We believe our success begins with our people. We wish to earn the respect and loyalty of each employee by creating a work environment that is challenging and rewarding. We recognize that building this type of relationship requires a foundation of trust, teamwork, recognition and ethical and fair treatment. This enables us to hire, develop and retain the people with the skills necessary to add value to our business.

Full-Time Equivalent Permanent Employees1 as at December 15, 2003 North America 1,312 North Sea 273 Southeast Asia 168 Algeria 1 Other2 4 Total 1,758 1 Contract and temporary staff are not included. 2 “Other” includes Trinidad, Qatar and secondees to operating partners. Full-Time Equivalent Positions Added in 20031 North America 126 North Sea 117 Southeast Asia 26 Algeria 1 Other2 5 Total 275 1 Total does not account for the sale of our indirect assets in Sudan (70 positions). 2 “Other” includes Trinidad and secondees to operating partners.

Workforce Policies

We promote a workplace free of harassment, discrimination and intimidation and confidentiality for all employees. In 2003, we revised our Sexual Harassment Policy to include other forms of harassment in an all encompassing Harassment Policy. All employees, and particularly managers and supervisors, must maintain and promote these principles in their hiring practices and in their relationships with other employees.

In 2004, we will review our global workforce policies to ensure that key corporate philosophies and workforce practices are reflected worldwide.

Total Rewards Philosophy

Talisman’s rewards philosophy is an integral component of our strategy to be a competitive, successful company amongst our oil and gas industry peers.

While the type and design of plans vary by country, they are designed to be market competitive and support the alignment of employee performance with business success and increasing shareholder value. Health, insurance and pension benefits are also part of the rewards offered to employees.

Total Rewards

In 2003, total remuneration including salary, benefits and bonuses provided to employees was approximately $250 million. This amount increased significantly over 2002 due to a larger workforce, a one-time bonus that was paid to employees worldwide in recognition of very strong financial results and the Company’s decision to expense stock options, which resulted in a redesign of the stock option plan. For a breakdown of compensation by country, see below.

Compensation Surveys Around the World

Talisman annually benchmarks its total compensation program against the marketplace by participating in compensation and benefits surveys around the world. These surveys are conducted by independent consulting firms that provide human resources expertise and services within our areas of operations. We focus our participation in surveys that provide market data specific to oil and gas industry practices where available. We compare the value of the employee plans and programs we provide against these survey results to assess the competitiveness of our total rewards package.

Employee Benefits

In 2003, Talisman created 26 full-time equivalent positions in Southeast Asia.

In 2003, changes were also introduced to our fitness subsidy program to promote improved employee health and well-being. Under the old program, the Company subsidized membership fees for Calgary-based employees who were members of one designated fitness facility. Today, all permanent Canadian-based employees, including those in field locations, can now receive subsidized individual membership fees for a recognized fitness facility of their choice. Employees in the United Kingdom, Norway and Malaysia are eligible for local fitness subsidies.

Number of Permanent Employees

As of December 2003, Talisman had 1,758 full-time equivalent permanent employees and over 670 temporary or contract employees worldwide. In 2003, Talisman added 275 permanent positions worldwide. This includes our acquisition in Norway, where we gained 94 permanent positions.

National Workforce Initiatives

In 2003, Talisman (Malaysia) reviewed local workplace terms and conditions. As a result, we developed compensation and benefits programs and workplace practices that are competitive with the local market, while being aligned with corporate philosophies. Some of the key changes implemented for national staff in Malaysia included a “pay-for-performance” system that links individual performance with Company results, a Fitness Club Membership subsidy, revised Annual Leave Entitlement that grants additional days leave based on years of service, and a Service Award Program that recognizes service milestones (aligned with the Talisman Energy Inc. program).

Flexible Work Arrangements

Talisman provides flexible work arrangements to assist employees with achieving a work and life balance while meeting the business needs of the Company. In Canada and the United Kingdom, Talisman currently employs approximately 80 people in either part time or tele-working arrangements. Tele-working uses remote computer access and telecommunications technology to enable employees to work part time from a home-based office environment. Additionally, about 950 employees worldwide have remote access to Talisman systems from their home computers.

To further adapt to employees’ lifestyle arrangements, Talisman has adopted flexible starting and finishing workday schedules.

Employee Training and Development

Talisman’s approach to employee training and development activities focuses on developing employees to be successful in current and future roles.

Approximately 525 employees registered in personal development programs in Canada in 2003, focusing on project management, supervisory fundamentals and interpersonal communications training. Technical training in areas such as engineering and geo-sciences provides employees with new skills and allows them to stay current with changing technology related to their profession.

The Company hosted seven training and development exchange employees from Malaysia and the United Kingdom in various positions at our corporate office. In Malaysia, Talisman currently has eight PetroVietnam employees training within its operations. Further, there were six Talisman (UK) employees participating in short-term assignments in Norway. A further 28 employees began various international expatriate assignments throughout the year.

In 2003, we revised our performance assessment process to reflect industry best practices.

We plan to implement an e-learning module globally throughout 2004, with coaching and feedback training through seminars and workshops.

