Talisman Energy acquires entry position in Norway

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May 19, 2003

Talisman Energy Inc. announces that Talisman Energy Norge AS has entered into an agreement with BP Norge AS, to acquire itsoperated interest in the Norwegian Gyda field, associated facilities, adjacent acreage, and tax pools at a price of $123 million effective from January 1, 2003. Talisman has also secured a transportation agreement for the oil export pipeline. The transaction is subject to Norwegian Government approval.

The assets to be acquired include:

  • A 61% working interest in License PL 019B comprising Blocks 2/1 and 7/12 and containing the Gyda Field and platform facilities. DONG Norge AS (34%) and Norske AEDC (5%) hold the remaining interests,
  • 61% of the Gyda gas export pipeline (43 km, 12 inch pipeline to the Ekofisk platform),
  • A 45% working interest in License PL 019C within Block 2/1, containing the Kark prospect, and
  • Tax pools with an estimated undiscounted value of $56 million.

The deal also includes an agreement for exporting oil from Gyda to the Ekofisk platform.

"Gyda is a good quality asset and well maintained but, more importantly, this acquisition offers us the opportunity to become a significant oil and gas producer in Norway and this is a natural extension of our successful North Sea strategy" said Dr Jim Buckee, President and Chief Executive Officer. "This first ever acquisition of an operated field in the Norwegian sector of the North Sea fits Talisman's investment style: operatorship of a producing field and ownership in key infrastructure, with associated exploration and development opportunities, which will increase production and lower unit operating costs. The acquisition gains Talisman a prime position to access similar opportunities in a world class hydrocarbon basin with significant remaining potential.

"We have identified a number of production growth opportunities, which we expect will lead to increased reserves. This will be achieved by using the newly acquired 3D seismic imaging to guide horizontal infill drilling and the introduction of gas lift. A number of exploration prospects in adjacent acreage offer potential for further growth. Importantly, Gyda will provide a revenue stream we can use to shelter future investments including exploration activity."

Talisman will acquire, as at the effective date, approximately 18 million boe of net proven reserves for a cost of $3.70 per boe (excluding tax pools). Assuming owner and government approval of Talisman's expected work program over the next four years, we expect to be able to add approximately 24 million boe at an average pre-tax cost of $10.00 per boe. Therefore, we expect aggregate pre-tax finding development and acquisition costs associated with this transaction will average $7.35 per boe over this period.

Net production from Gyda is currently 8,000 boe/d, of which 90% is 42 degree API crude oil. The expected investment program could increase this to over 20,000 boe/d by 2006. The increase in production coupled with lower transportation and operating costs will reduce the operating costs per boe.

Talisman plans to open an office in Stavanger and manage its Norwegian assets as part of its overall North Sea operations. BP employees (both offshore and onshore) will be transferred into the Talisman organisatio on completion of the deal. This will ensure the safe and efficient transfer of the assets, the retention of essential skills and experience, and a framework and core competency for future growth.


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