Report of Foreign Issuer (6-k)

FORM 6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Report of Foreign Issuer

Pursuant to Rule 13a-16 or 15d-16 of

the Securities Exchange Act of 1934

November 13, 2015

TALISMAN ENERGY INC.

Commission File No. 1-6665

[Translation of registrant’s name into English]

2000, 888 - 3rd Street S.W.,

Calgary, Alberta, Canada, T2P 5C5

[Address of principal executive offices]

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

Form 20-F o Form 40-F x

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Exhibit		Title

99.1		Interim Condensed Consolidated Financials
99.2		Interim Management’s Discussion and Analysis
99.3		Consolidated Financial Ratio
99.4		CEO Certification of Interim Filings
99.5		CFO Certification of Interim Filings

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	TALISMAN ENERGY INC.
	[Registrant]

Date: November 13, 2015	By:	/s/ Daryn V. MacEachern
		Daryn V. MacEachern
		Assistant Corporate Secretary

Exhibit 99.1

TALISMAN ENERGY INC.

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED SEPTEMBER 30, 2015

(Unaudited)

Condensed Consolidated Balance Sheets

(Unaudited)

	September 30,	December 31,
(millions of US$)	2015	2014

Assets
Current
Cash and cash equivalents (note 23)	78	262
Accounts receivable	456	893
Risk management (note 17)	—	850
Income and other taxes receivable (note 21)	490	80
Restricted cash (note 9)	—	149
Inventories	115	133
Prepaid expenses	34	34
	1,173	2,401
Other assets (note 8)	174	180
Investments (note 6)	531	604
Risk management (note 17)	—	421
Goodwill (note 7)	279	279
Property, plant and equipment (note 10)	8,268	9,064
Exploration and evaluation assets (note 10)	2,462	2,544
Deferred tax assets	127	1,837
	11,841	14,929
Total assets	13,014	17,330

Liabilities
Current
Bank indebtedness	13	9
Accounts payable and accrued liabilities	983	1,577
Current portion of Yme removal obligation (note 9)	—	186
Obligation to fund equity investee (note 6)	229	186
Risk management (note 17)	—	2
Income and other taxes payable	61	93
Loans from joint ventures (note 6)	96	15
Current portion of long-term debt (note 14)	156	1,109
	1,538	3,177
Decommissioning liabilities (note 12)	979	1,885
Other long-term obligations (note 15)	233	273
Loans from related parties (note 14)	959	—
Long-term debt (note 14)	3,793	3,955
Deferred tax liabilities	835	635
	6,799	6,748

Contingencies and commitments (note 18)

Shareholder’s equity
Common shares (note 16)	1,992	1,738
Preferred shares (note 16)	—	191
Contributed surplus	86	176
Retained earnings	1,899	4,489
Accumulated other comprehensive income	700	811
	4,677	7,405
Total liabilities and shareholder’s equity	13,014	17,330

See accompanying notes.

Condensed Consolidated Statements of Income (Loss)

(Unaudited)

	Three months ended				Nine months ended
	September 30,				September 30,
(millions of US$)	2015		2014		2015		2014
			(restated - note 4)				(restated - note 4)
Revenue
Sales	541		973		1,762		3,237
Other income (note 19)	24		35		105		112
Loss from joint ventures, after tax (note 6)	(231	)	(13	)	(545	)	(44	)
Total revenue and other income	334		995		1,322		3,305

Expenses
Operating	215		263		659		806
Transportation	47		47		137		128
General and administrative	61		92		228		297
Depreciation, depletion and amortization	394		398		1,184		1,220
Impairment, net of reversals (note 11)	325		—		373		(32	)
Dry hole	1		36		14		64
Exploration	20		44		142		127
Finance costs (note 13)	83		79		246		245
Share-based payments recovery (note 16)	—		(16	)	(24	)	(25	)
Gain on held-for-trading financial instruments (note 17)	—		(428	)	(62	)	(197	)
(Gain) loss on disposals (note 5)	—		(6	)	9		(560	)
Other, net (note 20)	34		(7	)	180		37
Total expenses	1,180		502		3,086		2,110
Income (loss) from continuing operations before taxes	(846	)	493		(1,764	)	1,195
Income taxes (note 21)
Current income tax (recovery)	(359	)	65		(224	)	330
Deferred income tax (recovery)	412		(11	)	644		52
	53		54		420		382
Net income (loss) from continuing operations	(899	)	439		(2,184	)	813

Discontinued operations
Net income (loss) from discontinued operations (note 4)	112		(14	)	(294	)	(134	)
Net income (loss)	(787	)	425		(2,478	)	679

Per common share (US$):
Net income (loss) from continuing operations	(0.86	)	0.42		(2.11	)	0.78
Net income (loss) from discontinued operations	0.11		(0.01	)	(0.28	)	(0.13	)
Net income (loss)	(0.75	)	0.41		(2.39	)	0.65
Diluted net income (loss) from continuing operations	(0.86	)	0.39		(2.14	)	0.70
Diluted net income (loss) from discontinued operations	0.11		(0.01	)	(0.28	)	(0.13	)
Diluted net income (loss)	(0.75	)	0.38		(2.42	)	0.57
Weighted average number of common shares outstanding (millions)
Basic	1,044		1,033		1,039		1,033
Diluted	1,044		1,041		1,039		1,040

See accompanying notes.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

	Three months ended				Nine months ended
	September 30,				September 30,
(millions of US$)	2015		2014		2015		2014

Net income (loss)	(787	)	425		(2,478	)	679

Items to be reclassified to net income or loss in subsequent periods:
Foreign currency translation	3		—		3		—
Transfer of accumulated comprehensive income on disposition of foreign operations (note 4)	(114	)	—		(114	)	—
Items not to be reclassified to net income or loss in subsequent periods:
Actuarial gains (losses) relating to pension and other post-employment benefits1	(4	)	(1	)	7		(4	)
Other comprehensive loss	(115	)	(1	)	(104	)	(4	)
Comprehensive income (loss)	(902	)	424		(2,582	)	675

1. For the three and nine months ended September 30, 2015, amount is net of tax of $2 million and $2 million respectively (2014 - $nil and $1 million respectively).

See accompanying notes.

Condensed Consolidated Statements of Changes in Shareholder’s Equity

(Unaudited)

	Three months ended				Nine months ended
	September 30,				September 30,
(millions of US$)	2015		2014		2015		2014

Common shares (note 16)
Balance at beginning of period	1,992		1,759		1,738		1,723
Issued on exercise of stock options	—		—		—		5
Converted from preferred shares	—		—		195		—
Shares purchased and held in trust for long-term PSU plan	—		(17	)	(30	)	(17	)
Shares in trust sold on open market	—		—		3		—
Shares released from trust for long-term PSU plan	—		—		86		31
Balance at end of period	1,992		1,742		1,992		1,742

Preferred shares (note 16)
Balance at beginning of period	—		191		191		191
Converted to common shares	—		—		(191	)	—
Balance at end of period	—		191		—		191

Contributed surplus
Balance at beginning of period	86		124		176		135
Preferred shares conversion difference	—		—		(4	)	—
Settlement of long-term PSU plan grant	—		—		(104	)	(31	)
Share-based payments	—		11		18		31
Balance at end of period	86		135		86		135

Retained earnings
Balance at beginning of period	2,690		5,802		4,489		5,695
Net income (loss)	(787	)	425		(2,478	)	679
Actuarial gains (losses) transferred to retained earnings	(4	)	(1	)	7		(4	)
Common share dividends (note 16)	—		(69	)	(117	)	(209	)
Preferred share dividends (note 16)	—		(2	)	(2	)	(6	)
Balance at end of period	1,899		6,155		1,899		6,155

Accumulated other comprehensive income
Balance at beginning of period	811		811		811		811
Other comprehensive loss	(115	)	(1	)	(104	)	(4	)
Actuarial losses (gains) transferred to retained earnings	4		1		(7	)	4
Balance at end of period	700		811		700		811

See accompanying notes.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended				Nine months ended
	September 30,				September 30,
(millions of US$)	2015		2014		2015		2014
			(restated - note 4)				(restated - note 4)
Operating activities
Net income (loss) from continuing operations	(899	)	439		(2,184	)	813
Add: Finance costs (cash and non-cash) (note 13)	83		79		246		245
Items not involving cash (note 22)	1,378		(20	)	4,077		493
	562		498		2,139		1,551
Changes in non-cash working capital	(393	)	(45	)	(370	)	(300	)
Cash provided by operating activities from continuing operations	169		453		1,769		1,251

Investing activities
Capital expenditures
Exploration, development and other	(295	)	(493	)	(791	)	(1,421	)
Property acquisitions	(2	)	(23	)	(10	)	(23	)
Proceeds of resource property dispositions (notes 4 and 5)	—		102		—		1,494
Loan to joint venture, net of repayments (note 6)	—		7		—		(343	)
Investment in joint ventures (note 6)	(97	)	(186	)	(459	)	(186	)
Changes in non-cash working capital	(2	)	142		(230	)	137
Cash used in investing activities from continuing operations	(396	)	(451	)	(1,490	)	(342	)

Financing activities
Long-term debt repaid (note 14)	—		(18	)	(1,558	)	(897	)
Long-term debt issued (note 14)	—		44		452		359
Loans from joint ventures (note 6)	22		12		81		30
Loans from related parties (note 14)	128		—		959		—
Common shares issued (note 16)	—		—		—		4
Common shares purchased (note 16)	—		(17	)	(30	)	(17	)
Common shares held in trust sold (note 16)	—		—		3		—
Finance costs (cash)	(73	)	(73	)	(223	)	(225	)
Common share dividends	—		(69	)	(117	)	(209	)
Preferred share dividends	—		(2	)	(2	)	(6	)
Deferred credits and other	(9	)	11		(39	)	12
Changes in non-cash working capital	16		17		26		30
Cash provided by (used in) financing activities from continuing operations	84		(95	)	(448	)	(919	)
Effect of translation on foreign currency cash and cash equivalents	—		(1	)	1		5
Cash provided by (used in) operating activities from discontinued operations (note 4)	(5	)	7		(29	)	44
Cash provided by (used in) investing activities from discontinued operations (note 4)	46		(35	)	9		(160	)
Net decrease in cash and cash equivalents	(102	)	(122	)	(188	)	(121	)
Cash and cash equivalents net of bank indebtedness, beginning of period	167		352		253		351
Cash and cash equivalents net of bank indebtedness, end of period	65		230		65		230

Cash and cash equivalents	78		237		78		237
Bank indebtedness	(13	)	(7	)	(13	)	(7	)
Cash and cash equivalents net of bank indebtedness, end of period	65		230		65		230

See accompanying notes.

