S-8

As filed with the Securities and Exchange Commission on June 3, 2009 333-

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM S-8

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

TALISMAN ENERGY INC.

(Exact name of registrant as specified in its charter)

Canada (State or other jurisdiction of incorporation or organization)	N/A (I.R.S. Employer Identification No.)
Suite 2000, 888 - 3rd Street S.W., Calgary, Alberta, Canada T2P 5C5 (Address of Principal Executive Offices) (Zip Code)

Performance Share Unit Plan for Eligible Employees of Talisman Energy Inc. and its Affiliates

(Full title of the plan)

NATIONAL CORPORATE RESEARCH, LTD.
(Name and address of agent for service)
 

1780 Barnes Blvd. Southwest
Tumwater, Washington 98512-0410
(800) 722-0708

(Telephone number, including area code, of agent for service)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o

CALCULATION OF REGISTRATION FEE

Title of securities to be registered	Amount to be registered (1)	Proposed maximum offering price per share(2)	Proposed maximum aggregate offering price(2)	Amount of registration fee(3)
Common Shares issuable pursuant to Performance Share Unit Plan	225,000	$16.70	$3,757,500	$209.67

(1) Estimated solely for the purpose of calculating the registration fee based upon the Registrant's current estimate of shares of Common Stock which will be acquired, on the open market, by the administrative agent pursuant to the Performance Share Unit Plan for Eligible Employees of Talisman Energy Inc. and its Affiliates. Also includes, pursuant to Rule 416(b) under the Securities Act of 1933, as amended (the "Securities Act"), any additional securities that may be offered or issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.

(2) The proposed maximum offering price per share and the registration fee were calculated in accordance with Rule 457(c) under the Securities Act, based on the average of the high and low prices of the Registrant’s Common Shares as reported by the New York Stock Exchange on June 1, 2009, which was $16.70 per share.

(3) An aggregate of U.S.$96,300 of the amount of the registration fee was previously paid in connection with U.S.$900,000,000 of the U.S.$2,000,000,000 of unissued securities registered under our F-9 shelf registration statement (File No. 333-130261) initially filed on December 12, 2005 and declared effective on December 19, 2005, which unsold securities have been deregistered. Accordingly, pursuant to Rule 457(p) of the General Rules and Regulations under the Securities Act of 1933, as amended, U.S.$209.67 is being offset against the total registration fee due for this Registration Statement.

INTRODUCTORY STATEMENT

This registration statement on Form S-8 registers 225,000 Common Shares (“Shares”) of Talisman Energy Inc. (the “Registrant” or the “Corporation”) to be issued pursuant to the Company's Performance Share Unit Plan for Eligible Employees of Talisman Energy Inc. and its Affiliates (the “Plan”). The Shares being registered pursuant to this Form S-8 will be acquired on the open market by the U.S. administrative agent under the Plan. No original issuance shares are to be used herewith. Such shares when so acquired on the open market by the administrative agent will be held for the account of participants under the Plan subject to vesting and distribution requirements in accordance with the Plan.

The Registrant may establish a “rabbi trust” under the Plan to assist with payments under certain circumstances. Amounts held under a rabbi trust may only be used to satisfy obligations under the Plan benefits or to satisfy the claims of the Registrant’s general creditors.

PART II.           INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation of Documents by Reference.

The following documents, which have been filed with the United States Securities and Exchange Commission (the “Commission”), are incorporated herein by reference:

(a) The Registrant’s annual report on Form 40-F for the fiscal year ended December 31, 2008 filed with the Commission on March 9, 2009, pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act of 1934”).

(b) All other reports filed pursuant to Section 13(a) or 15(d) of the Exchange Act of 1934 since the end of the fiscal year covered by the Registrant’s annual report incorporated by reference herein pursuant to (a) above.

(c) The description of the Registrant's securities contained in the Registrant's Registration Statement on Form 8-A filed with the Securities and Exchange Commission on September 8, 1997, including any amendment or report filed for the purpose of updating such description.

All documents subsequently filed by the Registrant pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act of 1934, prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by reference in this registration statement and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for the purposes of this registration statement to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this registration statement.

Item 4. Description of Securities.

Not Applicable.

Item 5. Interests of Named Experts and Counsel.

Not Applicable.

Item 6. Indemnification of Directors and Officers.

Section 124 of the Canada Business Corporations Act (the "Act") and Section 6.1 of By-Law No. 1 provide for the indemnification of directors and officers of the Corporation.

Section 124 of the Act provides as follows:

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124.   (1)  Indemnification — A corporation may indemnify a director or officer of the corporation, a former director or officer of the corporation or another individual who acts or acted at the corporation's request as a director or officer, or an individual acting in a similar capacity, of another entity, against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, reasonably incurred by the individual in respect of any civil, criminal, administrative, investigative or other proceeding in which the individual is involved because of that association with the corporation or other entity.

(2)   Advance of costs — A corporation may advance moneys to a director, officer or other individual for the costs, charges and expenses of a proceeding referred to in subsection (1). The individual shall repay the moneys if the individual does not fulfil the conditions of subsection (3).

(3)   Limitation — A corporation may not indemnify an individual under subsection (1) unless the individual

(a)   acted honestly and in good faith with a view to the best interests of the corporation, or, as the case may be, to the best interests of the other entity for which the individual acted as director or officer or in a similar capacity at the corporation's request; and

(b)   in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual's conduct was lawful.

(4)   Indemnification in derivative actions — A corporation may with the approval of a court, indemnify an individual referred to in subsection (1), or advance moneys under subsection (2), in respect of an action by or on behalf of the corporation or other entity to procure a judgment in its favour, to which the individual is made a party because of the individual's association with the corporation or other entity as described in subsection (1) against all costs, charges and expenses reasonably incurred by the individual in connection with such action, if the individual fulfils the conditions set out in subsection (3).

(5)   Right to indemnity — Despite subsection (1), an individual referred to in that subsection is entitled to indemnity from the corporation in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defence of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual's association with the corporation or other entity as described in subsection (1), if the individual seeking indemnity

(a)   was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done; and

(b)   fulfils the conditions set out in subsection (3).

(6)   Insurance — A corporation may purchase and maintain insurance for the benefit of an individual referred to in subsection (1) against any liability incurred by the individual

(a)   in the individual's capacity as a director or officer of the corporation; or

(b)   in the individual's capacity as a director or officer, or similar capacity, of another entity, if the individual acts or acted in that capacity at the corporation's request.

(7)   Application to court — A corporation, an individual or an entity referred to in subsection (1) may apply to a court for an order approving an indemnity under this section and the court may so order and make any further order that it sees fit.

(8)   Notice to Director — An applicant under subsection (7) shall give the Director notice of the application and the Director is entitled to appear and be heard in person or by counsel.

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(9)   Other notice — On an application under subsection (7) the court may order notice to be given to any interested person and the person is entitled to appear and be heard in person or by counsel.

The by-laws of the Corporation provide that the Corporation shall indemnify a current or former director or officer of the Corporation, or another individual who acts or acted at the Corporation's request as a director or officer of another entity to the fullest extent permitted by the Act or otherwise by law. The rights of any person to indemnification granted by the Act or the Corporation's by-laws are not exclusive of any other rights to which any person seeking indemnification may be entitled under any agreement, vote of shareholders or directors, at law or otherwise, and shall continue as to a person who has ceased to be a director, officer, employee or agent and will enure to the benefit of the heirs and legal representatives of that person. The bylaws provide further that the Corporation may purchase, maintain or participate in such insurance for the benefit of such persons referred to in Section 6.1 of the by-laws as the board may from time to time determine.

