Talisman Reports 2Q North American E&P; Now Producing More Than 30 MMcf/d In Marcellus

439 1185 Talisman Energy Inc., Calgary, (Toronto, NYSE: TLM) reports production in North America during the second quarter averaged approximately 171,000 barrels of equivalent per day in the quarter, down 9% from the same period in 2008.

            In the Marcellus shale, Talisman drilled nine gross (nine net) wells during the quarter, for a total of 12 gross (12 net) in the first half of the year. The development plan is ahead of schedule and the company is now producing at rates in excess of 30 million cubic feet of gas per day. Talisman currently has two pre-set drilling rigs and two horizontal rigs operating and a third horizontal rig is expected to start in July. The company is increasing capital spending in the Marcellus play due to recent results and its proximity to premium natural gas markets. Talisman expects to drill approximately 50 wells during the year versus the original plan of 36 wells.

Marcellus wells continue to exceed expectations. The latest wells on production have achieved initial production rates averaging 5 million cubic feet per day and peak rates of more than 5 million, higher than the original 2.5 million cubic feet per day type curve. Capital costs also continue to improve, with the most recent well achieving drilling and completion costs of approximately US$4 million. Drilling cycle times have been reduced by 60% as a result of Talisman’s LEAN well delivery initiative. The company is already drilling on state lands acquired in late 2008.

In the Montney core, Talisman drilled 12 gross (9.9 net) wells in the first half of the year. The most recent eight horizontal wells have averaged initial 30-day production rates of 3.5 million cubic feet per day, higher than the original target of 2.6 million per day. Talisman has made significant strides in reducing costs in the Montney, targeting a US$4/Mcf breakeven cost by year end.

In Canada, the company drilled a total of five wells in the Montney shale in the quarter, for a total of 12 gross (9.2 net) in the first half of the year. The first horizontal and vertical pilot wells exceeded initial type curve expectations.

In Quebec, the company is currently testing vertical wells, which were drilled to complete the land earning requirements. Based on encouraging test results from its vertical wells, Talisman intends to begin drilling horizontal pilot wells by the end of the third quarter, with the potential to drill at least two horizontal wells in 2009. To date, three separate pilot areas have been identified next to the vertical test wells.

Talisman's conventional areas continue to perform well even with reduced capital. Base declines are lower than anticipated and many areas continue to report strong production volumes.

Talisman has oil and gas operations in North America, the North Sea, southeastern Asia and North Africa.