Notes to the Interim Condensed Consolidated Financial Statements

(Unaudited)

(tabular amounts in millions of US dollars, except as noted)

1. CORPORATE INFORMATION

Talisman Energy Inc. (“Talisman” or “the Company”) is a company incorporated pursuant to the laws of Canada and domiciled in Alberta, Canada. Talisman’s common shares are wholly-owned by a subsidiary of Repsol S.A. (“Repsol”). Talisman continues to be a reporting issuer in each of the jurisdictions of Canada. Its registered office is located at Suite 2000, 888 — 3rd Street SW, Calgary, Alberta, Canada, T2P 5C5.

The Company is in the business of exploration, development, production and marketing of crude oil, natural gas and natural gas liquids (NGLs).

The interim condensed Consolidated Financial Statements as at and for the three and nine month periods ended September 30, 2015 were approved by the Audit Committee on November 12, 2015.

Repsol Acquisition of Talisman

On May 8, 2015, the acquisition of Talisman by Repsol, by the way of an arrangement under the Canada Business Corporations Act, was completed. Repsol acquired all of the Company’s outstanding common and preferred shares. Upon the completion of the arrangement, the common shares were delisted from the Toronto Stock Exchange and the New York Stock Exchange, and the preferred shares were delisted from the Toronto Stock Exchange and converted into common shares on a 1:1 basis (note 16).

2. BASIS OF PREPARATION

These interim condensed Consolidated Financial Statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting as issued by the International Accounting Standards Board (IASB). Certain information and disclosures required to be included in notes to annual Consolidated Financial Statements prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations of the International Financial Reporting Interpretations Committee (IFRIC), as issued by the IASB, have been condensed or omitted.

The interim condensed Consolidated Financial Statements should be read in conjunction with the audited annual Consolidated Financial Statements of Talisman as at and for the year ended December 31, 2014 and the notes thereto.

These interim condensed Consolidated Financial Statements were prepared on a going concern basis, under the historical cost convention, except for certain financial assets and liabilities measured at fair value through the condensed Consolidated Statement of Income (Loss).

3. SIGNIFICANT ACCOUNTING POLICIES

a) Changes in Accounting Policies

The interim condensed Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation as the 2014 audited annual Consolidated Financial Statements, except for the following:

Foreign Currency Translation

Subsequent to the sale of substantially all of the assets and liabilities of Talisman’s Norwegian operations on September 1, 2015, (note 4), management has determined that the functional currency of the remaining Norwegian activities is more closely linked to the Norwegian Krone (NOK) than to the US$. Accordingly, effective September 1, 2015, these activities have been accounted for using a NOK functional currency. The impact of this change in functional currency during the third quarter of 2015 was to recognize a translation gain of $3 million included in other comprehensive income.

b) Accounting Policies Used

The interim condensed Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation as the audited annual Consolidated Financial Statements as at and for the year ended December 31, 2014, except for adoption of the following amendments to standards effective as of January 1, 2015:

Employee Benefits

· IAS 19 Employee Benefits - Amendments to IAS 19. The amended standard clarified the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service. In addition, it permits a practical expedient if the amount of the contributions is independent of the number of years of service, in that contributions can be, but are not required to be recognized as a reduction in the service cost in the period in which the related service is rendered. The amendment is effective for annual periods beginning on or after July 1, 2014. Application of the amended standard does not have an impact on the Company’s financial statements as it reflects current accounting policy of the Company.

Operating Segments

· IFRS 8 Operating Segments - Amendments to IFRS 8. The amended standard requires (i) disclosure of judgments made by management in aggregating segments, and (ii) a reconciliation of segmented assets to the Company’s assets when segment assets are reported. The amendment is effective for annual periods beginning on or after July 1, 2014. The amendment does not have an impact on the Company’s financial statements.

Fair Value Measurement

· IFRS 13 Fair Value Measurement - Amendments to IFRS 13. The amended standard clarifies that short-term receivables and payables with no stated interest rates can be measured at invoice amounts if the effect of discounting is immaterial. It also clarifies that the portfolio exception can be applied not only to financial assets and liabilities, but also to other contracts within scope of IAS 39 and IFRS 9. The amendment is effective for annual periods beginning on or after July 1, 2014. The application does not have a significant impact on the Company’s financial statements.

Related Parties

· IAS 24 Related Parties - Amendments to IAS 24. The amended standard (i) revises the definition of related party to include an entity that provides key management personnel services to the reporting entity or its parent, and (ii) clarifies related disclosure requirements. The amendment does not have an impact on the Company’s financial statements, as there is no entity performing key management services for the Company.

c) Accounting Pronouncements Not Yet Adopted

The Company continues to assess the impact of adopting the pronouncements from the IASB as described below:

Financial Instruments

· IFRS 9 Financial Instruments. IFRS 9 (July 2014) replaces earlier versions of IFRS 9 that had not yet been adopted by the Company and supersedes IAS 39 Financial Instruments: Recognition and Measurement. IFRS 9 introduces new models for classification and measurement of financial instruments, hedge accounting and impairment of financial assets and is mandatorily effective for periods beginning on or after January 1, 2018. The Company continues to review the standard as it is updated and monitor its impact on the Company’s financial statements.

Revenue from Contracts with Customers

· IFRS 15 Revenue from Contracts with Customers. IFRS 15 specifies that revenue should be recognized when an entity transfers control of goods or services at the amount the entity expects to be entitled to as well as requiring entities to provide users of financial statements with more informative, relevant disclosures. The standard supersedes IAS 18 Revenue, IAS 11 Construction Contracts, and a number of revenue-related interpretations. Initially, IFRS 15 was effective for annual periods beginning on or after January 1, 2017. On September 11, 2015, the IASB issued an amendment to the standard deferring the effective date to January 1, 2018. Application of the standard is mandatory and early adoption is permitted. The Company continues to review the standard as it is updated and monitor its impact on the Company’s financial statements.

4. DISCONTINUED OPERATIONS

On September 1, 2015, Talisman completed the sale of substantially all of the assets and liabilities of Talisman’s Norwegian operations (the “Disposal Group”), to Repsol Exploration Norge AS, a subsidiary of Repsol, for proceeds of $47 million including working capital. Talisman retained a corporate income tax asset.

Operating results related to the Disposal Group have been included in net income (loss) from discontinued operations in the interim condensed Consolidated Statements of Income (Loss). Comparative period balances of the condensed Consolidated Statements of Income (Loss) and Cash Flows have been restated. During the three months ended June 30, 2015, the Disposal Group was remeasured to its recoverable amount of $47 million and as a result, a loss on remeasurement of discontinued operations of $472 million pre-tax ($292 million after-tax) was recorded in Norway. When the acquisition closed on September 1, 2015, an additional $10 million pre-tax loss on remeasurement of discontinued operations ($2 million after-tax) was recorded. Exchange gains of $114 million relating to the Disposal Group previously recognized in accumulated other comprehensive income was included in the “Net income (loss) from discontinued operations” on the condensed Consolidated Statements of Income (Loss).

Net income (loss) from discontinued operations reported on the condensed Consolidated Statements of Income (Loss) is composed of the following:

Three months ended September 30	2015		2014
Revenue	38		141
Expenses	(28	)	(167	)
	10		(26	)
Loss on remeasurement of discontinued operations	(10	)	—
Realized accumulated translation adjustments on disposition of foreign operations	114		—
Income (loss) from discontinued operations before taxes	114		(26	)
Income taxes
Current income tax recovery	(1	)	(7	)
Deferred income tax expense (recovery)	3		(5	)
Net income (loss) from discontinued operations	112		(14	)

Nine months ended September 30	2015		2014
Revenue	182		414
Expenses	(429	)	(714	)
	(247	)	(300	)
Loss on remeasurement of discontinued operations	(482	)	—
Realized accumulated translation adjustments on disposition of foreign operations	114		—
Loss from discontinued operations before taxes	(615	)	(300	)
Income taxes
Current income tax recovery	(8	)	(12	)
Deferred income tax recovery	(313	)	(154	)
Net loss from discontinued operations	(294	)	(134	)

During the nine month period ended September 30, 2015, the Company recorded an impairment of $118 million in Norway E&E assets to fully impair costs associated with a license after a dry exploration well confirmed the license to be uneconomic. In addition, the Company recorded an impairment of $30 million in Norway, due to an increase in the decommissioning obligation and asset caused by a 1.5% decrease in the credit-adjusted discount rate used to measure decommissioning liabilities.

During the nine month period ended September 30, 2014, the Company recorded an impairment of $60 million in Norway, due to an increase in the decommissioning obligation and asset caused by a 1% decrease in the credit-adjusted discount rate used to measure decommissioning liabilities. The Company also recorded $130 million of impairment expense in Norway as a result of the Company’s decision to withdraw from an exploration license following technical evaluation, representing the full book value of the license.

The cash flows from discontinued operations, including changes in related non-cash working capital items, are as follows:

	Three months ended September 30				Nine months ended September 30
	2015		2014		2015		2014
Operating	(5	)	7		(29	)	44
Investing	46		(35	)	9		(160	)
Cash flows from discontinued operations	41		(28	)	(20	)	(116	)

5. DISPOSALS

North Sea Disposition

On September 1, 2015, Talisman completed the sale of substantially all of the assets and liabilities of Talisman’s Norwegian operations, to Repsol Exploration Norge AS, a subsidiary of Repsol, for proceeds of $47 million including working capital (note 4).

North America Dispositions

In July 2014, Talisman sold non-core assets in western Canada for total cash consideration of C$120 million. The transaction closed on July 31, 2014 with net proceeds of $99 million after $1 million in working capital adjustments, resulting in a pre-tax loss on disposal of $3 million ($3 million after-tax).