The Corporation maintains directors' and officers' liability insurance with policy limits of U.S.$100,000,000 per claim, subject to an annual limit of U.S.$100,000,000 for all directors and officers and certain other senior employees. This policy covers all directors, officers and certain other senior employees of the Corporation and its subsidiaries. There is no deductible applicable to the policy. No portion of the premium will be paid by directors or officers or senior employees. In addition, the Corporation has entered into agreements with each of its directors and officers and certain other senior employees of the Corporation and its subsidiaries which indemnify them to the maximum extent permitted by law.

Insofar as indemnification for liabilities arising under the United States Securities Act of 1933 may be permitted to directors, officers or persons controlling the Corporation pursuant to the foregoing provisions, the Corporation has been informed that in the opinion of the U.S. Securities and Exchange Commission such indemnification is against public policy as expressed in the United States Securities Act of 1933 and is therefore unenforceable.

Item 7. Exemption from Registration Claimed.

Not Applicable.

Item 8. Exhibits.

Exhibit Number	Exhibit
4.1	Performance Share Unit Plan for Eligible Employees of Talisman Energy Inc. and its Affiliates
4.2	Performance Share Unit Grant Agreement for U.S. Participants and Eligible Employees of Fortuna Energy Inc.
23.1	Consent of Ernst & Young LLP, Chartered Accountants
23.2	Consent of Michael Adams, Internal Qualified Reserves Evaluator
24.1	Power of Attorney (see page II-7 of this registration statement)

Item 9. Undertakings.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:

(i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933.

(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the

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aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.

(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement.

Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement.

(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

(b) The undersigned Registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Registrant’s annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan’s annual report pursuant to section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

(c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

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SIGNATURES

The Registrant. Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-8 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Calgary, Province of Alberta, Canada, on June 3, 2009.

TALISMAN ENERGY INC.

/s/ John A. Manzoni                              

John A. Manzoni,

President and Chief Executive Officer

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SIGNATURES AND POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints John A. Manzoni, L. Scott Thomson and Robert Redgate, or any two of them acting together, his or her true and lawful attorneys-in-fact and agents with full powers of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any or all amendments to this Registration Statement, including post-effective amendments, and any and all additional registration statements (including amendments and post-effective amendments thereto, and other documents in connection therewith to this registration statement and any later registration statement filed by the registrant under Rule 462(b) of the Securities Act of 1933, which relates to this registration statement) and to file the same, with all exhibits thereto, and other documents and in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and all of them or any two of them full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, and hereby ratifies and confirms all his or her said attorneys-in-fact and agents or any of them or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the date indicated.

Signature	Title	Date
/s/ John A. Manzoni
John A. Manzoni	President, Chief Executive Officer and Director (Principal Executive Officer)	June 3, 2009
/s/ L. Scott Thomson
L. Scott Thomson	Executive Vice-President, Finance and Chief Financial Officer (Principal Financial and Accounting Officer)	June 3, 2009
Christiane Bergevin	Director
Donald J. Carty	Director
/s/ William R. P. Dalton
William R. P. Dalton	Director	June 3, 2009
/s/ Kevin S. Dunne
Kevin S. Dunne	Director	June 3, 2009

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/s/ Stella M. Thompson
Stella M. Thompson	Director	June 3, 2009
/s/ John D. Watson
John D. Watson	Director	June 3, 2009
/s/ Robert G. Welty
Robert G. Welty	Director	June 3, 2009
/s/ Charles R. Williamson
Charles R. Williamson	Director	June 3, 2009
/s/ Charles W. Wilson
Charles W. Wilson	Director and Duly Authorized Representative of Talisman Energy Inc. in the United States	June 3, 2009
Charles M. Winograd	Director

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EXHIBIT INDEX

Exhibit Number	Exhibit
4.1	Performance Share Unit Plan for Eligible Employees of Talisman Energy Inc. and its Affiliates
4.2	Performance Share Unit Grant Agreement for U.S. Participants and Eligible Employees of Fortuna Energy Inc.
23.1	Consent of Ernst & Young LLP, Chartered Accountants
23.2	Consent of Michael Adams, Internal Qualified Reserves Evaluator
24.1	Power of Attorney (see page II-7 of this registration statement)

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EX-4.1

Exhibit 4.1

1. PREAMBLE AND DEFINITIONS

1.1 Title.

The Plan described in this document shall be called the “Performance Share Unit Plan for Eligible Employees of Talisman Energy Inc. and its Affiliates”.

1.2 Purposes of the Plan.

The purposes of the Plan are:

a. to promote a further alignment of interests between employees of the Corporation and its Affiliates and the shareholders of the Corporation; and

b. to retain employees with the knowledge, experience and expertise required by the Corporation and its Affiliates.

1.3 Definitions.

1.3.1 “Affiliate” means any corporation, partnership or other entity in which the Corporation, directly or indirectly, has majority ownership interest.

1.3.2 “Agent” means such bank or trust company that is independent of and unaffiliated with the Corporation which may from time to time be appointed by the Committee to acquire Shares on behalf of and for the account of Eligible Employees in settlement of their Vested PSUs.

1.3.3 “Applicable Law” means any applicable provision of law, domestic or foreign, including, without limitation, applicable securities legislation, together with all regulations, rules, policy statements, rulings, notices, orders or other instruments promulgated thereunder, and Stock Exchange Rules.

1.3.4 “Beneficiary” means, subject to Applicable Law, an individual who has been designated by an Eligible Employee, in such form and manner as the Committee may determine, to receive benefits payable under the Plan upon the death of the Eligible Employee, or, where no such designation is validly in effect at the time of death, the Eligible Employee’s legal representative.

1.3.5 “Board” means the Board of Directors of the Corporation.

1.3.6 “Cause” in respect of an Eligible Employee means just cause or cause under Applicable Law and, in addition, includes the Eligible Employee’s:

(a) willful breach or neglect of the duties of his employment or willful breach or neglect of obligations to the Corporation or an Affiliate under the terms of his or her employment (whether written or

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unwritten), including being absent from his place of work for four or more days in succession without consent, except where such absence is permitted by Applicable Law or the terms of the Eligible Employee’s employment;

(b) failure or refusal to perform such duties or obligations after demand for performance or to comply with the rules, policies or practices of the Corporation or an Affiliate, as applicable;

(c) dishonesty;

(d) insubordination;

(e) gross, serious or repeated misconduct;

(f) conduct where such conduct endangers, or is likely to endanger, the health or safety of others;

(g) conviction of a crime constituting a felony or indictable offence;

(h) serious breach of his or her contract of employment;

(i) gross incompetence; or

(j) action or failure to act which has the effect of bringing the Corporation and/or any Affiliate into disrepute.

