Exhibit 3      ANNUAL INFORMATION FORM
FOR THE YEAR ENDED DECEMBER 31, 2002  March 4, 2003  
   TABLE OF CONTENTS  FORWARD-LOOKING STATEMENTS
  1EXCHANGE RATE INFORMATION
  2ABBREVIATIONS
  2CORPORATE STRUCTURE
  3GENERAL DEVELOPMENT
  OF THE BUSINESS
  3DESCRIPTION OF THE
  BUSINESS
  5North America
  5Canda
  5Greater Arch
  5Deep Basin
  5Alberta Foothills
  6Edson Area
  6Monkman
  6Ontario
  6Chauvin
  7Other
  7United States
  7Landholdings, Production and Producing Wells
  8International
  9North Sea
  9Ross/Blake
  9Flotta Catchment Area
  9Clyde
  10Buchan
  10Beatrice
  10Brae
  10Landholdings, Production and Producing
  Wells
  11Southeast Asia
  12Indonesia
  12Malaysia and Vietnam
  13Papua New Guinea
  13Landholdings, Production and
  Producing Wells
  14Sudan
  14Landholdings, Production
  and Producing Wells
  15Algeria
  15Trinidad
  15Colombia
  16Qatar
  16Other
  16Risks and Uncertainties
  16Drilling Activity
  17Location of Wells
  18Land Holdings
  19Reserves Estimates
  20Reconciliation of Reserves
  21Selected
  Historical Financial and Operational Information
  22Future Commitments
  22Competitive Conditions
  22Environmental Protection
  22Employees
  22SELECTED CONSOLIDATED
  FINANCIAL INFORMATION
  23Annual Information
  23Dividends
  23MANAGEMENTS
  DISCUSSION AND ANALYSIS
  24MARKET FOR THE
  SECURITIES OF THE COMPANY
  24DIRECTORS AND OFFICERS
  24Directors
  24Officers
  25Shareholdings
  of Directors and Officers
  26ADDITIONAL INFORMATION
  26  
   FORWARD-LOOKING STATEMENTS  This Annual Information Form contains or incorporates by reference
statements that constitute forward-looking statements within the meaning of
the United States Private Securities Litigation Reform Act of 1995.  How to
recognize forward-looking statements  Forward-looking statements are included throughout this Annual
Information Form including, among other places, under the headings General
Development of the Business and Description of the Business and in the
Managements Discussion and Analysis, incorporated herein by reference.  These statements include, among others,
statements regarding:  outlook
for oil and gas prices; estimates of future sales and production; business
plans for drilling, exploration and production; the
estimated amounts and timing of capital expenditures; anticipated
operating costs; anticipated
future debt levels; royalty
rates and exchange rates; or other
expectations, beliefs, plans, goals, objectives, assumptions and statements
about future events or performance.  Statements concerning oil and gas reserves contained in this Annual
Information Form under the headings Description of the Business  Reserves
Estimates and  Reconciliation of Reserves and elsewhere involve the implied
assessment that the resources described can be profitably produced in the
future, based on certain estimates and assumptions.  Consequently, statements about oil and gas reserves may also be
deemed to be forward-looking statements.  Often, but not always, forward-looking statements use words or phrases
such as:  expects or does not
expect, is expected, anticipates or does not anticipate, plans,
estimates or estimated, projected, forecasts or intends, or state
that certain actions, events or results may, could, would, might or
will be taken, occur or be achieved.  Risks related
to 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 the Company
and described in the forward-looking statements.  These risks include the risks of the oil and gas industry, such
as:  operational
risks in exploring for, developing and producing crude oil and natural gas; risks
and uncertainties involving geology of oil and gas deposits; the
uncertainty of reserve estimates; 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 and foreign currency exchange rates; and health,
safety and environmental risks.  Relevant risks also include, but are not limited to:  uncertainties
as to the availability and cost of financing; risks
in conducting foreign operations (for example, political and fiscal instability
or the possibility of civil unrest or military action in countries such as
Indonesia, Malaysia, Vietnam, Sudan, Algeria or Colombia); the
effect of United States sanctions against Sudan; the
conditions that must be met before the Companys sale of its interest in the
Greater Nile Oil Project in Sudan will close; general
economic conditions; the
effect of acts of, or actions against international terrorism; and the
possibility that government policies may change or governmental approvals may
be delayed or withheld.  Additional information on these and other factors which could affect
the Companys operations or financial results are included in the Managements
Discussion and Analysis and elsewhere in this Annual Information Form.  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.  1 
   EXCHANGE RATE INFORMATION  Except where otherwise indicated, in this Annual
Information Form all dollar amounts are stated in Canadian dollars.The following table sets forth the
Canadian/United States exchange rates in effect at the end of each of the years
indicated.  The high, low and average
exchange rates for each year were identified or calculated from the rates in
effect as of the last day of each month during the relevant year.  The exchange rates shown are Canadian
dollars expressed in United States dollars, based on the noon buying rate in
New York City for cable transfers in Canadian dollars as certified for customs
purposes by the Federal Reserve Bank of New York (the noon buying rate).  Year Ended December 312000
  
  2001
  
  2002Year End
  
  0.6669
  
  0.6279
  
  0.6329High
  
  0.6969
  
  0.6669
  
  0.6583Low
  
  0.6410
  
  0.6279
  
  0.6231Average
  
  0.6727
  
  0.6446
  
  0.6370  ABBREVIATIONS  The abbreviations set forth below have the following meanings:  bbls/d
  
  barrels per dayboe
  
  barrels of oil
  equivalentliquids
  
  natural gas liquidsmboe/d
  
  thousand barrels of oil
  equivalent per daymmbbls/d
  
  million barrels per daymbbls/d
  
  thousand barrels per
  daymmcf/d
  
  million cubic feet per
  daymcf
  
  thousand cubic feet  Natural gas is converted to oil equivalent at the rate of six thousand
cubic feet equals one barrel of oil equivalent.  2 
   CORPORATE STRUCTURE  Talisman Energy Inc. (Talisman or the Company) is amalgamated under
the Canada Business Corporations Act(the
CBCA).  The Companys registered and principal office is located at Suite 3400,
888 Third Street S.W., Calgary, Alberta T2P 5C5.  The following table sets forth the material operating subsidiaries
owned directly or indirectly by Talisman, their jurisdictions of incorporation
and the percentage of voting securities beneficially owned by Talismanas at December 31, 2002.  Name
  
  Jurisdiction of
  Incorporation
  
  Percent Owned(1)Talisman Energy (UK) Limited
  
  England
  
  100
  %Talisman North Sea Limited
  
  England
  
  100
  %Talisman (Corridor) Ltd.
  
  Barbados
  
  100
  %Talisman
  (Greater Nile) B.V.(2)
  
