EX-1 3 f2qinterimreportwithnotesfin.htm EXHIBIT 1 - 2Q INTERIM REPORT CALGARY, Alberta - November 26, 1998 -

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Exhibit 1




Talisman Generates a Record $1.45 Billion

in Cash Flow in the First Half of 2003

Company Expects Greater Than 10% Production Growth by Year End



Calgary, Alberta – July 30, 2003 - Talisman Energy Inc. today reported record high cash flow and earnings for the first six months of 2003.


Cash flow to June 30 was $1.45 billion ($11.17/share) compared to $1.23 billion ($9.15/share) a year ago.  Cash flow during the second quarter was $600 million ($4.65/share) compared to $652 million ($4.84/share) a year earlier.  On a comparable basis (excluding Talisman’s production from Sudan) cash flow per share was up 10% from $4.24 a year ago.


Earnings were $774 million ($5.90/share) compared to $191 million ($1.33/share) during the first six months of 2002.  Quarterly earnings were $201 million ($1.52/share) versus $90 million ($0.62/share) during the second quarter of 2002.


Production averaged 365,000 boe/d during the quarter, in line with the Company’s guidance.  Unit operating costs averaged $6.98/boe, down 3% from the first quarter.  Capital spending was $503 million during the quarter and Talisman’s net debt at the end of June was $1.8 billion.  On a net basis, debt to debt-plus-equity was 27%, down from 40% at year end.


“This quarter was operationally on plan, helped by strong commodity prices and I am looking forward to an exciting second half,” said Dr. Jim Buckee, President and Chief Executive Officer.  “We expect greater than 10% production growth by year end; we have a number of high impact exploration wells drilling, or about to drill; and Talisman has one of the strongest balance sheets in the sector.


“Our major development project in Malaysia/Vietnam is over 90% complete and on schedule for oil production in September.  Algerian oil production is increasing and expected to average over 15,000 bbls/d in the fourth quarter.  Blake Flank production will start in the North Sea in September as planned.  Gas sales from the Corridor Block to Singapore are expected to start in August and we have signed a number of significant agreements to progress additional Corridor sales.


“In North America, Talisman’s natural gas production is up 5%.  The Balvenie well off the east coast is drilling, we have two wells in Appalachia about to test and have farmed in to highly prospective acreage in Alaska.


“Talisman expects that cash flow per share will be in the $20-21 range this year based on forecasts of US$27/bbl WTI oil prices, US$5/mcf NYMEX gas prices and a US$0.73 Canadian dollar exchange rate in the second half of the year.  We are on track to meet our production guidance for the year.  


“We have completed a number of small acquisitions and increased our exploration and development budget by about $200 million in Canada and Appalachia, which will boost production in 2004. Total exploration and development spending for the year is expected to be about $2.25 billion.


“We have also repurchased an additional 1.2 million shares in recent weeks, reflecting Talisman’s strong financial position and a continuing belief that Talisman is an attractive investment at current price levels.


“In summary, Talisman is positioned for significant production growth over the next six months.  We have a large opportunity inventory and are expanding our drilling programs in North America. Our strong balance sheet protects us against a drop in prices and will enable us to bolt on new opportunities. Talisman’s strategy continues to add value and we have a unique and attractive opportunity set for the future.”


Talisman Second Quarter Summary


•

High drilling success continued at 92% in North America with completion of 56 oil and 43 gas wells during the quarter.

•

A Talisman subsidiary has entered into an agreement to farm-in to 10 townships of highly prospective exploration acreage in Alaska.

•

The Balvenie exploration well off the east coast of Nova Scotia spudded on July 7, 2003.

•

A second well has reached total depth in Appalachia.  Clean up of the first well is under way and both wells will be testing soon.

•

Talisman has acquired an entry position in Norway with the announced acquisition of a 61%  operated interest in the Gyda field for $123 million.

•

First production from the Blake Flank is expected in September as planned.  The first well has been completed and tested at over 5,000 bbls/d from one of two prospective zones.

•

A new oil discovery adjacent to the Tartan field is currently testing at approximately 5,000 bbls/d, constrained by a half inch choke.

•

Construction of the PM-3 CAA development in Malaysia/Vietnam is over 90% complete and the central processing facilities have been installed offshore.  Oil sales are scheduled to start in September and gas sales in October.  Production volumes in Malaysia are expected to grow from 6,000 boe/d currently to over 40,000 boe/d early next year.

•

Natural gas sales from the Corridor Block to Singapore are expected to start in August as scheduled.

•

A new gas sales agreement has been signed to sell gas from Corridor to Island Power in Singapore.  Gas sales heads of agreements have been reached for significant volumes from Corridor to West Java.

•

The MLN field in Algeria started oil production in late June and Algerian production is expected to reach over 15,000 bbls/d in the fourth quarter.

•

Development of the Greater Angostura field is under way in Trinidad.  Facilities installation will start in the fourth quarter of 2003 with first oil production expected early in 2005.

•

An  exploration well, Howler, is currently drilling in Trinidad.

•

Talisman’s first exploration well in Colombia is expected to spud next month.








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Management’s Discussion and Analysis (MD&A)


This discussion and analysis should be read in conjunction with the Interim Consolidated Financial Statements.  The calculation of barrels of oil equivalent (boe) is based on a conversion rate of six thousand cubic feet (mcf) of natural gas for one barrel of oil equivalent.  All comparative percentages are between the quarters ended June 30, 2003 and 2002, unless stated otherwise.   All amounts are in Canadian dollars unless otherwise indicated.   Readers are also referred to the product netbacks by reporting segment included in this interim report upon which much of the following discussion is based.


Included in the MD&A are references to terms commonly used in the oil and gas industry such as cash flow and cash flow per share.  These terms are not defined by Generally Accepted Accounting Principles in either Canada or the US.  Consequently these are referred to as non-GAAP measures.  Cash flow, as discussed below, appears as a separate caption on the Company’s cash flow statement and is reconciled to both net income and cash flow from operations.  


Quarterly results summary

 

Three months ended

Six months ended

June 30,

2003

2002

2003

2002

Financial (millions of C$ unless otherwise stated)

 

Cash flow1&3

600

652

1,445

1,229

Net income1   

201

90

774

191

Exploration and development expenditures

492

386

947

948

Per common share (dollars)

    

     Cash flow1&3    – Basic

4.65

4.84

11.17

9.15

                           – Diluted

4.59

4.76

11.03

9.00

Net income2    – Basic

1.52

0.62

5.90

1.33

                           – Diluted

1.50

0.61

5.82

1.31

Production (daily average production)

   

Oil and liquids (bbls/d)

188,682

275,157

217,864

276,556

Natural gas (mmcf/d)

1,061

1,051

1,078

1,047

Total mboe/d (6mcf=1boe)

365,473

450,354

397,613

451,137

1)

Amounts are reported prior to preferred security charges of $9 million ($5 million, net of tax) for the three months ended June 30, 2003 (2002 - $10 million; $6 million, net of tax).  

2)

Per common share amounts for net income and diluted net income are reported after preferred security charges.

3)

Cash flow is a non-GAAP measure and represents net income before exploration costs, DD&A, future taxes and other non-cash expenses.


The Company’s quarterly cash flow was $600 million, down slightly from the quarter a year ago due to sale of the Sudan operations during the first quarter of 2003 and lower North Sea liquids volumes due to scheduled maintenance.  North American natural gas prices were $2.33/mcf higher during the quarter compared to a year ago, whereas commodity prices are down from the first quarter.


Net income per share increased during the quarter to $1.52, up from $0.62 in 2002.    Net income per share for the first six months was $5.90/share, up from $1.33/share in 2002.   The Company’s net income for the first half of 2003 was impacted by three significant special items that increased net income by $2.74/share.  The second quarter impact of these items was an increase to net income of $0.46/share.  None of these items impacted the Company’s reported cash flow.  


During the first quarter of 2003, the gain on sale of the Sudan operations increased net income by $296 million ($2.28/share).  Beginning in the second quarter of 2003, the Company changed its accounting for stock options which resulted in an expense of $105 million ($74 million, net of tax) or $0.57/share.  Also during the second quarter, the Company recorded a $133 million ($1.03/share) future tax recovery primarily due to a reduction in the Canadian federal and provincial tax rates, which was partially offset by a future tax expense associated with unrealized foreign exchange gains on the Company’s foreign denominated debt.  The 2002 second quarter comparative net income was reduced by a one-time non-cash future tax expense of $116 million ($0.86/share), primarily due to a new supplemental tax in the UK.

Pro forma Sudan operations and gain on sale

The following table has been provided to assist readers in understanding the Company’s results after taking into account the sale of the Sudan operations.   Pro forma is before the gain on sale of the Sudan operations in 2003 and excludes Sudan results of operations for the period January 1 to March 12, 2003 (sale closing date) and from the 2002 comparatives.

 

Three months ended

Six months ended

June 30,

2003

2002

2003

2002

Financial (millions of C$ unless otherwise stated)

  

Cash flow

600

571

1,369

1,076

Net income

201

42

433

93

Exploration and development expenditures

492

365

945

902

Per common share (dollars)

 
  

     Cash flow        – Basic

4.65

4.24

10.58

8.02

                           – Diluted

4.59

4.16

10.45

7.88

Net income    – Basic

1.52

0.27

3.26

0.60

                           – Diluted

1.50

0.26

3.22

0.59

Production (daily average production)

 
  

Oil and liquids (bbls/d)

188,682

214,553

191,569

216,944

Natural gas (mmcf/d)

1,061

1,051

1,078

1,047

Total mboe/d (6mcf=1boe)

365,473

389,750

371,318

391,525

   



On a pro forma basis after removing the Sudan operating results from the 2002 comparatives, cash flow per share increased 10% due to the higher North American natural gas revenues and fewer outstanding common shares.  Pro forma net income for the quarter increased 378% compared to a year ago.






