This Annual Report contains statements that constitute forward-looking statements within the meaning of applicable securities legislation.

Identifying Forward-Looking Statements

Forward-looking statements are included throughout this Annual Report, including among other places, under the headings “A Premium Investment”, “A Very Strong Year in 2004”, “A Discussion with Dr. Jim Buckee”, “The Business Environment”, “A Well Executed and Consistent Strategy”, “Talisman’s Key Targets in 2005”, “Financial and Operating Performance”, and “Operating Areas”. These statements include, among others, statements regarding:

• anticipated cash flow and cash flow per share;
• estimates of future sales, production and operations or financial performance;
• business plans for drilling, exploration and development;
• the estimated amounts and timing of capital expenditures;
• estimates of drilling and operating costs;
• business strategy and plans or budgets;
• outlook for oil and gas prices;
• anticipated liquidity, capital resources and debt levels;
• royalty rates and exchange rates;
• the merits or anticipated outcome of pending litigation; and
• other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results or operations or performance.

Statements concerning oil and gas reserves contained in this Annual Report may be deemed to be forward-looking statements as they involve the implied assessment that the resources described can be profitably produced in the future, based on certain estimates and assumptions. Often, but not always, forward-looking statements use words or phrases such as: “expects”, “does not expect” or “is expected”, “anticipates” or “does not anticipate”, “plans” or “planned”, “estimates” or “estimated”, “projects” or “projected”, “forecasts” or “forecasted”, “believes”, “intends”, “likely”, “possible”, “probable”, “scheduled” “positioned”, “goal”, “objective” or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.

Material factors that could cause actual results to differ materially from those in forward-looking statements

Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those anticipated by Talisman and described in the forward-looking statements. These risks and uncertainties include:

• the risks of the oil and gas industry, such as operational risks in exploring for, developing and producing crude oil and natural gas, and market demand;
• risks and uncertainties involving geology of oil and gas deposits;
• the uncertainty of reserves estimates and reserves life;
• the uncertainty of estimates and projections relating to production, costs and expenses;
• potential delays or changes in plans with respect to exploration or development projects or capital expenditures;
• fluctuations in oil and gas prices, foreign currency exchange rates and interest rates;
• health, safety and environmental risks;
• uncertainties as to the availability and cost of financing;
• uncertainties related to the litigation process, such as possible discovery of new evidence or acceptance of novel legal theories and difficulties in predicting the decisions of judges and juries;
• risks in conducting foreign operations (for example, political and fiscal instability or the possibility of civil unrest or military action);
• general economic conditions;
• the effect of acts of, or actions against international terrorism; and
• the possibility that government policies or laws may change or governmental approvals may be delayed or withheld.

We caution that the foregoing list of risks and uncertainties is not exhaustive. Additional information on these and other factors which could affect the Company’s operations or financial results are included: (1) under the headings “Management’s Discussion and Analysis – Risks and Uncertainties” and “Outlook for 2005” and elsewhere in the Company’s 2004 Annual Report Financial Review; and, (2) under the heading “Risk Factors” in the Company’s Annual Information Form for the year ended December 31, 2004. Additional information may also be found in the Company’s other reports on file with Canadian securities regulatory authorities and the United States Securities and Exchange Commission.

No obligation to update forward-looking statements

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.