  Netherlands
  
  100
  %Petromet Resources
  Limited
  
  Ontario, Canada
  
  100
  %  
 Notes: (1)With the exception of Talisman Energy (UK)
Limited and Talisman (Corridor) Ltd., none of the above subsidiaries has any
non-voting securities outstanding.  All
of the non-voting securities of Talisman Energy (UK) Limited are directly owned
by Talisman.  All of the non-voting
securities of Talisman (Corridor) Ltd. are indirectly owned by Talisman. (2)On October 30, 2002, Talisman and an indirect
wholly-owned subsidiary entered into a definitive agreement for the sale of
Talismans indirectly held interest in the Greater Nile Oil Project in Sudan to
ONGC Videsh Limited.  The sale was not
completed as at December 31, 2002.  Effective June 1, 2001, Talisman Energy Inc. and Petromet Resources
Limited (Petromet), an indirect subsidiary of Talisman, formed an Alberta
general partnership named Talisman Energy Canada (the Partnership). Talisman
is the managing partner of the Partnership. Talisman and Petromet contributed
to the Partnership substantially all of their oil and gas assets located in
Canada, including their interests in the facilities for processing, treating,
storing and transporting the production from such assets. Since that date,
substantially all of Talismans and Petromets Canadian oil and gas operations
have been carried on through the Partnership.  The above table does not include all of the subsidiaries of Talisman.
The assets and revenues of unnamed operating subsidiaries, in the aggregate,
did not exceed 20% of the total consolidated assets or total consolidated
revenues, respectively, of Talisman as at, and for the year ended, December 31,
2002.  Unless the context indicates otherwise, a reference in this Annual Information
Form to Talisman or the Company includes direct or indirect subsidiaries of
Talisman Energy Inc. and partnership interests held by Talisman Energy Inc. and
its subsidiaries.  GENERAL DEVELOPMENT OF THE BUSINESS  Talisman is an independent, Canadian based, international upstream oil
and gas company whose main business activities include exploration,
development, production and marketing of crude oil, natural gas and natural gas
liquids. The Companys reporting segments are North America, the North Sea,
Southeast Asia and Sudan(1), where there are ongoing production, development
and exploration activities.  The Company
is also active in a number of other international areas, including Algeria,
Trinidad, Colombia and Qatar(2).  In the past three years, Talisman has developed its business and
diversified its interests through a combination of exploration, development,
acquisitions and dispositions.  In late 1999 and early 2000, Talisman subsidiaries completed a number
of transactions involving assets in the central North Sea.  These transactions included asset exchanges,
purchases and dispositions and Talismans acquisition of interests in the
Claymore, Piper, Saltire, Chanter, Iona, Scapa, Tartan, Highlander and
Petronella producing fields, as well as the Flotta terminal, related pipelines
and undeveloped acreage.  With the
inclusion of the MacCulloch producing field, the areas listed above are
collectively known as the Flotta Catchment Area.  The transactions provided Talisman with long-term incremental
production, additional reserves and operatorship of significant infrastructure
in the North Sea.  
 (1)Talisman has entered into a definitive agreement for the sale of its
interests in Sudan.  A full description
of the sale is provided under the headings General Development of the
Business and Description of the Business  Sudan. (2)Qatar interests are contingent upon obtaining an Emir Decree, which
is expected in the first quarter of 2003.  3 
   In September 2000, Talisman purchased two midstream (raw gas gathering)
pipeline systems from TransCanada PipeLines Limited. These systems provide a
strategic connection between relatively under-exploited areas of the Western
Canada Sedimentary Basin (the WCSB) and the Talisman-operated Edson gas
plant. This acquisition also provided the Company with third-party revenues on
this open access system.  In December 2000, the Algerian Ministry of Energy approved an
application for the development of Block 405a MLN field (MLN).  Development of MLN and four additional
fields adjacent to MLN (also in Block 405a) is ongoing with first production
expected in mid-2003.  Also in December 2000, Talisman was awarded the Acevedo Block in
Colombia.  This represented the Companys
first entry in Colombia.  Talisman has
subsequently acquired non-operated interests in four additional blocks, all of
which are in the primary exploration phase.  In May 2001, Talisman, through a direct wholly-owned subsidiary,
acquired the outstanding shares of Petromet. The Petromet assets added an
extensive land base around Talismans growing Edson area, as well as gas
volumes produced at low operating costs and a large number of development
opportunities.  In August 2001, Talisman, through a direct wholly-owned subsidiary,
acquired Lundin Oil AB (Lundin Oil), a Swedish company with international oil
and gas activities. The acquisition of Lundin Oil (which has been renamed
Talisman Energy Sweden AB) provided Talisman with a new core area in Malaysia
and Vietnam, additional interests in the North Sea and interests in Papua New
Guinea.  In 2001, Talisman participated in major oil and gas discoveries
offshore Trinidad.  In 2002, Talisman
expanded its interests both offshore and onshore Trinidad and is planning oil
development on offshore Block 2(c).  In May 2002, a consortium, in which Talisman is a member, was awarded a
three million acre exploration block offshore Vietnam.  The award represents a key step in
Talismans strategy to grow its Vietnam/Malaysia business.  Also in May 2002, Talisman reached a farm-in agreement with Imperial
Oil Resources Ventures Ltd. to acquire a 30% interest in two deep-water
exploration licenses offshore Nova Scotia. 
The acreage contains a number of gas prospects, which the Company
believes will provide a good opportunity for Talisman to add a new layer of
longer-term growth potential.  On October 30, 2002, Talisman and an indirect wholly-owned subsidiary
entered into a definitive agreement for the sale of Talismans indirectly held
interest in the Greater Nile Oil Project in Sudan.  The purchaser, ONGC Videsh Limited, is a subsidiary of Oil and
Natural Gas Corporation Limited, Indias national oil company.  As of the date hereof, the transaction had
not yet been completed.  The completion
of the transaction is subject to certain conditions, primarily relating to
obtaining consents from the Government of Sudan and the other consortium
members and to the waiver of rights of first refusal.  At December 31, 2002, the net carrying value of the Sudan assets
and liabilities was $745 million. 
Additional information regarding the sale of the Sudan operations may be
found in note 17 of the Companys comparative audited consolidated financial
statements for the year ended December 31, 2002 and in Managements
Discussion and Analysis.  In October 2002, Talismans indirect wholly-owned subsidiary acquired
the producing Trenton-Black River natural gas assets and additional undeveloped
lands of Fairman Drilling Company, FDC Venture 15, LP, East Resources, Inc. and
ABARTA Oil & Gas Co., Inc. located in New York State.  In January 2003, Talismans indirect
wholly-owned subsidiary acquired additional natural gas properties, working
interests, production and facilities relating to the Trenton-Black River play
in New York State.  Through these
acquisitions, the subsidiary broadened its exploration and development program
in the area.  In November 2002, Talisman signed a five-year Exploration and
Production Sharing Agreement covering a block offshore Qatar.  This development provides Talisman with an
oil exploration play situated in the midst of existing oil and gas discoveries.  In December 2002, oil production from the Algerian Ourhoud field
commenced with first oil sales achieved in January 2003.  Talisman continually investigates strategic acquisitions, dispositions
and other business opportunities, some of which may be material. In connection
with any such transaction, the Company may incur debt or issue equity
securities.  4 
   DESCRIPTION OF THE BUSINESS  Talisman is one of the largest independent oil and gas producers in
Canada. The Companys main business activities include exploration,
development, production and marketing of crude oil, natural gas and natural gas
liquids. Each of Talismans reporting segments (as described above) has
substantial exploration and development potential, which Talisman expects will
provide future growth. Through its subsidiaries, Talisman conducts exploration
projects in each of the reporting segments and in Algeria, Trinidad, Colombia
and Qatar.  NORTH AMERICA  Talisman plans to spend approximately $975 million on exploration and
development in Canada and the United States (US) in 2003. Of this, over 80%
is directed towards natural gas.  The
Company plans to participate in drilling approximately 590 wells in 2003.  CANADA  Talismans large Canadian domestic operations provide a solid base for
continuing growth worldwide. In Canada, the Companys strategy is to continue
natural gas exploration and development by focusing on deeper portions of the
basin where prospect sizes are larger. The utilization of existing
infrastructure and a high level of operatorship enable Talisman to maintain
control over costs and capital spending. Talismans diverse Canadian portfolio
permits flexibility in responding to changing economic conditions. The
Companys production growth has been achieved through drilling activities as
well as through corporate and property acquisitions.  The Company has focused on divesting its non-strategic assets and
acquiring producing properties complementary to existing core areas.
Exploration and development and capital spending activity have shifted to core
gas properties to take advantage of Talismans expertise in medium to deep
areas of the WCSB. The focus of this activity will continue in the Greater
Arch, Alberta Foothills, Monkman, Deep Basin and Edson areas.  Talismans domestic exploration and development operations are
organized around 14 core producing areas in Alberta, British Columbia, Ontario
and Saskatchewan, which accounted for 86% of the Companys domestic production
in 2002. The balance comprises production from joint venture properties and
Talismans indirect interest in the Syncrude joint venture.  Of the 14 core areas, eight are dominated by
gas production, namely: Greater Arch, Deep Basin, Alberta Foothills, Edson area
(Edson, West Whitecourt and Bigstone/Wild River), Lac La Biche, Northern
Plains, Monkman and Ontario offshore. Six core areas are dominated by oil
production, namely: Chauvin, Carlyle, central Alberta, Ontario onshore,
Shaunavon and Turner Valley. Within individual core areas, Talisman typically
operates approximately 75% of its production with high working interests in a
large number of facilities.  Seven core properties accounted for approximately 70% of the Companys
domestic production in 2002:  Greater
Arch, Deep Basin, Alberta Foothills, Monkman, Edson area, Ontario (onshore and
offshore) and Chauvin.  Greater Arch  The Greater Arch is Talismans largest natural gas producing area and
contains numerous opportunities to add reserves adjacent to existing
infrastructure. The Company has a large inventory of multi-zone prospects and
has operated interests ranging from 50% to 100% in oil and gas
properties and non-operated interests ranging from 8% to 10% in gas properties,
in the area. Talisman holds operated interests ranging from 37% to 100% in gas
plants at Teepee Creek, Belloy, Boundary Lake, George, Josephine, Silver Valley
and Shane, as well as interests in a number of other non-operated gas plants in
the area. The Company plans to spend $104 million in the Greater Arch in 2003
to participate in drilling approximately 72 wells.  Deep Basin  The Deep Basin is one of Talismans new growth areas.  Talisman holds 6% to 8%
non-operated interests in the South Wapiti, Wapiti Deep Cut and Narraway gas
plants.  The Company plans to spend $52
million in the Deep Basin in 2003 to participate in drilling approximately 51
wells.  5 
   Alberta
Foothills  Through exploration and development activity, the Alberta Foothills
continues to be one of Talismans fastest growing areas.  Since 1999, the areas annual compound
production growth rate has been 22%. Continued exploration in the northern
Alberta Foothills has established Talisman as a significant player in the
area.  The Company holds an 80% interest
in the operated Cordel dehydration facility and associated pipelines, as well
as operated interests ranging from 32% to 79% in the Lovett River and
Redcap Phase 1, 3 and 5 pipelines and non-operated interests ranging from
14% to 34% in Basing, Voyager, Stolberg and Brown Creek pipelines.
With commissioning the Chungo pipeline in 2001 and an aggressive drilling
program in 2002, production increased 18% over 2001.  Capital spending by the Company in the Alberta Foothills in 2003
is projected to be $132 million, with plans to participate in drilling 23
wells.  Edson Area  Talismans acquisitions of Petromet and midstream assets from
TransCanada PipeLines Limited have rejuvenated growth in the Edson area
creating expanded development activity. The acquired Bigstone/Wild River
acreage has an inventory of multi-zone prospects that Talisman is currently
exploring and developing.  Talisman
holds operated interests ranging from 55% to 85% in the Edson,
Medicine Lodge, McLeod, Bigstone West and Wild River gas plants as well as
non-operated interests ranging from 10% to 11% in the Kaybob South,
Bigstone Dunvegan and the West Whitecourt gas plants. Capital spending by the
Company in the Edson area in 2003 is projected to be $49 million with plans to
participate in drilling 19 wells. In the Bigstone/Wild River area, the Company
plans to spend $90 million in 2003 with plans to participate in drilling
30 wells. Capital spending by the Company in the West Whitecourt area in 2003
is projected to be $38 million with plans to participate in drilling 30
wells.  The Companys 100% owned Central Foothills Gas Gathering System
(CFGGS), Columbia Minehead Gas Gathering System (CMGGS) and other midstream
pipeline assets ranging from 70% to 100% ownership support the exploration and
development program in both the Foothills and the Edson areas and provide
revenues from transportation and processing fees. Capital spending to expand
and optimize the CFGGS and CMGGS in 2003 is projected to be $35 million. The
Erith pipeline, which is scheduled to be completed in the fourth quarter of
2003, is expected to route gas from the Foothills area to the Edson and
Hanlan-Robb sour gas plants, providing much needed egress from this growing
area.  Monkman  The number of wells drilled, coupled with a high success rate, has made
Talisman an industry leader for 24 years in the Monkman area. Talisman holds
54% to 77%operated interests in
the Bullmoose, Sukunka and West Sukunka dehydration plants, 29% to 32%
non-operated interests in the Murray River and Brazion dehydration plants and a
50% interest in the Mink Highhat pipelines. The successful commissioning of the
Westcoast Acid Gas Reinjection Project and the expansion of the Bullmoose Plant
is expected to facilitate greater throughput from existing, previously shut-in
and future planned wells.  Compared to
2001, production was lower in 2002 due to fewer drilling opportunities in the
mature Triassic play.  In 2002, the
Company drilled and brought on production its first successful gas well on the
Deep Monkman Permian play.  The
Companys overall production is expected to remain flat until 2005 when
increased gas production from the new Permian play is expected to increase
total production in the Monkman area. 
Capital spending by the Company in this area in 2003 is projected to be
$39 million, with plans to participate in drilling six wells.  Ontario  Talisman is the largest oil and gas producer in Ontario with natural
gas production in the offshore area of Lake Erie and oil production onshore.
Talisman has a 100% interest in the Renwick, North Wheatley (East), Rochester
and Hillman central facilities. In addition, Talisman has interests ranging
from 65% to 100% in the Morpeth, Port Stanley, Port Alma, Port Maitland,
Rochester and Nanticoke gas plants. Compression was added in 2002 at the
offshore Central Lake Erie sour gas compressor station.  Talismans drilling program will continue in
2003 with plans to participate in drilling 19 onshore gas and oil wells and 20offshore gas wells. Capital spending by
the Company in Ontario in 2003 is expected to be $21 million.  6 
   Chauvin  Chauvin is Talismans largest domestic oil producing core property.
High working interests characterize this area. With the acquisition of
producing properties in the area and continued successful development activity,
Talisman has achieved an annual production growth rate of 17% since 1999.  Talisman holds a 100% interest in the
Chauvin pipeline, which transports approximately 39,000 bbls/d of condensate
blended crude, and a 100% interest in the Chauvin Custom Treating Facility. The
Companys expected 2003 capital program for Chauvin of $65 million
includes participation in approximately 114 wells.  Other  Talisman is involved in a number of other projects in Canada.  In Turner Valley, Alberta, the Company
commenced a nitrogen injection pilot project. 
This enhanced oil recovery project is the first of its kind in
Canada.  The Company has completed one
year of a three-year evaluation period to determine whether to expand the
project to full-scale development. 
Talismans interest in the four oil units that comprise the project pool
averages 60%.  The Companys expected
2003 capital program for Turner Valley is $36 million.  In Carlyle, Warburg and south central Alberta, Talisman continues its
moderate capital spending on oil development. 
Additionally, Talisman holds a 1.25% indirect interest in the Syncrude
oil sands project in northern Alberta.  The Company is also exploring the potential for producing coal bed
methane on lands in Alberta and British Columbia. Appraisal drilling
and prospect evaluation commenced in 2002. 
In 2003, Talisman plans to participate in drilling 20 gross wells in six
focus areas.  Capital expenditures by
the Company in this area in 2003 are expected to be approximately $18 million.  In 2002, Talisman entered into a farm-in agreement on two exploration
blocks in the deep-water Scotia Slope, southeast of Sable Island, Nova
Scotia.  The agreement allows the
Company to earn a 30% working interest in an exploration well to be spud in
mid-year 2003.  Seismic work during 2002
and early 2003 has identified a number of potential gas prospects on the
farm-in blocks.  Capital spending by the
Company in 2003 in this area is expected to be approximately $38 million.  UNITED
STATES  In the fourth quarter 2002 and during January 2003, Talismans indirect
wholly-owned subsidiary, Fortuna Energy Inc., initiated and expanded its New
York interests through a number of property acquisitions.  These acquisitions established Appalachia as
Fortuna Energy Inc.s first core gas area in the US.  The acquired assets are in the under-explored deep Trenton-Black
River gas play fairway.  Fortuna Energy
Inc. has identified over 50 prospects on the lands and plans to participate in
drilling 10 wells in 2003. Capital spending by the Company in this area in 2003
is expected to be approximately $70 million.  Fortuna (U.S.) Inc., another indirect wholly-owned subsidiary of
Talisman, is focusing its exploration activities in the Wasatch Plateau in
Utah.  The Company plans to spend $15
millionin this area in 2003, with
plans to participate in drilling two wells.  7 
   LANDHOLDINGS, PRODUCTION
AND PRODUCING WELLS  The following tables set forth Talismans North American landholdings
as at December 31, 2002, as well as production for 2001 and 2002 and producing
wells as at December 31, 2002.  Property
  
