APRIL 2013

Information Memorandum

Talisman Energy - Liquid-Rich Duvernay Opportunity in the Heart of Greater Kaybob

DUVERNAY Talisman is offering 135,040 acres (54,016 Ha, 211 sections) of

contiguous 100% WI land in the heart of the Alberta Duvernay Shale play, focused in the Greater Kaybob area, ~200 km west of Edmonton

Talisman’s lands are larger licenses which require only a few wells to validate and continue acreage

Industry has spent almost $2 billion acquiring Duvernay land rights in the area via Crown land sales in the last five years

Development activity has been dramatic with almost 150 wells targeting the Duvernay licensed or drilled in the last three years

Talisman lands lie strategically in the fairway where free condensate yields range to over 300 bbl/MMcf and NGL yields approach 150 bbl/MMcf

With three pilot wells drilled, the Talisman assets are well positioned to move into full field development, offering a new entrant or existing player a strategic advantage in dominating a key liquid-rich resource play in the Western Canadian Sedimentary Basin

Wild River Sub Basin

Waskahigan

Kaybob South

Pine Creek

Duvernay Regional Phase Windows  

Duvernay activityTalisman Well

Talisman Land

Windfall Leduc

Complex Fir C

omplex

Talisman owns a substantial asset base (more than five townships of 100% working interest lands) in the Duvernay, strategically located in the most desirable part of the Duvernay fairway in Alberta.

Western Canada  

Talisman North

Duvernay WCSB Atlas fig 12.17

Bituminous Shale(Duvernay & equivalent)

All Other Facies (Duvernay Time equiv.)

British Columbia

Alberta

Saskatchewan

Edmonton

Calgary

Fort McMurray

Black Oil

Retrograde Gas

Dry Gas

Wet Gas

Volatile Oil Stratigraphy

 

0 100 200 30050100Kilometres

0 100 20050100Miles

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Operator Map Colour

Producing Standing Location & Drilling

HZ Total

Exxon (Celtic) 7 8 1 12 16Shell 5 14 39 55 58

Trilogy 4 2 2 8 8Husky Oil 3 7 7 10Athabasca 3 3 1 5 7

Talisman 3 3 3

Encana-PetroChina 2 4 7 11 13Chevron 8 3 11 11

Alta Enrg Partners 6 2 6ConocoPhillips 1 1 1

Others 1 9 2 6 12Total 28 62 55 121 145

Greater Kaybob - Tightly Held Land with Intense Drilling Activity

The top ten Duvernay landowners in the Greater Kaybob area are indicated on the map, illustrating that the lands are very tightly held, limiting new entry opportunities

These top ten companies control the Duvernay landbase, and account for over 90% of the well activity, as shown in the table below

Recent pertinent transactions include Exxon’s ($3B) acquisition of Celtic Exploration and Encana’s ($2.2B) joint venture with PetroChina. Exxon and Encana-PetroChina both have significant Duvernay holdings at Kaybob

Major Land Holders and Duvernay Activity  

Top Duvernay Operators by Well Count  

Windfall Leduc

Complex Fir C

omplex

Simonette

Source: Various Corporate Presentations

TalismanAlta Energy PartnersAthabascaChevronConocoPhillipsEncana-PetroChinaExxon (Celtic)Husky OilShellTrilogy

Wild River

Waskahigan

Whitecourt

Pine Creek

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Greater Kaybob - The Eagle Ford of the North - Liquid-Rich, High Pressure with Excellent Deliverability

HIGH PRESSURE The Duvernay is highly over pressured in the Greater Kaybob area, with

pressures as high as 11 Kpsi (76 mPa), resulting in excellent deliverability

Pressure gradients are expected to range from 0.7 to 0.9 psi/ft on Talisman acreage (15.8 to 20.3 kPa/m)

Regional assessment of fluids in Leduc reservoirs (sourced from Duvernay) indicate reservoir pressures should be well above dew point pressures in the Greater Kaybob area. This mitigates the risk of dropping out liquids in the reservoir

Comparative Pressure Depth Plot  

LIQUID-RICH The map to the left shows Duvernay free condensate yields which

range from 3 to 1,300 bbl/MMcf

Talisman’s lands are well situated to benefit from strong condensate yields of up to 300+ bbl/MMcf

Further, Leduc pinnacle reef liquid production in the Wild River area indicates that the Duvernay shales here have a liquid component

07-30-058-22W5 was completed in the Duvernay in 2008 and flowed free condensate validating liquid potential on the western edge of Talisman’s acreage

The Greater Kaybob area is served by two major deep cut plants and two major export pipelines, as shown on the map

