This MD&A contains forward-looking information as contemplated by Canadian securities regulators’ Form 51-102F1 and forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively, “forward-looking statements”).

Identifying forward-looking statements

Forward-looking statements are included throughout this MD&A, including among other places, under the headings “Outlook for 2005” and “Economic Assumptions”. 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 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 of operations or performance.

Statements concerning oil and gas reserves contained in this MD&A under the headings “Depreciation, Depletion and Amortization Expense”, “Reserve Replacement”, “Asset Impairments”, “Outlook for 2005” and elsewhere 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” or “positioned”, “goal” or “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 the 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.

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 under the headings “Risks and Uncertainties” and “Outlook for 2005” and elsewhere in this MD&A. 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.