Independent Reviewer's Report
TO THE BOARD OF DIRECTORS AND MANAGEMENT OF TALISMAN ENERGY INC.
We have been asked to review selected quantitative performance indicators presented in Talisman's Corporate Responsibility Report (the Report) for the year ended December 31, 2005. Talisman management is responsible for collection and presentation of the indicators and information within the Report. Our responsibility is to express a conclusion as to whether anything has come to our attention to suggest that the selected performance indicators are not presented fairly in accordance with the relevant criteria.
Scope
The information selected for review in 2005 included quantitative indicators relating to community investments; community relations; health, safety and environment; employee relations; and other areas in the Performance Data Summary noted in bold on pages 39-41. The performance indicators were selected by Talisman primarily on the basis of perceived external stakeholder interest. We did not review the narrative sections of the Report, except where they incorporated the selected quantitative performance indicators. The "Economic Performance Data" contains financial performance information extracted from Talisman's 2005 financial statements, along with selected corporate responsibility expenditures that are within scope of this review. We did not review financial performance information taken from Talisman's financial statements, which are audited by Ernst & Young LLP.
Methodology
Our review was completed in accordance with the International Standard on Assurance Engagements (ISAE) 3000, developed by the International Federation of Accountants. As such, we planned and performed our work in order to provide limited, rather than absolute, assurance with respect to the selected quantitative information that we reviewed. Our review criteria were based on Global Reporting Initiative (GRI) Sustainability Reporting Guidelines (2002 version), relevant regulations, Talisman management definitions, and accepted industry standards. Our procedures included obtaining, examining and evaluating evidence relating to the selected indicators. Our process is further described in the sidebar on this page. We believe our work provides a reasonable basis for our conclusion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the selected quantitative information presented in bold on pages 39-41 of this Report is not presented fairly in accordance with the relevant criteria.
PricewaterhouseCoopers
Calgary, Alberta, Canada
March 13, 2006
Description of Our Review Process
Talisman Energy Inc. asked us to review management's assertions regarding the Company's corporate responsibility performance and to provide a report setting out our conclusions. Our review work was carried out at Talisman's offices in Calgary, Canada and Aberdeen, Scotland. Our review team comprised individuals with backgrounds and experience in environment, health and safety, social, economic and financial assurance. In total, our review required approximately 550 hours of professional time.
During our review, we obtained, examined and evaluated evidence using a variety of procedures, including:
- Interviewing relevant Talisman management and staff;
- Obtaining an understanding of the management systems, processes and controls used to generate, aggregate and report the data at Talisman's regional operations and head office;
- Examining relevant internally and externally generated documents and records, including correspondence with external parties;
- Comparing the Company assertions to publicly available third party information;
- Testing and recalculating performance data on a sample basis; and
- Assessing the information for consistency with our knowledge of Talisman's overall operations.
We focused our review mainly on information relating to the Company's Canadian and UK operations, which together represent approximately 70% of Talisman's worldwide production in 2005. With the exception of the UK operations, we did not visit Talisman's international locations. Information relating to these other operations was collated and reviewed at the Calgary head office.
PricewaterhouseCoopers' Observations
In addition to providing a conclusion on the selected key performance indicators noted in bold, we also asked PwC to provide us with feedback on areas of strength and opportunities for improvement in our corporate responsibility performance monitoring and reporting processes. Illustrative examples of PwC's feedback are presented at right. PwC informed Talisman that the identified opportunities for improvement result in inefficiencies in both the consolidation and review of the performance indicators, but are not believed to have a material effect on the reported performance data.
- AREAS OF STRENGTH
- Advancements have been made in information management systems used for generating, compiling and reporting environmental data within the Canadian and UK operations, in particular the greenhouse gas emissions data.
- Advancements have been made Company-wide in information management systems used for managing and reporting workforce practices data.
- OPPORTUNITIES FOR IMPROVEMENT
- The level of internal data review prior to submission to corporate head office varies across the operating regions. Ensuring thorough checks of data at the regional level would reduce the risk of errors and omissions in data provided to head office.
- Gaps remain in the availability of data across the different regional operations for certain performance indicators. Addressing these gaps would allow the Company to aggregate its global performance and measure improvements year-over-year for these indicators.