1.3.7 “Change in Control” means, notwithstanding the terms of any agreement between the Corporation or an Affiliate and an Eligible Employee relating to a change in control of the Corporation or an Affiliate, the occurrence of any of the following events:

(a) any individual, partnership, firm, corporation, association, trust, unincorporated organization or other entity, or any persons acting jointly or in concert with the foregoing, is or becomes the beneficial owner, directly or indirectly of, securities of the Corporation which directly or following conversion thereof represent more than 50% of the combined voting power of the Corporation’s then outstanding securities entitled to vote in the election of the directors of the Corporation;

(b) the Corporation shall have disposed of, other than to an affiliate within the meaning of the Securities Act (Alberta), (A) all or substantially all of its assets, such that shareholder approval was required to be obtained under the Canada Business Corporations Act;

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(c) the shareholders of the Corporation approve the liquidation, winding up or other dissolution of the Corporation;

(d) the Corporation enters into an amalgamation, arrangement, restructuring, reorganization, merger or consolidation (a “Transaction”) whereby, or the ultimate effect of which is, that the shareholders of the Corporation immediately prior to the Transaction have the right to vote less than 50% of the voting securities of the Corporation or the surviving entity (if different from the Corporation) following completion of the Transaction;

(e) pursuant to a single election or appointment or a series of elections or appointments over any period from and after the effective date of this Plan (A) those individuals who at the effective date of this Plan constituted the Board, together with (B) any new or additional director or directors whose nomination for election by the Corporation’s shareholders, or whose appointment to the Board by the Board, has been approved by a majority of the votes cast by all of the directors then still in office, who either were directors at the effective date of this Plan or whose appointment or nomination for election was previously so approved, cease for any reason to constitute a majority of the Board; or

(f) the Board, by resolution duly adopted by the affirmative vote of a simple majority of the votes cast by the Board, determines that for purposes of this Plan, a Change in Control of the Corporation has occurred.

Securities beneficially owned or controlled or directed by an employee plan or related trust sponsored or maintained by the Corporation or its Affiliates shall not be taken into account in determining whether the threshold percentage in Section 1.3.7(a) above is exceeded.

For the purposes of this Section 1.3.7:

(a) the term “acting jointly or in concert” shall be interpreted in accordance with Section 159 of the Securities Act (Alberta), as amended; and

(b) the term “beneficial ownership” shall have the meaning ascribed thereto in Section 5 of the Securities Act (Alberta).

1.3.8 “Committee” means the Management Succession and Compensation Committee of the Board, any successor thereto, or such other committee of the Board which may be appointed by the Board to, among other things, interpret, administer and implement the Plan and includes any delegate of the Committee under Section 10.3 with respect to such duties and powers as have been delegated to him or her thereunder.

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1.3.9 “Corporation” means Talisman Energy Inc. and any successor corporation whether by amalgamation, merger or otherwise.

1.3.10 “Disability” means the Eligible Employee’s physical or mental incapacity that prevents him from substantially fulfilling his duties and obligations on behalf of the Corporation or, if applicable, an Affiliate, and in respect of which the Eligible Employee commences receiving, or is eligible to receive, disability benefits under the Corporation’s or an Affiliate’s short-term or long-term disability plan.

1.3.11 “Dividend Equivalent PSU” has the meaning set out in Section 5.2.

1.3.12 “Effective Date” has the meaning set out in Section 3.1.

1.3.13 “Eligible Employee” means any permanent non-union employee of the Corporation or an Affiliate as the Committee may, in its sole discretion, designate as eligible to participate in the Plan.

1.3.14 “Employed” means, with respect to an Eligible Employee, that:

(a) he or she is performing work at a workplace of the Corporation or an Affiliate; or

(b) he or she is not actively at work at a workplace of the Corporation or an Affiliate due to an approved leave of absence, maternity or parental leave or Disability.

For greater certainty, except as expressly provided herein, an individual whose employment has been terminated without Cause by the Corporation or an Affiliate shall not be considered to be “Employed” for purposes of the Plan during any statutory, contractual or common law notice period and shall be considered to have ceased to be “Employed” for purposes of the Plan on the date on which the Corporation or an Affiliate, as the case may be, states is his or her last day of employment (provided that such individual has been given notice of termination of employment on or before such date).

1.3.15 “Grant” means a grant of PSUs made to an Eligible Employee pursuant to Section 4.1.

1.3.16 “Grant Agreement” means an agreement between the Corporation or an Affiliate and an Eligible Employee under which a PSU is granted, as contemplated by Section 4.2, together with such schedules, amendments, deletions or changes thereto as are permitted under the Plan.

1.3.17 “Grant Date” means the effective date of a Grant.

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1.3.18 “Market Value” means, with respect to any particular date, the average closing price per Share on the Stock Exchange over the immediately preceding 5 Trading Days.

1.3.19 “Performance Condition” means such financial and/or operational performance criteria as may be determined by the Committee in respect of a Grant to any Eligible Employee or Eligible Employees and set out in a Grant Agreement. Performance Conditions may apply to the Corporation, an Affiliate, the Corporation and its Affiliates as a whole, a business unit of the Corporation or group comprised of the Corporation and some of its Affiliates or a group of Affiliates, either individually, alternatively or in any combination, and measured either in total, incrementally or cumulatively over a specified performance period, on an absolute basis or relative to a pre-established target, to previous years’ results or to a designated comparator group, or otherwise.

1.3.20 “Performance Period” means, with respect to a Grant, the period commencing on January 1 of the year that includes the Grant Date and ending on December 31 of the second anniversary of such Grant Date, or such other date as may be specified in the Grant Agreement relating to such Grant, subject to Section 4.5.

1.3.21 “Plan” means this Performance Share Unit Plan for Eligible Employees of Talisman Energy Inc. and its Affiliates including any schedules or appendices hereto, as amended from time to time.

1.3.22 “Pro Rated PSUs” has the meaning ascribed thereto in Sections 6.5, 6.6, 6.7, and 6.8 as applicable.

1.3.23 “PSU” means a unit granted to an Eligible Employee that is represented by a bookkeeping entry on the books of the Corporation, the value of which on any particular date shall be equal to the Market Value.

1.3.24 “PSU Account” has the meaning set out in Section 5.1.

1.3.25 “Retirement” means the Eligible Employee’s retirement from the Corporation or an Affiliate, as applicable, provided that such retirement is accepted by the Corporation or Affiliate pursuant to a letter from the Corporation or Affiliate granting the Eligible Employee retirement status and confirming the Eligible Employee’s date of retirement.

1.3.26 “Settlement Date” means, with respect to a Grant, the date following the end of the Performance Period for such Grant fixed by the Committee for settlement of Vested PSUs.

1.3.27 “Share” means a common share of the Corporation and such other share as may be substituted for it as a result of amendments to the articles of the

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Corporation, arrangement, reorganization or otherwise, including any rights that form a part of the common share or substituted share.

1.3.28 “Share Purchase Trust” means a trust established pursuant to Section 7.1 hereof, to acquire and hold Shares for delivery from time to time to Eligible Employees upon settlement of Vested PSUs.

1.3.29 “Stock Exchange” means The Toronto Stock Exchange, or if the Shares are not listed on The Toronto Stock Exchange, such other stock exchange on which the Shares are listed, or if the Shares are not listed on any stock exchange, then on the over-the-counter market.

1.3.30 “Stock Exchange Rules” means the applicable rules of any stock exchange upon which shares of the Corporation are listed.

1.3.31 “Talisman” means the Corporation and its Affiliates, collectively.

1.3.32 “Target Award” means, with respect to a Grant, 100% of the PSUs included in such Grant, determined without regard for any graduated vesting of such PSUs that may apply under the terms of the Grant Agreement applicable thereto.