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Company Netbacks

  

Three months ended

Six months ended

June 30,

2003

2002

2001

2003

2002

2001

Oil and liquids ($/bbl)

       

   Sales price

 

34.87

36.46

38.66

40.51

33.87

37.57

   Hedging expense (income)

 

0.65

0.11

0.12

2.06

(0.32)

0.13

   Royalties

 

3.83

6.32

8.34

6.49

5.92

7.44

   Operating costs

 

9.87

7.17

7.45

9.58

7.27

7.19

  

20.52

22.86

22.75

22.38

21.00

22.81

Natural gas ($/mcf)

       

   Sales price

 

6.09

4.02

5.74

6.80

3.78

6.99

   Hedging expense (income)

 

0.10

(0.16)

0.13

0.18

(0.25)

0.28

   Royalties

 

1.28

0.65

1.37

1.34

0.64

1.69

   Operating costs

 

0.65

0.62

0.62

0.69

0.61

0.60

  

4.06

2.91

3.62

4.59

2.78

4.42

Total $/boe  (6mcf=1boe)

       

   Sales price

 

35.68

31.63

36.88

40.62

29.53

39.41

   Hedging expense (income)

 

0.63

(0.31)

0.41

1.60

(0.77)

0.79

   Royalties

 

5.71

5.36

8.30

7.20

5.11

8.57

   Operating costs

 

6.98

5.81

5.85

7.11

5.87

5.69

  

22.36

20.77

22.32

24.71

19.32

24.36

Netbacks do not include synthetic oil and pipeline operations.  Additional netback information by major product type and region is included elsewhere in this interim report.

The Company’s average netback for the quarter was $22.36/boe, up 8% from 2002 with higher North American natural gas prices reduced by increased hedging losses and higher royalties on natural gas sales.  Oil royalties during the quarter were reduced due to a royalty recovery in the North Sea.  Unit operating costs increased due to expected maintenance in the North Sea.

Revenue

The Company’s gross sales were $1.2 billion for the quarter, down slightly from 2002 due to the sale of the Sudan operations.  On a pro forma basis, after removing the Sudan operations, gross sales for the quarter were up 5% as the drop in oil and liquids revenue was more than offset by higher natural gas revenues in North America.  


Production (daily average production)

Three months ended

Six months ended

June 30,

 

2003

2002

2001

2003

2002

2001

Oil and liquids (bbls/d)

       

North America

 

59,743

63,050

66,624

60,601

63,328

66,456

North Sea

 

102,274

129,002

85,751

105,498

130,850

95,533

Southeast Asia

 

22,899

22,501

18,502

22,134

22,766

18,628

Algeria

 

3,766

-

-

3,336

-

-

Sudan

 

-

60,604

53,208

26,295

59,612

51,654

  

188,682

275,157

224,085

217,864

276,556

232,271

Natural gas (mmcf/d)

       

North America

 

865

822

792

866

822

791

North Sea

 

91

136

99

114

128

103

Southeast Asia

 

105

93

89

98

97

93

  

1,061

1,051

980

1,078

1,047

987

Total boe/d (6mcf=1boe)

 

365,473

450,354

387,486

397,613

451,137

396,739

The Company’s average oil and liquids production for 2003 as compared to 2002 decreased with the sale of the Sudan operations and major North Sea planned maintenance.  North American liquids production was lower as the Company continues to focus on natural gas opportunities.  Southeast Asia liquids production remained steady during the quarter.  Algerian production at Ourhoud commenced at the end of 2002 and increased through the first half of 2003.  Production from the Greater MLN project started at quarter end with the completion of the initial commissioning of the oil processing and storage facilities.  The Company’s oil and liquids production is expected to increase significantly during the second half of 2003 with higher North Sea volumes, start up of the PM-3 CAA development project in Malaysia/Vietnam and increased production from the Greater MLN project.


North American natural gas production for the quarter ended June 30 increased to 865 mmcf/d, up 5% over the same period last year.  The increase is primarily due to the addition of the US natural gas properties acquired at the end of 2002 and during the first quarter of 2003, which contributed 67 mmcf/d during the second quarter.  Production was reduced due to delayed development and turnarounds.  North Sea natural gas production was affected by reduced access to export pipeline capacity at Brae.  Southeast Asia production averaged 105 mmcf/d due to higher sales at Corridor.  The Company’s natural gas production is expected to increase during the second half of 2003 with reduced turnarounds and the tie in of new wells in North America, the start up of the PM-3 CAA development later in the year and access to additional export pipeline capacity at Brae becoming available in the fourth quarter.  


Prices

  

Three months ended

Six months ended

June 30,

 

2003

2002

2001

2003

2002

2001

Oil and liquids ($/bbl)

       

North America

 

32.92

32.76

33.70

37.87

29.80

34.42

North Sea

 

35.29

37.71

40.48

40.85

35.77

39.66

Southeast Asia

 

37.81

38.77

42.81

42.26

35.78

40.51

Algeria

 

35.05

-

-

37.33

-

-

Sudan

 

-

36.64

40.22

43.89

33.08

36.51

  

34.87

36.46

38.66

40.51

33.87

37.57

Natural gas ($/mcf)

       

North America

 

6.41

4.08

5.99

7.22

3.68

7.51

North Sea

 

4.16

3.05

3.92

4.61

3.97

4.66

Southeast Asia

 

5.05

4.92

5.60

5.53

4.42

5.15

  

6.09

4.02

5.74

6.80

3.78

6.99

Total $/boe (6mcf=1boe)

 

35.68

31.63

36.88

40.62

29.53

39.41

Hedging loss (income)-excluded from the above prices

    Oil and liquids ($/bbl)

 



0.65



0.11



0.12



2.06



(0.32)



0.13

    Natural gas  ($/mcf)

 

0.10

(0.16)

0.13

0.18

(0.25)

0.28

    Total $/boe (6mcf=1boe)

 

0.63

(0.31)

0.41

1.60

(0.77)

0.79

Benchmark prices

   WTI        (US$/bbl)

 


28.91


26.25


27.96


31.39


23.95


28.34

   Brent       (US$/bbl)

 

26.03

25.04

27.33

28.77

23.10

26.59

   NYMEX (US$/mmbtu)

 

5.48

3.37

4.78

6.05

2.88

6.03

   AECO     (C$/gj)

 

6.63

4.19

6.70

7.07

3.68

8.52

 Excludes synthetic oil.


World oil prices are above the level of a year ago but are down from the first quarter of 2003.  North American natural gas prices, which remained high during the second quarter with inventory levels continuing to be at historically low levels, have also fallen from the first quarter of the year.  Talisman’s Canadian dollar average reported price for oil and liquids fell during the quarter primarily due to the strengthening of the Canadian dollar vis-à-vis the US dollar, which also had a mitigating impact on Talisman’s reported average natural gas price.  Talisman’s average natural gas price for the quarter increased in part due to the inclusion of natural gas sales from the recently acquired Appalachia properties, which averaged $8.66/mcf during the quarter.


The Company’s commodity hedging activities resulted in a $0.63/boe loss for the quarter compared to a gain of $0.31/boe in 2002, due principally to higher North American natural gas prices.  The Company’s net hedging loss for the quarter was $21 million compared to a gain of $13 million in 2002.  A summary of the Company’s outstanding commodity based sales contracts may be found in note 5 of the Interim Financial Statements.


Royalties


June 30,

 

Three months ended

Six months ended

Average royalty rates (%)

 

2003

2002

2001

2003

2002

2001

North America

 

23

18

26

22

20

26

North Sea

 

(2)

5

5

-

5

5

Southeast Asia

 

28

25

20

28

26

20

Algeria

 

51

-

-

51

-

-

Sudan

 

-

38

45

46

38

42

  

16

17

23

18

17

22

Excludes synthetic oil


The Company’s royalty expense for the second quarter was $190 million, which equates to a royalty rate of 16%, down from 17% in 2002.  Higher natural gas prices in Canada increased the royalty rate for North America.  North Sea royalties decreased as a result of the UK abolishing government royalties effective January 2003.  During the period, agreement was reached in respect of the majority of outstanding royalty issues in respect of prior years resulting in a negative royalty rate during the current period.  Talisman expects to resolve additional outstanding government royalty claims by year end, which may result in further royalty adjustments.  Talisman’s Algerian royalty rate is expected to average 51% during the initial years of production.  Without Sudan, the Company’s quarterly average royalty rate would have been 13% and 18% for 2002 and 2001, respectively.


Operating Expense


June 30,

Three months ended

Six months ended

Unit operating costs ($/boe)

 

2003

2002

2001

2003

2002

2001

North America

 

4.69

4.14

4.39

4.87

4.28

4.26

North Sea

 

11.53

8.53

9.76

11.89

8.90

9.20

Southeast Asia

 

5.38

5.71

5.55

5.90

5.43

5.11

Algeria

 

4.07

-

-

5.01

-

-

Sudan

 

-

4.55

3.93

3.73

3.74

3.82

  

6.98

5.81

5.85

7.11

5.87

5.69

Excludes synthetic oil


Operating expense decreased slightly to $249 million for the quarter due to the sale of the Sudan operations offset by higher operating expense in North America and the North Sea.  Unit operating costs averaged $6.98/boe, down from $7.22/boe in the first quarter with lower costs in North America and the stronger Canadian dollar.  Unit operating costs as compared to a year ago are up due primarily to higher North Sea maintenance while North American unit operating costs increased due to higher power and processing fees.  