Duvernay Free Condensate Yields/Leduc Condensate Production  

07-30-058-22W5 Vertical Duvernay

Test Produced Free Condensate

Depth Range of Talisman Lands

Wild River Sub Basin

Waskahigan

Kaybob South

Pine Creek

Windfall Leduc

Complex Fir C

omplex

Deep Cut Gas PlantsNGTL (Nova) and Alliance Mainlines

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Talisman’s Waskahigan block covers 10,880 net acres (4,352 Ha, 17 sections) and is surrounded by extensive Duvernay development with excellent results to date. Talisman’s lands are in the heart of the volatile oil window, with free condensate yields of >300 bbl/MMcf expected

Encana’s vertical well (11-08-062-24W5) tested 200 Mcf/d with 300 bbl/MMcf of condensate. The offsetting horizontal well (16-05-062-24W5) tested 2.7 MMcf/d with 200 bbl/MMcf of condensate

Athabasca’s 06-10-062-23W5 well tested at 5 MMcf/d with 450 bbl/d of condensate (> 50o API). Their 02-34-062-20W5 well yielded 250 bbl/MMcf of free condensate (55° API) over the first 80 days of production, with a flowing wellhead pressure of 2,900 psi (20 mPa)

Yoho Resources reports total liquid yields from three wells in the area of 150–180 bbl/MMcf, of which approximately 65% is free condensate

Further north and east, Shell has been very active with multi-well pad licenses. Their two (confidential) wells in township 063-19W5 have cumulative production of 119 MMcf with 27 Mbbl condensate (two months production)

The Duvernay at Waskahigan is 45 metres thick, with excellent porosity, highlighted in red on the log above from the 10-09-062-23W5 vertical well, which is adjacent to Athabasca’s horizontal well at 06-10-062-23W5

Waskahigan - Large Duvernay Land Position Where Liquid Yields Exceed 300 bbl/MMcf

Waskahigan Area Activity Map

 

10-09-062-23W5 Type Log  

45 m

Athabasca 06-10-062-23W5 HZ

Encana Activity 300 bbl/MMcf

Type Log

Athabasca 06-10-062-23W5

450 bbl/MMcf Condensate

3 Yoho Wells ~712 bbl/d

Condensate

Athabasca 02-34-062-20W5

250 bbl/MMcf

Shell Producers CTD 27 Mbbl in

2 months

Shell Multi-Well Pads

Black Oil

Volatile Oil

APRIL 2013

0

1,000

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0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Prod

ucin

g Da

y Ra

w Ga

s Pr

oduc

tion (

Mcf

/d)

Normalized Production From Peak Rate (Months)

11-25-060-18W5: 1134m Length + 10 Fracs*

03-13-060-20W5: 1386m Length + 13 Fracs*

15-33-060-20W5: 1558m Length + 7 Fracs*

13-36-060-20W5: 1736m Length + 25 Fracs*

Horizontal Well Average

04-09-057-18W5: 1130m Length + 6 Fracs*

12-26-059-20W5: 1020m Length + 8 Fracs*

01-18-060-20W5: 960m Length + 6 Fracs*

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Talisman’s Whitecourt and Pine Creek lands are in three contiguous blocks covering 52,480 net acres (20,992 Ha, 82 sections)

Talisman’s initial pilot wells were short horizontals (~1,000 m), yet show some of the stronger rates in the play. Talisman’s 01-18-060-20W5 well placed only six of eight fracs, but is still above the average well. Increasing well length and number of fracs to optimize performance is the next step for full field development

The superior performance of this area is supported at Whitecourt where the lands are immediately offset by some of the longest producing and best rate wells in the play

The Pine Creek lands are expected to be in the wet gas/retrograde gas window as evidenced by the high free condensate yield (50 bbl/MMcf) in Talisman’s 04-09-057-18W5 well. Liquid yields are expected to increase to the east

Whitecourt and Pine Creek - The Sweet Spot - Excellent Deliverability and Liquid Content

Normalized Duvernay Production  

Whitecourt and Pine Creek Activity Map  

Talisman Wells

Talisman 01-18-060-20W5

Total Yield 79 bbl/MMcf*

Talisman 12-26-059-20W5

Total Yield 101 bbl/MMcf*

Talisman 04-09-057-18W5

Total Yield 165 bbl/MMcf* 50 bbl/MMcf Free Condensate

(Exxon) Celtic 15-33-060-20W5

75 bbl/MMcf Free Condensate

Longest Producing Duvernay

(Exxon) Celtic 13-36-060-20W5

94 bbl/MMcf Free Condensate

Trilogy 03-13-060-20W5

80 bbl/MMcf Free Condensate Currently the Best

Rate in the Duvernay

Husky Activity 11-23-060-18W5

237 bbl/MMcf Free Condensate

Duvernay Whitecourt and Pine Creek Type Logs  

Chevron Activity

60 m

12-26-059-20W5 HZ 04-09-057-18W5 HZ

Whitecourt Pine Creek

Dry Gas

Wet Gas

Retrograde Gas

Whitecourt

Pine Creek

* Total yields based on assumed Deep Cut NGL recovery

* Successful Fracs

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Wild River - Large Contiguous Land Block with Thick, Porous Duvernay Shale