1.3.33 “Trading Day” means any date on which the Stock Exchange is open for the trading of Shares and on which Shares are actually traded.

1.3.34 “Trustee” means such bank or trust company that is independent of and unaffiliated with the Corporation and any Affiliate as may from time to time be appointed by the Committee as trustee of a Share Purchase Trust and may be the same person as the Agent.

1.3.35 “Vested PSUs” has the meaning set out in Section 6.1.

2. CONSTRUCTION AND INTERPRETATION

2.1 Gender, Singular, Plural. In the Plan, references to the masculine include the feminine; and references to the singular shall include the plural and vice versa, as the context shall require.

2.2 Governing Law. The Plan shall be governed and interpreted in accordance with the laws of the Province of Alberta and any actions, proceedings or claims in any way pertaining to the Plan shall be commenced in the courts of the Province of Alberta.

2.3 Severability. If any provision or part of the Plan is determined to be void or unenforceable in whole or in part, such determination shall not affect the validity or enforcement of any other provision or part thereof.

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2.4 Headings, Sections. Headings wherever used herein are for reference purposes only and do not limit or extend the meaning of the provisions herein contained. A reference to a section or schedule shall, except where expressly stated otherwise, mean a section or schedule of the Plan, as applicable.

3. EFFECTIVE DATE AND EMPLOYMENT RIGHTS

3.1 Effective Date. The Corporation is establishing the Plan effective April 1, 2009.

3.2 No Employment Rights. Nothing contained in the Plan shall be deemed to give any person the right to be retained as an employee of the Corporation or of an Affiliate.

4. PSU GRANTS AND PERFORMANCE PERIODS

4.1 Grant of PSUs. Each Eligible Employee may receive a Grant of PSUs in such number as may be specified by the Committee, with effect from such date(s) as the Committee may specify.

4.2 Grant Agreement. Each Grant and the participation of an Eligible Employee in the Plan shall be evidenced by a written Grant Agreement issued by the Corporation or an Affiliate containing such terms and in such form as may be prescribed by the Committee. Each Grant Agreement shall set forth, at a minimum, the Grant Date of the Grant evidenced thereby, the number of PSUs subject to such Grant, the applicable Performance Conditions, the applicable Performance Period(s) and the treatment of the Grant upon termination of employment.

The Committee may prescribe terms for Grant Agreements in respect of Eligible Employees who are subject to the laws of a jurisdiction other than Canada in connection with their participation in the Plan that are different than the terms of the Grant Agreements for Eligible Employees who are subject to the laws of Canada in connection with their participation in the Plan, and/or deviate from the terms of the Plan set out herein, for purposes of compliance with Applicable Law in such other jurisdiction or where in the Committee’s opinion such terms or deviations are necessary or desirable to obtain more advantageous treatment for the Corporation, an Affiliate or the Eligible Employees in respect of the Plan under the Applicable Law of the other jurisdiction.

Notwithstanding the foregoing, the terms of any Grant Agreement shall be consistent with the Plan to the extent practicable having regard to the Applicable Law of the jurisdiction in which such Grant Agreement is applicable.

4.3 PSUs. Each PSU will give an Eligible Employee the right, subject to Section 10.4, to receive one Share purchased by the Agent on behalf and for the account of the Eligible Employee, or where the Committee so specifies, one Share from a Share Purchase Trust, or a cash payment in an amount determined in accordance with the Plan and such Grant Agreement, provided such PSU becomes a Vested

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PSU in accordance with the terms of the Plan and the applicable Grant Agreement. For greater certainty, an Eligible Employee or Beneficiary shall have no right to receive any Shares or payment, and no payment shall be made as compensation, damages, or otherwise, with respect to any PSUs that are forfeited or otherwise do not become Vested PSUs.

4.4 Waiver or Change of Performance Conditions. The Committee may, without the consent of any Eligible Employee, subsequent to the making of a Grant:

a. waive any Performance Condition applicable to such Grant, or determine that it has been satisfied;

b. change or replace any Performance Condition or modify the weighting as between different Performance Conditions applicable to a particular Grant as the Committee sees fit in the event of a material change affecting Talisman including a material acquisition, disposition, change in Applicable Law or change in accounting or reserves/resources booking standards applicable to Talisman provided that the Committee reasonably determines that (i) the change or replacement is required to preserve the rights of the Eligible Employees under the Plan on a basis substantially proportionate to that which existed prior to the event giving rise to the change or replacement, or (ii) that the change or replacement will not materially adversely affect the likelihood of vesting or amount of any Grant.

4.5 Other Terms and Conditions. Subject to the terms of the Plan, the Committee may, in its sole discretion, determine other terms or conditions of any PSUs, including terms or conditions pertaining to confidentiality of information relating the Corporation’s operations or businesses and any other additional conditions with respect to the grant or vesting of PSUs, in whole or in part, which other terms or conditions shall be set out in the applicable Grant Agreement. In addition, the Committee may, in its sole discretion, authorize the vesting of PSUs granted or credited to an Eligible Employee hereunder that would, in the absence of such authorization, be forfeited pursuant to Section 6.1.

For greater certainty, no term or condition imposed under a Grant Agreement may have the effect of causing settlement (in cash or in Shares) of any of an Eligible Employee’s PSUs to occur after December 31 of the third calendar year following the calendar year in respect of which such PSU was granted.

5. ACCOUNTS, DIVIDEND EQUIVALENTS AND REORGANIZATION

5.1 PSU Account. An account, called a “PSU Account”, shall be maintained by the Corporation, or an Affiliate, as specified by the Committee, for each Eligible Employee and will be credited with the Grants received by an Eligible Employee pursuant to Section 4.1 and Dividend Equivalent PSUs in respect of the PSUs included in such Grant. Where Section 6.5, Section 6.7 or Section 6.8 applies with respect to an Eligible Employee’s PSUs, effective at the time the calculation of Pro Rated PSUs is made under any such Section, the number of PSUs recorded

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in the Eligible Employee’s PSU Account will be decreased accordingly to equal the Eligible Employee’s Pro Rated PSUs. PSUs that fail to vest in an Eligible Employee pursuant to Section 6 and are forfeited, or that are settled in accordance with Section 7, shall be cancelled and shall cease to be recorded in the Eligible Employee’s PSU Account as of the date on which such PSUs are forfeited or settled, as the case may be.

5.2 Dividend Equivalent PSUs. Whenever cash dividends are paid on the Shares, additional PSUs will be credited to the Eligible Employee’s PSU Account in accordance with this Section 5.2 (“Dividend Equivalent PSUs”). The number of Dividend Equivalent PSUs will be calculated by dividing the cash dividends that would have been paid to the Eligible Employee if the PSUs recorded in the Eligible Employee’s PSU Account as at the record date for the cash dividend had been Shares by the Market Value on the date on which the dividends are paid on the Shares.

5.3 Adjustments. In the event of any stock dividend, stock split, combination or exchange of shares, capital reorganization, consolidation, spin-off or other distribution (other than normal cash dividends) of the Corporation’s assets to shareholders, or any other similar changes affecting the Shares, a proportionate adjustment to reflect such change or changes shall be made with respect to the number of PSUs outstanding under the Plan, or securities into which the Shares are changed or are convertible or exchangeable may be substituted for Shares under this Plan, on a basis proportionate to the number of PSUs in the Eligible Employee’s PSU Account or some other appropriate basis, all as determined by the Committee in its sole discretion.