Capital expenditures ($ millions)

  

Three months ended

Six months ended

June 30,

 

2003

2002

2001

2003

2002

2001

North America

 

236

143

186

872

430

496

North Sea

 

142

116

203

220

264

332

Southeast Asia

 

74

56

18

154

106

34

Algeria

 

10

24

15

25

41

29

Sudan

 

-

21

28

2

46

51

Other

 

40

35

8

58

71

13

  

502

395

458

1,331

958

955

Capital expenditures include exploration and development expenditures and net asset acquisitions but exclude corporate acquisitions and administrative capital.


Total planned exploration and development spending for 2003 is now expected to be $2.25 billion.  During the first six months of 2003, $947 million was spent on exploration and development and $384 million was spent on net acquisitions, mostly related to the US property acquisitions during the first quarter.  In the first six months of 2003, the category “other” in the above table includes $40 million spent for exploration and development in Trinidad.


Not included in the above capital expenditures for the quarter is the amount related to the agreement to purchase a 61% operated interest in the Norwegian offshore Gyda field, associated facilities and adjacent acreage for $123 million effective January 1, 2003.  Gyda, in addition to providing highly prospective field development opportunities, is expected to add 7,000 boe/d of production.  All significant conditions of the agreement have been met and the acquisition is expected to close in September.  


Depreciation, Depletion and Amortization


June 30,

DD&A ($/boe)

 

Three months ended

Six months ended

 

2003

2002

2001

2003

2002

2001

North America

 

9.23

8.14

7.89

9.14

8.27

7.49

North Sea

 

12.33

12.42

12.01

12.63

12.13

11.55

Southeast Asia

 

6.52

6.11

6.38

6.19

6.11

6.46

Algeria

 

7.01

-

-

7.39

-

-

Sudan

 

-

4.14

4.13

3.98

4.23

3.99

  

9.90

8.88

8.33

9.59

8.85

8.10


The 2003 second quarter depreciation, depletion and amortization (DD&A) expense was $329 million, down from $364 million in 2002 as an increase in unit DD&A rates partly offset the impact of lower production volumes.  The DD&A rates in North America increased due to the inclusion of costs associated with the US property acquisitions.









Other ($ millions except where noted)


June 30,

 

Three months ended

Six months ended

 

2003

2002

2001

2003

2002

2001

G&A ($/boe)

 

1.07

0.87

0.75

1.03

0.81

0.75

Interest costs capitalized

 

7

4

7

14

11

12

Dry hole expense

 

42

25

41

114

52

55

Other expense (income)

 

41

23

(60)

34

74

2

Interest expense

 

32

46

30

72

84

59

Other revenue

 

14

18

18

37

39

43


Dry hole expense was $42 million, of which $37 million was incurred in North America.  Other expense (income) of $41 million in the second quarter of 2003 includes a property impairment in the North Sea of $27 million due to disappointing development drilling at Ivanhoe/Rob Roy.  Interest expense fell during the quarter due to the lower average debt level.  Other revenue included $12 million of pipeline and processing revenue.


Stock-Based Compensation


As approved by Talisman’s shareholders, the Company’s stock option plans have been amended to provide employees and directors who hold stock options the choice upon exercise to purchase a share of the Company at the stated exercise price or to receive a cash payment in exchange for surrendering the option.  The cash payment is equal to the appreciated value of the stock option as determined based on the difference between the option’s exercise price and the Company’s share price at the time of exercise.  These amendments are expected to result in reduced shareholder dilution from both existing options and  in the future, as it is anticipated that holders of the stock options will elect to take a cash payment.  Such cash payments made by the Company to stock option holders will be deductible by the Company for corporate income tax purposes.  As a result of the amendments, the Company’s second quarter results include a $105 million ($74 million, net of tax) or $0.57/share stock-based compensation expense relating to the appreciated value of the Company’s outstanding stock options.  Additional stock-based compensation expense or recoveries in future periods is dependent on the movement of the Company’s share price and the number of outstanding options.  See notes 1 and 3 of the June 30 Interim Financial Statements for additional information on stock based compensation.


Taxes ($ millions)


June 30

 

Three months ended

Six months ended

 

2003

2002

2001

2003

2002

2001

Income before tax

 

118

323

428

906

513

955

Less PRT

 

17

35

36

50

76

80

  

101

288

392

856

437

875

Income tax expense (recovery)

       

   Current income tax

 

43

73

69

135

124

194

   Future income tax

 

(143)

125

34

(53)

122

109

  

(100)

198

103

82

246

303

Effective tax rate

 

(99%)

69%

26%

10%

56%

35%


The current tax expense for the quarter was reduced due to lower North Sea revenues.  During the second quarter of 2003, the Company recorded a non-cash future tax recovery of $160 million ($1.24/share) due to a reduction in the Canadian federal and provincial tax rates.  In addition, the second quarter included a $27 million ($0.21/share) future tax expense relating to the potential Canadian future tax liability associated with the impact of a stronger Canadian dollar on the foreign denominated debt.  In 2002, the future tax expense for the second quarter increased due to the introduction of a 10% supplemental tax in the UK ($128 million), which was partially offset by a reduction in the Alberta provincial tax rate ($12 million).  Adjusting for the impact of the above items in 2003 and 2002, the effective tax rate for the second quarter of 2003 and 2002 would have been 33% and 28%, respectively.  This adjusted effective tax rate increased during the quarter due to the change in the sourcing of the Company’s pre-tax income between tax jurisdictions.

Long-term debt and liquidity


Long-term debt decreased to $2.3 billion, down from $3.0 billion at year end due to a portion of the Sudan net proceeds being used to repay amounts outstanding under the Company’s bank credit facilities.  In addition, with 72% of the Company’s debt effectively denominated in US dollars, the strengthening of the Canadian dollar during the first half of 2003 decreased the reported debt amount by $272 million as compared to year end.  The majority of the change in reported debt due to currency movements does not impact the Company’s net income but instead impacts the cumulative foreign currency translation account which is included in shareholders’ equity.


Allowing for $488 million of cash and short-term investments, total net corporate debt at quarter end, excluding the preferred securities, was $1.8 billion.  On a net debt basis, debt-to-debt plus equity was 27%, down from 40% at year end.


During the quarter, the Company purchased 68,500 common shares under its normal course issuer bid for $4 million ($56.58/share).  Subsequent to the end of the quarter, 1,200,900 common shares were repurchased for $73 million ($60.99/share).  Year to date, the Company has purchased 3,335,600 common shares for $194 million ($58.23/share).  In March 2003, the Company renewed the normal course issuer bid to permit the purchase of up to 6,456,669 of its common shares, representing 5% of the total number of common shares outstanding at the time of the renewal.   


Sale of Sudan operations


On March 12, 2003, Talisman completed the sale of its indirectly held subsidiary which owned an interest in the Greater Nile Oil Project in Sudan to ONGC Videsh Limited ("OVL"), a subsidiary of India's national oil company.  The aggregate amount realized by Talisman from the transaction (including interest and cash received by Talisman between September 1, 2002 and closing) was $1.13 billion (US$771 million), subject to post-closing adjustments. See note 7 of the Interim Financial Statements.







#





Exploration and Operations Review


North America


During the second quarter, Talisman participated in 108 wells (gross). A total of 43 gas and 56 oil wells were drilled, resulting in an average success rate of 92%.  


Gas production in North America during the second quarter averaged 865 mmcf/d, an increase of 5% over the same period last year, primarily due to the recent acquisition of US properties in Appalachia.  Liquids production averaged 59,743 bbls/d, a decrease of 5% over the same period last year.  Natural gas continues to be the focus of the Company’s exploration and development activities in North America, supplemented by low risk oil projects.


In the Alberta Foothills, natural gas production averaged 124 mmcf/d, essentially unchanged from the last few quarters.  Production in this area is limited by available infrastructure and Talisman estimates that it has 15-20 mmcf/d of shut in production.  The Erith Pipeline and dehydration projects should be commissioned in the fourth quarter to alleviate this bottleneck.  The pipeline will add 75 mmcf/d of raw gas capacity from the Foothills Area to Talisman’s Edson gas plant.  The Company expects to utilize approximately two-thirds of this new capacity.   Talisman continued its active program in the area with five operated and two non-operated drilling rigs. During the quarter, six of the 23 wells (gross) planned for this year were drilled with a 100% success rate.


In the Turner Valley field, Talisman’s successful oil and up hole gas drilling programs continued with four new wells drilled with a 100% success rate.  Of particular note is the new 12-9 well (100% TLM), which tested at a rate of 4 mmcf/d.   The well has been tied in and is on production.


In the Monkman area, natural gas production averaged 87 mmcf/d, an increase of 11% over the same period last year and 5% over the last quarter.  Two recently drilled Triassic gas wells have contributed to the production growth in the Monkman area.  TEC et al Perry (Bullmoose)b-2-E (44% TLM) tested at 18 mmcf/d and is expected to be on stream in late August 2003. There are currently two rigs active in the area.


In Chauvin, nine wells were drilled in the second quarter with a 100% success rate.  Chauvin’s production averaged 17,865 boe/d, an increase of 3% over the same period last year, establishing a new production record.  