  Acreage (thousands acres)Gross(1)
  
  Net(2)North
  AmericaCanadaGreater Arch
  
  1,638.7
  
  1,305.9Deep Basin
  
  320.8
  
  168.7Alberta Foothills
  
  323.1
  
  167.7Edson Area
  
  1,674.6
  
  1,089.0Monkman
  
  500.7
  
  318.6Ontario
  
  1,221.0
  
  826.9Chauvin
  
  186.6
  
  130.5Other
  
  7,319.0
  
  1,926.6United
  States
  
  996.7
  
  815.6Total
  
  14,181.2
  
  6,749.5  
 Notes: (1)Gross acres refers to the total number of
acres, including developed and undeveloped acreage, in which Talisman has an
interest.  These figures include lands
in respect of which the Company has royalty interests and net carried
interests. (2)Net acres refers to the number of acres,
including developed and undeveloped acreage, obtained by multiplying the gross
acres in each property by Talismans percentage working interest.  These figures do not include lands in
respect of which the Company has royalty interests and net carried interests.  Property
  
  Oil & Liquids Production
  (bbls/d)
  
  Natural Gas Production
  (mmcf/d)
  
  Producing Wells as at
  December 31, 20022002
  
  2001
  
  2002
  
  2001
  
  Gross(1)
  
  Net(2)North
  AmericaGreater Arch
  
  8,842
  
  10,347
  
  166.9
  
  204.2
  
  1,265
  
  711.3Deep Basin
  
  1,564
  
  1,181
  
  38.2
  
  19.8
  
  332
  
  42.0Alberta Foothills
  
  167
  
  139
  
  121.1
  
  102.4
  
  129
  
  59.2Edson Area
  
  4,189
  
  3,449
  
  199.7
  
  162.7
  
  739
  
  543.1Monkman
  
  
  
  11
  
  82.7
  
  90.0
  
  53
  
  30.6Ontario
  
  2,664
  
  3,056
  
  20.2
  
  18.9
  
  829
  
  585.1Chauvin
  
  14,265
  
  12,578
  
  18.3
  
  16.7
  
  1,193
  
  1,091.0Other(3)
  
  30,985
  
  35,295
  
  172.9
  
  194.3
  
  5,475
  
  2,030.0Total
  
  62,676
  
  66,056
  
  820.0
  
  809.0
  
  10,015
  
  5,092.3  
 Notes: (1)Gross wells mean
the total number of wells in which the Company has a working interest. (2)Net wells mean
the aggregate of the percentage working interest of each of the gross wells. (3)Other includes
US.  8 
   INTERNATIONAL  Talismans international strategy concentrates on opportunities in
sedimentary basins that have a proven hydrocarbon system and significant
reserves and production potential. 
Talisman has developed its international business through ongoing
exploration, development drilling and corporate and property acquisitions in
all reporting segments.  Talisman produces substantial oil and gas volumes from the North Sea,
with ongoing exploration and development activities in the area.  Talisman is also active in Southeast Asia,
where continued operations in Indonesia and in the new core producing area in
Malaysia and Vietnam are expected to produce significant oil and gas volumes.  Production in Sudan continued throughout
2002, although, on October 30, 2002, the Company signed a definitive agreement
to sell its Sudan interests. As of the date hereof, the transaction had not yet
been completed.  Talisman also has
acquired exploration interests in other areas including Trinidad, Colombia and
Qatar. Production from the Algerian Ourhoud field commenced at year end with
first sales in January 2003. 
Development activity is ongoing in Algeria and Trinidad.  NORTH SEA  Talismans North Sea strategy is to develop commercial hubs around core
operated properties and infrastructure. The North Sea is a relatively mature
producing area, but the Company is creating value through strategic property
acquisitions and extending the life of assets through development
opportunities, exploration of nearby prospects, secondary recovery, cost
reduction and third-party tariff revenues. A portfolio of quality, non-operated
assets complements this strategy. Talisman is ranked sixth in UK North Sea
liquids production and second in the central North Sea in oil field operations
as measured by the number of operated producing oil fields.  Talismans North Sea assets, which are held principally by Talisman
Energy (UK) Limited and Talisman North Sea Limited, include producing fields
and exploration acreage in several areas of the central and southern North Sea.
Talismans core North Sea operations are Ross/Blake, Flotta Catchment Area,
Clyde, Buchan, Beatrice and Brae. During 2002, these areas in the central North
Sea produced approximately 93% of the Companys North Sea oil and natural gas
liquids production and 88% of its natural gas production. At the end of 2002,
Talisman operated over 60% of its North Sea production.  In 2003, Talismans capital program in the North Sea is expected to be
approximately $532 million, with $127 million directed to exploration
spending and $405 million directed to development. The Companys 2003
North Sea drilling program includes participation in approximately eight
exploration and 27 development wells.  Ross/Blake  In the Ross/Blake area, Talisman has a 56% (Ross) and a 53% (Blake)
interest in the sub-sea tiebacks to Bleo Holm, the leased Floating, Production,
Storage and Offloading vessel (FPSO). 
In 2002, development approval was received for the Blake Flank project.
Production is expected to start in the third quarter of 2003. In 2003, Talisman
plans to spend $95 million and participate in one exploration well and
four development wells in the Ross/Blake area.  Flotta
Catchment Area  Talisman holds interests ranging from 20% to 100% in a number of
production facilities and pipelines in the Flotta Catchment Area, which include
a 60% interest in the Flotta terminal. In April 2002, the Company cancelled
plans to develop the Kildrummy field based on the results of an appraisal well,
which indicated the reserves were insufficient for field development. Capital
spending by the Company in the Flotta Catchment Area is expected to be $193million in 2003.  The Company plans to participate in drilling
two exploration and eight development wells in the area in 2003.  9 
   Clyde  The Company owns various operated interests in the Clyde area,
including a 95% interest in the Clyde production platform, an 88% interest in
the Orion pipeline tieback, a 60% interest in Halley area and a 13% interest in
the Fulmar production platform. Clyde area production has been maintained due
to the completion of the Orion tieback to Clyde in September 1999, continued
in-fill and exploration drilling in the Clyde field and the development of the
Halley field, a satellite field adjacent to the Fulmar field.  First production was achieved from the
Halley Field in July 2002.  Capital
spending by the Company in the Clyde area in 2003 is expected to be
$91 million, with plans to participate in drilling three exploration and
three development wells.  Buchan  The Company has an average 86% operated working interest in the field,
the Buchan floating production platform and the tie-in to the Forties
pipeline.  In March 2002, Talisman
produced the first oil from the Hannay field where it operates with an 86%
interest. The well is tied back to Buchan, where the oil is processed using
existing facilities and exported via the Forties pipeline system.  In October 2002, Talisman drilled the J-1
exploration well, which resulted in a significant new oil discovery adjacent to
the Buchan Field. Talisman holds an 87% interest in the northern area of the
block containing the discovery.  Capital
spending by the Company in 2003 at Buchan is expected to be $80 million,
with plans to participate in drilling two exploration wells and one development
well.  Beatrice  Talisman holds a 100% interest in the Beatrice Alpha, Bravo and Charlie
production platforms, as well as the Beatrice/Nigg pipeline and the Nigg
terminal.  In 2001, Talisman replaced
the majority of the offshore pipeline from Beatrice to the Nigg terminal and
completed a successful infill-drilling program.  Talisman plans a capital spending program of $2 million in
Beatrice in 2003 directed to facilities enhancement.  Brae  Talisman holds non-operated interests averaging 18% in the Brae field
area, including a number of producing fields, associated production facilities,
the Brae Forties liquids pipeline and the Brae-St. Fergus gas pipeline and
terminal. The Brae complex is a low cost, long life asset. Capital spending by
the Company in 2003 at Brae is expected to be $20 million, with plans to
participate in drilling three development wells.  10 
   LANDHOLDINGS, PRODUCTION ANDPRODUCINGWELLS  The following tables set forth Talismans North Sea landholdings as at
December 31, 2002, production for 2001 and 2002 and producing wells as at
December 31, 2002.  Property
  
  Acreage (thousands acres)Gross(1)
  
  Net(2)Ross/Blake
  
  204.1
  
  144.4Flotta Catchment Area
  
  421.5
  
  262.8Clyde
  
  357.8
  
  167.8Buchan
  
  228.5
  
  98.8Beatrice
  
  109.9
  
  89.4Brae
  
  122.1
  
  21.4Other
  
  541.4
  
  70.0Total
  
  1,985.3
  
  854.6  
 Notes: (1)Gross acres refers to the total number of
acres, including developed and undeveloped acreage, in which Talisman has an
interest. (2)Net acres refers to the number of acres,
including developed and undeveloped acreage, obtained by multiplying the gross
acres in each property by Talismans percentage working interest.  Property
  
  Oil & Liquids Production(bbls/d)
  
  Natural Gas Production
  (mmcf/d)
  
  Producing Wells as at
  December 31, 20022002
  
  2001
  
  2002
  
  2001
  
  Gross(1)
  
  Net(2)Ross/Blake
  
  27,017
  
  16,029
  
  7.7
  
  3.0
  
  13
  
  7.1Flotta Catchment Area
  
  52,246
  
  50,774
  
  1.4
  
  0.9
  
  103
  
  59.8Clyde
  
  14,688
  
  15,112
  
  4.5
  
  7.1
  
  21
  
  19.9Buchan
  
  8,062
  
  5,990
  
  0.7
  
  1.0
  
  10
  
  8.6Beatrice
  
  7,406
  
  2,160
  
  
  
  
  