5.4 No Certificates. No certificates shall be issued with respect to any PSUs.

6. VESTING OF PSUs

6.1 Vested PSUs. Vesting of PSUs granted to an Eligible Employee shall be determined in accordance with Section 6.2, Section 6.5, Section 6.6, Section 6.7, Section 6.8 or Section 6.9 as applicable. PSUs that vest are referred to herein as “Vested PSUs”. PSUs which have been granted to an Eligible Employee and which do not become Vested PSUs shall be forfeited by the Eligible Employee and the Eligible Employee will have no further right, title or interest in such PSUs.

6.2 Continued Employment. Subject to Section 6.9, PSUs that are the subject of a Grant to an Eligible Employee and Dividend Equivalent PSUs credited to the Eligible Employee’s PSU Account in respect thereof shall vest on the date on which the Committee determines that the applicable Performance Conditions have been satisfied in accordance with the Grant Agreement governing such Grant or waives such Performance Conditions, provided that the Eligible Employee remains Employed throughout the Performance Period.

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For greater certainty, an Eligible Employee shall not be considered to have ceased being Employed for purposes of this Section 6.2 where, during a Performance Period, he or she ceases employment with the Corporation and immediately commences employment with an Affiliate or ceases employment with an Affiliate and immediately commences employment with the Corporation or another Affiliate.

6.3 Termination of Employment for Cause. In the event an Eligible Employee’s employment is terminated for Cause by the Corporation or an Affiliate, as applicable, before the Settlement Date in respect of any PSUs granted to the Eligible Employee, all such PSUs, whether or not Vested, and any Dividend Equivalent PSUs in respect of such PSUs, shall be forfeited and the Eligible Employee will have no further right, title or interest in such PSUs.

6.4 Termination of Employment due to Resignation. In the event an Eligible Employee resigns from his or her employment with the Corporation or an Affiliate, as applicable, prior to the end of the Performance Period in respect of PSUs granted to the Eligible Employee, all such PSUs, whether or not Vested, and any Dividend Equivalent PSUs in respect of such PSUs, shall be forfeited and the Eligible Employee will have no further right, title or interest in such PSUs. For greater certainty, an Eligible Employee who is Employed throughout a Performance Period but resigns prior to the Settlement Date in respect of such Performance Period shall not forfeit any PSUs granted in respect of such Performance Period or related Dividend Equivalent PSUs as a result of such resignation.

6.5 Termination without Cause. In the event an Eligible Employee’s employment is terminated without Cause by the Corporation or an Affiliate, as applicable, prior to the end of the Performance Period relating to a Grant of PSUs to the Eligible Employee, except as otherwise determined by the Committee, the number of such PSU and any Dividend Equivalent PSUs in respect of such PSUs determined by the formula A x B/C (the “Pro Rated PSUs”), where

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A equals the total number of PSUs and Dividend Equivalent PSUs recorded in his or her PSU Account in respect of such Grant as at the date on which he or she ceases to be Employed,

B equals the total number of days between the first day of the Performance Period for such Grant and the date on which the Eligible Employee ceases to be Employed (rounded up to the nearest whole number of days), and

C equals the total number of days (rounded up to the nearest whole number of days) between the first day of the Performance Period for such Grant and the date on which Performance Period ends,

shall, subject to Section 6.9, be eligible to become Vested PSUs at the end of such Performance Period, subject to satisfaction or waiver by the Committee of the Performance Conditions relating to such Grant.

6.6 Death. In the event an Eligible Employee ceases to be Employed by reason of death prior to the end of the Performance Period applicable to a Grant of PSUs to the Eligible Employee, subject to Section 6.9, the number of PSUs and any Dividend Equivalent PSUs in respect of such PSUs that become Vested PSUs on the last day of such Performance Period shall be the number of PSUs that would have vested pursuant to the Plan and the Grant Agreement applicable to such Grant had the Eligible Employee remained Employed until the end of such Performance Period.

6.7 Retirement. In the event an Eligible Employee ceases to be Employed by reason of Retirement prior to the end of the Performance Period applicable to a Grant of PSUs to the Eligible Employee, the number of such PSUs and any Dividend Equivalent PSUs in respect of such PSUs determined by the formula A x B/C (the “Pro Rated PSUs”), where

A equals the total number of PSUs and any Dividend Equivalent PSUs in respect of such PSUs recorded in his or her PSU Account in respect of such Grant as at the date of his or her Retirement,

B equals the total number of days between the first day of the Performance Period for such Grant and the Eligible Employee’s date of Retirement (rounded up to the nearest whole number of days) plus the lesser of 365 days and the number of days remaining in such Performance Period on such date of Retirement, and

C equals the total number of days (rounded up to the nearest whole number of days) between the first day of the Performance Period for such Grant and the date on which Performance Period ends,

shall, subject to Section 6.9, be eligible to become Vested PSUs at the end of such Performance Period, subject to satisfaction or waiver by the Committee of the Performance Conditions relating to such Grant.

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6.8 Business Sales. In the event that the Corporation disposes of all or substantially all of its ownership interest in an Affiliate or the Corporation or an Affiliate disposes of all or substantially all of the assets of a business unit of the Corporation or the Affiliate, as applicable, and, in connection with any such disposition, an Eligible Employee who has received a Grant of PSUs ceases to be Employed prior to the end of the Performance Period relating to such Grant (other than in circumstances in which Section 6.3 applies), except as otherwise determined by Committee, the number of such PSUs and any Dividend Equivalent PSUs in respect of such PSUs determined by the formula A x B/C (the “Pro Rated PSUs”), where

A equals the total number of PSUs and Dividend Equivalent PSUs recorded in his or her PSU Account in respect of such Grant as at the date on which he or she ceases to be Employed,

B equals the total number of days between the first day of the Performance Period for such Grant and the date on which the Eligible Employee ceases to be Employed (rounded up to the nearest whole number of days), and

C equals the total number of days (rounded up to the nearest whole number of days) between the first day of the Performance Period for such Grant and the date on which Performance Period ends,

shall, subject to Section 6.9, be eligible to become Vested PSUs at the end of such Performance Period, subject to satisfaction or waiver by the Committee of the Performance Conditions relating to such Grant.

6.9 Change in Control. In the event of a Change in Control prior to the end of the Performance Period for a Grant of PSUs to an Eligible Employee (excluding individuals whose employment has been terminated for Cause):

a. the Committee shall determine the extent to which the Performance Conditions applicable to the PSUs recorded in the Eligible Employee’s PSU Account have been satisfied during the portion of the applicable Performance Period(s) completed prior to the Change in Control;

b. if, having regard to the determination contemplated in paragraph a. above, the Committee determines that the number of PSUs in respect of a Grant that are eligible to become Vested PSUs in connection with the Change in Control exceeds the Target Award in respect of such Grant, PSUs and any Dividend Equivalent PSUs in respect of such PSUs recorded in an Eligible Employee’s PSU Account as at the effective date of the Change in Control increased by the appropriate multiplier under the applicable Grant Agreement, as determined by the Committee, shall become Vested PSUs effective at the time of the Change in Control;

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c. if, having regard to the determination contemplated in paragraph a. above, the Committee determines that the number of PSUs in respect of a Grant that are eligible to become Vested PSUs in connection with the Change in Control does not exceed the Target Award in respect of such Grant, no less than such Target Award and any Dividend Equivalent PSUs in respect of such Target Award shall become Vested PSUs effective at the time of the Change in Control.

