North Sea

Talisman is the leading independent operator in both the UK and Norwegian sectors of the North Sea. Talisman was one of the first independents to enter the North Sea as an operator and has built a substantial business in the area, where ownership of infrastructure allows the Company to control timing and development.

Talisman’s objective in the North Sea is to establish the UK as a long-term, high quality source of cash flow from a sustainable, flat production base. This will be achieved through ongoing development drilling, new projects and exploration in the Central Graben area of the UK North Sea. As part of this strategy, Talisman had planned to sell additional assets in the UK. This is still the strategic intent; however, the process has been delayed due to current market conditions.

Norway is an area of growth and potential exploration upside.

In line with Talisman’s strategy to focus its portfolio, during 2008, the Company completed the sale of its Beatrice asset as well as the sale of its producing assets in Denmark. The sale of the Netherlands assets was completed in January 2009.

2008 in review

During 2008, Talisman spent $1.6 billion in the North Sea.

The Company drilled 14 successful oil and gas development wells in the UK and 10 successful oil and gas development wells in Norway. Talisman also drilled three successful exploration wells in the UK and one in Norway.

In the UK, developments at Affleck, Burghley, Auk North and Auk South progressed during the year. In Norway, development of the Rev Field and redevelopment of the Yme oilfield were both progressed. First production from the Rev Field was announced early in 2009.

In 2008, the Tweedsmuir Phase 2 topside modifications to the Piper platform were completed. The Tweedsmuir Phase 3 water injection development project will be completed in 2009.

In November 2008, Talisman completed the sale of the Beatrice oilfield licence interests. Early in 2009, Talisman entered into an agreement to sell a 10% interest in the Yme Field in Norway.