  28
  
  28.0Brae
  
  8,801
  
  9,221
  
  93.2
  
  79.3
  
  73
  
  10.0Other
  
  9,266
  
  11,542
  
  14.7
  
  16.8
  
  122
  
  8.7Total
  
  127,486
  
  110,828
  
  122.2
  
  108.1
  
  370
  
  142.1  
 Notes: (1)Gross wells mean
the total number of wells in which the Company has a working interest. (2)Net wells mean
the aggregate of the percentage working interest of each of the gross wells.  11 
   SOUTHEAST
ASIA  The Companys interests in Southeast Asia include operations in
Indonesia, Malaysia and Vietnam, as well as exploration acreage in Papua New
Guinea.  Indonesia  Talismans strategy in Indonesia has focused on exploitation of
existing oil properties and continued development of the major natural gas
discoveries at Corridor, which started production in October 1998. The
Companys natural gas production from Corridor has partially offset the natural
decline in Talismans oil and natural gas liquids production in Indonesia over
the same period.  Talisman has interests in the Ogan Komering and Jambi contract areas
located in Sumatra and in the Tanjung Raya contract area in Kalimantan. The
Ogan Komering and Tanjung Raya blocks are operated through a joint venture with
Perusahaan Pertambangan Minyak Dan Gas Bumi Negara (Pertamina), Indonesias
national oil company. Talisman plans to spend approximately $70 million in
Indonesia in 2003, primarily on drilling and an expansion of Corridor gas
facilities.  The Company plans to
participate in drilling five exploration and 13 development wells in 2003.  Corridor  Talisman (Corridor) Ltd. (TCL), an indirect wholly-owned subsidiary
of Talisman, has a 36% non-operated interest in the Corridor Production Sharing
Contract (PSC) and field production facilities.  Talisman (Sumatra) Ltd., a direct wholly-owned subsidiary of
Talisman, has a 40% non-operated interest in the Corridor Technical Assistance
Contract (TAC) and field production facilities, as agent for Talisman.  In the Corridor PSC, the focus of TCLs strategy is to complement the
existing Duri steam flood natural gas sales arrangements with PT Caltex Pacific
Indonesia (Caltex) with the near-term development of large reserves in the
Suban and Sumpal fields and the building of associated infrastructure to supply
natural gas markets in Southeast Asia. 
TCL is planning to commence deliveries of natural gas under an
arrangement with Singapore Power in early 2004 upon the completion of the
Grissik-Singapore pipeline.  Further
supply opportunities are being actively pursued with sales to a number of
potential Indonesian domestic and export markets.  The anticipated growth in long-term natural gas sales will be
achieved through continued development of the Suban field together with the
expansion of natural gas handling capacity at Grissik.  At Suban, processing capacity is being
increased from its current 300 mmcf/d capacity (Suban Phase 1) to an
anticipated 700 mmcf/d after completion of the Suban Phase 2 project by
2006.  The Suban Phase 2 Plan of
Development was recently submitted to the Indonesian government and by the end
of 2002, preliminary design and pre-project works were underway.  The Companys strategy in the region has
recently been strengthened by the acquisition of a 15% interest in Transasia
Pipeline Company Pvt. Ltd., which owns a 40% interest in PT Transportasi Gas
Indonesia, an Indonesian pipeline company that owns and operates the Duri
pipeline in Indonesia and is currently building a pipeline from Indonesia to
service gas markets in Batam and Singapore.  In 2003, Talisman expects capital spending in the area to be
approximately $49 million.  The
Company plans to participate in drilling two exploration and seven development
wells and to continue development of the Suban gas facilities.  Ogan Komering  Talisman has a 50% operated interest in the Ogan Komering Block.
Natural declines at Ogan Komering have been partially offset by continued
development drilling. Natural gas sales from this block commenced in early
2002.  Capital spending by the Company
at Ogan Komering in 2003 is expected to be $7 million, with plans to
participate in drilling two exploration and six development wells.  Tanjung Raya  At Tanjung Raya in Kalimantan, Talisman has a 100% operated working
interest, which terminates in 2004 unless renewed.  Natural declines at Tanjung Raya have been offset by positive
results from fracture stimulations and infill drilling.  Capital spending by the Company in 2003 will
focus on extending the successful well fracturing program and is expected to
total approximately $3 million.  12 
   Malaysia
and Vietnam  In Malaysia and Vietnam, the Companys strategy is to develop oil and
natural gas fields in areas adjacent to its operated blocks and extend its
position in the Southeast Asian gas market. 
The Company operates all of its working interest properties in Malaysia
and Vietnam except Block 46/02.  Block PM-3 CAA and 46-Cai Nuoc  Talismans interest in the PM-3 Commercial Arrangement Area (PM-3
CAA) and associated production facilities in Malaysia and Vietnam is held by
two indirect wholly-owned subsidiaries, Talisman Malaysia Limited (26.4%) and
Talisman Malaysia (PM3) Limited (15%). 
In October 2001, Talisman Vietnam Limited, another indirect wholly-owned
subsidiary, acquired a 33.15% operated interest in the adjacent Block 46-Cai
Nuoc area in Vietnam.  Part of that area
and part of the PM-3 CAA were unitized in 1998 to become the East Bunga Kekwa 
Cai Nuoc unit.  In Malaysia and Vietnam, the Company is continuing with the PM-3 CAA
development project.  Engineering,
fabrication and installation of new platforms and facilities in the Kekwa-Raya
area are underway.  By the end of 2002,
approximately 50% of the project was complete. 
The project is scheduled to be fully commissioned by the fourth quarter
of 2003.  Natural gas is to be sold
under a long-term contract to Petroliam Nasional Berhad and Vietnam Oil and Gas
Corporation at a gross rate of approximately 270 mmcf/d.  Production from this major development
undertaking is expected to supplement the existing output with first oil
planned for September 2003 and natural gas deliveries planned to commence in
October 2003.  Average monthly net
production for PM-3 CAA is anticipated to increase from its current rate of
approximately 5,000 boe/d to 6,000 boe/d to over 40,000 boe/d in
2004.  Capital spending by the Company in this area in 2003 is expected to
total approximately $273 million with plans to participate in drilling six
exploration wells and 21 development wells.  Block PM-305  Talisman Malaysia Limited holds a 60% working interest in Block PM-305
PSC in Malaysia, approximately 250 kilometres southeast of Block PM-3
CAA.  The block is adjacent and
contiguous to several large oil and gas fields and contains a number of undrilled
prospects.  Capital spending by the Company
in this area in 2003 is expected to total approximately $16 million with
plans to participate in drilling two to three exploration wells.  Block 46/02  In December 2002, Talisman (Vietnam 46/02) Ltd. signed a Petroleum
Contract for a 30% interest in Block 46/02 in Vietnam.  Talisman (Vietnam 46/02) Ltd. holds a 30%
interest in the operator, Truong Son Joint Operating Company, with the
remainder held by Petronas Carigali Overseas SDN BHP (30%) and PetroVietnam Exploration
and Production Company (40%).  It is
anticipated that exploration and development opportunities on Block 46/02 will
provide additional production growth for Talismans adjoining producing Block
PM-3 CAA.  Capital spending by the
Company in Vietnam in 2003 is expected to total approximately
$7 million.  The Company plans to
participate in drilling one exploration well in late 2003.  Papua New
Guinea  The Company acquired an operated interest in offshore Papua New Guinea
Block PPL-200 (35%) and Block PRL-1 (48%) through the Lundin corporate
acquisition in 2001.  Block PRL-1
contains an existing natural gas discovery and Block PPL-200 has an identified
prospect, in which the Company and its partners must commit to drill a well in
2003 or relinquish the block.  Further
exploration and appraisal work on both blocks will be contingent on the
advancement of possible pipeline projects. 
If realized, the advancement could lead to commercial development of
Papua New Guineas natural gas fields.  13 
   LANDHOLDINGS, PRODUCTION ANDPRODUCINGWELLS  The following tables set forth Talismans Southeast Asia landholdings
as at December 31, 2002, production for 2001 and 2002 and producing wells as at
December 31, 2002.  Property
  
  Acreage (thousands acres)Gross(1)
  
  Net(2)IndonesiaCorridor (PSC and TAC)
  
  766.7
  
  280.8Ogan Komering
  
  289.3
  
  144.7Tanjung Raya
  
  24.9
  
  24.9Jambi
  
  10.1
  
  4.0Madura
  
  786.9
  
  196.7Malaysia
  and VietnamPM-3 CAA and 46-Cai Nuoc
  
  333.8
  
  138.3PM-305
  
  543.6
  
  326.246/02
  
  3,043.9
  
  913.8Papua New
  Guinea
  
  1,686.0
  
  614.8Total
  
  7,485.2
  
  2,644.2  
 Notes: (1)Gross acres refers to the total number of
acres, including developed and undeveloped acreage, in which Talisman has an
interest. (2)Net acres refers to the number of acres,
including developed and undeveloped acreage, obtained by multiplying the gross
acres in each property by Talismans percentage working interest.  Property
  
  Oil & Liquids Production(bbls/d)
  
  Natural Gas Production(mmcf/d)
  
  Producing Wells as at
  December 31, 20022002
  
  2001
  
  2002
  
  2001
  
  Gross(1)
  
  Net(2)IndonesiaCorridor (PSC and TAC)
  
  6,360
  
  7,425
  
  89.4
  
  93.3
  
  237
  
  91.8Ogan Komering
  
  2,721
  
  3,340
  
  5.0
  
  
  
  49
  
  20.4Tanjung Raya
  
  6,617
  
  6,414
  
  
  
  
  
  75
  
  75.0Jambi
  
  1,154
  
  1,420
  
  
  
  
  
  185
  
  74.0Malaysia
  and VietnamPM-3 CAA and46-Cai Nuoc
  
  5,617
  
  2,273
  
  
  
  
  
  13
  
  5.3Total
  
  22,469
  
  20,872
  
  94.4
  
  93.3
  
  559
  
  266.5  
 Notes: (1)Gross well means the total number
of wells in which the Company has a working interest. (2)Net wells mean
the aggregate of the percentage working interest of each of the gross wells.  SUDAN  Talisman (Greater Nile) B.V. holds a 25% interest in the Greater Nile
Oil Project, consisting of three exploration blocks (Blocks 1a, 2a and 4) and
one development block (Block 1b/2b) in the Muglad basin, a 1,500 kilometre
pipeline from the producing fields to Port Sudan on the Red Sea and a marine
terminal located at Port Sudan. In addition, Talisman (Greater Nile) B.V. owns
25% of the shares in the joint operating company, Greater Nile Petroleum
Operating Company Limited. An Exploration and Production Sharing Agreement with
the Government of Sudan governs upstream exploration, development and
production rights and obligations. 
Talisman (Greater Nile) B.V. holds its interest in the pipeline and
marine terminal pursuant to a Crude Oil Pipeline Agreement (COPA) with the
Government of Sudan, which terminates on the later of September 1, 2014 or the
date on which the owners under the COPA have achieved a 16.2% real internal
rate of return.  The upstream contract area consists of approximately 12.1 million
acres. Ten discovered oil fields (Unity, Heglig, El-Nar, El-Harr, El-Toor, Toma
South, Bamboo, Khairat, Garaad and Munga) are now on production. Recently
discovered fields in Block 4 at Diffra, Diffra West and Hamam are under
development.  Exploration is ongoing to
identify additional fields.  A program
of facilities debottlenecking and optimization increased pipeline capacity to
approximately 300 mbbls/d by year end 2002 and a program is ongoing to
increase processing capacity.  The oil
transportation agreement for Blocks 1a, 2a and 4 was executed in 2002 and
negotiations with potential third-party shippers are expected to commence in
2003.  14 
   On October 30, 2002, Talisman and an indirect wholly-owned subsidiary
entered into a definitive agreement for the sale of Talismans indirectly held
interest in the Greater Nile Oil Project in Sudan.  The purchaser, ONGC Videsh Limited, is a subsidiary of Oil and
Natural Gas Corporation Limited, Indias national oil company.  As of the date hereof, the transaction had
not yet been completed.  The completion
of the transaction is subject to certain conditions, primarily relating to
obtaining consents from the Government of Sudan and the other consortium
members and to the waiver of rights of first refusal.  At December 31, 2002, the net carrying value of the Sudan assets
and liabilities was $745 million. 
Additional information regarding the sale of the Sudan operations may be
found in note 17 of the Companys comparative audited consolidated financial
statements for the year ended December 31, 2002 and in Managements
Discussion and Analysis.  LANDHOLDINGS,PRODUCTION ANDPRODUCINGWELLS  The following tables set forth Talisman (Greater Nile) B.V.s Sudanese
landholdings as at December 31, 2002, production for 2001 and 2002 and
producing wells as at December 31, 2002.  Property
  