Talisman’s Wild River acreage is contiguous covering 71,680 net acres (28,672 Ha, 112 sections)

Free condensate yields in the order of 10 bbl/MMcf are projected based on historic liquid production from Leduc pinnacle reefs

The Duvernay at 12-12-057-22W5 is 70 metres thick, and shows a profile typical of organic-rich shales; irradiated gamma-ray and heightened resistivity

Colour-filled density porosity highlights the excellent storage capacity of the reservoir with some of the largest OGIP values in the trend

Wild River Sub-Basin Activity Map  

12-12-057-22W5 Type Log  

Leduc Pinnacle CTD 208 bbl cnd

Encana Vertical Tested Gas (Nov 2012)

Daily Oil Bulletin

Leduc Pinnacle CTD 3,663 bbl cnd

Leduc Pinnacle CTD 872 bbl cnd

Encana Hz License

Type Log

70 m

Dry Gas

Wet Gas

APRIL 2013

New (since 2011) Montney WellsData As Of:

Producing Wells: 245Injecting Wells: 0

From: 2011-01To: 2013-02

Unit(M\A): API

11 12 13Date (Month/Years)

100

100 0

000

100 0

100 0

010

0 000

110

0 00

1010

010

0 0

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100 0

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100 0

100 0

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0 000

100

100 0

000

100 0

100 0

010

0 000

PRD Cal-Day Avg GAS Mcf/Day PRD Well CountPRD Cal-Day Avg CND Bbl/DayPRD Cal-Day Avg OIL Bbl/Day

Cum PRD OIL 5,401,844.9 BblCum PRD GAS 77,431,422.6 McfCum PRD CND 498,328.6 Bbl

Montney

Subcrop

R14W5R1W6 R15R16R17R18R19R20R21R22R23R24R25R26R27R2

R14W5R1W6 R15R16R17R18R19R20R21R22R23R24R25R26R27R2

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Montney Activity at Kaybob  

MONTNEY 49,920 acres (19,968 ha, 78 sections) of 100% Montney rights are

included on the Talisman lands

The Montney at Kaybob produces both liquid-rich gas and oil

The land tenure in the Montney is similar to the Duvernay which offers ample time to develop the resource

Since 2011, almost 400 wells have been licensed in the Montney with much of the new activity proximal to the Talisman acreage

As of January 2013, these new wells are producing 154.2 MMcf/d of gas and 16.2 Mbbl/d of oil and free condensate

NEXT STEPS Interested parties should execute a confidentiality agreement by contacting

Ian Van Staalduinen at +1.403.515.1526 (email: ian.van@bmo.com) or Wendy Smith Low at +1.403.515.1528 (email: wendy.smithlow@bmo.com) 

Virtual data room access will be provided to those executing a confidentiality agreement

Presentations will occur in Calgary to interested parties

The virtual data room will open early to mid May 2013 with presentations to take place in Calgary later in May 2013

Additional Resource Play Opportunity in the Montney

New Montney Production  

(Exxon) Celtic 07-09-060-20W5 HZ

CTD: 711 MMcf IP: 5.7 MMcf/d (11/04)

Rate: 430 Mcf/d (13/01)

Apache 09-27-058-21W5 HZ

CTD: 1,106 MMcf IP: 8.4 MMcf/d (12/04)

Rate: 2.9 MMcf/d (13/01)

APRIL 2013

A&D ADVISORY

Wendy Smith Low Managing Director +1.403.515.1528 wendy.smithlow@bmo.com

Joyce Kennedy Vice President +1.403.515.1576 joyce.kennedy@bmo.com

Gary Fisher Vice President +1.403.515.3674 gary.fisher@bmo.com

INVESTMENT BANKING

Shane Fildes Managing Director Global Head - Energy +1.403.515.1588 shane.fildes@bmo.com

Greg Stadnyk Vice President +1.403.515.3655 gregory.stadnyk@bmo.com

Ian van Staalduinen Managing Director +1.403.515.1526 ian.van@bmo.com

ABOUT BMO CAPITAL MARKETS BMO Financial Group (NYSE, TSX: BMO) is an integrated financial services provider offering a range of retail banking, wealth management, and investment and corporate banking products. BMO serves Canadian retail clients through BMO Bank of Montreal and BMO Nesbitt Burns. In the United States, personal and commercial banking clients are served by BMO Harris Bank N.A. (Member FDIC). Investment and corporate banking services are provided in Canada and the US through BMO Capital Markets.