Production from Appalachia averaged 67 mmcf/d during the quarter, an increase of 12% over last quarter. Fortuna Ganung Hz #1 (100% TLM) has been completed and cleanup is under way.  A second well has reached total depth and both wells will be tested soon.  Prices averaged $8.66/mcf during the quarter.  Two rigs are operating in the area and seven to nine wells are planned for the rest of the year.


Edson area production increased 3% over last quarter.  West Whitecourt again achieved record production averaging 10,200 boe/d, an increase of 7% over the same period last year and 2% over last quarter, as a result of a successful winter drilling program.  In Bigstone/Wild River, five wells were drilled in the quarter with 100% success.  Production at Bigstone/Wild River averaged 16,204 boe/d, an increase of 7% over last quarter, mainly due to the successful drilling program.  Talisman is currently operating three drilling rigs in this area and plans to increase the rig activity level to five rigs this fall.    

In Deep Basin, two gas wells were drilled in the second quarter with a 100% success rate. Average production was 9,503 boe/d, an increase of 3% over the same period last year.


The EUB has issued GB2003-16, which recommended gas producing from the Wabiskaw-McMurray formation in designated areas be shut-in while a detailed review is conducted.  This proposed policy has minimal impact on Talisman, as less than 1.5 mmcf/d of production falls within the newly prescribed area.  Talisman will continue to monitor the situation, but expects no further impact on our operations or development plans in the area.


North American Frontiers


South east of Nova Scotia, on offshore Block EL 2379, we are participating in the high-risk, high-potential exploration well Balvenie-B79.  The well spudded on July 7 and is scheduled to reach total depth by the end of August.


Talisman’s  subsidiary, Fortuna Exploration LLC, entered into an agreement with Total E&P USA, Inc. to explore 10 townships in the National Petroleum Reserve Area of Alaska.  Fortuna will earn 30% in the lands.  Several large prospects have been identified and geological and geophysical work is progressing in preparation for a 2004 exploration well.


North Sea


North Sea production during the second quarter averaged 117,500 boe/d, down 11%, as expected, from the first quarter of 2003, mainly due to major planned shutdowns for maintenance and modifications at Ross/Blake and at Claymore/Tartan.  With the major planned shutdowns now complete, additional production from the Blake Flank and the ongoing  development well drilling program, production is anticipated to increase to about 140,000–150,000 boe/d in the fourth quarter.


The Blake Flank pilot development is still on schedule to deliver first production of about 11,500 bbls/d in September (TLM 54%).  Reservoir quality in the first two development wells is better than expected and the first well has been completed and tested at over 5,000 bbls/d from one of two prospective zones.


Talisman has a very active drilling program in the North Sea with wells currently drilling in the Clyde, Ross, Blake and Claymore fields.  The second Hannay well was successful, although production was delayed due to a subsea mechanical fault and is expected to start up in early August.  The water injector well at Halley, drilled during the first and second quarters, proved to have poor injectivity and is expected to be sidetracked later this year.


An exploration well adjacent to the Tartan field in Block 15/16a (TLM 100%) is currently testing at approximately 5,000 bbls/d, constrained by a half inch choke.


Talisman’s first entry into the Norwegian North Sea with the acquisition of the operated Gyda field was announced in May.  The transaction is proceeding as planned and the Company expects completion and assumption of operatorship before the end of the third quarter.    Upon completion of the transaction, initial net production is expected to be 7,000 boe/d with plans to increase this to 20,000 boe/d by 2006.






#





Indonesia


The successful fracture stimulation program at Tanjung continued into the second quarter with production rates maintained at 6,500 bbls/d (net TLM).


Sales of Corridor gas to Singapore Power are due to commence in August 2003, on schedule.


Negotiations are progressing well for additional Corridor gas sales.  In July, a gas sales agreement was concluded for gas sales from Corridor to Island Power in Singapore at an initial rate of approximately 20 mmcf/d (net TLM) likely starting in 2006.  A gas sales heads of agreement was signed in July for Corridor to supply gross volumes of 2.4 tcf of gas to PT PLN (Indonesia’s state owned electric power generator).  Gas deliveries are expected to start in 2006 and reach 300 mmcf/d in 2008 and a plateau rate of 400 mmcf/d (TLM 36%).


Malaysia/Vietnam


The PM-3 CAA project requires the fabrication of four wellhead riser platforms, a central processing platform, compression platform and floating storage and offloading vessel.  Construction activity is over 90% complete and on schedule for oil start up in September and gas sales in October 2003.


To the end of June, the four wellhead riser platforms and the jacket for the processing platform had been installed, with all other project activities nearing completion.  In July, the processing topsides were shipped out to the field and installed as scheduled.  Development drilling is progressing in tandem with construction activity and is progressing as planned.  To date, eleven development wells have been completed with the batch drilling of further wells under way.   Well results are generally exceeding expectations and there is already sufficient deliverability capacity to meet initial gas sales volumes.


In the northern part of Block PM-3 CAA, the Pakma/Orkid appraisal program was successful.  The East Bunga Orkid-2 appraisal well was drilled with two sidetracks, encountering 27 different gas zones with a maximum of 191 meters of net pay.  Two of the 27 zones were tested and flowed at rates 18.2 mmcf/d and 17.2 mmcf/d.  The North Bunga Pakma-2 appraisal well was drilled with one sidetrack, encountering 15 different gas zones with a maximum of 72 meters of net pay.  One of the 15 zones was tested and flowed at 20 mmcf/d.  These wells have increased proved and probable reserves in the Bunga Orkid/Pakma complex.


Development planning for the South Angsi discovery is under way, towards a production start in mid-2005.


Trinidad


Development of the Greater Angostura field located in offshore Block 2c is progressing as planned (TLM 25%), with the installation of facilities due to commence in the fourth quarter of 2003.  First oil from the project is expected in early 2005.  On Block 2c, the Howler-1 exploration well is drilling.  Acquisition of the onshore 3D seismic program on the Eastern Block has been suspended during rainy weather with 67% of the CEC-1 area shot.






#





Algeria


Oil production from the Menzel Lejmat North (MLN) field in Algeria commenced in late June 2003.  Initial gross production of approximately 14,000 bbls/d of oil is expected to increase to around 33,000 bbls/d in late 2003 (TLM 35%).  Production from the Ourhoud field (TLM 2%) commenced in late 2002 with first oil sales in 2003.  Talisman's overall share of Algeria production is expected to average 15,000 bbls/d (net TLM) in the fourth quarter.


The Company is continuing to evaluate its MLSE gas discoveries in the southern portion of Block 405a.


Colombia


Drilling on the Acevedo and the Huila Norte Blocks is expected to start in late August or early September.


Talisman Energy Inc. is a large, independent oil and gas producer, with operations in Canada and, through its subsidiaries, the North Sea, Indonesia, Malaysia, Vietnam, Algeria and the United States.  Talisman's subsidiaries also conduct business in Trinidad, Colombia and Qatar.  Talisman has adopted the International Code of Ethics for Canadian Business and is committed to maintaining high standards of excellence in corporate citizenship and social responsibility wherever its business is conducted.  Talisman's shares are listed on Toronto Stock Exchange in Canada and the New York Stock Exchange in the United States under the symbol TLM.


For further information, please contact:

David Mann, Senior Manager, Investor Relations & Corporate Communications


Phone:

(403) 237-1196

Fax:

(403) 237-1210

E-mail:

tlm@talisman-energy.com


Website:

www.talisman-energy.com


Forward Looking Statements:  This interim report contains “forward-looking statements” within the meaning of the US Private Securities Litigation Reform Act of 1995, including estimates of future production and cash flows, business plans for drilling, exploration, production, construction, oil or gas sales or deliveries, and acquisitions, the estimated amounts and timing of capital expenditures, and other expectations, beliefs, plans, objectives, assumptions or statements about future events or performance (often, but not always, using words such as “expects”, “expected”,  “anticipated”, ”intended”, “planned”, “on schedule to”, “due to”, “should be”, “scheduled”, “likely” or stating that certain actions, events or results “may”, or “will” be taken, occur or be achieved).  Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties that could cause actual results to differ materially from those reflected in the statements.  These risks include, but are not limited to: the risks of the oil and gas industry (for example, operational risks in exploring for, developing and producing crude oil and natural gas; risks and uncertainties involving geology of oil and gas deposits; the uncertainty of reserve estimates; the uncertainty of estimates and projections relating to future production, costs and expenses and the success of exploration and development projects; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; and health, safety and environmental risks); uncertainties as to the availability and cost of financing; risks in conducting foreign operations (for example, political and fiscal instability or the possibility of civil unrest or military action in countries such as Indonesia, Algeria or Colombia); fluctuations in oil and gas prices and foreign currency exchange rates; and the possibility that government policies may change or governmental approvals may be delayed or withheld.  Additional information on these and other factors that could affect the Company’s operations or financial results are included in the Company’s other reports on file with Canadian securities regulatory authorities and the United States Securities and Exchange Commission.  Forward-looking statements are based on the estimates and opinions of the Company’s management at the time the statements are made.  The Company assumes no obligation to update forward-looking statements should circumstances or management’s estimates or opinions change.


Non-GAAP Measures:  Included in this news release are references to terms commonly used in the oil and gas industry, such as cash flow and cash flow per share.  These terms are not defined by Generally Accepted Accounting Principles in either Canada or the US.  Consequently, these are referred to as non-GAAP measures.  Cash flow, as discussed in this news release, appears as a separate caption on the Company’s cash flow statement and is reconciled to both net income and cash flow from operations.


17-03






#







Talisman Energy Inc.