In April 2014, Talisman sold non-core assets in western Canada for net proceeds of $42 million after $2 million in working capital adjustments, resulting in a pre-tax loss on disposal of $3 million ($4 million after-tax).

In March 2014, Talisman completed the sale of its Montney acreage in northeast British Columbia for proceeds of $1.3 billion, resulting in a pre-tax gain of $564 million ($493 million after tax).

6. INVESTMENTS

	September 30, 2015	December 31, 2014
Investments in Joint Ventures
Equity investment in Equion Energía Limited (Equion)	446	523
Available-for-sale investments
Transasia Pipeline Company Pvt. Ltd.	34	34
Other	51	47
	85	81
Total	531	604

	September 30, 2015		December 31, 2014
Obligation to Fund Equity Investee
Equity investment in Talisman Sinopec Energy (UK) Limited (TSEUK)	(229	)	(700	)
Loan to TSEUK	—		514
	(229	)	(186	)

Investments in Joint Ventures

Movement in the investment in TSEUK joint venture during the period is as follows:

	Nine months ended September 30, 2015		Year ended December 31, 2014
Balance, beginning of period	(186	)	206
Investment in TSEUK	1,000		961
Loan to TSEUK, net of repayments and settlements1	(514	)	(298	)
Share of net loss and comprehensive loss	(529	)	(1,055	)
Balance, end of period	(229	)	(186	)

1. Amount shown net of subscriptions of common shares which settled a portion of the shareholder loan in each of June 2014 and July 2015.

Talisman has a 51% interest in the ownership and voting rights of TSEUK whose principal place of operations is the United Kingdom (UK) and is incorporated in England and Wales. Talisman is one of two shareholders in this corporate joint venture engaging in the exploration for, and development and production of crude oil and natural gas. The corporate joint venture is governed by a shareholders’ agreement, which requires that unanimous consent be obtained from the shareholders for all significant operating and financing decisions.

Movement in the investment in Equion joint venture during the period is as follows:

	Nine months ended September 30, 2015		Year ended December 31, 2014
Balance, beginning of period	523		920
Share of net income (loss) and comprehensive income (loss)	(16	)	15
Dividend declared by Equion1	(61	)	(279	)
Impairment	—		(133	)
Balance, end of period	446		523

1. The dividend declared in 2014 was settled through a reduction in the loan payable to Equion.

Talisman has a 49% interest in the ownership and voting rights of Equion whose principal place of operations is Colombia. Talisman is one of two shareholders in this strategic corporate joint venture engaged in the exploration for, and development and production of crude oil and natural gas. The corporate joint venture is governed by a heads of agreement between the shareholders, which requires that unanimous consent be obtained from the shareholders for all significant operating and financing decisions.

The following tables summarize the financial information of the joint ventures. The tables also reconcile financial information to the carrying amount of the Company’s interests in joint ventures, which are accounted for using the equity method.

	September 30, 2015				December 31, 2014
Summarized Balance Sheets	TSEUK1		Equion1	Total	TSEUK1		Equion1	Total
Cash and cash equivalents	45		107	152	37		141	178
Current assets	369		150	519	517		314	831
Loans receivable from shareholders	—		195	195	—		29	29
Non-current assets	4,920		1,051	5,971	4,812		1,246	6,058
Total assets	5,334		1,503	6,837	5,366		1,730	7,096
Current liabilities	787		331	1,118	1,073		392	1,465
Loans payable to shareholders	—		—	—	1,009		—	1,009
Non-current liabilities	5,147		321	5,468	4,807		329	5,136
Total liabilities	5,934		652	6,586	6,889		721	7,610
Net assets (liabilities)	(600	)	851	251	(1,523	)	1,009	(514	)

1. Balances represent respective entity’s 100% share.

Talisman’s interest	51	%	49	%			51	%	49	%
Talisman’s share of net assets (liabilities)	(306	)	417		111		(777	)	494		(283	)
Goodwill	77		162		239		77		162		239
	(229	)	579		350		(700	)	656		(44	)
Loan to TSEUK	—		—		—		514		—		514
Accumulated impairment on investment	—		(133	)	(133	)	—		(133	)	(133	)
Talisman’s investment (obligation to fund)	(229	)	446		217		(186	)	523		337

Summarized Statements of Income	Three months ended September 30, 2015						Three months ended September 30, 2014
(Loss)	TSEUK1		Equion1		Total		TSEUK1		Equion1		Total
Revenue	208		152		360		233		167		400

Operating	253		17		270		349		26		375
Transportation	2		11		13		6		11		17
General and administrative	1		—		1		12		—		12
Depreciation, depletion and amortization	164		89		253		64		60		124
Exploration expense	2		—		2		5		—		5
Finance costs	56		1		57		27		—		27
Other	24		30		54		26		(9	)	17
Income (loss) before tax	(294	)	4		(290	)	(256	)	79		(177	)
Current income tax expense (recovery)	(18	)	35		17		(24	)	50		26
Deferred income tax expense (recovery)	132		16		148		(173	)	(6	)	(179	)
Net income (loss) and comprehensive income (loss)	(408	)	(47	)	(455	)	(59	)	35		(24	)

1. Balances represent respective entity’s 100% share.

Talisman’s interest	51	%	49	%			51	%	49	%
Talisman’s share of income (loss) after tax	(208	)	(23	)	(231	)	(30	)	17		(13	)
Cash dividends received by Talisman	—		—		—		—		—		—

Summarized Statements of Income	Nine months ended September 30, 2015						Nine months ended September 30, 2014
(Loss)	TSEUK1		Equion1		Total		TSEUK1		Equion1		Total
Revenue	598		382		980		939		488		1,427

Operating	730		56		786		1,005		71		1,076
Transportation	13		27		40		17		31		48
General and administrative	42		—		42		27		—		27
Restructuring costs	5		—		5		—		—		—
Depreciation, depletion and amortization	448		240		688		240		192		432
Exploration expense	4		—		4		10		—		10
Finance costs	134		2		136		94		1		95
Impairment	260		—		260		198		—		198
Other	71		33		104		53		(35	)	18
Income (loss) before tax	(1,109	)	24		(1,085	)	(705	)	228		(477	)
Current income tax expense (recovery)	(70	)	51		(19	)	(50	)	125		75
Deferred income tax expense (recovery)	(2	)	6		4		(445	)	(25	)	(470	)
Net income (loss) and comprehensive income (loss)	(1,037	)	(33	)	(1,070	)	(210	)	128		(82	)

1. Balances represent respective entity’s 100% share.

Talisman’s interest	51	%	49	%			51	%	49	%
Talisman’s share of income (loss) after tax	(529	)	(16	)	(545	)	(107	)	63		(44	)
Cash dividends received by Talisman	—		—		—		—		—		—

	Three months ended September 30, 2015						Three months ended September 30, 2014
Summarized Statements of Cash Flows	TSEUK1		Equion1		Total		TSEUK1		Equion1		Total
Operating activities
Net income (loss)	(408	)	(47	)	(455	)	(59	)	35		(24	)
Add: Finance costs (cash and non-cash)	56		1		57		27		—		27
Items not involving cash	299		114		413		(87	)	53		(34	)
Changes in non-cash working capital	75		37		112		24		48		72
Cash provided by (used in) operating activities	22		105		127		(95	)	136		41

Investing activities
Capital expenditures	(157	)	(23	)	(180	)	(237	)	(62	)	(299	)
Loans to shareholders	—		(45	)	(45	)	—		(24	)	(24	)
Other	(31	)	(9	)	(40	)	(19	)	12		(7	)
Cash used in investing activities	(188	)	(77	)	(265	)	(256	)	(74	)	(330	)

Financing activities
Common shares issued	190		—		190		365		—		365
Loans from shareholders, net of repayments	—		—		—		(12	)	—		(12	)
Finance costs (cash)	(4	)	—		(4	)	(10	)	—		(10	)
Other	2		—		2		10		—		10
Cash provided by (used in) financing activities	188		—		188		353		—		353

1. Balances represent respective entity’s 100% share.

	Nine months ended September 30, 2015						Nine months ended September 30, 2014
Summarized Statements of Cash Flows	TSEUK1		Equion1		Total		TSEUK1		Equion1		Total
Operating activities
Net income (loss)	(1,037	)	(33	)	(1,070	)	(210	)	128		(82	)
Add: Finance costs (cash and non-cash)	134		2		136		94		1		95
Items not involving cash	736		259		995		35		154		189
Changes in non-cash working capital	(59	)	27		(32	)	(65	)	21		(44	)
Cash provided by (used in) operating activities	(226	)	255		29		(146	)	304		158

Investing activities
Capital expenditures	(568	)	(65	)	(633	)	(890	)	(131	)	(1,021	)
Proceeds of dispositions	—		7		7		—		14		14
Loans to shareholders	—		(166	)	(166	)	—		(61	)	(61	)
Other	(95	)	(65	)	(160	)	87		(3	)	84
Cash used in investing activities	(663	)	(289	)	(952	)	(803	)	(181	)	(984	)

Financing activities
Common shares issued	900		—		900		365		—		365
Loans from shareholders, net of repayments	—		—		—		674		—		674
Finance costs (cash)	(23	)	—		(23	)	(40	)	—		(40	)
Other	20		—		20		2		—		2
Cash provided by (used in) financing activities	897		—		897		1,001		—		1,001

1. Balances represent respective entity’s 100% share.

The summarized financial information presented is the amounts included in the financial statements of the joint venture entities adjusted for fair value adjustments made at the time of acquisition of the joint venture, as appropriate. The fair value adjustments related to the Company’s jointly controlled equity interest in Equion principally relate to property, plant and equipment, provisions and the related indemnification asset and goodwill. In addition, the financial statements of TSEUK have been adjusted with respect to asset impairments, depletion, depreciation and amortization, deferred income taxes, decommissioning liabilities and provisions.