PSUs and Dividend Equivalent PSUs in respect thereof which vest pursuant to this Section 6.9 shall be settled as soon as practicable after the effective date of the Change in Control.

7. PURCHASE OF SHARES AND SETTLEMENT OF VESTED PSUs

7.1 Establishment of Share Purchase Trusts. The Corporation or, on the direction of the Committee, an Affiliate, may establish one or more Share Purchase Trusts, on such terms and conditions as the Committee shall determine and in compliance with Applicable Law, and may contribute cash for the purchase of Shares thereto, in such amounts as the Committee shall determine, on behalf of the Corporation and/or on behalf of such other Affiliate(s) as the Committee may direct.

7.2 Purchase of Shares by Trustee. Shares delivered to Eligible Employees from a Share Purchase Trust in connection with the settlement of Vested PSUs shall be purchased on the open market by the Trustee acting through a broker designated by the Trustee who is independent of the Corporation in accordance with Stock Exchange Rules and who is a member of the Stock Exchange. Subject to the foregoing part of this Section 7.2, any such designation of a broker may be changed from time to time.

7.3 Purchase of Shares by Agent. Shares delivered to Eligible Employees in connection with the settlement of Vested PSUs otherwise than from a Share Purchase Trust shall be purchased on the open market by the Agent through a broker designated by the Agent who is independent of the Corporation in accordance with Stock Exchange Rules and who is a member of the Stock Exchange. Subject to the foregoing part of this Section 7.3, any such designation of a broker may be changed from time to time. The Corporation shall notify the Agent as to the number of Shares to be purchased by the Agent on behalf of the Eligible Employee, on the basis of one Share for each Vested PSU, subject to provision for applicable taxes and other source deductions in accordance with Section 10.4. As soon as practicable thereafter, the Agent shall purchase on the open market the number of Shares specified in the notice from the Corporation and shall advise the Eligible Employee, or the Eligible Employee’s Beneficiary, as applicable, and the Corporation of:

a. the aggregate purchase price of the Shares;

b. the purchase price per share or, if the Shares were purchased at different prices, the average purchase price (computed on a weighted average basis) per share);

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c. the amount of any related brokerage commission; and

d. the settlement date for the purchase of the Shares.

On the settlement date in respect of the Shares purchased hereunder, upon payment of the aggregate purchase price and related brokerage commission by the Corporation or an Affiliate on behalf of the Eligible Employee or the Eligible Employee’s Beneficiary, as applicable, the Agent shall credit such Shares to an account with the Agent in the name of the Eligible Employee or the Eligible Employee’s Beneficiary, as applicable.

7.4 Settlement.On the Settlement Date an Eligible Employee’s Vested PSUs shall be settled as determined by the Committee, through any of the following:

a. through the delivery to the Eligible Employee or his or her Beneficiary, as applicable of Shares from a Share Purchase Trust subject to Section 10.4;

b. through the purchase of Shares by the Agent for the account of the Eligible Employee or his or her Beneficiary, as applicable, in accordance with Section 7.3;

c. a cash payment to the Eligible Employee or his or her Beneficiary, as applicable determined in accordance with Section 7.5, or

d. any combination of Shares from a Share Purchase Trust, Shares purchased by the Agent in accordance with Section 7.3 and/or cash, all as determined by the Committee.

7.5 Settlement in Cash.

7.5.1 Subject to Section 7.5.1 and Section 10.4, settlement of Vested PSUs in cash pursuant to Section 7.4 shall be made through the payment of an aggregate amount determined by the formula A x B, where:

A equals the Market Value on the last day of the Performance Period (or, where applicable, the date of a Change in Control), and

B equals the number of Vested PSUs being settled in cash.

7.5.2 Subject to Section 10.4, in the event that at the time contemplated for the purchase of Shares under Section 7.3 there is no public market for the Shares, or at the time contemplated for the delivery of Shares the Committee determines, in its sole discretion, that having regard to Applicable Law, it would be impractical or result in a breach of such Applicable Law to provide Shares to an Eligible Employee or a group of Eligible Employees the obligations of the Corporation or any Affiliate with respect to such Eligible Employee(s)’ Vested PSUs shall be met by a payment in cash in such amount as is reasonably determined by the

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Committee to be equitable in the circumstances based on the value of the Shares at the time of payment, such determination to be final and binding for all purposes.

8. CURRENCY

8.1 Currency. Except where expressly provided otherwise, all references in the Plan to currency refer to lawful Canadian currency.

9. SHAREHOLDER RIGHTS

9.1 No Rights to Shares. PSUs are not Shares and the grant of PSUs will not entitle an Eligible Employee to any shareholder rights, including, without limitation, voting rights, dividend entitlement or rights on liquidation.

10. ADMINISTRATION

10.1 Committee. Unless otherwise determined by the Board or as specified herein, the Plan shall be administered in accordance with its terms by the Committee in its sole discretion. Subject to and consistent with the terms of the Plan, in addition to any authority of the Committee specified under any other terms of the Plan, the Committee shall have full and complete discretionary authority to:

a. interpret the Plan and Grant Agreements;

b. prescribe, amend and rescind such rules and regulations and make all determinations necessary or desirable for the administration and interpretation of the Plan and Grant Agreements; and

c. approve or authorize the applicable form and terms of Grant Agreements.

10.2 Compliance with Laws and Policies. The Corporation’s issuance of any PSUs and its obligation to arrange for the purchase of any Shares or make any payments is subject to compliance with Applicable Law. Each Eligible Employee shall acknowledge and agree (and shall be conclusively deemed to have so acknowledged and agreed by participating in the Plan) that the Eligible Employee will, at all times, act in strict compliance with Applicable Law and all other laws and any policies of the Corporation applicable to the Eligible Employee in connection with the Plan including, without limitation, furnishing to the Corporation all information and undertakings as may be required to permit compliance with Applicable Law. The Shares have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold in the United States unless registered or an exemption from registration is available. The Corporation intends to file a registration statement with respect to shares offered or sold in the United States.

10.3 Delegation. The Committee may also delegate to any officer or employee of the Corporation such duties and powers relating to the Plan as it may see fit.

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10.4 Withholdings. So as to ensure that the Corporation, an Affiliate or the Trustee, as applicable, will be able to comply with the applicable provisions of any federal, provincial, state or local law relating to the withholding of tax or other required deductions, including on the amount, if any, includable in the income of an Eligible Employee, the Corporation, an Affiliate or the Trustee, as applicable, may withhold or cause to be withheld from any amount payable to an Eligible Employee, either under this Plan, or otherwise, such amount as may be necessary to permit the Corporation, the Affiliate or the Trustee, as applicable, to so comply. The Corporation, an Affiliate and the Trustee shall also have the right in its discretion to satisfy any such liability for withholding or other required deduction amounts by selling or requiring an Eligible Employee to sell Shares which would otherwise be delivered or provided to the Eligible Employee hereunder. The Committee may require an Eligible Employee, as a condition to the settlement of any PSUs, to pay or reimburse the Corporation, an Affiliate or the Trustee for any such withholding or other required deduction of amounts related to the settlement of such PSUs.