Privacy Compliance Assessment Project

Talisman supports our employees’ right to access their personal information held by the organization, to challenge its accuracy and usage and to expect that safeguards appropriate to the sensitivity of that information be in place.

In early 2004, new privacy legislation was officially introduced in Canada to balance an individual’s right to privacy of his or her personal information with the need of organizations like Talisman to collect, use or disclose certain personal information for legitimate business purposes. The legislation affects Talisman’s ability to collect and use the personal information of employees, applicants, residents, landowners, contractors and other stakeholders. To ensure compliance within the appropriate time frame, Talisman launched a Privacy Compliance Assessment Project in June 2003.

Through this project, Talisman developed specific corporate policies and ongoing processes and procedures to assist the Company in meeting its obligations to its employees and the public under the legislation. The project has assisted in the identification of limitations or gaps in systems and business practices and identified changes required to ensure compliance. For example, new consent processes were implemented in the collection of landowner, resident and employee information.

Talisman’s Privacy Coordinator and project team have educated management and employees on the new legislation through privacy seminars and material posted on Talisman’s internal website.

Sudan — Redeploying our Expatriate and Rotational Workforce Redeploying Talisman’s Sudan-based expatriate and rotational workforce was a significant challenge. Most employees worked in Sudan on a rotational basis, primarily from Canada, and wished to continue to be able to work in this fashion. Many of those who were on expatriate status in Sudan indicated a desire to remain on an international assignment. As Sudan was the only international location where Talisman maintained a rotational schedule, we were unable to provide an alternate assignment location. For those on expatriate assignment, we looked at the staffing requirements in each country in which we operate, to see if their skills could be matched with the requirements of our other international locations. Twenty-five of 70, or 36%, of Talisman’s Sudan-based employees, contractors or term employees were retained by the Company following the sale of our indirect interest in Sudan. Of the 28 permanent employees assigned to Sudan on a rotational or resident basis, 12 were repatriated to their home country, one retired, one resigned, nine were transferred to other international sites (one each to Qatar, Malaysia, Indonesia, and Vietnam, two to the United States, and three to the UK) and five had their employment terminated. Of the 11 contract employees, all but one had their contracts terminated (a security consultant continued with Talisman on a new contract). Of the 31 ’term’ or non-permanent employees, one remains in Sudan and two were redeployed to Indonesia, while the other 28 were released.

Representatives of our Human Resources and hiring departments attend career fairs at universities across Western Canada each fall including the universities of Alberta, Calgary and Regina. This allows us to inform students about Talisman as an employer of choice, while creating a first point of contact for potential candidates.

In 2003, Talisman hired 125 cooperative education and summer students with geo-science, engineering, commerce and general backgrounds for our Canadian operations.

In the UK, Talisman participates in the UK Offshore Operators Association (UKOOA) Graduate Attractiveness Program. Through the program, Talisman supports the Opportunities Exhibition Trailer, a vehicle used to inform university students about the oil and gas industry. The trailer provides a venue for recent graduates now working in the industry to discuss personal experiences with students considering similar careers. Last year, the trailer visited close to 40 universities.

Talisman (UK) traditionally hires placement students for one-year programs. Many have received permanent employment offers upon completion of their schooling.

In 2003, Talisman (UK) continued its sponsorship of an industry program managed by Cogent, which provides common training for all oil and gas industry technician trainees and consists of two years of academic work at college and two years ’on the job’ experience. In June 2003, Talisman’s trainees began the ’on the job’ component of their training. Students were assigned to platforms depending on need. Five Talisman trainees gained first-hand experience at our Flotta, Piper and Clyde facilities. In early 2004, Talisman took on six more students at Flotta, Clyde, Piper and Tartan.

Voluntary Staff Turnover
Historically, Talisman has had low voluntary turnover rates. This trend continued in 2003, where our global voluntary turnover rate was 4%. In comparison, the industry average for Canada was 12.5% in 2002. To recognize the commitment and loyalty of Talisman staff, we provide a Service Award Program to commemorate three, five, 10, 15, 20 and 25-year service anniversaries.

Jim Cooper Got Hands on and Chest Deep Experience at Talisman When I decided to work for Talisman as an engineering co-op student, I knew there would be exciting opportunities, but never in my wildest dreams could I have imagined helping construct a 1,200-metre pipeline by hand in muskeg with water up to my chest in some places. But that’s exactly what I did while working at Talisman in July 2003. I had heard from friends that Talisman was a great company to work for because of the various work experiences available, opportunities to advance within the Company and great people to learn from. Within a few weeks, I found out for myself how great those experiences would be. While working in Lac La Biche, Alberta, I was involved in a pipeline project that got me “hands on” and “chest deep” experience in construction of a temporary above ground pipeline. It was great because of the challenges involved, including helicopter-only access during the summer construction season for people and construction materials. I also assisted in production tracking and payouts, pipeline corrosion control and mitigation, facility and pipeline application audit files and regulatory applications and wellbore optimizations and recompletions — pretty technical work that increased my interests in engineering because of the many open-ended challenges we encountered. I had a lot of great experiences in Lac La Biche — experiences I am looking forward to building on again in the summer of 2004 while working with Talisman’s Chauvin engineering group. Jim Cooper