Highlights

 

Three months ended

 

Six months ended

 

June 30

 

June 30

 

2003

2002

 

2003

2002

Financial

     

(millions of Canadian dollars unless otherwise stated)

     

Cash flow

600

652

 

1,445

1,229

Net income

201

90

 

774

191

Exploration and development expenditures

492

386

 

947

948

Per common share (dollars)

     

    Cash flow (1)

4.65

4.84

 

11.17

9.15

    Net income (2)

1.52

0.62

 

5.90

1.33

Production

     

(daily average)

     

Oil and liquids (bbls/d)

     

    North America

57,302

60,381

 

58,087

60,524

    North Sea

102,274

129,002

 

105,498

130,850

    Southeast Asia

22,899

22,501

 

22,134

22,766

    Algeria

3,766

-  

 

3,336

-  

    Sudan

-  

60,604

 

26,295

59,612

    Synthetic oil

2,441

2,669

 

2,514

2,804

Total oil and liquids

188,682

275,157

 

217,864

276,556

Natural gas (mmcf/d)

     

    North America

865

822

 

866

822

    North Sea

91

136

 

114

128

    Southeast Asia

105

93

 

98

97

Total natural gas

1,061

1,051

 

1,078

1,047

Total mboe/d

365

450

 

398

451

Prices (3)

     

Oil and liquids ($/bbl)

     

    North America

32.92

32.76

 

37.87

29.80

    North Sea

35.29

37.71

 

40.85

35.77

    Southeast Asia

37.81

38.77

 

42.26

35.78

    Algeria

35.05

-  

 

37.33

-  

    Sudan

-  

36.64

 

43.89

33.08

Crude oil and natural gas liquids

34.87

36.46

 

40.51

33.87

    Synthetic oil

46.24

42.84

 

46.71

37.25

Total oil and liquids

35.02

36.53

 

40.58

33.90

Natural gas ($/mcf)

     

    North America

6.41

4.08

 

7.22

3.68

    North Sea

4.16

3.05

 

4.61

3.97

    Southeast Asia

5.05

4.92

 

5.53

4.42

Total natural gas

6.09

4.02

 

6.80

3.78

Total ($/boe) (includes synthetic)

35.75

31.70

 

40.66

29.58

      

(1) Cash flow per common share is calculated before deducting preferred security charges.

 

(2) Net income per common share is calculated after deducting preferred security charges.

 

(3) Prices are before hedging.

     




#






Talisman Energy Inc.

Consolidated Balance Sheets

    
    
  

June 30

 December 31

(millions of Canadian dollars)

 

2003

2002

Assets

   

Current

   

   Cash and short-term investments

 

488

27

   Accounts receivable

 

690

719

   Inventories

 

116

147

   Prepaid expenses

 

16

24

  

1,310

917

    

Accrued employee pension benefit asset

 

66

67

Other assets

 

78

99

Goodwill

 

444

469

Property, plant and equipment

 

9,168

10,042

  

9,756

10,677

Total assets

 

11,066

11,594

    
    

Liabilities

   

Current

   

   Accounts payable and accrued liabilities

 

890

803

   Income and other taxes payable

 

219

186

  

1,109

989

    

Deferred credits

 

53

57

Provision for future site restoration

 

766

813

Long-term debt

 

2,280

2,997

Future income taxes

 

2,020

2,236

  

5,119

6,103

    

Shareholders' equity

   

Preferred securities

 

431

431

Common shares

 

2,747

2,785

Contributed surplus

 

73

75

Cumulative foreign currency translation

 

(134)

140

Retained earnings

 

1,721

1,071

  

4,838

4,502

Total liabilities and shareholders' equity

 

11,066

11,594

    

See accompanying notes.

   

Interim statements are not independently audited.

  







Talisman Energy Inc.

Consolidated Statements of Income

 

Three months ended

 

Six months ended

(millions of Canadian dollars

June 30

 

June 30

 except per share amounts)

2003

2002

 

2003

2002

Revenue

     

   Gross sales

1,169

1,312

 

2,812

2,475

   Less royalties

190

219

 

516

414

   Net sales

979

1,093

 

2,296

2,061

   Other

14

18

 

37

39

Total revenue

993

1,111

 

2,333

2,100

      

Expenses

     

   Operating

249

254

 

543

510

   General and administrative

35

35

 

74

66

   Depreciation, depletion and amortization

329

364

 

690

723

   Dry hole

42

25

 

114

52

   Exploration

42

41

 

91

78

   Interest on long-term debt

32

46

 

72

84

   Stock-based compensation

105

-  

 

105

-  

   Other

41

23

 

34

74

Total expenses

875

788

 

1,723

1,587

Gain on sale of Sudan operations

-  

-  

 

296

-  

Income before taxes

118

323

 

906

513

Taxes

     

   Current income tax

43

73

 

135

124

   Future income tax (recovery)

(143)

125

 

(53)

122

   Petroleum revenue tax

17

35

 

50

76

 

(83)

233

 

132

322

Net income

201

90

 

774

191

Preferred security charges, net of tax

5

6

 

11

12

Net income available to common shareholders

196

84

 

763

179

      

Per common share (dollars)

     

   Net income

1.52

0.62

 

5.90

1.33

   Diluted net income

1.50

0.61

 

5.82

1.31

Average number of common shares outstanding (millions)

     

   Basic

129

135

 

129

134

   Diluted

131

137

 

131

137

      
      

Consolidated Statements of Retained Earnings

      
      
 

Three months ended

 

Six months ended

 

June 30

 

June 30

(millions of Canadian dollars)

2003

2002

 

2003

2002

      

Retained earnings, beginning of period

1,566

882

 

1,071

787

Net income

201

90

 

774

191

Common share dividends

(39)

(40)

 

(39)

(40)

Purchase of common shares

(2)

-  

 

(74)

-  

Preferred security charges, net of tax

(5)

(6)

 

(11)

(12)

Retained earnings, end of period

1,721

926

 

1,721

926

      

See accompanying notes.

     



Talisman Energy Inc.

Consolidated Statements of Cash Flows

      
      
 

Three months ended

 

Six months ended

 

June 30

 

June 30

(millions of Canadian dollars)

2003

2002

 

2003

2002

Operating

     

Net income

201

90

 

774

191

Items not involving current cash flow

357

521

 

580

960

Exploration

42

41

 

91

78

Cash flow

600

652

 

1,445

1,229

Deferred gain on unwound hedges

(2)

(13)

 

(5)

(25)

Changes in non-cash working capital

78

28

 

2

10

Cash provided by operating activities

676

667

 

1,442

1,214

Investing

     

Proceeds on sale of Sudan operations

-  

-  

 

1,012

-  

Capital expenditures

     

    Exploration, development and corporate

(505)

(392)

 

(966)

(960)

    Acquisitions

(14)

(15)

 

(398)

(20)

Proceeds of resource property dispositions

4

8

 

14

12

Investments

(2)

-  

 

(3)

-  

Changes in non-cash working capital

23

(132)

 

(15)

(79)

Cash used in investing activities

(494)

(531)

 

(356)

(1,047)

Financing

     

Long-term debt repaid

(180)

(647)

 

(737)

(1,163)

Long-term debt issued

-  

571

 

292

1,055

Common shares issued (purchased)

2

14

 

(114)

34

Common share dividends

(39)

(40)

 

(39)

(40)

Preferred security charges

(9)

(10)

 

(19)

(21)

Deferred credits and other

-  

(4)

 

18

(13)

Cash used in financing activities

(226)

(116)

 

(599)

(148)

Effect of translation on foreign currency cash

(26)

-  

 

(26)

-  

Net (decrease) increase in cash

(70)

20

 

461

19

Cash and short-term investments, beginning of period

558

16

 

27

17

Cash and short-term investments, end of period

488

36

 

488

36

      

See accompanying notes.

     






NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(tabular amounts in millions of Canadian dollars (“$”) except as noted)



The Interim Consolidated Financial Statements of Talisman Energy Inc. (“Talisman” or the “Company”) have been prepared by management in accordance with accounting principles generally accepted in Canada.  Certain information and disclosures normally required to be included in notes to annual consolidated financial statements have been condensed or omitted.  The Interim Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and the notes thereto in Talisman’s Annual Report for the year ended December 31, 2002.


1.  Significant Accounting Policies


The Interim Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation as the Consolidated Financial Statements for the year ended December 31, 2002 except for the following:


Talisman’s stock option plans, as approved by the Company’s shareholders, have been amended effective July 1, 2003 to provide employees and directors who hold stock options the choice upon exercise to receive a cash payment in exchange for surrendering the option.  The cash payment is equal to the appreciated value of the stock option as determined based on the difference between the option’s exercise price and the Company’s share price at the time of exercise.  As a result of the amendments to the stock option plans, the Company has recorded $105 million ($74 million after tax) of compensation expense and a corresponding liability based on the appreciated value of the outstanding stock options as determined using the June 30, 2003 closing share price.


In addition to the Company’s stock option plans, Talisman has issued 382,080 cash units during the quarter to certain of its overseas employees.  Cash units are similar to stock options except that the holder does not have a right to purchase the underlying share of the Company.  


Future stock based compensation expense or recoveries will be dependent on changes in the Company’s share price and the number of options and cash units outstanding.


2.  Share Capital

Talisman’s authorized share capital consists of an unlimited number of common shares without nominal or par value and first and second preferred shares.  No preferred shares have been issued.