TSEUK Joint Venture

As at September 30, 2015, the investment balance in the TSEUK joint venture was negative $229 million. The obligation to fund TSEUK, in proportion of its shareholding, arises from the Company’s past practice of funding TSEUK’s cash flow deficiencies, and the expectation that cash flow deficiencies will continue to be funded through 2016. In addition, the Company, in proportion of its shareholding, has provided certain guarantees to fund TSEUK’s decommissioning obligation if TSEUK is unable to (note 17), and the shareholders of TSEUK have provided equity funding facilities to TSEUK which include funding decommissioning liabilities. As such, the Company has recognized a negative investment value from the application of equity accounting. The Company’s obligation to fund TSEUK will increase to the extent future losses are generated within TSEUK. In addition, future contributions to the TSEUK joint venture could be impaired to the extent recoverability is not probable.

In June 2014, the shareholders of TSEUK provided an equity funding facility totaling $1.2 billion to TSEUK, of which Talisman was committed to $612 million, for the purpose of funding capital, decommissioning and operating expenditures of TSEUK. In March 2015, the maximum available amount was increased to $1.5 billion. This facility expired on June 30, 2015. During the period from July 1, 2014 to December 31, 2014, the shareholders of TSEUK agreed to subscribe for common shares of TSEUK in the amount of $625 million under this facility, of which Talisman’s share was $319 million. During the six month period ended June 30, 2015, the shareholders of TSEUK agreed to subscribe for common shares of TSEUK in the amount of $710 million under this facility, of which Talisman’s share was $362 million.

In June 2015, the shareholders of TSEUK provided a new equity funding facility of $1.7 billion, of which Talisman is committed to $867 million, for the purpose of funding capital, decommissioning and operating expenditures of TSEUK. This facility is effective from July 1, 2015 and expires on December 31, 2016. During the three month period ended September 30, 2015, the shareholders of TSEUK agreed to subscribe for common shares of TSEUK in the amount of $190 million under this facility, of which Talisman’s share was $97 million.

The shareholders of TSEUK have provided an unsecured loan facility totaling $2.4 billion to TSEUK, of which Talisman is committed to $1.2 billion, for the purpose of funding capital expenditures of TSEUK. In January 2015, an agreement was reached by the shareholders of TSEUK, in which the quarterly principal and interest payments of the facility were deferred until July 31, 2015. In July 2015, the shareholders of TSEUK agreed to subscribe for common shares of TSEUK in the amount of $1.1 billion, of which Talisman’s share was $541 million, which settled the remaining shareholder loan balance of $1.0 billion and accrued interest of $52 million, of which Talisman’s share was $514 million and $27 million, respectively. There was no loan balance outstanding as at September 30, 2015.

Any loans outstanding under this facility bear interest at the UK interest rate swap rate plus 2.5%, and are repayable quarterly in equal installments based upon a five year repayment period calculated from the date each loan is advanced. Any outstanding loans will mature December 31, 2017, although the maturity date may be extended from time to time upon agreement between the shareholders and TSEUK. Prior to the maturity date, TSEUK may repay, in full or in part, the balance outstanding on any loan advanced under this facility. Remaining borrowing capacity under this facility:

	Nine months ended September 30, 2015	Year ended December 31, 2014
Borrowing capacity, beginning of period	742	1,525
Advances	—	(783	)
Borrowing capacity, end of period	742	742
Talisman’s share	378	378

In June 2014, the shareholders of TSEUK agreed to subscribe for common shares of TSEUK in the amount of $1.26 billion, of which Talisman’s share was $643 million, which settled shareholder loans of $1.24 billion and accrued interest of $18 million, of which Talisman’s share was $634 million and $9 million, respectively.

TSEUK is required to provide demand letters of credit as security in relation to certain decommissioning obligations in the UK pursuant to contractual arrangements under Decommissioning Security Agreements (DSAs). Refer to “Liquidity Risk” in note 17.

During the three months ended March 31, 2015, the UK government announced that effective January 1, 2015 the rate of supplementary charge on ring fence profits decreased from 32% to 20%. Consequently, there is now a combined UK corporation tax and supplementary charge rate of 50% (down from 62%) for oil and gas companies with fields not subject to Petroleum Revenue Tax (PRT). The UK government also announced that the PRT rate will decrease from 50% to 35%, effective for years ending after December 31, 2015. As a result of this legislative change, TSEUK recorded a recovery of deferred PRT of $98 million ($50 million net to Talisman).

During the nine months ended September 30, 2015, an impairment expense of $260 million, of which Talisman’s share was $133 million, was recorded in TSEUK as a result of Talisman’s adoption of Repsol’s credit-adjusted discount rate in measuring decommissioning obligations.

Equion Joint Venture

During the three months ended September 30, 2015, Equion declared dividends payable to the shareholders in the amount of $125 million of which Talisman’s share was $61 million. The Company has recorded dividends receivable of $61 million with a corresponding reduction in the equity investment in Equion.

During the year ended December 31, 2014, Equion declared dividends payable to the shareholders in the amount of $570 million, of which Talisman’s share was $279 million. The Company has recorded a corresponding reduction in the equity investment in Equion. The dividends were settled through reduction of the loan due to Equion as described below.

The loan due to Equion of $96 million (December 31, 2014 - $15 million) is unsecured, due upon demand and bears interest at LIBOR plus 0.30%.

There have been no significant changes in expected future commitments of TSEUK and Equion, and the timing of those payments, since December 31, 2014.

7. GOODWILL

Continuity of goodwill	Nine months ended September 30, 2015	Year ended December 31, 2014
Balance, beginning of period	279	575
Disposals	—	(9	)
Impairments	—	(287	)
Balance, end of period	279	279

Goodwill has no tax basis.

8. OTHER ASSETS

	September 30, 2015	December 31, 2014
Accrued pension asset	3	4
Decommissioning sinking fund	74	71
Transportation rights1	86	92
Other	11	13
Total	174	180

1. Net of $22 million accumulated depreciation (December 31, 2014 - $16 million).

9. YME REMOVAL OBLIGATION

In March 2013, Talisman, acting on behalf of its partners in the Yme field in Norway, entered into an agreement with the platform contractor. This agreement terminated all existing Yme contracts and outstanding disputes between the Yme partners and the platform contractor, set out the provisions regarding the removal of the existing above-surface Yme structure, the delivery of the existing above-surface Yme structure to the platform contractor (which Talisman, acting on behalf of the Yme partners, will complete as the “Talisman Works”) and provided for a payment of $470 million from the platform contractor to the Yme partners to fund the cost of the Talisman Works. The Yme partners agreed to deposit $409 million into an escrow account, which can only be withdrawn for purposes of settling costs and liabilities associated with the Talisman Works.

During the three and nine months ended September 30, 2015, $2 million and $60 million (2014 - $9 million and $38 million) respectively in eligible expenditures were incurred on the Talisman Works which reduced the Yme removal obligation and the restricted cash balance by an equal amount. The remaining balances of restricted cash and Yme removal obligation were sold to Repsol Exploration Norge AS, a subsidiary of Repsol, as part of the Norwegian operating assets and liabilities on September 1, 2015 (note 4).

10. OIL AND GAS ASSETS

The cost and accumulated DD&A of the Company’s PP&E (including corporate assets) and E&E assets are as follows:

	PP&E		E&E assets		Total

Cost
At December 31, 2013	23,039		5,393		28,432

Additions	1,743		409		2,152
Disposals and derecognition	(1,981	)	(23	)	(2,004	)
Transfers from E&E assets to PP&E	285		(285	)	—
Change in decommissioning liabilities	130		114		244
Expensed to dry hole	—		(140	)	(140	)

At December 31, 2014	23,216		5,468		28,684

Acquisitions	—		11		11
Additions	715		132		847
Disposals and derecognition	(3,845	)	(2,125	)	(5,970	)
Transfers from E&E assets to PP&E	18		(18	)	—
Change in decommissioning liabilities	307		6		313
Expensed to dry hole	—		(20	)	(20	)

At September 30, 2015	20,411		3,454		23,865

Accumulated DD&A
At December 31, 2013	13,287		2,228		15,515

Charge for the period	1,936		10		1,946
Disposals and derecognition	(1,733	)	—		(1,733	)
Transfers from E&E assets to PP&E	10		(10	)	—
Impairment losses, net of reversals	672		676		1,348
Transfers from PP&E to E&E assets	(20	)	20		—

At December 31, 2014	14,152		2,924		17,076

Charge for the period	1,271		—		1,271
Disposals and derecognition	(3,613	)	(2,125	)	(5,738	)
Impairment, net of reversals1 (note 11)	333		193		526

At September 30, 2015	12,143		992		13,135

Net book value
At September 30, 2015	8,268		2,462		10,730
At December 31, 2014	9,064		2,544		11,608
At December 31, 2013	9,752		3,165		12,917

1. Balance includes $153 million in impairment expense related to discontinued operations in Norway.

11. IMPAIRMENT, NET OF REVERSALS

	Three months ended September 30		Nine months ended September 30
	2015	2014	2015	2014
Impairment losses
E&E assets	62	—	64	—
PP&E	263	—	309	—
	325	—	373	—
Impairment reversals
PP&E	—	—	—	(32	)
	—	—	—	(32	)
Net Impairment (reversal)	325	—	373	(32	)

During 2014, the Company recorded a $614 million pre-tax ($614 million after-tax) impairment expense relating to Eagle Ford, of which $488 million was to PP&E assets and $126 million to E&E assets. The CGU consists of upstream properties and midstream assets. The impairment was taken mainly as a result of the overall lower commodity price environment leading to the decrease of the properties and asset valuation. The recoverable amount, as reflected by the fair value less cost to sell of the CGU, is $1.8 billion (using Level 2 fair value inputs). In developing its view of fair market value, management considered precedent Eagle Ford transactions. Precedent transactions from 2014 and 2013 were used to derive market metrics. A discount factor was applied to the historical 2014 and 2013 market metrics to reflect the lower liquids prices observed in the fourth quarter of 2014, the reduction determined by reference to comparable “pure play” companies operating in the CGU. During 2015, there was sustained decline in commodity prices and few precedent transactions. As a result, the Company applied a further discount to historical observed market metrics and recorded a $325 million pre-tax ($325 million after-tax) impairment expense of which $263 million was to PP&E assets and $62 million to E&E assets.