  Acreage (thousands acres)Gross(1)
  
  Net(2)Sudan
  
  12,086.4
  
  3,021.6  
 Notes: (1)Gross acres refers to the total number of
acres, including developed and undeveloped acreage, in which Talisman has an
interest. (2)Net acres refers to the number of acres,
including developed and undeveloped acreage, obtained by multiplying the gross
acres in each property by Talismans percentage working interest.  Property
  
  Oil & Liquids Production
  (bbls/d)
  
  
  Producing Wells as at 
  December 31, 20022002
  
  2001
  
  
  Gross(1)
  
  Net(2)Sudan
  
  60,109
  
  53,257
  
  
  144
  
  36.0  
 Notes: (1)Gross wells mean the total number of wells in which the Company has a
working interest. (2)Net wells mean the aggregate of the percentage working interest of
each of the gross wells.  ALGERIA  Talisman (Algeria) B.V., an indirect wholly-owned subsidiary of
Talisman, holds a 35% working interest in Blocks 405a and 215 under a
Production Sharing Contract with Algerias National Company SONATRACH
(Sonatrach). Talismans interest is subject to the right of Sonatrach to back
into the development of fields within the blocks, which, if exercised, would
reduce Talismans working interest to 26.25% on the exercised portions.  Talisman expects to relinquish its interest
in Block 215 in 2003.  Production at Ourhoud commenced at year end with first oil sales in
2003.  Talisman holds approximately a 2%
interest in Ourhoud.  A number of successful exploration and appraisal wells have been
drilled on Block 405a during the exploration phase.  The Algerian Ministry of Energy approved the application for the
development of MLN in December 2000.  In
late 2001, Talisman and its partner submitted development applications for four
additional fields adjacent to MLN. 
Development of those four fields is ongoing with first production
expected in mid-2003.  In 2003, Talisman plans capital spending of approximately
$60 million in Algeria, which includes funding for the participation in
drilling 10 wells at Ourhoud and three development wells in the MLN area.  TRINIDAD  The Company has a non-operated interest in two exploration blocks in
offshore shallow water to the northeast of Trinidad.  Talisman holds a 25% interest in Block 2(c) and was awarded a 30%
interest in the Production Sharing Contract on Block 3(a), which is adjacent
and contiguous to its discoveries at Angostura in Block 2(c).  The Company relinquished its 50% interest in
offshore Block 2(ab) in 2002 following disappointing exploration results
over the past three years.  In January 2002, Block 2(c) was declared commercial, and in December
2002, the Trinidad Ministry of Energy accepted a Plan of Development for the
Greater Angostura oil and gas project. 
First production from the development project is expected in early 2005.  15 
   In 2002,
Talisman also acquired the right to earn an operated 65% interest in the
onshore Eastern Block.  Seismic
operations on the block commenced in 2002 and are planned to include the
shooting of a large 2D and 3D seismic program. 
The drilling of exploration wells is anticipated to commence in 2004.  Trinidad
capital spending by the Company in 2003 is estimated to be $149 million to
fund facility construction and the participation in four development wells in
the Angostura project, five exploration wells on Blocks 2(c) and 3(a) and
seismic activity on the Eastern Block.  COLOMBIA  Talismans
operations in Colombia are focused on large exploration prospects in a known
hydrocarbon basin utilizing the Companys expertise in structural geology and
geophysics.  All of Talismans Colombian
interests are held by its direct wholly-owned subsidiary, Talisman
(Colombia) Oil & Gas Ltd.  Talisman was
awarded a 100% operated interest in the Acevedo Block in the Upper Magdalena
Valley in December 2000. In 2001, the Company commenced seismic operations on
the block under the terms of the initial exploration phase.  In 2002, Talisman exchanged a 30% interest
and operatorship in the Acevedo Block for a 30% interest in the Sociedad
Internacional Petrolera S.A. (Sipetrol) operated Altamizal Block and also
acquired a 30% interest in the adjacent Sipetrol-operated Huila Norte
Block.  It is anticipated that Talisman
will participate in exploration drilling on all three blocks in 2003 and early
2004.  In 2001, the
Company also acquired a 30% non-operated interest in the Hocol S.A.-operated
Tangara and Mundo Nuevo Blocks, situated in the Llanos Foothills area of north
central Colombia.  The blocks are
adjacent to the Cusiana/Cupiagua oil field. 
Geophysical operations on the blocks commenced in 2001 and are currently
ongoing with plans for Talisman to participate in drilling one exploration well
in late 2003 or early 2004.  Capital spending
by the Company in Colombia in 2003 is expected to total approximately $33
million including funds for a seismic program and participation in drilling two
wells with the possibility of participation in an additional two wells in the
latter part of 2003.  QATAR  Talisman
Energy (Qatar) Inc., a direct wholly-owned subsidiary of Talisman, signed an
Exploration and Production Sharing Agreement for offshore Block 10 in Qatar in
November 2002.  Talisman Energy (Qatar)
Inc. holds a 100% interest in the agreement. 
Geophysical work is expected to begin in 2003 after the signed agreement
is ratified by official decree of the Emir of Qatar.  OTHER  Talismans
strategy is to expand activity in core producing areas and to add new ventures
where appropriate.  The Company has an
active international exploration group based in Calgary, which continuously
investigates new ventures outside core producing areas.  Exploration and corporate development groups
based within core areas investigate incremental opportunities within, and
proximate to, core production.  RISKS AND
UNCERTAINTIES  Information
with respect to the risks and uncertainties affecting Talismans business is
described in Managements Discussion and Analysis under the heading Risks
and Uncertainties and is incorporated herein by reference.  16 
   DRILLING ACTIVITY  The following
tables sets forth the number of wells(1) Talisman has drilled or has
participated in drilling and the net(2) interest of the Company in such wells
as at December 31, 2002 and December 31, 2001.  Year Ended
  December 31, 2002Exploration
  
  Development
  
  TotalOil
  
  Gas
  
  Dry
  
  Total
  
  Oil
  
  Gas
  
  Dry
  
  Total
  
  Oil
  
  Gas
  
  Dry
  
  TotalNorth AmericaCanada
  
  Gross
  
  17.0
  
  95.0
  
  35.0
  
  147.0
  
  129.0
  
  127.0
  
  15.0
  
  271.0
  
  146.0
  
  222.0
  
  50.0
  
  418.0Net
  
  14.8
  
  66.4
  
  26.4
  
  107.6
  
  88.9
  
  70.9
  
  10.9
  
  170.7
  
  103.7
  
  137.3
  
  37.3
  
  278.3United States
  
  Gross
  
  
  
  1.0
  
  5.0
  
  6.0
  
  
  
  
  
  
  
  
  
  
  
  1.0
  
  5.0
  
  6.0Net
  
  
  
  1.0
  
  3.4
  
  4.4
  
  
  
  
  
  
  
  
  
  
  
  1.0
  
  3.4
  
  4.4North Sea(3)
  
  Gross
  
  1.0
  
  
  
  3.0
  
  4.0
  
  15.0
  
  2.0
  
  3.0
  
  20.0
  
  16.0
  
  2.0
  
  6.0
  
  24.0Net
  
  0.9
  
  
  
  1.6
  
  2.5
  
  5.4
  
  0.1
  
  2.2
  
  7.7
  
  6.3
  
  0.1
  
  3.8
  
  10.2Southeast
  AsiaIndonesia
  
  Gross
  
  
  
  3.0
  
  2.0
  
  5.0
  
  5.0
  
  
  
  1.0
  
  6.0
  
  5.0
  
  3.0
  
  3.0
  
  11.0Net
  
  
  
  0.9
  
  1.0
  
  1.9
  
  2.5
  
  
  
  0.4
  
  2.9
  
  2.5
  
  0.9
  
  1.4
  
  4.8Malaysia
  and Vietnam
  
  Gross
  
  1.0
  
  1.0
  
  2.0
  
  4.0
  
  3.0
  
  4.0
  
  
  
  7.0
  
  4.0
  
  5.0
  
  2.0
  
  11.0Net
  
  0.4
  
  0.4
  
  0.8
  
  1.6
  
  1.2
  
  1.7
  
  
  
  2.9
  
  1.6
  
  2.1
  
  0.8
  
  4.5Sudan
  
  Gross
  
  17.0
  
  
  
  7.0
  
  24.0
  
  6.0
  
  
  
  1.0
  
  7.0
  
  23.0
  
  
  
  8.0
  
  31.0Net
  
  4.3
  
  
  
  1.8
  
  6.1
  
  1.5
  
  
  
  0.3
  
  1.8
  
  5.8
  
  
  
  2.1
  
  7.9Algeria
  
  Gross
  
  
  
  
  
  
  
  
  
  9.0
  
  
  
  
  
  9.0
  
  9.0
  
  
  
  
  
  9.0Net
  
  
  
  
  
  
  
  
  
  1.2
  
  
  
  
  
  1.2
  
  1.2
  
  
  
  
  
  1.2Trinidad
  
  Gross
  
  2.0
  
  1.0
  
  2.0
  
  5.0
  
  
  
  
  
  
  
  
  
  2.0
  
  1.0
  
  2.0
  
  5.0Net
  
  0.5
  
  0.3
  
  0.9
  
  1.7
  
  
  
  
  
  
  
  
  
  0.5
  
  0.3
  
  0.9
  
  1.7Total
  
  Gross
  
  38.0
  
  101.0
  
  56.0
  
  195.0
  
  167.0
  
  133.0
  
  20.0
  
  320.0
  
  205.0
  
  234.0
  
  76.0
  
  515.0Net
  
  20.9
  
  69.0
  
  35.9
  
  125.8
  
  100.7
  
  72.7
  
  13.8
  
  187.2
  
  121.6
  
  141.7
  
  49.7
  
  313.0  Year Ended
  December 31, 2001Exploration
  
  Development
  
  TotalOil
  
  Gas
  
  Dry
  
  Total
  
  Oil
  
  Gas
  
  Dry
  
  Total
  
  Oil
  
  Gas
  
  Dry
  
  TotalCanada
  
  Gross
  
  27.0
  
  100.0
  
  38.0
  
  165.0
  
  231.0
  
  141.0
  
  17.0
  
  389.0
  
  258.0
  
  241.0
  
  55.0
  
  554.0Net
  
  23.0
  
  63.0
  
  30.2
  
  116.2
  
  137.7
  
  74.2
  
  10.6
  
  222.5
  
  160.7
  
  137.2
  
  40.8
  
  338.7North Sea(3)
  
  Gross
  
  3.0
  
  3.0
  
  4.0
  
  10.0
  
  20.0
  
  
  
  3.0
  
  23.0
  
  23.0
  
  3.0
  
  7.0
  
  33.0Net
  
  2.1
  
  0.3
  
  1.6
  
  4.0
  
  8.8
  
  
  
  0.4
  
  9.2
  
  10.9
  
  0.3
  
  2.0
  
  13.2Southeast
  AsiaIndonesia
  
  Gross
  
  1.0
  
  3.0
  
  4.0
  
  8.0
  
  49.0
  
  
  
  8.0
  
  57.0
  
  50.0
  
  3.0
  
  12.0
  
  65.0Net
  
  0.4
  
  1.1
  
  1.6
  
  3.1
  
  19.6
  
  
  
  3.1
  
  22.7
  
  20.0
  
  1.1
  
  4.7
  
  25.8Malaysia
  and Vietnam
  
  Gross
  
  1.0
  
  
  