Continuity of common shares (year to date)

            2003

 

Shares

Amount

Balance at January 1,

131,039,435

$2,785

Issued upon exercise of stock options

257,913

8

Purchased

(2,134,700)

(46)

Balance at June 30,

129,162,648

2,747


Pursuant to a normal course issuer bid renewed in March 2003, Talisman may repurchase up to 6,456,669 common shares representing 5% of the outstanding common shares of the Company at the time the normal course issuer bid was renewed. During the first six months of 2003 the Company repurchased 2,134,700 common shares for $121 million, including 68,500 common shares for $4 million in the quarter ended June 30, 2003. Subsequent to June 30, 2003, the Company repurchased an additional 1,200,900 of common shares for $73 million.







3.  STOCK OPTIONS


Continuity of stock options (year to date)

              2003

 

Number

Average

 

Of

Exercise

 

Options

Price

Outstanding at January 1, 2003

7,384,054

46.53

   Granted during the period

2,299,499

59.36

   Exercised

257,913

33.33

   Expired/forfeited

109,836

58.62

Outstanding at June 30, 2003

9,315,804

49.92

Exercisable at June 30, 2003

3,900,957

35.90


As indicated in note 1, the Company began recording compensation expense in the second quarter of 2003 for stock options and cash units outstanding.  Prior to the second quarter, no amount of compensation expense had been recognized in the financial statements for stock options granted to employees and directors.  The following table provides pro forma measures of net income and net income per common share had stock options been recognized as compensation expense prior to 2003 based on the estimated fair value of the options on the grant date.  Had the stock option plans not been amended during the second quarter of 2003, the pro forma net income would have been approximately $55 million ($0.42/share) higher than the net income as reported for the six months ended June 30, 2003.



June 30, 20021

Three months

ended

Six months

 ended

 

As Reported

Pro

Forma2

As Reported

Pro

Forma2

Net income ($millions)

90

82

191

176

Per common  share ($/share)

    

   Basic

0.62

0.56

1.33

1.22

   Diluted

0.61

0.55

1.31

1.20

1 Pro forma amounts have not been provided for 2003 due to the recording of compensation expense as disclosed in note 1.

2 Pro forma net income and net income per common share had stock options been recognized as compensation expense based on the estimated fair value of the options on the grant date.


Stock options granted during the six months ended June 30, 2003 had an estimated weighted-average fair value of $22.91 per option (2002 - $26.19 per share). The estimated fair value of stock options issued was determined using the Black-Scholes model using substantially the same assumptions disclosed in note 8 of the December 31, 2002 Consolidated Financial Statements. All options issued by the Company permit the holder to purchase one common share of the Company at the stated exercise price or, effective July 1, 2003, to receive a cash payment equal to the appreciated value of the stock option.







4. Long-Term Debt

 

June 30,

2003

December 31,

2002

Bank Credit Facilities (Canadian $ denominated)

$

-

$   

265

Debenture and Notes (unsecured)


 


 

    US$ denominated (US$850 million)


1,152


1,342

    Canadian $ denominated


634


814

    £ denominated (£250 million) 1


494


576

  


2,280


2,997

Less current portion


-


-

 

$

2,280

$

2,997

1 Swapped into US dollars.  See note 6 of the December 31, 2003 Consolidated Financial Statements.


5. Commodity Based Sales Contracts

The following tables are an update of the commodity price derivative contracts and fixed price sales contracts outstanding:


a)

Commodity price derivative contracts

Natural gas

Fixed price

Swaps

Remainder

2003


2004

 

Three-way

collars

Remainder

2003

(AECO gas index)



 

(AECO gas index)


Volumes   (mcf/d)

27,500

-

 

Volumes         (mcf/d)

9,200

Price         ($/mcf)

6.35

-

 

Ceiling price   ($/mcf)

3.39

(NYMEX gas index)



 

Floor price      ($/mcf)

3.11

Volumes   (mcf/d)

58,000

48,500

 

Sold put price  ($/mcf)

2.56

Price         (US$/mcf)

5.13

4.58

  



Two-way

collars

Remainder

2003

(AECO gas index)


Volumes        (mcf/d)

18,500

Ceiling price  ($/mcf)

7.26

Floor price     ($/mcf)

6.23

Crude oil contracts

Fixed price

swaps

Remainder

2003

 

Two-way

collars

Remainder

2003


2004

(Brent oil index)


 

(Brent oil index)



Volumes  (bbls/d)

12,000

 

Volumes        (bbls/d)

12,000

10,000

Price        (US$/bbl)

22.79

 

Ceiling price  (US$/bbl)

25.71

25.02

 


 

Floor price     (US$/bbl)

22.23

22.34

(WTI oil index)


 

(WTI oil index)



Volumes  (bbls/d)

30,000


Volumes        (bbls/d)

23,000

-

Price        (US$/bbl)

25.34


Ceiling price  (US$/bbl)

28.48

-

 



Floor price     (US$/bbl)

23.05

-


b)

Physical contracts (North America)


 Fixed price sales

Remainder 2003


2004


2005-2007

 Volumes                         (mcf/d)

59,200

33,200

11,100

 Weighted average price  ($/mcf)

3.65

3.37

3.30

In addition to the fixed price contracts, the Company has entered into contracts with a pricing structure similar to the three-way commodity collars disclosed in note 9 of the Company’s December 31, 2002 Consolidated Financial Statements.  


NIT index

Remainder

2003


2004

Volumes           (mcf/d)

15,300

15,300

Ceiling              ($/mcf)

3.56

3.49

Floor                 ($/mcf)

3.37

3.32

Sold put strike  ($/mcf)

2.76

2.67


6. Selected Cash Flow Information

 

Three months ended

June 30

Six months ended

June 30

 

2003

2002

2003

2002

Net income

201

90

774

191

Items not involving current cash flow

    

   Depreciation, depletion and amortization

329

364

690

723

   Property impairments

28

4

28

49

   Dry hole

42

25

114

52

   Net loss (gain) on asset disposals

(5)

2

(9)

1

   Gain on sale of Sudan operations

-

-

(296)

-

   Stock-based compensation

105

-

105

-

   Future taxes and deferred PRT

(139)

129

(53)

138

   Other

(3)

(3)

1

(3)

 

357

521

580

960

Exploration

42

41

91

78

Cash flow

600

652

1,445

1,229


7.  Sale of Sudan Operations

On March 12, 2003, the Company completed the sale of its 25% indirectly held interest in the Greater Nile Oil Project in Sudan.  Total gross proceeds were $1.13 billion (US$771 million), including interest and cash received by Talisman between September 1, 2002 and closing on March 12, 2003.  The gain on sale is as follows:

 

Gross proceeds on sale of Sudan operations (US$771 million)

$ 1,135  

 Less interim adjustments

(123)

 

1,012

   Property, plant and equipment

687

   Working capital and other assets

72

   Future income tax liability

(59)

Net carrying value at March 12, 2003

700

Estimated closing costs

16

Gain on disposal

$296  


The interim adjustments are subject to finalization and may change.







8. Segmented Information

              
  

 North America (1)

 

 North Sea (2)

 

 Southeast Asia (3)

  

 Three months

 Six months

 

 Three months

 Six months

 

 Three months

 Six months

  

 ended

 ended

 

 ended

 ended

 

 ended

 ended

  

 June 30

 June 30

 

 June 30

 June 30

 

 June 30

 June 30

 (millions of Canadian dollars)

2003

2002

2003

2002

 

2003

2002

2003

2002

 

2003

2002

2003

2002

 Revenue

              
 

 Gross sales

     671

      510

 1,489

      941

 

     362

      480

     837

      947

 

     124

      121

     256

      227

 

 Royalties

     157

        89

     338

      170

 

        (8)

        22

        (4)

        49

 

       35

        31

       74

        58

 

 Net sales

     514

      421

 1,151

      771

 

     370

      458

     841

      898

 

       89

        90

     182

      169

 

 Other

         7

          8

       20

        18

 

         7

        10

       17

        21

 

          -

          -

          -

          -

 Total revenue

     521

      429

 1,171

      789

 

     377

      468

     858

      919

 

       89

        90

     182

      169

 Segmented expenses

              
 

 Operating

       94

        82

     193

      166

 

     134

      128

     288

      266

 

       20

        19

       41

        38

 

 DD&A

     172

      148

     340

      300

 

     131

      172

     284

      334

 

       24

        21

       43

        43

 

 Dry hole

       37

          5

       62

        21

 

         4

          -

       51

          -

 

         1

          4

         1

          4

 

 Exploration

       15

        13

       38

        31

 

         8

          7

       11

        11

 

         3

          4

         7

          6

 

 Other

        (7)

        (1)

     (20)

        (4)

 

       28

          5

       29

        55

 

         3

          4

         4

          4

 Total segmented expenses

     311

      247

     613

      514

 

     305

      312

     663

      666

 

       51

        52

       96

        95

 Segmented income before taxes

     210

      182

     558

      275

 

       72

      156

     195

      253

 

       38

        38

       86

        74

 Non-segmented expenses

              
 

 General and administrative

              
 

 Interest on long-term debt

              
 

 Gain on sale of Sudan operations

             
 

 Stock based compensation

              
 

 Currency translation

              

 Total non-segmented expenses

              

 Income before taxes

              

 Capital expenditures

              
 

 Exploration

       98

        55

     233

      162

 

       19

        26

       34

        53

 

       18

        10

       33

        14

 

 Development

     135

        92

     258

      270

 

     117

        79

     183

      201

 

       56

        45

     121

        91

 Exploration and development

     233

      147

     491

      432

 

     136

      105

     217

      254

 