In conjunction with the acquisition of the Company by Repsol, Repsol has completed a preliminary allocation of the purchase price for purposes of its accounting subsequent to the acquisition date. As part of the purchase price allocation, Repsol estimated preliminary fair values of the Company’s assets and liabilities. Based on this preliminary assessment, certain of the Company’s assets could be impaired or subject to impairment reversals in future periods. Management has not recorded these potential impairments or reversals in the September 30, 2015 financial statements as the estimates are considered preliminary and subject to further review. The magnitude of any impairments or reversals to be recorded in future periods will be determined as the purchase price allocation is finalized.

12. DECOMMISSIONING LIABILITIES

Continuity of decommissioning liabilities	Nine months ended September 30, 2015		Year ended December 31, 2014
Balance, beginning of period	1,928		1,769
Liabilities incurred during the period	11		75
Liabilities settled during the period	(73	)	(59	)
Accretion expense 1	37		51
Revisions in estimated cash flows	(19	)	109
Change in discount rate	321		60
Disposals	(1,188	)	(77	)
Balance, end of period	1,017		1,928
Expected to be settled within one year	38		43
Expected to be settled in more than one year	979		1,885
	1,017		1,928

1. Balance includes $14 million in accretion expense related to discontinued operations in Norway.

As a result of Repsol’s acquisition of Talisman in May 2015, Talisman has adopted Repsol’s credit-adjusted rate to discount its decommissioning liabilities. The provision has been calculated using the current estimated cost to retire the asset inflated to the estimated retirement date and then discounted using a weighted average credit-adjusted rate of 4.3% at September 30, 2015. As a result of the sale of assets and liabilities of the Company’s Norwegian operations to Repsol, $1.2 billion of discounted decommissioning liabilities ($1.3 billion undiscounted, note 18) were transferred to Repsol effective September 1, 2015.

13. FINANCE COSTS

	Three months ended September 30		Nine months ended September 30
	2015	2014	2015	2014
Interest on long-term debt	62	65	192	202
Miscellaneous interest expense and other fees	11	8	31	23
Accretion expense	10	6	23	20
	83	79	246	245

14. LONG-TERM DEBT

	September 30, 2015		December 31, 2014
Bankers’ Acceptances	—		475
Commercial Paper	—		103
Tangguh Project Financing	40		43
Short-term LIBOR Loan	—		150
Debentures and Notes (Unsecured)
US$ denominated	3,532		3,905
UK£ denominated (UK£ million)	377		388
Gross debt	3,949		5,064
Less: current portion	(156	)	(1,109	)
Long-term debt	3,793		3,955

		September 30, 2015		December 31, 2014
Loans from Related Parties		959		—

During the nine month period ended September 30, 2015, Talisman repaid debt of $1.6 billion, including $150 million of short-term LIBOR loan, $775 million of bankers’ acceptances, $255 million of commercial paper, $375 million of 5.125% notes and $3 million of Tangguh project financing. The Company also issued debt of $452 million, including $300 million of bankers’ acceptances and $152 million of commercial paper. The current liability of $156 million consists of $150 million in 8.5% notes, and $6 million in Tangguh project financing.

Bank Credit Facilities and Commercial Paper

At September 30, 2015, Talisman had unsecured credit facilities totaling $3.2 billion, consisting of facilities of $3 billion (Facility No. 1), maturing March 19, 2019 and $200 million (Facility No. 2), maturing October 21, 2019.

Borrowings under Facility No. 1 are available in the form of prime loans, C$ or US$ bankers’ acceptances, US$ base rate loans, LIBOR-based loans and letters of credit. In addition, drawings to a total of $1.0 billion are available in the form of letters of credit. Borrowings under Facility No. 2 are available in the form of prime loans, C$ or US$ bankers’ acceptances, US$ base rate loans, LIBOR-based loans and letters of credit.

At September 30, 2015, there were no drawings in the form of bankers’ acceptances or commercial paper. There was $79 million in letters of credit support outstanding at September 30, 2015. The authorized amount under the Company’s

commercial paper program is $1.0 billion, but the amount available under this program is limited to the availability of backup funds under the Company’s Facility No. 1.

At September 30, 2015, available borrowing capacity under the bank credit facilities was $3.1 billion.

Related Party Facilities

On May 8, 2015, TE Holdings SARL., a subsidiary of Talisman, entered into a $500 million revolving facility with Repsol Tesoreria Y Gestion Financiera, S.A. The facility matures on May 8, 2016 and bears an interest rate of LIBOR+0.80%. On September 30, 2015, the facility agreement was amended to extend the maturity date to May 8, 2018. As at September 30, 2015, $205 million has been drawn under this facility. Interest expense related to the facility recognized by Talisman during the quarter was $1 million.

On May 8, 2015, Talisman also entered into a $1.0 billion revolving facility with Repsol Energy Resources Canada, Inc. The facility matures on May 8, 2018 and bears an interest rate of LIBOR+1.20%. As at September 30, 2015, $754 million has been drawn under this facility. Interest expense related to the facility recognized by Talisman during the quarter was $3 million.

Debt Covenants

Talisman is in compliance with all of its debt covenants. The Company’s principal financial covenant under its primary bank credit facility is a debt-to-cash flow ratio of less than 3.5:1, calculated quarterly on a trailing 12-month basis as of the last day of each fiscal quarter. Considering the current commodity price environment, Talisman may require support from Repsol to ensure continued compliance with its liquidity and covenant requirements.

15. OTHER LONG-TERM OBLIGATIONS

	September 30, 2015	December 31, 2014
Accrued pension and other post-employment benefits liabilities	106	135
Deferred credits	18	41
Long-term portion of discounted obligations under finance leases	34	41
Long-term portion of share-based payments liability (note 16)	—	1
Other	75	55
	233	273

The fair value of financial liabilities included above approximates the carrying amount.

16. SHARE CAPITAL AND SHARE-BASED PAYMENTS

Authorized

Talisman’s authorized share capital consists of an unlimited number of common shares without nominal or par value and an unlimited number of first and second preferred shares.

Common Shares Issued

	Nine months ended September 30, 2015				Year ended December 31, 2014
Continuity of common shares	Shares		Amount		Shares		Amount
Balance, beginning of period	1,031,525,988		1,738		1,031,356,870		1,723
Issued on exercise of stock options	—		—		478,244		5
Converted from preferred shares	8,000,000		195		—		—
Shares previously held in trust sold on the open market	323,584		3		—		—
Shares purchased and held in trust for long-term PSU plan	(3,793,939	)	(30	)	(2,265,898	)	(21	)
Shares released from trust for long-term PSU plan	8,110,395		86		1,956,772		31
Balance, end of period	1,044,166,028		1,992		1,031,525,988		1,738

On May 8, 2015, Repsol’s acquisition of Talisman was completed, whereby Repsol acquired all outstanding common and preferred shares of Talisman. The outstanding preferred shares were subsequently converted into common shares on a 1:1 basis.

During the three month period ended September 30, 2015 and subsequent to September 30, 2015, there were no activities relating to the Company’s common shares.

During the nine month period ended September 30, 2015, the Company declared common share dividends of $0.1125 per common share for an aggregate dividend of $117 million.

Preferred Shares Issued

	Nine months ended September 30, 2015				Year ended December 31, 2014
Continuity of preferred shares	Shares		Amount		Shares	Amount
Cumulative Redeemable Rate Reset First Preferred Shares, 4.2% Series 1:
Balance, beginning of period	8,000,000		191		8,000,000	191
Converted into common shares	(8,000,000	)	(191	)	—	—
Balance, end of period	—		—		8,000,000	191

Subsequent to the acquisition of Talisman by Repsol on May 8, 2015, all Series 1 preferred shares were converted on a 1:1 basis into common shares.

During the nine month period ended September 30, 2015, Talisman declared preferred share dividends of C$0.2625 per share for an aggregate dividend of $2 million.

Share-Based Payments

Subsequent to the acquisition of Talisman by Repsol on May 8, 2015, all share-based payment units were settled and paid by May 29, 2015.

As at September 30, 2015, there were no short-term or long-term obligations on the Company’s balance sheets, relating to stock options, cash units, DSUs and RSUs, as all such outstanding units were settled and paid in the three month period ended June 30, 2015.

During the nine month period ended September 30, 2015, the Company recorded share-based payments recovery of $24 million (2014 - $25 million recovery) in respect of the following plans: stock options $38 million recovery, cash units - $3 million recovery, PSUs - $7 million expense, RSUs - $10 million expense, and DSUs - $nil. The share-based payments expense includes cash payments of $32 million (2014 - $20 million) to employees in settlement of fully accrued share-based payments liabilities for RSUs settled in the period. An additional cash payment of $86 million was made to employees in cash settlement of all stock options, cash units, RSUs, and PSUs outstanding on completion of Repsol’s acquisition of Talisman. In general and administrative expense in the condensed Consolidated Statement of Income (Loss), the Company recognized no DSU recovery relating to the directors and executive deferrals. General and administrative expense included payments of $8 million for settlement of DSUs as a result of Repsol’s acquisition of Talisman.

At September 30, 2015, there were no outstanding share-based payment arrangements.

17. FINANCIAL INSTRUMENTS

Talisman’s financial assets and liabilities at September 30, 2015 consisted of cash and cash equivalents, accounts receivable, available-for-sale investments, bank indebtedness, accounts payable and accrued liabilities, loans from joint ventures, loans from related parties, long-term debt (including the current portion) and risk management assets and liabilities arising from the use of derivative financial instruments.

Fair Value of Financial Assets and Liabilities

The fair values of cash and cash equivalents, accounts receivable, bank indebtedness, accounts payable and accrued liabilities, and loans from joint ventures approximate their carrying values due to the short-term maturity of those instruments.

Borrowings under bank credit facilities are short-term in nature and are market rate-based, thus, carrying value approximates fair value. The fair value of public debentures and notes is based on market quotations, which reflect the discounted present value of the principal and interest payments using the effective yield for instruments having the same term and risk characteristics. The fair values of private notes are based on estimations provided by third parties. The fair value of Talisman’s floating rate debt is determined by discounting future estimated coupon payments at the current market interest rate. The fair value of Talisman’s long-term debt (including the current portion) at September 30, 2015 was $4.7 billion (December 31, 2014 - $5.3 billion), while the carrying value was $4.9 billion (December 31, 2014 - $5.1 billion). The Company uses Level 2 inputs as described below to estimate the fair value of the outstanding long-term debt as at September 30, 2015.

