Workforce Practices

LA1-LA3, LA9, LA10, LA12, LA16-LA17, MR1-MR5

WHAT IS TALISMAN DOING TO ADDRESS EMPLOYEE RECRUITMENT AND RETENTION?

Attracting and retaining skilled, high performing employees is critical to Talisman's future success and growth. In 2005, Talisman conducted a detailed review of its performance in the areas of recruitment and retention, as well as the external market conditions in the industry. Based on this, a number of changes were implemented to the Company's compensation program along with other workplace improvement initiatives to ensure that Talisman can meet its staffing needs in an extremely competitive employment market.

Employment Competition in the Marketplace

Due to intense competition for technically competent, top performing employees in the energy industry, oil and gas companies like Talisman seek ways to distinguish themselves within the marketplace. Talisman believes it offers a compelling and unique work environment. To that end, Talisman initiated a global Employment Branding initiative in 2005. Research has shown that potential employees are drawn to Talisman's diverse international operations, quality of work, limited bureaucracy and the dynamic pace of the work environment. Talisman's Employment Branding initiative engaged internal and external stakeholders to help the Company define and articulate the Company's unique employment identity. Through the course of the project, Talisman will develop a suite of communication tools aimed at delivering this message to prospective employees beginning in early 2006.

Recruiting and Retaining Staff in the UK

In 2005, Talisman (UK) participated in the Upstream Oil and Gas Modern Apprenticeship program. Talisman (UK) relies on this apprenticeship program as a primary source of new technicians to meet long-term employment needs. Mechanical, electrical or instrument technicians train for positions on offshore platforms, FPSOs (Floating Production Storage and Offtake vessel) or terminal operations. The program consists of up to 18 months of training at a college or training centre followed by approximately two years hands-on experience in an oil and gas facility, either offshore, onshore or both. In 2005, five graduating trainees from this program were employed by Talisman (UK)'s major contractor.

Employee Mobility

In 2005, five finance, drilling and reservoir engineering young professionals from Talisman (UK) participated in expatriate assignments in Canada. Further, one Talisman (Malaysia) national employee began an assignment in Canada in June 2005, while two other national employees completed their assignments in July and November 2005.

In addition, one Malaysian national employee from Petronas Carigali was assigned to Talisman (Malaysia)'s Development and Project Department and 10 Vietnamese national employees from PetroVietnam Investment and Development Company (PIDC) were assigned to Talisman (Malaysia)'s Exploration, Drilling, Planning and Operations Departments. Talisman (Malaysia) also agreed to accept one additional Petronas engineer to its Development Project Department effective in early 2006.

Student Employment

Talisman provides opportunities for co-operative and summer students in a variety of roles throughout the year. During placement periods ranging from eight to 12 months, students are assessed for future employment within the Company. Upon completion of their studies, these students are often hired into new graduate positions. Talisman hired 111 co-operative education and summer students with geo-sciences, engineering and commerce backgrounds for work in Talisman's Canadian operations. Talisman (UK) hired 18 placement and summer students. Additionally, two summer students were hired in Talisman (Norge) operations. Talisman (Malaysia) also accepted two national practical training students placements to support the early development of new national graduates. Globally, Talisman hired 27 new graduates as full-time permanent employees in 2005.

Employment Law for Talisman (UK) Managers

Talisman (UK) designed an employment law course to provide an update on the latest employment law, advice and guidance on how to manage difficult situations and correct management of staff. A pilot session was held with 10 managers in 2005 and further sessions are scheduled in early 2006.

Talisman establishes university scholarships.

$2 million over 10 years to establish scholarships for University of Calgary students. The new Talisman Scholarships will include $10,000 awards for undergraduates – the largest single scholarship amount available for undergraduates at the university. Students in Science, Engineering, Business, Environmental Design, Law and Graduate Studies will be eligible to apply for the annual scholarships. Graduate scholarships will support students whose research focuses on the advancement of environmentally, socially and economically responsible provision of energy. Seven undergraduates and two graduate students received $10,000 scholarships in the fall of 2005. In a similar 10-year, $1 million commitment, Talisman Energy Inc. also established $2,500 scholarships at the University of Alberta to support 40 first- and second-year engineering students annually.

Canada

Talisman enhanced its learning and development offerings to include training in priority setting, delegation, conflict resolution and understanding, and using financial information. Talisman's project management training is now delivered internally providing greater definition of Company project management processes and procedures. In 2006, a course in Business Process Management will be introduced.

"Coaching for Success"

Talisman's "Coaching for Success" seminars and workshops were enhanced by a one day "Coaching Forum" in 2005. A "Coaching Conversations" workshop was also designed and delivered in Canada and the UK-based on participant feedback. This initiative will be expanded in 2006 with additional modules. A new Leadership Foundations Program will be launched in 2006 to further develop the capability and enhance the effectiveness of Talisman's leaders.

Cross-Cultural Awareness Training

Talisman continued to offer its employees cross-cultural awareness training prior to international assignment. In 2005, nine employees attended these sessions facilitated by an external expert.

A Better Place to Work

Starting in mid-2004 and continuing throughout 2005, Talisman's North American Operations (NAO) initiated a program to make NAO ‘a better place to work and a place that works better'. The initiative aims to improve NAO results and to attract and retain high performing staff. To date the process has included focus group sessions and an employee engagement survey designed to gather invaluable feedback to guide NAO improvements in three key areas. These areas include management training and employee leadership, career and workload management and rewards and recognition. There was significant progress in these areas in 2005 which contributed to low turnover rates.

Labour Relations

The Collective Agreement between Talisman and the Communications Energy and Paperworkers Union of Canada for the Monkman, BC, area operations and maintenance staff was renegotiated in 2005. Talisman and the Central Ontario Regional Council of Carpenters, Drywall and Allied Workers United Brotherhood of Carpenters and Joiners of America established their first Collective Bargaining agreement in 2005. These workers perform diving services in Talisman's Ontario operations. Privacy of Personal Information Talisman supports the right to access 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. Talisman has specific corporate policies and ongoing processes and procedures to assist the Company in meeting its obligations to its employees and the public under Canada's privacy legislation, including the appointment of a Privacy Officer. In 2005, Talisman had no formal complaints or access to information requests.

Values Demonstrate Who We Are

In February 2005, Talisman articulated a statement of the Company's Values, describing who we are, how we conduct our Business and how our people perform their work. Talisman's values include: passion for our business, bias for results, teamwork, excellence, respect and honest communication. Talisman's people have incorporated these values into their daily business activities and actions to make the Company more successful and a better place to work. Talisman succeeds by personal accountability and by working together in an efficient and effective manner to deliver outstanding results. Talisman employees respect, understand and appreciate each other's unique skills, and thrive on enthusiasm and empowerment in our work.

I would sincerely like to thank you for your generosity. No other company or organization that I know of has shown this much support to undergraduate students at the University of Calgary. It is a relief to have the costs associated with school covered this year. It will allow me to fully focus on my courses and make decisions about my plans for next year after graduation. Joanna Cooper, Undergraduate Scholarship Recipient