10.5 No Additional Rights. Neither the designation of an employee as an Eligible Employee nor the grant of any PSUs to any Eligible Employee entitles any person to the grant, or any additional grant, as the case may be, of any PSUs under the Plan.

10.6 Amendment, Termination. The Plan may be amended or terminated at any time by the Board in whole or in part. No amendment of the Plan shall, without the consent of the Eligible Employees affected by the amendment, or unless required by Applicable Law, adversely affect the rights accrued to such Eligible Employees with respect to PSUs granted prior to the date of the amendment. Upon termination of the Plan, all unvested PSUs shall continue to vest and be settled in accordance with the terms of the Plan and the applicable Grant Agreement.

10.7 Administration Costs. The Corporation will be responsible for all costs relating to the administration of the Plan.

10.8 Unfunded Obligation. The obligation to make payments that may be required to be made under the Plan will be an unfunded and unsecured obligation of the Corporation or an Affiliate, as applicable. The Plan, or any provision thereunder, shall not create (or be construed to create) any trust or other obligation to fund or secure amounts payable under the Plan in whole or in part.

11. ASSIGNMENT

11.1 Assignment. The assignment or transfer of the PSUs, or any other benefits under this Plan, shall not be permitted other than by operation of law.

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PERFORMANCE SHARE UNIT PLAN FOR ELIGIBLE EMPLOYEES OF TALISMAN ENERGY INC. AND ITS AFFILIATES

Adopted with effect from April 1, 2009

EX-4.2

Exhibit 4.2

Talisman Energy Inc. (“Talisman”) has established the Performance Share Unit Plan for Eligible Employees of Talisman Energy Inc. and its Affiliates effective April 1, 2009 (the “Plan”) under which Grants of performance share units (“PSUs”) may be made to Eligible Employees of Talisman and its Affiliates at the discretion of the Management Succession and Compensation Committee (the “Committee”).

The Committee has authorized the issuance of PSUs under the Plan for certain Eligible Employees of Talisman and its Affiliates.

Pursuant to the Plan and in respect of services to be provided to Fortuna Energy Inc. (“Fortuna”) or Talisman by you, you have been granted the PSUs listed under the heading "Total PSUs" above, effective April 1, 2009 (the “Grant Date”). Capitalized terms not defined herein shall have the meanings given to those terms in the Plan. The PSUs are granted to you subject to your acceptance of this Grant Agreement and the following terms:

1. Grant of PSUs

1.1 The granting and vesting of the PSUs and the delivery to you of any Shares in respect of any Vested PSU (as defined in Section 2.1 of this Grant Agreement) are subject to the terms and conditions of this Grant Agreement including, without limitation, any schedule to this Grant Agreement, and the terms and conditions of the Plan, all of which are incorporated into and form an integral part of this Grant Agreement. In the event of a conflict between the terms and conditions of the Plan and this Grant Agreement, the terms of this Grant Agreement will prevail.

1.2 Neither the granting of PSUs nor the crediting of Dividend Equivalent PSUs entitles you to any benefits until the PSUs and Dividend Equivalent PSUs become Vested PSUs.

2. Vesting of PSUs  

2.1 Subject to the provisions of the Plan and the provisions of Section 4 of this Grant Agreement, provided you remain Employed throughout the Performance Period specified in Schedule A attached hereto, the PSUs and Dividend Equivalent PSUs subject to this Grant Agreement will become Vested PSUs on such date following the end of the Performance Period (the “Determination Date”) that the Committee: (A) determines the extent to which the conditions set out in Schedule A (the “Performance Conditions”) have been satisfied, or waives such Performance Conditions; and (B) specifies the number or proportion of PSUs that have become Vested PSUs. The Determination Date will be as soon as administratively feasible following the last day of the Performance Period.

3. Settlement of Awards

3.1 Vested PSUs shall be settled in Shares in accordance with the Plan in the first calendar year beginning after the last day of the Performance Period, and settlement will occur as soon as administratively feasible following the Determination Date. Notwithstanding the foregoing, PSUs that become Vested PSUs as a result of a change in control as defined in Section 3.3 below will be settled on a date that is within 90 days following the date of such change in control, provided that the Eligible Employee shall have no ability to designate the taxable year of the payment/settlement. In no event will Vested PSUs be settled later than December 31, 2012. The

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settlement of PSUs is subject to payment or other satisfaction of all related withholding obligations in accordance with Section 5.1 of this Grant Agreement.

3.2 With respect to the settlement of PSUs in Shares, Talisman, or an Affiliate, may enter into an arrangement with a financial institution or broker that is independent of Talisman and any Affiliates (the “Agent”) in accordance with Stock Exchange Rules and that is a member of the Stock Exchange, pursuant to which the Agent will purchase Shares on the open market on your behalf. Talisman or the Affiliate will notify the Agent as to the number of Common Shares to be purchased by the Agent on your behalf on the basis of one Share for each Vested PSU, subject to provision for applicable taxes and other source deductions in accordance with Section 10.4 of the Plan. As soon as practicable thereafter, the Agent shall purchase on the open market the number of Shares specified in the notice from Fortuna or Talisman and shall advise you, or your Beneficiary, as applicable, and Fortuna or Talisman, of (i) the aggregate purchase price of the Shares; (ii) the purchase price per Share or, if the Shares were purchased at different prices, the average purchase price (computed on a weighted average basis) per Share; (iii) the amount of any related brokerage commission; and (iv) the settlement date for the purchase of the Shares. On the settlement date in respect of the Shares purchased, following payment of the aggregate purchase price and related brokerage commission by Talisman or an Affiliate on your behalf, or on your Beneficiary’s behalf, as applicable, the Agent shall credit such Shares to an account with the Agent in your name, or your Beneficiary’s name, as applicable. For greater clarity, and not withstanding Sections 7.1 and 7.2 of the Plan, in no event will you be a beneficiary of, nor will your right to payment with respect to your PSUs be funded out of, any Share Purchase Trust as contemplated by Section 7.1 of the Plan unless such trust is a U.S. situs trust meeting the requirements of a “rabbi trust” (as generally understood under U.S. federal income tax principles).

3.3 For purposes of this grant of PSUs, and not withstanding anything to the contrary in the Plan (including but not limited to Sections 1.3.7 and 6.9 of the Plan), a “change in control” is an event that meets the definition of Change in Control under Section 1.3.7 of the Plan, and that also constitutes a “change in the ownership,” a “change in effective control,” and/or a “change in the ownership of a substantial portion of the assets” as defined under U.S. Treasury Regulation § 1.409A-3(i)(5).

3.4 For greater certainty, PSUs and Dividend Equivalent PSUs which do not become Vested PSUs shall be forfeited by you, you will have no further right, title or interest in such PSUs and Dividend Equivalent PSUs and neither you nor your Beneficiary shall have any right to receive any Shares or payment, and no payment shall be made as compensation, damages, or otherwise, with respect to any PSUs or Dividend Equivalent PSUs that are forfeited or otherwise do not become Vested PSUs in accordance with the Plan and this Grant Agreement.

4. Termination of Employment or Change in Control

4.1 Unless otherwise determined by the Committee:

4.1.1 In the event your employment is terminated for Cause by Fortuna, Talisman, or an Affiliate, as applicable at any time prior to the Settlement Date of your PSUs none of the PSUs set out above, nor any Dividend Equivalent PSUs in respect of such PSUs, shall vest, and all such PSUs and Dividend Equivalent PSUs shall be forfeited in accordance with Section 3.4 of this Grant Agreement.