  1.0
  
  2.0
  
  1.0
  
  
  
  
  
  1.0
  
  2.0
  
  
  
  1.0
  
  3.0Net
  
  0.4
  
  
  
  0.6
  
  1.0
  
  0.4
  
  
  
  
  
  0.4
  
  0.8
  
  
  
  0.6
  
  1.4Sudan(4)
  
  Gross
  
  20.0
  
  
  
  6.0
  
  26.0
  
  23.0
  
  
  
  
  
  23.0
  
  43.0
  
  
  
  6.0
  
  49.0Net
  
  5.0
  
  
  
  1.5
  
  6.5
  
  5.8
  
  
  
  
  
  5.8
  
  10.8
  
  
  
  1.5
  
  12.3Algeria
  
  Gross
  
  3.0
  
  1.0
  
  2.0
  
  6.0
  
  8.0
  
  
  
  
  
  8.0
  
  11.0
  
  1.0
  
  2.0
  
  14.0Net
  
  1.1
  
  0.4
  
  0.7
  
  2.2
  
  0.8
  
  
  
  
  
  0.8
  
  1.9
  
  0.4
  
  0.7
  
  3.0Trinidad
  
  Gross
  
  2.0
  
  
  
  1.0
  
  3.0
  
  
  
  
  
  
  
  
  
  2.0
  
  
  
  1.0
  
  3.0Net
  
  0.5
  
  
  
  0.5
  
  1.0
  
  
  
  
  
  
  
  
  
  0.5
  
  
  
  0.5
  
  1.0Total
  
  Gross
  
  57.0
  
  107.0
  
  56.0
  
  220.0
  
  332.0
  
  141.0
  
  28.0
  
  501.0
  
  389.0
  
  248.0
  
  84.0
  
  721.0Net
  
  32.5
  
  64.8
  
  36.7
  
  134.0
  
  173.1
  
  74.2
  
  14.1
  
  261.4
  
  205.6
  
  139.0
  
  50.8
  
  395.4  
 Notes: (1)This refers to gross wellbores,
which is the total number of wells Talisman has drilled or participated in
drilling, with a working interest.  Oil
and gas wells are deemed capable of production.  Service wells, including water injection, gas injection, water
source and water disposal wells are not included. Multilaterals from the same
well bore are counted as a single well bore. (2)Net wellbores are the aggregate
of the percentage working interest of the Company in each of the gross
wellbores. Data is rounded to the nearest decimal place and summed. (3)North Sea includes the United
Kingdom and the Netherlands Continental Shelf. (4)2001 gross and net well numbers
include five wells cased as potential oil wells which remained untested as at
December 31, 2000 and a stratigraphic test well (Abu Likri) on Block 4.  17 
   LOCATION OF WELLS  The following
table sets out all of Talismans producing wells(1) as at December 31, 2002.  Conventional
  Crude Oil and
  Natural Gas Liquids
  
  Natural Gas
  
  TotalGross(2)
  
  Net(3)
  
  Gross(2)
  
  Net(3)
  
  Gross(2)
  
  Net(3)North AmericaCanadaAlberta
  
  3,308
  
  1,861.5
  
  3,150
  
  1,627.8
  
  6,458
  
  3,489.3British
  Columbia
  
  93
  
  39.5
  
  217
  
  99.0
  
  310
  
  138.5Saskatchewan
  
  2,365
  
  848.5
  
  37
  
  18.1
  
  2,402
  
  866.6Ontario
  
  165
  
  159.4
  
  666
  
  427.5
  
  831
  
  586.9Northwest
  Territories
  
  
  
  
  
  2
  
  
  
  2
  
  Yukon
  Territory
  
  
  
  
  
  1
  
  
  
  1
  
  United
  States
  
  
  
  
  
  11
  
  11.0
  
  11
  
  11.0Total North America
  
  5,931
  
  2,908.9
  
  4,084
  
  2,183.4
  
  10,015
  
  5,092.3North Sea(4)
  
  347
  
  139.5
  
  23
  
  2.6
  
  370
  
  142.1South East AsiaIndonesia
  
  522
  
  252.7
  
  24
  
  8.5
  
  546
  
  261.2Malaysia
  and Vietnam
  
  13
  
  5.3
  
  
  
  
  
  13
  
  5.3Sudan
  
  144
  
  36.0
  
  
  
  
  
  144
  
  36.0Total International
  
  1,026
  
  433.5
  
  47
  
  11.1
  
  1,073
  
  444.6Total Worldwide
  
  6,957
  
  3,342.4
  
  4,131
  
  2,194.5
  
  11,088
  
  5,536.9  
 Notes: (1)Producing wells include only
those on production, or capped or suspended but deemed capable of producing and
is based on boreholes. Wells are classified based on the major hydrocarbon on a
boe basis. (2)Gross wells mean the total
number of wells in which the Company has a working interest. (3)Net wells mean the aggregate of
the percentage working interests in each of the gross wells. (4)North Sea includes the United
Kingdom and the Netherlands Continental Shelf.  18 
   LAND HOLDINGS  The following
table summarizes Talismans developed and undeveloped land holdings as at December
31, 2002.  Developed(1)
  
  Undeveloped(2)
  
  Total(thousands of acres)
  
  Gross(3)
  
  Net(4)
  
  Gross(3)
  
  Net(4)
  
  Gross(3)
  
  Net(4)North AmericaCanadaWestern
  Canada(5)
  
  2,646.6
  
  1,368.2
  
  5,301.4
  
  3,461.3
  
  7,948.0
  
  4,829.5Syncrude
  Project
  
  8.2
  
  1.0
  
  405.7
  
  32.6
  
  413.9
  
  33.6Total
  Western Canada
  
  2,654.8
  
  1,369.2
  
  5,707.1
  
  3,493.9
  
  8,361.9
  
  4,863.1Ontario
  
  539.4
  
  357.8
  
  681.6
  
  469.1
  
  1,221.0
  
  826.9Other(6)
  
  2.0
  
  
  
  3,599.6
  
  243.9
  
  3,601.6
  
  243.9United
  States
  
  3.5
  
  3.4
  
  993.2
  
  812.2
  
  996.7
  
  815.6Total North America
  
  3,199.7
  
  1,730.4
  
  10,981.5
  
  5,019.1
  
  14,181.2
  
  6,749.5North Sea(7)
  
  194.1
  
  93.2
  
  1,791.2
  
  761.4
  
  1,985.3
  
  854.6Southeast AsiaIndonesia
  
  292.6
  
  127.1
  
  1,585.3
  
  524.0
  
  1,877.9
  
  651.1Malaysia
  and Vietnam
  
  224.4
  
  92.5
  
  3,696.9
  
  1,285.8
  
  3,921.3
  
  1,378.3Papua
  New Guinea
  
  
  
  
  
  1,686.0
  
  614.8
  
  1,686.0
  
  614.8Sudan(8)
  
  598.4
  
  149.6
  
  11,488.0
  
  2,872.0
  
  12,086.4
  
  3,021.6Algeria(9)
  
  76.8
  
  5.2
  
  750.5
  
  262.7
  
  827.3
  
  267.9Trinidad(10)
  
  
  
  
  
  320.9
  
  134.5
  
  320.9
  
  134.5Other(11)
  
  
  
  
  
  1,637.3
  
  793.3
  
  1,637.3
  
  793.3Total International
  
  1,386.3
  
  467.6
  
  22,956.1
  
  7,248.5
  
  24,342.4
  
  7,716.1Total Worldwide
  
  4,586.0
  
  2,198.0
  
  33,937.6
  
  12,267.6
  
  38,523.6
  
  14,465.6  
 Notes: (1)Developed
lands refers, in the context of North American landholdings, to the number of
acres to which the Company has assigned proved reserves or to lands that
contain either capped, producing, suspended and standing wells and, in the
context of international landholdings, to lands designated as development or
productive pursuant to the applicable contract. (2)Undeveloped
lands refers, in the context of North American landholdings, to the number of
acres not directly associated with capped, producing, suspended and standing wells and wells to which no
status has yet been assigned and, in the context of international landholdings,
to lands designated as exploratory pursuant to the applicable contract. (3)Gross
acres refers to the total number of acres in which Talisman has an interest.
North American landholdings include lands in respect of which the Company has
royalty interests and net carried interests. (4)Net
acres refers to the number of acres obtained by multiplying the gross acres in
each property by Talismans percentage working interest. These figures do not
include lands in respect of which the Company has royalty interests and net
carried interests. (5)Western Canada includes
petroleum and natural gas rights in British Columbia, Alberta, Saskatchewan and
Manitoba and excludes coal leases held in British Columbia. (6)Other
includes Yukon Territory, Northwest Territories and Arctic Islands. (7)North
Sea includes the United Kingdom and Netherlands Continental Shelf. (8)Sudan
developed acreage includes
Block 1b/2b and Field Development Plan acreage as follows: Bamboo, Garaad, El
Mahafir, El Toor, Toma South, El Nar, El Saqr, El Harr, Kairat NE and Munga. (9)Algeria
developed acreage includes Ourhoud Unit and MLN (Main) Exploitation Licence
Application. (10)Trinidad
includes interests held in
Block 2(c), Eastern Block and Block 3(a). (11)Other
includes undeveloped acreage in
Colombia (Acevedo, Mundo Nuevo, Tangera, Altamizal and Huila Norte blocks) and
Falkland Islands (Tranche F), but excludes Qatar pending Emir Decree.  19 
   RESERVES ESTIMATES  Talisman
performs an annual internal evaluation of its reserves.  Each year, a portion of the Companys
reserves is evaluated by independent engineering consultants in order to test
and substantiate the Companys internal estimates. Over the past three years
ending December 31, 2002, approximately 90% of Talismans proved reserves (on a
boe basis) have been independently evaluated. 
There were no material differences between Talismans internal estimates
and the independent estimates.  The following
table sets forth Talismans estimates of its proved developed and proved
undeveloped reserves as at December 31, 2002.  Proved
  Developed(2)
  
  Proved
  Undeveloped(3)
  
  Total Proved(1)Gross(4)
  
  Net(5)
  
  Gross(4)
  
  Net(5)
  
  Gross(4)
  
  Net(5)Oil and Natural Gas Liquids(millions of
  barrels)North AmericaCanada
  
  190.0
  
  157.2
  
  9.1
  
  6.9
  
  199.1
  
  164.1North Sea(6)
  
  212.6
  
  210.8
  
  37.1
  
  36.8
  
  249.7
  
  247.6Southeast AsiaIndonesia(7)
  
  18.0
  
  11.0
  
  2.2
  
  1.4
  
  20.2
  
  12.4Malaysia and
  Vietnam(7)
  
  1.7
  
  0.9
  
  38.7
  
  22.8
  
  40.4
  
  23.7Sudan(7)
  
  143.4
  
  84.1
  
  17.5
  
  10.2
  
  160.9
  
  94.3Other(7)(8)
  
  4.8
  
  2.4
  
  41.8
  
  30.4
  
  46.9
  
  32.8Total
  
  570.5
  
  466.4
  
  146.4
  
  108.5
  
  716.9
  
  574.9Natural Gas(billions of
  cubic feet)North AmericaCanada
  
  2,258.7
  
  1,729.6
  
  314.7
  
  239.2
  
  2,573.4
  
  1,968.8United States
  
  20.0
  
  17.3
  
  
  
  
  
  20.0
  
  17.3North Sea(6)
  
  232.8
  
  210.0
  
  29.3
  
  27.9
  
  262.1
  
  237.9Southeast AsiaIndonesia(7)
  