The fair values of all other financial assets and liabilities approximate their carrying values.

Risk management assets and liabilities are recorded at their estimated fair values. To estimate fair value, the Company uses quoted market prices when available, or models that utilize observable market data. In addition to market information, the Company incorporates transaction-specific details that market participants would utilize in a fair value measurement, including the impact of non-performance risk. The Company’s non-performance risk is determined based on third party quotes for the Company’s debt instruments with maturity dates that are similar, or in close approximation, to the maturity dates of the corresponding financial instrument. The Company characterizes inputs used in determining fair value using a hierarchy that prioritizes inputs depending on the degree to which they are observable.

The three levels of the fair value hierarchy are as follows:

· Level 1 — inputs represent quoted prices in active markets for identical assets or liabilities (for example, exchange-traded commodity derivatives). Active markets are those in which transactions occur in sufficient frequency and volume to provide pricing information on an ongoing basis;

· Level 2 — inputs other than quoted prices included within level 1 that are observable, either directly or indirectly, as of the reporting date. Level 2 valuations are based on inputs, including quoted forward prices for commodities, market interest rates and volatility factors, which can be observed or corroborated in the marketplace. The Company obtains information from sources such as the New York Mercantile Exchange (NYMEX) and independent price publications; and

· Level 3 — inputs that are less observable, unavailable or where the observable data does not support the majority of the instrument’s fair value, such as the Company’s internally developed assumptions about market participant assumptions used in pricing an asset or liability, for example, an estimate of future cash flows used in the Company’s internally developed present value of future cash flows model that underlies the fair value measurement.

In forming estimates, the Company utilizes the most observable inputs available for valuation purposes. If a fair value measurement reflects inputs of different levels within the hierarchy, the measurement is categorized based upon the lowest level of input that is significant to the fair value measurement. The valuation of over-the-counter financial swaps and collars is based on similar transactions observable in active markets or industry standard models that rely primarily on market observable inputs. Substantially all of the assumptions for industry standard models are observable in active markets throughout the full term of the instrument. These are categorized as Level 2.

Fair values for derivative instruments are determined based on the estimated cash payment or receipt necessary to settle the contract. Fair values for commodity price derivatives are based on discounted cash flow analysis using current market rates and prices and option pricing models using forward pricing curves and implied volatility, as appropriate, which are compared to quotes received from financial institutions for reasonability. Fair values for interest rate instruments are based on discounted cash flow analysis using current market rates and prices.

Risk Management Assets, Liabilities, Gains and Losses

During the nine month period ended September 30, 2015, the Company received proceeds of $1.3 billion for settlement of its oil and gas derivative contracts, which included proceeds related to the liquidation of outstanding instruments. As at September 30, 2015, there was less than $1 million of risk management liability associated with the Company’s outstanding fixed price power swaps, which were measured using Level 2 inputs.

During the three month period ended September 30, 2015, the Company recorded no gain or loss on held-for-trading financial instruments (2014 - $428 million gain) and a gain of $62 million for the nine month period ended September 30, 2015 (2014 - $197 million gain).

Currency Risk

Talisman operates internationally and is therefore exposed to foreign exchange risk. Talisman’s primary exposure is from fluctuations in the US$ relative to the C$, UK£, and NOK.

Talisman manages its foreign exchange exposure in a number of ways. By denominating most of its borrowings in US$, the Company is able to reduce some of its economic exposure to currency fluctuations. Talisman also manages its translation exposure by generally matching internal borrowings with its subsidiaries’ functional currencies. The Company purchases foreign currencies, mostly at spot value, to meet its current foreign currency obligations as they come due.

In respect of financial instruments existing at September 30, 2015, a 1% strengthening of the US$ against the other currencies noted above, with all other variables assumed constant, would have resulted in less than $1 million change in net loss and comprehensive loss during the three month period ended September 30, 2015. A similar weakening of the US$ would have had the opposite impact.

Interest Rate Risk

Talisman is exposed to interest rate risk principally by virtue of its borrowings including loans from joint ventures. Borrowing at floating rates exposes Talisman to short-term movements in interest rates. Borrowing at fixed rates exposes Talisman to reset risk (i.e. at debt maturity). Risk management activities aim to manage the mix of fixed-to-floating debt to best manage the trade-off between longer term interest rate reset risk and shorter term volatility in interest rates.

In order to mitigate its exposure to interest rate changes, Talisman enters into interest rate swaps from time to time to manage the ratio of fixed rate debt to floating rate debt. The Company had fixed-to-floating interest rate swap contracts with a total notional amount of $300 million outstanding at the beginning of the year. These contracts expired on May 15, 2015. The Company did not enter any new interest rate swap contracts during the third quarter.

Credit Risk

A significant proportion of Talisman’s accounts receivable balance is with customers in the oil and gas industry and is subject to normal industry credit risks. At September 30, 2015, approximately 80% of the Company’s trade accounts receivables were current and the largest single counterparty exposure, accounting for 5% of the total, was with a highly rated counterparty. Concentration of counterparty credit risk is managed by having a broad domestic and international customer base primarily of highly rated counterparties.

Liquidity Risk

Talisman is exposed to liquidity risk, which is the risk that the Company may be unable to generate or obtain sufficient cash to meet its commitments as they come due. Talisman mitigates this risk through its management of cash, debt, committed credit capacity and its capital program.

Talisman manages its liquidity requirements by use of both short-term and long-term cash forecasts, and by maintaining appropriate undrawn capacity under committed bank and related party credit facilities. The Company has in place committed bank facilities totaling $3.2 billion, all of which are committed through 2019. At September 30, 2015, there were no drawings

in the form of bankers’ acceptance or commercial paper, and there was $79 million in letters of credit support outstanding. Available borrowing capacity under committed bank facilities was $3.1billion at September 30, 2015. In addition, the Company also has in place related party facilities from Repsol subsidiaries totaling $1.5 billion, all of which are committed through 2018. At September 30, 2015, $959 million were drawn under these facilities.

In addition, the Company utilizes letters of credit pursuant to letter of credit facilities, most of which are uncommitted. At September 30, 2015, demand letters of credit guaranteed by the Company totaling $1.2 billion were issued, of which $1.1 billion were issued from uncommitted facilities. Of that total, $0.9 billion is provided as security for the costs of decommissioning obligations in the UK, as described below. The remaining outstanding letters of credit relate primarily to a retirement compensation arrangement, guarantees of minimum work commitments and decommissioning obligations in other areas.

TSEUK is required to provide letters of credit as security in relation to certain decommissioning obligations in the UK pursuant to contractual arrangements under Decommissioning Security Agreements (DSAs). At the commencement of the joint venture, Addax Petroleum UK Limited (Addax) assumed 49% of the decommissioning obligations of TSEUK. Addax’s parent company, China Petrochemical Corporation (Sinopec), has provided an unconditional and irrevocable guarantee for this 49% of the UK decommissioning obligations.

The UK government passed legislation in 2013 which provides for a contractual instrument, known as a Decommissioning Relief Deed, for the government to guarantee tax relief on decommissioning costs at 50%, allowing security under DSAs to be posted on an after-tax basis and reducing the value of letters of credit required to be posted by 50%. TSEUK has entered into a Decommissioning Relief Deed with the UK Government and continues to negotiate with counterparties to amend all DSAs accordingly. Tax relief guaranteed by the UK government is limited to corporate tax paid since 2002. Under the limitation, TSEUK’s tax relief is capped at $2.1 billion, representing corporate income taxes paid and recoverable since 2002.

At September 30, 2015, TSEUK has $2.6 billion of demand shared facilities in place under which letters of credit of $1.8 billion have been issued. The Company guarantees 51% of all letters of credit issued under these shared facilities.

The Company has also granted guarantees to various beneficiaries in respect of decommissioning obligations of TSEUK.

At September 30, 2015, Talisman’s share of TSEUK’s total recorded decommissioning liabilities was $2.7 billion. Decommissioning estimates are subject to a significant amount of management judgment given the long dated nature of the assets and the timing of remediation upon cessation of production. The Company reviews its assessment of decommissioning liabilities annually, or where a triggering event causes a review, taking into account new information and industry experience.

Any changes to decommissioning estimates influence the value of letters of credit required to be provided pursuant to DSAs. In addition, the extent to which shared facility capacity is available, and the cost of that capacity, is influenced by the Company’s investment-grade credit rating.

funding decommissioning liabilities. As such, the Company has recognized a negative investment value from the application of equity accounting. The Company’s obligation to fund TSEUK will increase to the extent future losses are generated within TSEUK. In addition, future contributions to the TSEUK joint venture could be impaired to the extent recoverability is not probable.

Except for long-term debt that matures as outlined in note 14 and other long-term obligations detailed in note 15, all of the Company’s financial liabilities are due within one year.

Commodity Price Risk

Talisman is exposed to commodity price risk since its revenues are dependent on the price of crude oil, natural gas and NGLs. Talisman may enter into derivative instruments from time to time to mitigate commodity price risk volatility under guidelines approved by the Board of Directors. The Company may hedge a portion of its future production to protect cash flows to allow it to meet its strategic objectives.

During the six month period ended June 30, 2015, the Company liquidated all its contracts related to commodity price risk management. During the three month period ended September 30, 2015 and subsequent to September 30, 2015, the Company has not entered into any new commodity price risk management derivative contracts.

At September 30, 2015, the Company had power commodity price derivative contracts outstanding with fair value of less than $1 million.

18. CONTINGENCIES AND COMMITMENTS

Provisions and Contingencies

From time to time, Talisman is the subject of litigation arising out of the Company’s operations. Damages claimed under such litigation may be material or may be indeterminate and the outcome of such litigation may materially impact the Company’s financial condition or results of operations. While Talisman assesses the merits of each lawsuit and defends itself accordingly, the Company may be required to incur significant expenses or devote significant resources to defend itself against such litigation. These claims are not currently expected to have a material impact on the Company’s financial position. A summary of specific legal proceedings and contingencies is as follows:

Galley Pipeline

In August 2012, a portion of the Galley pipeline, in which TSEUK has a 67.41% interest, suffered an upheaval buckle.

