This is Talisman’s fourth corporate responsibility report,
what’s new?

When Talisman first started formally reporting on our corporate responsibility efforts in our 2000 Corporate Responsibility Report, we focused on our operations and activities in Sudan. In 2001, a discussion of our Colombian operations and activities was added to the reporting process. Last year, we significantly expanded our reporting efforts to cover all our principal geographic areas of operation utilizing the Global Reporting Initiative (GRI) as the reporting framework.

This year, based on stakeholder feedback we’ve collected throughout the year and significant input on our reporting process from our independent reviewer, PricewaterhouseCoopers, we have continued to expand the scope of the report to include more KPI’s, greater country by country performance analysis and stakeholder feedback collected throughout the year. The 2003 Corporate Responsibility Report continues to reflect the diversity of our activities, their impacts and the interests of our numerous stakeholders.

What were some of Talisman’s key corporate responsibility accomplishments in 2003?

Talisman completed a year-long, multi-departmental review and update of our Policy on Business Conduct and Ethics, which was approved by our Board of Directors in December 2003. Central to the review was the development of human rights and community relations principles for all Talisman employees and operations.

We established formal security arrangements with our coventurers in Colombia in the spirit of the Voluntary Principles on Security and Human Rights. We received a Certificate of Environmental Clearance in Trinidad with respect to our onshore exploration program. We established a community development legacy office in Sudan and began development of several innovative projects including a cogeneration facility in Edson, Alberta and a potential offshore windfarm at our Beatrice platform in the North Sea.

In February 2004, Talisman confirmed its support of the United Nations led Global Compact Initiative. See the section on Human Rights for more information.

Our 2003 activity demonstrates Talisman’s continuing commitment in the area of corporate responsibility.

What are some key corporate responsibility challenges facing Talisman going forward?

Continued corporate responsibility is expected in all facets of our business. Reducing our impact on the environment, being welcome in the communities in which we operate and meeting the highest standards of business ethics are the foundation upon which we build our corporate performance, but there is always room to improve. This includes continuing work in Colombia with respect to human rights and security agreements, potential implementation of the Beatrice windfarm demonstrator and Edson cogeneration projects and strengthening relations with aboriginal communities in Western Canada.

What type of risk assessments does Talisman do prior to investing in a new country or project?

Wherever we operate, our Company has always believed in making investment decisions that consider the interests of all our stakeholders. Our commitment to meet the highest standards of ethics guides our actions. We have successfully operated or invested in such politically, environmentally or socially sensitive areas as Colombia, Trinidad, Algeria and Indonesia.

“I believe that the business case for corporate responsibility is underpinned by its contribution to enhanced security to Talisman assets and personnel, employee recruitment and retention, increased access to capital and positioning of Talisman as the partner of choice with both governments and other energy companies.”
Prior to any investment, Talisman performs a rigorous risk assessment related to geological prospectivity, economic terms and political, legal and social considerations. We research the political realities of the country in which we are interested in investing, we review the performance of all potential partners in any joint venture and security advisors, environmental experts and corporate responsibility advisors conduct site visits. No decision to invest is taken lightly and the social and environmental implications of the investment are always considered. Once a decision to invest is made, we implement measures to mitigate risks we have identified and we monitor our progress.

What can you tell us about the class action lawsuit filed against Talisman for alleged complicity in human rights abuses related to the Company’s past investment in Sudan?

A class action complaint was filed on November 8, 2001 in the U.S. District Court for the Southern District of New York against Talisman Energy Inc., by the Presbyterian Church of Sudan and others who seek status to represent a much larger group of individuals residing in Sudan. Talisman regards the allegations in the Complaint to be entirely without merit and is vigorously defending the case. We believe that our presence in Sudan was a force for good. Though we did complete the sale of our indirect interest in Sudan in March 2003, we have committed to continue funding our development projects through to 2005. These projects are designed to encourage self-sufficiency, building upon the early success of our agricultural and small business development programs.

How does corporate responsibility translate into bottom line results?

While difficult to quantify, I have no doubt that a strong business case can be made for corporate responsibility, including its contribution to enhanced security to Talisman assets and personnel, employee recruitment and retention, increased access to capital and positioning of Talisman as the partner of choice with both governments and other energy companies.

I hope you enjoy reading about Talisman’s 2003 performance.



James W. Buckee
President and Chief Executive Officer
March 2, 2004