  723.8
  
  471.6
  
  353.5
  
  230.3
  
  1,077.3
  
  701.9Malaysia and
  Vietnam(7)
  
  
  
  
  
  451.0
  
  267.0
  
  451.0
  
  267.0Other(7)(8)
  
  
  
  
  
  223.5
  
  220.0
  
  223.5
  
  220.0Total
  
  3,235.3
  
  2,428.5
  
  1,372.0
  
  984.4
  
  4,607.3
  
  3,412.9Synthetic Oil(millions of
  barrels)Canada
  
  43.2
  
  36.7
  
  
  
  
  
  43.2
  
  36.7Sulphur(millions of
  long tons)Canada
  
  2.1
  
  1.7
  
  0.5
  
  0.4
  
  2.6
  
  2.1  
 Notes: (1)Proved reserves are the
estimated quantities of crude oil, natural gas and natural gas liquids which
geological and engineering data demonstrate with reasonable certainty to be recoverable
in future years from known reservoirs under existing economic and operating
conditions. Reserves which can be produced economically through application of
improved recovery techniques (such as fluid injection or compression) are
included in the proved classification when successful testing by a pilot
project, or the operation of an installed program in the reservoir, or the
successful implementation of such techniques in similar offsetting reservoirs,
provides support for the engineering analysis on which the project or program
was based. (2)Proved Developed reserves are
those reserves that are expected to be recovered from existing wells and
installed facilities or, if facilities have not been installed, that would
involve a low expenditure (i.e. when compared to the cost of drilling a well)
to put the reserves on production. (3)Proved Undeveloped reserves are
those reserves expected to be recovered from known accumulations where a
significant expenditure (i.e. when compared to the cost of drilling a well) is
required to render them capable of production. (4)Gross reserves are the
remaining reserves of Talisman before deduction of estimated royalties. (5)Net reserves are the remaining
reserves of Talisman after deduction of estimated royalties. (6)North Sea includes the United
Kingdom and the Netherlands Continental Shelf. (7)Interests of various governments,
other than working interests, are accounted for as royalties. Royalties are
reflected in net reserves using effective rates over the life of the
contract. (8)Other includes Algeria and
Trinidad.  20 
   RECONCILIATION OF RESERVES  The following
table contains the Companys reconciliation of its total proved reserves from
December 31, 2001 to December 31, 2002.  GROSS PROVED OIL AND GAS RESERVES (BEFORE
ROYALTIES)  Year End2001
  
  Discoveries,AdditionsandExtensions
  
  Acqusitions
  
  Dispositions
  
  Net
  Revisions
  and
  Transfers(1)
  
  Production
  During 2002
  
  Year End
  2002Oil and Natural Gas
  Liquids(millions
  of barrels)North AmericaCanada
  
  212.3
  
  13.0
  
  1.4
  
  (4.6
  )
  (1.2
  )
  (21.8
  )
  199.1North Sea(2)
  
  274.5
  
  13.5
  
  7.5
  
  (2.8
  )
  3.5
  
  (46.5
  )
  249.7Southeast AsiaIndonesia
  
  24.6
  
  1.3
  
  
  
  
  
  0.5
  
  (6.2
  )
  20.2Malaysia
  and Vietnam
  
  34.7
  
  8.3
  
  
  
  
  
  (0.5
  )
  (2.1
  )
  40.4Sudan
  
  156.3
  
  32.3
  
  
  
  
  
  (5.8
  )
  (21.9
  )
  160.9Other(3)
  
  35.2
  
  21.8
  
  
  
  
  
  (10.4
  )
  
  
  46.6Total
  
  737.6
  
  90.2
  
  8.9
  
  (7.4
  )
  (13.9
  )
  (98.5
  )
  716.9Natural Gas(billions
  of cubic feet)North AmericaCanada
  
  2,596.8
  
  374.2
  
  16.8
  
  (34.9
  )
  (80.3
  )
  (299.2
  )
  2,573.4United
  States
  
  
  
  
  
  20.9
  
  
  
  
  
  (0.9
  )
  20.0North Sea(2)
  
  302.2
  
  15.4
  
  0.4
  
  
  
  (11.3
  )
  (44.6
  )
  262.1Southeast AsiaIndonesia
  
  1,108.7
  
  3.7
  
  
  
  
  
  (0.6
  )
  (34.5
  )
  1,077.3Malaysia
  and Vietnam
  
  488.8
  
  16.0
  
  
  
  
  
  (53.8
  )
  
  
  451.0Other(3)
  
  
  
  223.5
  
  
  
  
  
  
  
  
  
  223.5Total
  
  4,496.5
  
  632.8
  
  38.1
  
  (34.9
  )
  (146.0
  )
  (379.2
  )
  4,607.3Synthetic Oil(millions of barrels)Canada
  
  43.4
  
  0.9
  
  
  
  
  
  (0.1
  )
  (1.0
  )
  43.2Sulphur(millions of long tons)Canada
  
  3.1
  
  0.4
  
  
  
  (0.8
  )
  0.4
  
  (0.5
  )
  2.6  NET PROVED OIL AND GAS RESERVES (AFTER
ROYALTIES)  Year End2001
  
  Discoveries,AdditionsandExtensions
  
  Acquisitions
  
  Dispositions
  
  Net
  Revisions
  and
  Transfers(1)
  
  Production
  During 2002
  
  Year End
  2002Oil and Natural Gas
  Liquids(millions
  of barrels)North AmericaCanada
  
  175.8
  
  10.6
  
  1.1
  
  (3.7
  )
  (2.5
  )
  (17.2
  )
  164.1North Sea(2)
  
  260.2
  
  13.5
  
  7.5
  
  (2.8
  )
  13.9
  
  (44.7
  )
  247.6Southeast AsiaIndonesia
  
  15.9
  
  0.7
  
  
  
  
  
  (0.5
  )
  (3.7
  )
  12.4Malaysia
  and Vietnam
  
  23.7
  
  5.1
  
  
  
  
  
  (3.7
  )
  (1.4
  )
  23.7Sudan
  
  116.3
  
  19.0
  
  
  
  
  
  (27.7
  )
  (13.3
  )
  94.3Other(3)
  
  16.9
  
  20.2
  
  
  
  
  
  (4.3
  )
  
  
  32.8Total
  
  608.8
  
  69.1
  
  8.6
  
  (6.5
  )
  (24.8
  )
  (80.3
  )
  574.9Natural Gas(billions
  of cubic feet)North AmericaCanada
  
  2,052.6
  
  283.1
  
  13.4
  
  (26.7
  )
  (110.8
  )
  (242.8
  )
  1,968.8United
  States
  
  
  
  
  
  18.1
  
  
  
  
  
  (0.8
  )
  17.3North Sea(2)
  
  267.3
  
  14.0
  
  0.4
  
  
  
  (4.3
  )
  (39.5
  )
  237.9Southeast AsiaIndonesia
  
  779.2
  
  2.4
  
  
  
  
  
  (47.4
  )
  (32.3
  )
  701.9Malaysia
  and Vietnam
  
  332.9
  
  9.3
  
  
  
  
  
  (75.2
  )
  
  
  267.0Other(3)
  
  
  
  220.0
  
  
  
  
  
  
  
  
  
  220.0Total
  
  3,432.0
  
  528.8
  
  31.9
  
  (26.7
  )
  (237.7
  )
  (315.4
  )
  3,412.9Synthetic Oil(millions of barrels)Canada
  
  36.4
  
  0.7
  
  
  
  
  
  0.6
  
  (1.0
  )
  36.7Sulphur(millions of long tons)Canada
  
  2.9
  
  0.3
  
  
  
  (0.6
  )
  (0.1
  )
  (0.4
  )
  2.1  
 Notes: (1)Net Revisions and Transfers
reflect actual performance and re-assessment of data. (2)North Sea includes the United
Kingdom and the Netherlands Continental Shelf. (3)Other includes Algeria and
Trinidad.  21 
   SELECTED HISTORICAL FINANCIAL AND OPERATIONAL INFORMATION  Selected
quarterly financial and operational information for the Company, including
capital expenditures, daily average production and product netbacks is
contained on pages 69 and 70 of the Companys 2002 Annual Report under the
heading Selected Quarterly Financial Data, which information is incorporated
herein by reference.  FUTURE COMMITMENTS  Future
commitments to buy, sell, exchange, process and transport oil or gas of the
Company are described under note 10 entitled Contingencies and Commitments in
the comparative audited consolidated financial statements of the Company for
the year end December 31, 2002, which information is incorporated herein by
reference.  COMPETITIVE
CONDITIONS  The oil and
gas industry, both within Canada and internationally, is highly competitive in
all aspects, including the acquisition of properties, the exploration for and
development of new sources of supply and the marketing of current production.
In the exploration, development and marketing of oil and natural gas, the
Companys competitors include major integrated oil and gas companies, numerous
other independent oil and gas companies, individual producers and operators and
national oil companies. Some of the Companys competitors have financial and
other resources substantially in excess of those available to the Company. The
oil and gas industry also competes with other industries in supplying energy,
fuel and related products to consumers.  ENVIRONMENTAL
PROTECTION  The oil and
gas industry is subject to safety and environmental regulation pursuant to
extensive legislation, enacted by various levels of government, both in Canada
and internationally.  The Company
maintains a comprehensive range of internal programs and controls to promote
regulatory compliance and an appropriate level of safety and environmental
protection across its operations. Public expectation regarding the industrys
safety and environmental performance remains high and this continues to
translate into new and generally more rigorous policies, legislation and
regulations. Within jurisdictions and sectors, these regulatory instruments
apply generally and do not typically influence competitive position.  The Company
does not anticipate making material expenditures for environmental compliance
during 2003. However, it does expect to incur site restoration costs over a
prolonged period as existing fields become fully produced. Talisman provides
for future abandonment and reclamation costs in its financial statements in
accordance with Canadian generally accepted accounting principles. Additional
information regarding future abandonment and reclamation costs is set forth
under note 10 entitled Contingencies and Commitments in the comparative
audited consolidated financial statements of the Company for the year ended
December 31, 2002, which information is incorporated herein by reference.  EMPLOYEES  At December
31, 2002, Talismans permanent staff complement(1) was 1,565, as set forth in
the table below.  Permanent
  staff complement(1)
  as at December 31, 2002Canada
  
  1,191North Sea
  
  174Southeast Asia
  
  149Sudan
  
  51Total
  
  1,565  
 Note: (1)Contractors
and temporary staff are not included in complement numbers.  22 
   SELECTED CONSOLIDATED
FINANCIAL INFORMATION  ANNUAL INFORMATION  The following
table sets out selected financial information of the Company for the past three
years.  Years ended
December 31(millions of Canadian dollars unless otherwise stated)  2002
  