       74

        55

     154

      105

 

 Property acquisitions

              
 

 Proceeds on dispositions

              
 

 Other non-segmented

              

 Net capital expenditures (4)

              

 Property, plant and equipment

  

 5,367

   4,955

   

 2,474

   2,921

   

 1,033

   1,093

 Goodwill

  

     291

      291

   

       40

        46

   

     113

      132

 Other

  

     858

      350

   

     299

      387

   

     201

      205

 Segmented assets

  

 6,516

   5,596

   

 2,813

   3,354

   

 1,347

   1,430

 Non-segmented assets

              

 Total assets (5)

              
  

 Three months

 Six months

      

 Three months

 Six months

  

 ended

 ended

      

 ended

 ended

  

 June 30

 June 30

      

 June 30

 June 30

 (1)

 North America

2003

2002

2003

2002

(2)

 North Sea

   

2003

2002

2003

2002

 

 Canada

      475

      429

   1,072

      789

 

 United Kingdom

   

      370

      460

      841

      902

 

 US

        46

          -

        99

          -

 

 Netherlands

   

          7

          8

        17

        17

 

 Total revenue

      521

      429

   1,171

      789

 

 Total revenue

   

      377

      468

      858

      919

 

 Canada

  

   4,948

   4,848

 

 United Kingdom

     

   2,435

   2,875

 

 US

  

      419

      107

 

 Netherlands

     

        39

        46

 

 Property, plant and equipment (5)

  

   5,367

   4,955

 

 Property, plant and equipment

   

   2,474

   2,921

 (4)

 Excluding corporate acquisitions.

              

 (5)

 Current year represents balances as at June 30, prior year represents balances as at December 31.

       


 Algeria

 

 Sudan

 

 Other

 

 Total

 Three months

 Six months

 

 Three months

 Six months

 

 Three months

 Six months

 

 Three months

 Six months

 ended

 ended

 

 ended

 ended

 

 ended

 ended

 

 ended

 ended

 June 30

 June 30

 

 June 30

 June 30

 

 June 30

 June 30

 

 June 30

 June 30

2003

2002

2003

2002

 

2003

2002

2003

2002

 

2003

2002

2003

2002

 

2003

2002

2003

2002

                   

       12

          -

       21

          -

 

          -

      201

      209

      360

 

          -

          -

          -

          -

 

    1,169

     1,312

    2,812

     2,475

         6

          -

       11

          -

 

          -

        77

        97

      137

 

          -

          -

          -

          -

 

       190

        219

       516

        414

         6

          -

       10

          -

 

          -

      124

      112

      223

 

          -

          -

          -

          -

 

       979

     1,093

    2,296

     2,061

          -

          -

          -

          -

 

          -

          -

         (1)

          -

 

          -

          -

         1

          -

 

         14

          18

         37

          39

         6

          -

       10

          -

 

          -

      124

      111

      223

 

          -

          -

         1

          -

 

       993

     1,111

    2,333

     2,100

                   

         1

          -

         3

          -

 

          -

        25

        18

        40

 

          -

          -

          -

          -

 

       249

        254

       543

        510

         2

          -

         4

          -

 

          -

        23

        19

        46

 

          -

          -

          -

          -

 

       329

        364

       690

        723

          -

          -

          -

          -

 

          -

          7

           -

          7

 

          -

          9

          -

        20

 

         42

          25

       114

          52

          -

          -

          -

          -

 

          -

          2

          5

          4

 

       16

        15

       30

        26

 

         42

          41

         91

          78

          -

          1

          -

          1

 

          -

          -

           -

          -

 

         3

        (1)

         3

          -

 

         27

            8

         16

          56

         3

          1

         7

          1

 

          -

        57

        42

        97

 

       19

        23

       33

        46

 

       689

        692

    1,454

     1,419

         3

        (1)

         3

        (1)

 

          -

        67

        69

      126

 

     (19)

      (23)

     (32)

      (46)

 

       304

        419

       879

        681

                   
               

         35

          35

         74

          66

               

         32

          46

         72

          84

               

             -

             -

     (296)

             -

               

       105

             -

       105

             -

               

         14

          15

         18

          18

               

       186

          96

        (27)

        168

               

       118

        323

       906

        513

                   
                   

         6

        (1)

         3

          -

 

          -

          9

          7

        14

 

       24

        31

       38

        65

 

       165

        130

       348

        308

         4

        24

       22

        41

 

          -

        12

         (5)

        32

 

       15

          4

       20

          5

 

       327

        256

       599

        640

       10

        23

       25

        41

 

          -

        21

          2

        46

 

       39

        35

       58

        70

 

       492

        386

       947

        948

               

         14

          15

       398

          20

               

          (4)

          (8)

        (14)

        (12)

               

         13

            6

         19

          12

               

       515

        399

    1,350

        968

                   
  

     219

      244

   

           -

      772

   

       75

        57

   

    9,168

   10,042

  

          -

          -

   

           -

          -

   

          -

          -

   

       444

        469

  

       12

          6

   

           -

        56

   

       18

        12

   

    1,388

     1,016

  

     231

      250

   

           -

      828

   

       93

        69

   

 11,000

   11,527

                 

         66

          67

                 

 11,066

   11,594

     

 Three months

 Six months

          
     

 ended

 ended

          
     

 June 30

 June 30

          

(3)  Southeast Asia

  

2003

2002

2003

2002

          

 Indonesia

   

        74

        77

       149

      144

          

 Malaysia

   

        14

        12

         26

        23

          

 Vietnam

   

          1

          1

           7

          2

          

 Total revenue

   

        89

        90

       182

      169

          

 Indonesia

     

       420

      515

          

 Malaysia

     

       602

      565

          

 Vietnam

     

         11

        13

          

 Property, plant and equipment

  

    1,033

   1,093

          
                   






9.  Contingencies


Talisman is being sued by the Presbyterian Church of Sudan and others under the Alien Tort Claims Act in the United States District Court for the Southern District of New York.  Talisman’s motion to dismiss the lawsuit was denied by the Court in March 2003.  In June 2003, Talisman's motion for reconsideration or certification for appeal of the Court’s denial of the motion to dismiss the lawsuit was also denied.  In July 2003, Talisman filed a motion to dismiss the lawsuit for lack of personal jurisdiction of the Court over Talisman.  No decision on this motion is expected until 2004.  Talisman is continuing to vigorously defend itself against this lawsuit.






Talisman Energy Inc.

Product Netbacks

  

Three months ended

 

Six months ended

  

June 30

 

June 30

(C$ - production before royalties)

2003

 

2002

 

2003

 

2002

North

Oil and liquids ($/bbl)

       

America

   Sales price

32.92

 

32.76

 

37.87

 

29.80

 

   Hedging (gain)

1.26

 

0.11

 

2.83

 

(0.33)

 

   Royalties

6.50

 

6.35

 

7.90

 

6.12

 

   Operating costs

5.89

 

4.64

 

6.08

 

5.06

  

19.27

 

21.66

 

21.06

 

18.95

 

Natural gas ($/mcf)

       
 

   Sales price

6.41

 

4.08

 

7.22

 

3.68

 

   Hedging (gain)

0.12

 

(0.21)

 

0.22

 

(0.32)

 

   Royalties

1.54

 

0.73

 

1.61

 

0.70

 

   Operating costs

0.70

 

0.65

 

0.73

 

0.65

  

4.05

 

2.91

 

4.66

 

2.65

North Sea

Oil and liquids ($/bbl)

       
 

   Sales price

35.29

 

37.71

 

40.85

 

35.77

 

   Hedging (gain)

0.14

 

0.11

 

1.98

 

(0.32)

 

   Royalties

(0.89)

 

1.41

 

(0.39)

 

1.50

 

   Operating costs

12.91

 

9.51

 

13.49

 

9.89

  

23.13

 

26.68

 

25.77

 

24.70

 

Natural gas ($/mcf)

       
 

   Sales price

4.16

 

3.05

 

4.61

 

3.97

 

   Hedging (gain)

-  

 

-  

 

-  

 

-  

 

   Royalties

0.04

 

0.41

 

0.16

 

0.59

 

   Operating costs

0.38

 

0.49

 

0.50

 

0.47

  

3.74

 

2.15

 

3.95

 

2.91

Southeast Asia (1)

Oil and liquids ($/bbl)

       
 

   Sales price

37.81

 

38.77

 

42.26

 

35.78

 

   Hedging (gain)

1.26

 

0.11

 

2.72

 

(0.33)

 

   Royalties

15.86

 

13.76

 

17.23

 

13.04

 

   Operating costs

7.22

 

7.61

 

7.78

 

7.38

  

13.47

 

17.29

 

14.53

 

15.69

 

Natural gas ($/mcf)

       
 

   Sales price

5.05

 

4.92

 

5.53

 

4.42

 

   Hedging (gain)

-  

 

-  

 

-  

 

-  

 

   Royalties

0.27

 

0.25

 

0.30

 

0.23

 

   Operating costs

0.49

 

0.49

 

0.56

 

0.45

  

4.29

 

4.18

 

4.67

 

3.74

Algeria

Oil ($/bbl)

       
 

   Sales price

35.05

 

-  

 

37.33

 

-  

 

   Hedging (gain)

1.26

 

-  

 

2.62

 

-  

 

   Royalties

18.04

 

-  

 

18.96

 

-  

 

   Operating costs

4.07

 

-  

 

5.01

 

-  

  

11.68

 

-  

 

10.74

 

-  

Sudan

Oil ($/bbl)

       
 

   Sales price

-  

 

36.64

 

43.89

 

33.08

 

   Hedging (gain)

-  

 

0.11

 

-  

 

(0.31)

 

   Royalties

-  

 

13.96

 

20.34

 

12.67

 

   Operating costs

-  

 

4.55

 

3.73

 

3.74

  

-  

 

18.02

 

19.82

 

16.98

  

Three months ended

 

Six months ended

  

June 30

 

June 30

(C$ - production before royalties)

2003

 

2002

 

2003

 

2002

Total Company

Oil and liquids ($/bbl)

       
 

   Sales price

34.87

 

36.46

 

40.51

 

33.87

 

   Hedging (gain)

0.65

 

0.11

 

2.06

 

(0.32)

 

   Royalties

3.83

 

6.32

 

6.49

 

5.92

 

   Operating costs

9.87

 

7.17

 

9.58

 

7.27

  

20.52

 

22.86

 

22.38

 

21.00

 

Natural gas ($/mcf)

       
 

   Sales price

6.09

 

4.02

 

6.80

 

3.78

 

   Hedging (gain)

0.10

 

(0.16)

 

0.18

 

(0.25)

 

   Royalties

1.28

 

0.65

 

1.34

 

0.64

 

   Operating costs

0.65

 

0.62

 

0.69

 

0.61

  

4.06

 

2.91

 

4.59

 

2.78

(1) Includes operations in Indonesia and Malaysia/Vietnam.

