----------------------------------------------------------------------------
Total assets (5)                                                            
----------------------------------------------------------------------------
Decommissioning liabilities (5)                                30        46 
----------------------------------------------------------------------------

                                                   Total                    
                                --------------------------------------------
                                  Three months ended        Year ended      
                                     December 31           December 31      
                                --------------------------------------------
(millions of US$)                     2013       2012       2013       2012 
----------------------------------------------------------------------------
Revenue                                                                     
Sales                                1,243      1,432      4,652      6,767 
Other income                            26         25        109         84 
Income (loss) from joint                                                    
 ventures and associates, after                                             
 tax                                  (340)       206       (275)       315 
----------------------------------------------------------------------------
Total revenue and other income         929      1,663      4,486      7,166 
----------------------------------------------------------------------------
Segmented expenses                                                          
Operating                              384        578      1,432      2,361 
Transportation                          44         44        192        221 
DD&A                                   555        708      1,922      2,371 
Impairment                             946        426        946      2,589 
Dry hole                                 7         72         89        238 
Exploration                             52        118        260        346 
Other                                   30         21         95         91 
----------------------------------------------------------------------------
Total segmented expenses             2,018      1,967      4,936      8,217 
----------------------------------------------------------------------------
Segmented income (loss) before                                              
 taxes                              (1,089)      (304)      (450)    (1,051)
----------------------------------------------------------------------------
Non-segmented expenses                                                      
General and administrative             114        128        434        510 
Finance costs                           87         61        331        272 
Share-based payments expense                                                
 (recovery)                             19        (52)        49        (63)
Currency translation                    12         12         18         33 
(Gain) loss on held-for-trading                                             
 financial instruments                 161        (35)       140         93 
Gain on disposals                      (42)      (865)      (100)    (1,624)
----------------------------------------------------------------------------
Total non-segmented expenses           351       (751)       872       (779)
----------------------------------------------------------------------------
Income (loss) before taxes          (1,440)       447     (1,322)      (272)
----------------------------------------------------------------------------
Capital expenditure (5)                                                     
Exploration                            114        117        398        524 
Development                            407        646      1,909      2,837 
Midstream                                -          1          -          1 
----------------------------------------------------------------------------
Exploration and development            521        764      2,307      3,362 
----------------------------------------------------------------------------
Acquisitions                             6        101        111        160 
Proceeds on dispositions               (43)       (24)      (146)      (964)
Other non-segmented                     12         61         41        138 
----------------------------------------------------------------------------
Net capital expenditures               496        902      2,313      2,696 
----------------------------------------------------------------------------
Property, plant and equipment                              9,752     10,462 
Exploration and evaluation                                                  
 assets                                                    3,165      3,319 
Goodwill                                                     575        775 
Investments in joint ventures                                               
 and associates                                            1,126      1,062 
Other                                                      3,730      3,645 
Asset held for sale                                          776          - 
----------------------------------------------------------------------------
Segmented assets                                          19,124     19,263 
Non-segmented assets                                          37         74 
----------------------------------------------------------------------------
Total assets (5)                                          19,161     19,337 
----------------------------------------------------------------------------
Decommissioning liabilities (5)                            1,769      1,557 
----------------------------------------------------------------------------
                                                                            
                                  Three months ended        Year ended      
                                     December 31           December 31      
                                --------------------------------------------
3. North Sea                          2013       2012       2013       2012 
----------------------------------------------------------------------------
UK (6)                                   5        323         23      2,017 
Norway                                 151        174        577        914 
Loss from TSEUK                       (377)       (46)      (450)       (46)
----------------------------------------------------------------------------
Total revenue and other income        (221)       451        150      2,885 
----------------------------------------------------------------------------
UK                                                             -          - 
Norway                                                       537        460 
----------------------------------------------------------------------------
Property, plant and equipment                                537        460 
----------------------------------------------------------------------------
UK                                                             -          - 
Norway                                                       289        254 
----------------------------------------------------------------------------
Exploration and evaluation                                                  
 assets                                                      289        254 
----------------------------------------------------------------------------
                                  Three months ended        Year ended      
                                     December 31           December 31      
                                --------------------------------------------
4. Other                              2013       2012       2013       2012 
----------------------------------------------------------------------------
Algeria                                 43         36        207        213 
Colombia (7)                            83        259        238        368 
----------------------------------------------------------------------------
Total revenue and other income         126        295        445        581 
----------------------------------------------------------------------------
Algeria                                                      260        273 
Colombia                                                       1          2 
----------------------------------------------------------------------------
Property, plant and equipment                                261        275 
----------------------------------------------------------------------------
Colombia                                                     203        124 
Kurdistan                                                    377        323 
Peru                                                           -          - 
Other                                                          -         13 
----------------------------------------------------------------------------
Exploration and evaluation                                                  
 assets                                                      580        460 
----------------------------------------------------------------------------
5.  Equion results have been equity accounted effective January 1, 2012 and 
    TSEUK results effective December 17, 2012.                              
6.  2012 results include revenue from the UK from January 1 to December 17, 
    2012. Subsequent to December 17, 2012, TSEUK results are included in    
    income (loss) from joint ventures and associates.                       
7.  Balances include after-tax equity income from Equion.                   

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