In September 2012, TSEUK, in which Talisman holds a 51% interest, claimed for the suffered losses as a consequence of the incidence to Oleum Insurance Company (“Oleum”), a wholly-owned Talisman subsidiary. TSEUK delivered a proof of loss seeking recovery under the insuring agreement of $315 million.

The information delivered by TSEUK in November 2014 purporting to substantiate its claim did not support a determination of coverage and Oleum sought additional information from TSEUK to facilitate final coverage determination.

TSEUK has sent additional information to Oleum that is being reviewed by external counsel.

Addax Arbitration

On July 13, 2015, Addax Petroleum UK Limited and Sinopec International Petroleum Exploration and Production Corporation, filed a Notice of Arbitration against Talisman Energy Inc. (“TEI”) and Talisman Colombia Holdco Limited (“TCHL”) in connection with the purchase of 49% shares of Talisman Energy (UK) Limited (now known as TSEUK). TEI and TCHL have filed their responses to the Notice of Arbitration on October 1, 2015. In the Company’s opinion, the claims included in the Notice of Arbitration are without merit.

Government and Legal Proceedings with Tax Implications

Specific tax claims which Talisman and its subsidiaries are parties to at September 30, 2015 are as follows:

Canada

The Canadian tax authorities, Canada Revenue Agency, (“CRA”) regularly inspect the tax matters of the Talisman Group companies based in Canada. In 2015, verification and investigation activities related to the years 2006-2010 have been made.

As part of these proceedings, the CRA has questioned certain restructuring transactions, although this line of questioning has not resulted in court proceedings to date.

Indonesia

Indonesian Corporate Tax Authorities have been questioning various aspects of the taxation of permanent establishments that Talisman Group has in the country. These proceedings are pending a court hearing.

Malaysia

Talisman Malaysia Ltd. and Talisman Malaysia (PM3) Ltd., the Talisman Group’s operating subsidiaries in Malaysia, have received notifications from the Inland Revenue Board (IRB) in respect of the years 2007, 2008 and 2011 questioning, primarily, the deductibility of certain costs. These proceedings are pending a court hearing.

Timor-Leste

The authorities of Timor-Leste, questioned the deduction by TLM Resources (JPDA 06-105) Pty Limited, the Talisman Group’s subsidiary in East Timor, of certain expenses for income tax purposes. This line of questioning is at a very preliminary stage of debate with the authorities.

Commitments

Except for the commitments at December 31, 2014 associated with Talisman’s Norwegian operations listed below, there have been no significant changes to Talisman’s expected future commitments, and the timing of those payments, since December 31, 2014. As a result of the sale of substantially all of the assets and liabilities of Talisman’s Norwegian operations, the following commitments are no longer those of the Company:

	2015	2016	2017	2018	2019	Subsequent to 2019	Total
Office leases	2	2	—	—	—	—	4
Vessel leases	5	2	2	2	—	—	11
Transportation and processing commitments	55	3	—	—	—	—	58
Decommissioning liabilities (note 12)	73	134	174	230	132	567	1,310
Yme removal obligation (note 9)	186	—	—	—	—	—	186
PP&E and E&E assets	61	—	—	—	—	—	61
Other service contracts	18	—	—	—	—	—	18
	400	141	176	232	132	567	1,648

19. OTHER INCOME

	Three months ended September 30		Nine months ended September 30
	2015	2014	2015	2014
Pipeline and customer treating tariffs	6	14	32	47
Investment income	4	4	10	14
Interest on loan to TSEUK (note 6)	—	4	10	23
Marketing and other income	14	13	53	28
	24	35	105	112

20. OTHER EXPENSES, NET

	Three months ended September 30			Nine months ended September 30
	2015	2014		2015	2014
Foreign exchange (gain) loss	3	(20	)	8	(15	)
PP&E derecognition	—	4		—	4
Restructuring	—	1		35	18
Transaction costs1	—	—		41	—
Other miscellaneous	31	8		96	30
	34	(7	)	180	37

1. Costs incurred in relation to the acquisition of Talisman by Repsol.

21. INCOME TAXES

Current Income Tax (Recovery) Expense

	Three months ended September 30				Nine months ended September 30
	2015		2014		2015		2014
North America	—		(38	)	(5	)	(34	)
Southeast Asia	60		94		189		318
North Sea	(419	)	1		(418	)	—
Other	—		8		10		46
Total	(359	)	65		(224	)	330

Deferred Income Tax (Recovery) Expense

	Three months ended September 30				Nine months ended September 30
	2015		2014		2015	2014
North America	(36	)	(34	)	141	10
Southeast Asia	(13	)	7		2	20
North Sea	445		19		469	22
Other	16		(3	)	32	—
Total	412		(11	)	644	52

During the three month period ended September 30, 2015, $419 million of the deferred tax asset was reclassified to current tax receivable by recording a $419 million deferred tax expense and a corresponding current tax recovery as a result of the disposition of substantially all assets and liabilities of the Norway operations. During the nine month period ended September 30, 2015, the deferred tax expense was impacted by a $37 million charge related to a substantively enacted Alberta corporate tax rate increase of 2%. In addition, as a result of the acquisition by Repsol, the Company recorded additional tax expense totaling $275 million related to the derecognition of certain tax assets.

22. SUPPLEMENTAL CASH FLOW

Items Not Involving Cash

	Three months ended September 30			Nine months ended September 30
	2015	2014		2015	2014
Depreciation, depletion and amortization	394	398		1,184	1,220
Impairment, net of reversals	325	—		373	(32	)
Dry hole	1	36		14	64
Share-based payments recovery	—	(17	)	—	(25	)
(Gain) loss on disposals	—	(6	)	9	(560	)
Unrealized (gain) loss on held-for-trading financial instruments	—	(420	)	1,268	(292	)
Deferred income tax	412	(11	)	644	52
Foreign exchange	3	(22	)	16	(16	)
Derecognition	—	4		—	4
Loss from joint ventures and associates, after tax	231	13		545	44
Other	12	5		24	34
	1,378	(20	)	4,077	493

Other Cash Flow Information

	Three months ended September 30		Nine months ended September 30
	2015	2014	2015	2014
Cash interest paid	55	49	185	174
Cash interest received	—	—	1	24
Cash income taxes paid	80	115	227	446

23. CASH AND CASH EQUIVALENTS

Of the cash and cash equivalents balance of $78 million (December 31, 2014 - $262 million), the entire balance (December 31, 2014 - $262 million) has been invested in bank deposits. There were no investments in highly rated marketable securities with original maturities of less than three months as at September 30, 2015.

24. RELATED PARTY DISCLOSURES

Interest in subsidiaries

The interim condensed Consolidated Financial Statements include the financial statements of Talisman Energy Inc. and its directly or indirectly owned subsidiaries. Transactions between subsidiaries are eliminated on consolidation. The following table lists the material operating subsidiaries owned directly or indirectly by Talisman as at September 30, 2015:

Name of Subsidiary	Jurisdiction of Incorporation	Percentage of Voting Securities Owned
Talisman Energy Canada¹	Alberta	100	%
Talisman Energy USA Inc.	Delaware	100	%
Talisman Alberta Shale Partnership	Alberta	100	%
Talisman (Corridor) Ltd.	Barbados	100	%
Talisman (Vietnam 15-2/01) Ltd.	Alberta	100	%
Talisman Malaysia Limited	Barbados	100	%
Talisman Malaysia (PM3) Limited	Barbados	100	%
Talisman (Algeria) B.V.	The Netherlands	100	%

1. Talisman Energy Canada is an Alberta general partnership which currently carries on substantially all of Talisman’s conventional Canadian oil and gas operations.

Related party transactions with Repsol and Joint Ventures

In June and August 2015, Talisman (Algeria) B.V. (“TABV”) entered into Sale and Purchase Agreements with Repsol Trading S.A., a subsidiary of Repsol, under which TABV sold to Repsol approximately 615,000 barrels and 269,000 barrels of Saharan Blend Crude Oil for $38 million and $12 million, respectively. As at September 30, 2015, there were no outstanding receivable balances as a result of these transactions.

In July 2015, Talisman (Colombia) Oil and Gas Ltd. (“TCOG”) entered into a Sale and Purchase Agreement with Repsol Trading S.A., a subsidiary of Repsol, under which TCOG sold to Repsol approximately 229,000 barrels of Crude Oil for $11 million. As at September 30, 2015, there were no outstanding receivable balances as a result of this transaction.

Talisman entered into a commitment in 2001 to sell gas of 367.5 million British thermal units (“mmbtu”) daily in the Corridor Block in Indonesia to Gas Supply Pte. Ltd (“GSPL”), a subsidiary of Repsol’s significant shareholder Temasek Holdings Limited (“Temasek”). The commitment matures in 2023. As a result of Repsol’s acquisition of Talisman on May 8, 2015, GSPL and Temasek became Talisman’s related parties. Since May 8, 2015, Talisman gas sales to GSPL totaled $93 million (net Talisman’s share). As at September 30, 2015, the amount included in accounts receivable as a result of this commitment was $20 million.

Other transactions between Talisman and subsidiaries of Talisman’s parent, Repsol, since May 8, 2015, are disclosed in note 4 and note 14. Related party transactions with joint ventures are disclosed as part of note 6 and note 19.

25. SEGMENTED INFORMATION

Talisman’s activities are conducted in four geographic segments: North America, the North Sea, Southeast Asia and Other. The North America segment includes operations and exploration in Canada and the US. The Southeast Asia segment includes operations and exploration activities in Indonesia, Malaysia, Vietnam, Papua New Guinea and in Australia/Timor-Leste. The North Sea segment includes operations and exploration activities in the UK. The Company also has non-operated production in Algeria, operations and exploration activities in Colombia, and exploration activities in the Kurdistan Region of Iraq. Furthermore, the Company is in the process of exiting Peru. For ease of reference, all of the activities in Algeria, Colombia, Peru and the Kurdistan Region of Iraq are referred to collectively as the Other geographic segment. All activities relate to the exploration, development, production and transportation of oil, liquids and natural gas.