    

Netbacks do not include synthetic oil or pipeline operations.

    



Talisman Energy Inc.

Additional Information for US Readers

Production net of royalties

        
        
 

Three months ended

 

Six months ended

 

June 30

 

June 30

 

2003

 

2002

 

2003

 

2002

        

Oil and liquids (bbls/d)

       

    North America

45,982

 

48,677

 

45,969

 

48,088

    North Sea

104,862

 

124,183

 

106,506

 

125,352

    Southeast Asia (1)

13,291

 

14,514

 

13,110

 

14,466

    Algeria

1,828

 

-  

 

1,642

 

-  

    Sudan

-  

 

37,511

 

14,111

 

36,777

    Synthetic oil (Canada)

2,296

 

2,521

 

2,376

 

2,664

Total oil and liquids

168,259

 

227,406

 

183,714

 

227,347

        

Natural gas (mmcf/d)

       

    North America

657

 

675

 

674

 

666

    North Sea

90

 

118

 

110

 

109

    Southeast Asia (1)

99

 

88

 

92

 

93

Total natural gas

846

 

881

 

876

 

868

        

Total mboe/d

309

 

375

 

330

 

372

        

(1) Includes operations in Indonesia and Malaysia/Vietnam.

      







Talisman Energy Inc.

Additional Information for US Readers

Product Netbacks

  

Three months ended

 

Six months ended

  

June 30

 

June 30

(US$ - production net of royalties)

2003

 

2002

 

2003

 

2002

North

Oil and liquids (US$/bbl)

       

America

   Sales price

23.54

 

21.08

 

26.04

 

18.93

 

   Hedging (gain)

1.13

 

0.09

 

2.46

 

(0.26)

 

   Operating costs

5.25

 

3.71

 

5.29

 

4.04

  

17.16

 

17.28

 

18.29

 

15.15

 

Natural gas (US$/mcf)

       
 

   Sales price

4.58

 

2.63

 

4.97

 

2.34

 

   Hedging (gain)

0.12

 

(0.16)

 

0.20

 

(0.25)

 

   Operating costs

0.66

 

0.51

 

0.65

 

0.51

  

3.80

 

2.28

 

4.12

 

2.08

North Sea

Oil and liquids (US$/bbl)

       
 

   Sales price

25.24

 

24.26

 

28.09

 

22.72

 

   Hedging (gain)

0.10

 

0.07

 

1.35

 

(0.21)

 

   Operating costs

9.00

 

6.35

 

9.19

 

6.56

  

16.14

 

17.84

 

17.55

 

16.37

 

Natural gas (US$/mcf)

       
 

   Sales price

2.97

 

1.96

 

3.17

 

2.52

 

   Hedging (gain)

-  

 

-  

 

-  

 

-  

 

   Operating costs

0.28

 

0.37

 

0.36

 

0.35

  

2.69

 

1.59

 

2.81

 

2.17

Southeast Asia (1)

Oil and liquids (US$/bbl)

       
 

   Sales price

27.04

 

24.94

 

29.06

 

22.73

 

   Hedging (gain)

1.55

 

0.11

 

3.15

 

(0.33)

 

   Operating costs

8.90

 

7.59

 

9.03

 

7.38

  

16.59

 

17.24

 

16.88

 

15.68

 

Natural gas (US$/mcf)

       
 

   Sales price

3.61

 

3.17

 

3.80

 

2.81

 

   Hedging (gain)

-  

 

-  

 

-  

 

-  

 

   Operating costs

0.37

 

0.33

 

0.41

 

0.30

  

3.24

 

2.84

 

3.39

 

2.51

Algeria

Oil (US$/bbl)

       
 

   Sales price

25.06

 

-  

 

25.67

 

-  

 

   Hedging (gain)

1.86

 

-  

 

3.66

 

-  

 

   Operating costs

6.00

 

-  

 

7.00

 

-  

  

17.20

 

-  

 

15.01

 

-  

Sudan

Oil (US$/bbl)

       
 

   Sales price

-  

 

23.57

 

30.18

 

21.01

 

   Hedging (gain)

-  

 

0.11

 

-  

 

(0.32)

 

   Operating costs

-  

 

4.73

 

4.78

 

3.85

  

-  

 

18.73

 

25.40

 

17.48

Total Company

Oil and liquids (US$/bbl)

       
 

   Sales price

24.91

 

23.50

 

27.79

 

21.63

 

   Hedging (gain)

0.52

 

0.09

 

1.68

 

(0.25)

 

   Operating costs

7.92

 

5.59

 

7.83

 

5.63

  

16.47

 

17.82

 

18.28

 

16.25

 

Natural gas (US$/mcf)

       
 

   Sales price

4.30

 

2.59

 

4.62

 

2.41

 

   Hedging (gain)

0.09

 

(0.12)

 

0.15

 

(0.19)

 

   Operating costs

0.59

 

0.47

 

0.58

 

0.47

  

3.62

 

2.24

 

3.89

 

2.13

(1) Includes operations in Indonesia and Malaysia/Vietnam.

      

Netbacks do not include synthetic oil or pipeline operations.

     






Talisman Energy Inc.

Consolidated Financial Ratios

June 30, 2003

    

The following financial ratios are provided in connection with the Company's continuous offering of

 

medium term notes pursuant to the short form prospectus dated March 27, 2002 and a prospectus supplement

dated March 28, 2002, and are based on the corporation's consolidated financial statements that are prepared

in accordance with accounting principles generally accepted in Canada.

  
    

The asset coverage ratios are calculated as at June 30, 2003.

  

The interest coverage ratios are for the 12 month period then ended.

  
    
  

Preferred

Preferred

  

Securities

Securities

  

as equity (5)

as debt (6)

Interest coverage (times)

  

    Income (1)

9.71

7.71

    Cash flow (2)

21.04

16.70

Asset coverage (times)

  

    Before deduction of future income taxes and deferred credits (3)

4.37

3.71

    After deduction of future income taxes and deferred credits (4)

3.12

2.65

    

(1) Net income plus income taxes and interest expense; divided by the sum of interest expense and capitalized interest.

(2) Cash flow plus current income taxes and interest expense; divided by the sum of interest expense and capitalized interest.

(3) Total assets minus current liabilities; divided by long-term debt.

  

(4) Total assets minus current liabilities and long-term liabilities excluding long-term debt; divided by long-term debt.

(5) The Company's preferred securities are classified as equity and the related charges have been excluded from interest expense.

(6) Reflects adjusted ratios, had the preferred securities been treated as debt and the related charges been included in interest expense.

    
    














Executive:

Executive Office:


James W. Buckee

Talisman Energy Inc.

President & Chief Executive Officer

3400, 888 – 3rd Street S.W.

Calgary, Alberta, Canada

T. Nigel D. Hares

T2P 5C5

Executive Vice-President, Frontier and International Operations

Telephone:

(403) 237-1234

Joseph E. Horler

Facsimile:

(403) 237-1902

Executive Vice-President, Marketing

Investor Relations Contacts:

Michael D. McDonald

Executive Vice-President, Finance and Chief Financial Officer

M. Jacqueline Sheppard

Executive Vice-President, Corporate and Legal

Robert W. Mitchell

and Corporate Secretary

Executive Vice-President, North American Operations

(403) 237-1183


Robert M. Redgate

David W. Mann

Executive Vice-President,  Corporate Services

Senior Manager, Investor Relations and

Corporate Communications

M. Jacqueline Sheppard

(403) 237-1196

Executive Vice-President, Corporate and Legal

e-mail:  tlm@talisman-energy.com

and Corporate Secretary






Abbreviations:


bbls

- barrels

bbls/d

- barrels per day

mbbls/d

- thousands of barrels per day

mmbbls

- million barrels

boe

- barrel of oil equivalent

mmboe

- million barrels of oil equivalent

mcf

- thousand cubic feet

mmcf

- million cubic feet

bcf

- billion cubic feet

liquids

- natural gas liquids


Notes:


1.

Barrels of oil equivalent have been calculated on the basis of 6 mcf of natural gas equals 1 boe


2.

Unless otherwise stated, all sums of money are expressed in Canadian dollars









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