4.1.2 In the event you resign from your employment with Fortuna, Talisman or an Affiliate, as applicable, prior to the end of the Performance Period, none of the PSUs set out above, nor any Dividend Equivalent PSUs in respect of such PSUs, shall vest, and all such PSUs and Dividend Equivalent PSUs shall be forfeited in accordance with Section 3.4 of this Grant Agreement.

4.1.3 In the event your employment is terminated without Cause by Fortuna, Talisman or an Affiliate, as applicable, prior to the end of the Performance Period, the number of PSUs determined by the formula A x B/C (the “Pro Rated PSUs”), where

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A equals the total number of PSUs and Dividend Equivalent PSUs recorded in your PSU Account as at the date on which you cease to be Employed;

B equals the total number of days between the first day of the Performance Period and the date on which you cease to be Employed (rounded up to the nearest whole number of days);

C equals total number of days (rounded up to the nearest whole number of days) between the first day of the Performance Period and the date on which the Performance Period ends,

shall, subject to Section 4.1.7, be eligible to become Vested PSUs following the end of the Performance Period (on the Determination Date), subject to satisfaction or waiver by the Committee of the Performance Conditions relating to this Grant.

4.1.4 In the event you cease to be Employed by reason of death prior to the end of the Performance Period, notwithstanding Section 2.1 but subject to Section 4.1.7, the number of PSUs and Dividend Equivalent PSUs that become Vested PSUs on the Determination Date shall be the number of PSUs that would have become Vested PSUs in accordance with Section 2.1 had you remained Employed until the end of the Performance Period.

4.1.5 In the event that you cease to be Employed by reason of Retirement prior to the end of the Performance Period, the number of PSUs determined by the formula A x B/C (the “Pro Rated PSUs”), where

A equals the total number of PSUs and Dividend Equivalent PSUs recorded in your PSU Account as at the effective date of your Retirement;

B equals the total number of days between the first day of the Performance Period and the Eligible Employee’s date of Retirement (rounded up to the nearest whole number of days) plus the lesser of 365 days and the number of days remaining in the Performance Period on such date of Retirement; and

C equals the total number of days (rounded up to the nearest whole number of days) between the first day of the Performance Period and the date on which the Performance Period ends,

shall, subject to Section 4.1.7, be eligible to become Vested PSUs following the end of the Performance Period (on the Determination Date), subject to satisfaction or waiver by the Committee of the Performance Conditions relating to this Grant.

4.1.6 In the event that Talisman disposes of all or substantially all of its ownership interest in an Affiliate or Talisman or an Affiliate disposes of all or substantially all of the assets of a business unit of Talisman or the Affiliate, as applicable, and, in connection with any such disposition, you cease to be Employed prior to the end of the Performance Period (other than in circumstances in which Section 4.1.1 applies), the number of PSUs determined by the formula A x B/C (the “Pro Rated PSUs”), where

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A equals the total number of PSUs and Dividend Equivalent PSUs recorded in your PSU Account at the date on which you cease to be Employed;

B equals the total number of days between the first day of the Performance Period and the date on which you cease to be Employed (rounded up to the nearest whole number of days); and

C equals total number of days (rounded up to the nearest whole number of days) between the first day of the Performance Period and the date on which the Performance Period ends,

shall, subject to Section 4.1.7, be eligible to become Vested PSUs following the end of the Performance Period (on the Determination Date), subject to satisfaction or waiver by the Committee of the Performance Conditions relating to this Grant.

4.1.7 In the event of a change in control as defined in Section 3.3 of this Grant Agreement prior to the end of the Performance Period:

(a) the Committee shall determine the extent to which the Performance Conditions applicable to the PSUs granted to you under this Grant Agreement have been satisfied during the portion of the Performance Period completed prior to such change in control; and

(b) if, having regard to the determination contemplated in paragraph (a) above, the Committee determines that the number of PSUs granted to you under this Grant Agreement that are eligible to become Vested PSUs in connection with the change in control exceeds the Target Award in respect of this Grant, PSUs in respect of this Grant and any Dividend Equivalent PSUs in respect of such PSUs recorded in your PSU Account as at the effective date of the change in control, increased by the appropriate multiplier under Schedule A, as determined by the Committee, shall become Vested PSUs effective at the time of the change in control;

(c) if, having regard to the determination contemplated in paragraph (a) above, the Committee determines that the number of PSUs granted to you under this Grant Agreement that are eligible to become Vested PSUs in connection with the change in control does not exceed the Target Award in respect of this Grant, no less than such Target Award and any Dividend Equivalent PSUs in respect of such Target Award shall become Vested PSUs effective at the time of the change in control.

PSUs and Dividend Equivalent PSUs in respect hereof which vest pursuant to this Section 4.1.7 shall be settled as soon as practicable after the effective date of the change in control, but in all events by the 90^th day following such change in control.

5. Tax

5.1 Fortuna, Talisman, any Affiliate or the Trustee may withhold from any amount payable to you, either under this Grant Agreement or otherwise, such amount as may be necessary so as to ensure that Fortuna, Talisman, Affiliate, or the Trustee, as the case may be, will be able to comply with the applicable provisions of Applicable Law relating to the withholding of tax or that any other required deductions are paid or otherwise satisfied, including withholding of the amount, if any, includable in your income. Fortuna, Talisman or any Affiliate, as applicable, and the Trustee shall also have the right in its discretion to satisfy any such liability for withholding or other required deduction amounts that become payable as a result of the settlement of PSUs by selling or requiring you to sell Shares which would otherwise be delivered or provided to you hereunder. Fortuna or Talisman may require you, as a condition to the settlement of any Vested PSUs, to pay or reimburse, or to indemnify, Fortuna, Talisman, an Affiliate or the Trustee for any such withholding or other required deduction of amounts related to the settlement of your Vested PSUs.

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6. Personal Information

6.1 You consent to the holding, processing and transferring of personal data provided by you to Fortuna, Talisman, any Affiliate, the Trustee, the Agent or to any third party service provider for all purposes relating to the operation of the Plan, including (i) administering and maintaining records in respect of you; (ii) providing information to Fortuna, Talisman, any Affiliate, their respective agents, the Trustee, the Agent or any third party service provider in respect of the Plan; (iii) providing information to future purchasers of Fortuna, Talisman, any Affiliate or the business in which you work; and (iv) transferring information about you to a country or territory outside the United States that may not provide the same statutory protection for the information as the United States does.

7. Binding Agreement

7.1 This Grant Agreement shall be binding upon you, your Beneficiary, the legal representatives of your estate and your heirs.

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EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statement (Form S-8) dated June 3, 2009 pertaining to the Performance Share Unit Plan for Eligible Employees of Talisman Energy Inc. and its Affiliates (the “Plan”) of our reports dated March 4, 2009 with respect to the consolidated financial statements of Talisman Energy Inc. (the “Company”), and the effectiveness of internal control over financial reporting of Talisman Energy Inc., included in an exhibit to the Company’s Annual Report (Form 40-F) for the year ended December 31, 2008, filed with the Securities and Exchange Commission.

Calgary, Canada	Chartered Accountants

June 3, 2009

EX-23.2

Exhibit 23.2