Southeast Asia

Southeast Asia continues to be an area of opportunity and growth for Talisman. This is a region of long-life assets in a low cost environment. In the past five years, Talisman has doubled production in the area and is positioned to grow at 10% per annum over the next few years.

The Company’s focus in Southeast Asia includes:

• improved oil recovery initiatives focused on mature properties in Malaysia and Indonesia;
• ongoing development of discovered reserves and infill opportunities;
• exploration activities in Vietnam and Indonesia that build on existing long-term foundations;
• evaluation of potential for more gas-focused activity in the region, particularly in Vietnam, Papua New Guinea and Indonesia;
• pursuit of further partnering opportunities with national oil companies; and
• ongoing assessment of acquisitions, dispositions and new investment opportunities in the area.

2008 in review

In Southeast Asia, exploration and development spending totaled $768 million, with 74 successful oil and gas wells, including five successful exploration wells.

In Malaysia/Vietnam, first natural gas from the Northern Fields in PM-3 CAA commenced production on schedule in July. The Bunga Orkid-A Central Processing Platform was successfully installed at year-end. In the Southern Fields, facilities upgrades were installed and fully commissioned, adding 17 mmcf/d of gross sales gas.

In Indonesia, Talisman set a record with natural gas production averaging 250 mmcf/d, with a full year of gas sales to West Java from the Corridor Block. The process to sanction Suban Phase 3 was initiated in 2008 and will continue in 2009. Talisman signed a memorandum of understanding with Pertamina to evaluate a number of opportunities for enhanced oil recovery projects utilizing the Company’s core skills and capabilities. This work will continue in 2009.

In Vietnam, Talisman drilled successful wells in Hai Su Trang and Hai Su Den in 2007 and 2008, following which the government approved the reserves assessments for these discoveries within Block 15-2/01. These wells flowed at a combined rate of approximately 36,000 bbls/d and an Outline Development Plan and Declaration of Commerciality have been approved.

In late 2008, first oil was produced from the Song Doc field within Block 46/02 at approximately 20,000 bbls/d and the early production history has more than met expectations. Gross production is expected to reach approximately 24,000 bbls/d in the first half of 2009.

In Australia, the Corallina riser was replaced successfully in the third quarter, with maintenance work on the Corallina and Laminaria fields continuing into the first half of 2009.