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©COPYRIGHT 2013 BMO CAPITAL MARKETS CORP.

DISCLAIMER This Information Memorandum (the “IM”) has been prepared by BMO Nesbitt Burns Inc. (“BMO Capital Markets”) from information furnished by the management of Talisman Energy Inc. (“Talisman” or the “Company”) and other sources and is being delivered for the sole purpose of providing recipients with an overview of Talisman in connection with a possible sale transaction (the “Transaction”). Unless the context indicates otherwise, references in this presentation to ‘‘Talisman’’ or the ‘‘Company’’ include, for presentation purposes only, the partnership interests held by TEI and its subsidiaries. Such use of ‘‘Talisman’’ or the ‘‘Company’’ to refer to these partnership interests does not constitute a waiver by Talisman Energy Inc. or such partnership of its separate legal status, for any purpose. The sale process will be conducted in accordance with the procedures provided to interested parties.

BMO Capital Markets, the Company and its affiliates reserve the right at any time, with or without notice or providing reasons to; (i) modify the process (ii) terminate the process (iii) refuse to allow an interested party to participate in the sale process (iv) end discussions with any interested party (v) reject an offer (vi) accept an offer other than the highest cash offer (vii) negotiate with one or more interested parties (viii) accept an offer prior to the closing date for the process; and (ix) limit access to any additional information, all without any liability.

The IM is not all-inclusive and does not contain all of the information required to evaluate the Transaction. Any recipient hereof should conduct its own independent analysis, consult its own advisors and satisfy themselves as to the accuracy and completeness of all information contained herein. Interested parties may access confidential information by executing two original Confidentiality Agreements in the form provided. Confidentiality Agreements from agents acting for undisclosed parties will not be accepted. The Company or BMO Capital Markets may require interested parties to provide references or demonstrate financial capability prior to, or at the same time as, execution of the Confidentiality Agreement.

While the information contained in this IM is believed to be accurate, BMO Capital Markets has not independently verified the information and no representations or warranties, expressed or implied, are made by BMO Capital Markets or the Company as to the accuracy or completeness of the IM. By accepting this IM, the recipient agrees that neither the Company nor BMO Capital Markets and its affiliates, directors, employees, consultants and agents has any liability resulting from the use of the information contained herein or otherwise supplied or resulting from the failure to supply additional information. Only those representations and warranties which may be made to a purchaser in a definitive purchase and sale agreement shall have any legal effect.

All estimates, statistics, options and forecasts contained in this IM are, by their nature, based on a number of assumptions, are subjective and may contain errors and omissions.

This presentation contains information that constitutes “forward-looking information” or “forward-looking statements” (collectively “FLI”) within the meaning of applicable securities legislation. This FLI includes, among others, statements regarding: business strategy, priorities and plans; expected initial production and deliverability improvements; and other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance. The factors or assumptions on which the FLI is based include assumptions inherent in current guidance; 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 FLI are reasonable but no assurance can be given that these factors, expectations and assumptions will prove to be correct. Undue reliance should not be placed on FLI. FLI 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 FLI contained in this presentation. 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; and uncertainty related to securing sufficient access to markets. 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 AIF. In addition, information is available in the Company’s other reports on file with Canadian securities regulatory authorities and the US SEC. FLI is based on the estimates and opinions of Talisman’s management at the time the information is presented. Talisman assumes no obligation to update FLI should circumstances or management’s estimates or opinions change, except as required by law.

In this presentation, Talisman discloses analogous information as defined by National Instrument 51-101 which is relevant to the company for comparative purposes. The information for this presentation was sourced from publically available data via the Energy Resource Conservation Board (ERCB) as well as from the referenced companies' corporate investor presentations and press releases, available on their respective websites. The company cannot confirm that this analogous information was prepared by a qualified reserves evaluator or that it was prepared in accordance with the COGEH Handbook.

In furnishing this IM, BMO Capital Markets undertakes no obligation to provide the recipient with access to any additional information or to update or correct any information contained herein. The IM shall not be deemed to represent an indication of the state of affairs of the Company nor shall it constitute an indication that there has been no change in the business or affairs of the Company since the date hereof.

This IM does not constitute an offer or solicitation for the sale of securities, a recommendation to purchase, sell or hold any securities, an offering memorandum, prospectus or a public offering as defined under applicable securities legislation or investment, legal, financial, tax advice or any advice of any kind.

The calculation of barrels of oil equivalent (“boe”) is based on a conversion ratio of six thousand cubic feet of natural gas to one barrel of oil to estimate relative energy content and does not represent a value equivalency at the wellhead. Boe's may be misleading, particularly if used in isolation.