  2001
  
  2000Balance sheetsCurrent assets
  
  917
  
  799
  
  1,042Other assets
  
  635
  
  559
  
  82Property,
  plant and equipment
  
  10,042
  
  9,461
  
  7,501Total assets
  
  11,594
  
  10,819
  
  8,625Current
  liabilities
  
  989
  
  1,204
  
  1,311Deferred
  credits and other liabilities
  
  3,106
  
  2,679
  
  1,997Long-term debt
  
  2,997
  
  2,794
  
  1,703Shareholders
  equity
  
  4,502
  
  4,126
  
  3,614Total
  liabilities and shareholders equity
  
  11,594
  
  10,819
  
  8,625Results of operationsRevenue
  
  4,452
  
  4,140
  
  3,989Expenses
  
  3,384
  
  2,844
  
  2,452Income before
  taxes
  
  1,068
  
  1,296
  
  1,537Taxes
  
  544
  
  563
  
  680Net income
  
  524
  
  733
  
  857Preferred
  security charges, net of tax
  
  24
  
  24
  
  22Net income
  available to common shareholders
  
  500
  
  709
  
  835Capital
  expenditures
  
  2,118
  
  2,098
  
  1,625Proceeds on
  dispositions
  
  (40
  )
  (47
  )
  (81
  )Net capital
  expenditures
  
  2,078
  
  2,051
  
  1,544Per common
  share (dollars)Net income
  
  3.73
  
  5.25
  
  6.05Diluted net
  income
  
  3.67
  
  5.16
  
  5.96Dividends per
  share
  
  0.60
  
  0.60
  
    The above
financial data has been taken from the comparative audited consolidated
financial statements of the Company for the years ended December 31, 2002, 2001
and 2000. The comparative audited consolidated financial statements have been
prepared in accordance with Canadian generally accepted accounting principles.  As disclosed
in note 2 to the December 31, 2002 comparative audited consolidated financial
statements of the Company, the selected financial information for 2001 and 2000
have been restated in accordance with a new Canadian Institute of Chartered
Accountants accounting standard.  The
effect of the restatement on the comparative figures and other changes in the
Companys accounting policies that may impact the comparability of the above
selected financial information are also disclosed in note 2.  In 2001, the
Company acquired Petromet Resources Limited and Lundin Oil AB.  Disclosure regarding the impact of these
acquisitions is included in note 3 of the 2002 comparative audited consolidated
financial statements. Additional information regarding factors which may affect
the comparability of the selected consolidated financial information may be
found in Managements Discussion and Analysis.  DIVIDENDS  In 2002, the
Company paid semi-annual dividends of $0.30 per share on Talismans common
shares. The Companys dividend policy is to pay $0.60 per share per year,
subject to semi-annual review by the board of directors.  23 
   MANAGEMENTS DISCUSSION AND
ANALYSIS  Reference is
made to the Managements Discussion and Analysis that accompanies the
comparative audited consolidated financial statements of the Company for the
year ended December 31, 2002, which information is incorporated herein by
reference.  MARKET FOR THE SECURITIES OF THE
COMPANY  The
common shares of the Company are listed on the Toronto and New York stock
exchanges under the trading symbol TLM. The Companys 9% and 8.9% Preferred
Securities are listed on the New York Stock Exchange under the trading symbols
TLM PrA and TLM PrB, respectively.  The
Companys Pounds Sterling 250,000,000 6.625% Notes are listed on the London
Stock Exchange.  DIRECTORS AND
OFFICERS  Information is
given below with respect to each of the current directors and officers of the
Company. The term of office of each director expires at the end of the 2003
Annual Meeting.  DIRECTORS  The following
table sets out the name, municipality of residence, year first elected to the
board and principal occupation within the past five years or more of each of
the directors of the Company.  Name and
  Municipality
  of Residence
  
  Year First
  Became
  Director
  
  Principal OccupationDouglas D. Baldwin(2,5)
  Calgary, Alberta
  
  2001
  
  Director of
  various corporations; from 1999 to 2001, President and Chief Executive
  Officer  of TransCanada PipeLines
  Limited (pipeline and power company); from 1992 to 1998, Senior
  Vice-President and Director of Imperial Oil Limited (natural resource company);
  from 1988  to 1992, President and Chief
  Executive Officer, Esso Resources Canada Limited (natural resource company)James W. Buckee(1, 4)
  Calgary, Alberta
  
  1992
  
  President
  and Chief Executive Officer of Talisman; prior to May 1993, President and
  Chief Operating Officer of the Company; prior to August 1991, Manager,
  Planning of BP Exploration Company Ltd. (natural resource company)Al L. Flood, C.M.(1, 2)
  Thornhill, Ontario
  
  2000
  
  Director of
  various corporations; from June 1999 to March 2000, Chairman of the Executive
  Committee of Canadian Imperial Bank of Commerce (CIBC) (a Canadian
  chartered bank); prior to June 1999, Chairman and Chief Executive Officer of
  CIBC and held various positions in the domestic and international operations
  of CIBCPaul J. Hoenmans(2, 3)
  Aspen, Colorado
  
  1998
  
  Director of
  various corporations; prior to September 1997, Executive Vice-President of
  Mobil Oil Corporation (integrated international natural resource company) and
  Director and Member of the Executive Committee of Mobil Corporation (integrated
  international oil, gas and chemicals company) and Mobil Oil Corporation; from
  1986 to 1996, President, Exploration & Producing Division, Mobil Oil
  CorporationDale G. Parker(2, 4)
  Vancouver,
  British Columbia
  
  1993
  
  Director of
  various corporations and public administration and financial institution
  advisor; prior to January 1998, President and Chief Executive Officer of
  Workers Compensation Board of British Columbia; prior to November 1994,
  President of White Spot Limited (food services company) and Executive
  Vice-President of Shato Holdings Ltd. (food processing and services and real
  estate company); prior to November 1993, Executive Vice-President and Chief
  Financial Officer of Shato Holdings Ltd.; prior to November 1992, Chairman
  and Chief Executive Officer of British Columbia Financial Institutions
  Commission (regulator of financial institutions)David E. Powell(1, 3, 5)
  Calgary, Alberta
  
  1998
  
  Chairman of
  the Board of the Company; director of various corporations; Chairman of the Board
  of Petroleum Industry Training Service (Canadian non-profit organization that
  serves the petroleum industry worldwide by identifying training and safety
  needs and establishing standards); from 1991 to 1995, President and Chief
  Executive Officer of Home Oil Company Ltd. (natural resource company)Roland Priddle(1, 4, 5)
  Victoria,
  British Columbia
  
  2000
  
  Consultant
  to public and private sector entities on policy and regulatory issues in oil
  and gas; prior to 1998, Chairman, National Energy Board of Canada  24 
   Name and
  Municipality
  of Residence
  
  Year First
  Became
  Director
  
  Principal OccupationLawrence G. Tapp(3, 5)London, Ontario
  
  2001
  
  Dean of the
  Richard Ivey School of Business of the University of Western Ontario since
  1995; from 1992 to 1995, Executive in Residence of the Faculty of Management
  and Adjunct Professor, University of Toronto; from 1985 to 1992, Vice
  Chairman, President and Chief Executive Officer of Lawson Mardon Group Limited
  (packaging conglomerate)Stella M. Thompson(3, 4)
  Calgary, Alberta
  
  1995
  
  Principal of
  Governance West Inc. (a company providing consulting services relating to
  corporate governance); President of Stellar Energy Ltd. (energy and
  management consulting company); director of various corporations; prior to
  June 1991, Vice-President, Planning, Business Information & Systems of
  Petro-Canada Products (petroleum refining and marketing company)Charles W. Wilson(6)
  Evergreen, Colorado
  
  2002
  
  Director of
  various corporations; from 1993 to 1999, President & Chief Executive
  Officer of Shell Canada (integrated oil and gas company); from 1988 to 1993,
  Executive Vice President US Downstream Oil and Chemical of Shell Oil US
  (integrated oil and gas company); prior to 1988, Vice President US Refining
  and Marketing of Shell Oil US and held various positions in the domestic and
  international natural resource operations of Shell  
 Notes: (1)Member of the Executive Committee (2)Member of the Audit Committee (3)Member of the Management
Succession and Compensation Committee (4)Member of the Pension Funds
Committee (5)Member of the Governance and
Nominating Committee (6)Member of the Audit Committee
effective March 4, 2003  Mr. Parker was a director of Royal Oak Mines Inc., a publicly traded
North American gold mining corporation, and he was a director of Agro Pacific
Industries Ltd., a publicly traded agricultural corporation, when each
corporation instituted proceedings under the Companies Creditors Arrangement Act(Canada).
Ms. Thompson is currently a director of Laidlaw Inc., a public holding
company, which has obtained an order in the United States Bankruptcy Court for
the Western District of New York confirming its plan of reorganization and has
obtained an order from the Ontario Superior Court of Justice under the Companies
Creditors Arrangement Act(Canada) recognizing and implementing the
plan in Canada.  OFFICERS  The following
table sets out the name, municipality of residence and office held with Talisman
of each of the executive officers and Assistant Corporate Secretaries of the
Company.  Name and Municipality
  of Residence
  
  OfficeJames W. BuckeeCalgary, Alberta
  
  President
  and Chief Executive OfficerEdward W. BogleCalgary, Alberta
  
  Executive
  Vice-President, ExplorationT. Nigel D. HaresCalgary, Alberta
  
  Executive
  Vice-President, Frontier and International OperationsJoseph E. HorlerCalgary, Alberta
  
  Executive
  Vice-President, MarketingMichael D. McDonaldCalgary, Alberta
  
  Executive
  Vice-President, Finance and Chief Financial OfficerRobert W. MitchellCalgary, Alberta
  
  Executive
  Vice-President, North American OperationsRobert M. RedgateCalgary, Alberta
  
  Executive
  Vice-President, Corporate ServicesM. Jacqueline SheppardCalgary, Alberta
  
  Executive
  Vice-President, Corporate and Legal, and Corporate SecretaryChristine D. Lee
  Calgary, Alberta
  
  Assistant
  Corporate SecretaryArdith D. WagnerCalgary, Alberta
  
  Assistant
  Corporate Secretary  25 
   In early 2003,
the Company changed the titles of all its vice-presidents to better reflect the
roles and responsibilities of their continuing offices.  All of the executive officers of the Company
have held their offices for at least five years with the exception of Mr.
McDonald, who has held his current position since March 12, 2001.  Prior to that date, he served as
Vice-President, Business Development of the Company.  SHAREHOLDINGS OF DIRECTORS AND OFFICERS  As of the date
hereof, the directors and executive officers of the Company, as a group,
beneficially own, directly or indirectly, or exercise control or direction over
121,688 common shares of the Company, representing 0.0943% of the issued and
outstanding common shares of the Company.  ADDITIONAL INFORMATION  The Company
will provide to any person or company upon request to the Assistant Corporate
Secretary of the Company:  (a)when the securities of the Company are in the course of a
distribution pursuant to a preliminary short form prospectus or a short form
prospectus in respect of a distribution of its securities:  (i)one copy of this Annual Information Form, together with one copy of
any document, or the pertinent pages of any document, incorporated herein by
reference;  (ii)one copy of the comparative audited consolidated financial
statements of the Company, together with the report of the auditor thereon, for
the Companys most recently completed financial year in respect of which such
financial statements have been filed and one copy of any interim financial
statements of the Company which have been filed subsequent to the annual
financial statements;  (iii)one copy of the Management Proxy Circular of the Company in respect
of its most recent annual meeting of shareholders, which involved the election
of directors;  (iv)one copy of any other document or report which is incorporated by
reference into the preliminary short form prospectus or the short form
prospectus and is not required to be provided under (i) to (iii) above; or  (b)at any other time, one copy of any other document referred to in
paragraphs (a)(i), (ii) and (iii) above, provided that the Company may require
the payment of a reasonable charge, if the person or company requesting a
document is not a security holder of the Company.  Additional
information including directors and officers remuneration and indebtedness,
principal holders of the Companys securities and options to purchase
securities is contained in the Companys Management Proxy Circular. Additional
financial information is provided in the Companys comparative audited
consolidated financial statements for the year ended December 31, 2002.  Copies of the
Companys Annual Report may be obtained from Talismans website at www.talisman-energy.com
or upon request from:  Investor
Relations and Corporate Communications Department Talisman
Energy Inc. Suite 3400,
888 Third Street S.W. Calgary,
Alberta  T2P 5C5 E-Mail:  tlm@talisman-energy.com  26