	North America (1)								Southeast Asia (2)
	Three months ended September 30				Nine months ended September 30				Three months ended September 30		Nine months ended September 30
(millions of US$)	2015		2014		2015		2014		2015	2014	2015	2014
Revenue
Sales	225		427		727		1,445		288	494	910	1,591
Other income	16		18		61		45		1	—	2	1
Income (loss) from joint ventures, after tax	—		—		—		—		—	—	—	—
Total revenue and other income	241		445		788		1,490		289	494	912	1,592
Segmented expenses
Operating	103		128		344		396		97	114	266	366
Transportation	25		26		76		65		13	13	41	40
DD&A	258		282		767		844		122	111	372	341
Impairment, net of reversals	325		—		325		(32	)	—	—	48	—
Dry hole	—		—		—		—		1	6	—	34
Exploration	(3	)	2		44		11		16	27	52	66
Other	7		10		116		41		2	1	25	3
Total segmented expenses	715		448		1,672		1,325		251	272	804	850
Segmented income (loss) from continuing operations before taxes	(474	)	(3	)	(884	)	165		38	222	108	742
Non-segmented expenses
General and administrative
Finance costs
Share-based payments recovery
Currency translation
Gain on held-for-trading financial instruments
(Gain) loss on asset disposals
Total non-segmented expenses
Income (loss) from continuing operations before taxes
Capital expenditure
Exploration	45		33		84		78		9	66	54	103
Development	179		315		471		871		46	59	109	205
Exploration and development	224		348		555		949		55	125	163	308
Acquisitions
Proceeds on dispositions
Other non-segmented
Net capital expenditures
Property, plant and equipment					6,107		6,321				1,915	2,223
Exploration and evaluation assets					1,332		1,345				731	667
Goodwill					110		110				169	169
Investments in joint ventures and associates					—		—				—	—
Other					306		555				567	740
Segmented assets					7,855		8,331				3,382	3,799
Non-segmented assets
Total assets (5)
Decommissioning liabilities (5)					664		381				324	334

Three months ended
September 30

Nine months ended
September 30

1. North America

2015

2014

2015

2014

Canada

177

327

635

146

268

461

855

Total revenue and other income

241

445

788

1,490

Canada

2,557

2,507

3,550

3,814

Property, plant and equipment (5)

6,107

6,321

Canada

930

871

402

474

Exploration and evaluation assets (5)

1,332

1,345

Three months ended
September 30

Nine months ended
September 30

2. Southeast Asia

2015

2014

2015

2014

Indonesia

161

266

506

794

Malaysia

136

263

422

Vietnam

111

304

Australia

—

Total revenue and other income

289

494

912

1,592

Indonesia

889

941

Malaysia

591

698

Vietnam

240

308

Papua New Guinea

129

143

Australia

133

Property, plant and equipment (5)

1,915

2,223

Indonesia

Malaysia

Vietnam

196

191

Papua New Guinea

400

398

Exploration and evaluation assets (5)

731

667

5. Current year represents balances at September 30. Prior year represents balances at December 31.

	North Sea (3)								Other (4)							Total
	Three months ended September 30				Nine months ended September 30				Three months ended September 30				Nine months ended September 30			Three months ended September 30				Nine months ended September 30
(millions of US$)	2015		2014		2015		2014		2015		2014		2015		2014	2015		2014		2015		2014
Revenue
Sales	—		—		—		—		28		52		125		201	541		973		1,762		3,237
Other income	1		5		11		24		6		12		31		42	24		35		105		112
Income (loss) from joint ventures, after tax	(208	)	(30	)	(529	)	(107	)	(23	)	17		(16	)	63	(231	)	(13	)	(545	)	(44	)
Total revenue and other income	(207	)	(25	)	(518	)	(83	)	11		81		140		306	334		995		1,322		3,305
Segmented expenses
Operating	—		—		—		—		15		21		49		44	215		263		659		806
Transportation	—		—		—		—		9		8		20		23	47		47		137		128
DD&A	—		—		—		—		14		5		45		35	394		398		1,184		1,220
Impairment, net of reversals	—		—		—		—		—		—		—		—	325		—		373		(32	)
Dry hole	—		—		—		—		—		30		14		30	1		36		14		64
Exploration	(4	)	—		16		—		11		15		30		50	20		44		142		127
Other	19		(1	)	23		(2	)	3		3		8		10	31		13		172		52
Total segmented expenses	15		(1	)	39		(2	)	52		82		166		192	1,033		801		2,681		2,365
Segmented income (loss) from continuing operations before taxes	(222	)	(24	)	(557	)	(81	)	(41	)	(1	)	(26	)	114	(699	)	194		(1,359	)	940
Non-segmented expenses
General and administrative																61		92		228		297
Finance costs																83		79		246		245
Share-based payments recovery																—		(16	)	(24	)	(25	)
Currency translation																3		(20	)	8		(15	)
Gain on held-for-trading financial instruments																—		(428	)	(62	)	(197	)
(Gain) loss on asset disposals																—		(6	)	9		(560	)
Total non-segmented expenses																147		(299	)	405		(255	)
Income (loss) from continuing operations before taxes																(846	)	493		(1,764	)	1,195
Capital expenditure
Exploration	—		—		—		—		1		28		10		118	55		127		148		299
Development	—		—		—		—		7		1		27		8	232		375		607		1,084
Exploration and development	—		—		—		—		8		29		37		126	287		502		755		1,383
Acquisitions																3		—		11		36
Proceeds on dispositions																—		(102	)	—		(1,494	)
Other non-segmented																3		10		22		30
Net capital expenditures																293		410		788		(45	)
Property, plant and equipment					—		256						246		264					8,268		9,064
Exploration and evaluation assets					—		125						399		407					2,462		2,544
Goodwill					—		—						—		—					279		279
Investments in joint ventures and associates					—		—						446		523					446		523
Other					472		2,051						212		301					1,557		3,647
Segmented assets					472		2,432						1,303		1,495					13,012		16,057
Non-segmented assets																				2		1,273
Total assets (5)																				13,014		17,330
Decommissioning liabilities (5)					—		1,176						29		37					1,017		1,928

	Three months ended September 30				Nine months ended September 30
3. North Sea	2015		2014		2015		2014
UK	—		4		10		23
Norway	1		1		1		1
Loss from TSEUK	(208	)	(30	)	(529	)	(107	)
Total revenue and other income	(207	)	(25	)	(518	)	(83	)
UK					—		—
Norway					—		256
Property, plant and equipment (5)					—		256
UK					—		—
Norway					—		125
Exploration and evaluation assets (5)					—		125

	Three months ended September 30				Nine months ended September 30
4. Other	2015		2014		2015		2014
Algeria	15		27		93		134
Colombia6	(4	)	54		47		172
Total revenue and other income	11		81		140		306
Algeria					195		224
Colombia					51		40
Property, plant and equipment (5)					246		264
Colombia					202		208
Kurdistan Region of Iraq					197		199
Exploration and evaluation assets (5)					399		407

5. Current year represents balances at September 30. Prior year represents balances at December 31.

6. Balances include after-tax equity income from Equion.

Exhibit 99.2

TALISMAN ENERGY INC.

INTERIM MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE PERIOD ENDED SEPTEMBER 30, 2015

Management’s Discussion and Analysis (MD&A)

(November 13, 2015)

General

This interim MD&A should be read in conjunction with the unaudited interim condensed Consolidated Financial Statements of Talisman Energy Inc. (“Talisman” or “the Company”) as at and for the three and nine month periods ended September 30, 2015 and 2014, and the 2014 MD&A and audited annual Consolidated Financial Statements of the Company. The Company’s interim condensed Consolidated Financial Statements have been prepared in accordance with International Accounting Standard (IAS) 34, Interim Financial Reporting within International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Talisman’s financial statements are prepared on a consolidated basis and include the accounts of Talisman and its subsidiaries. Substantially all of Talisman’s activities are conducted jointly with others, and the condensed Consolidated Financial Statements reflect only the Company’s proportionate interest in such activities, with the exception of the Company’s investments in Talisman Sinopec Energy UK Limited (TSEUK) and Equion Energía Limited (Equion) which are accounted for using the equity method.

All comparisons are between the three month periods ended September 30, 2015 and 2014, unless stated otherwise. All amounts presented are in US$, except where otherwise indicated. Abbreviations used in this MD&A are listed in the section “Abbreviations and Definitions”. Unless otherwise indicated, amounts only reflect results from consolidated subsidiaries. Additional information relating to the Company, including its Annual Information Form (AIF), can be found on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com.

On May 8, 2015, the acquisition of Talisman by a wholly-owned subsidiary of Repsol S.A. (“Repsol”), by the way of an arrangement under the Canada Business Corporations Act, was completed. Repsol acquired all of the Company’s outstanding common and preferred shares. Upon the completion of the arrangement, the common shares were delisted from the Toronto Stock Exchange and the New York Stock Exchange, and the preferred shares were delisted from the Toronto Stock Exchange and converted into common shares on a 1:1 basis.

During the three month period ended September 30, 2015, Repsol Exploration Norge AS, a subsidiary of Repsol acquired substantially all of the assets and liabilities of Talisman’s Norwegian operations pursuant to a purchase and sale agreement dated April 14, 2015. The transaction closed on September 1, 2015. For further information, see the “Discontinued Operations” and “Transactions with Related Parties” section of the MD&A.

Use of “boe” and Change in Conversion Ratio

In conjunction with the acquisition of the Company by Repsol, the Company has adopted Repsol’s barrels of oil equivalent (boe) conversion ratio. The Company now applies a conversion factor of 1 barrel of oil equivalent (boe) equals 5,615 standard cubic feet of gas. The previous conversion ratio used was 6,000 standard cubic feet of gas. Comparative periods have been adjusted to reflect the change in conversion. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 5.615mcf:1bbl is based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent value equivalence at the wellhead.

Change of Norwegian functional currency

Subsequent to the sale of substantially all of the assets and liabilities of Talisman’s Norwegian operations on September 1, 2015, management has determined that the functional currency of the remaining Norwegian activities is more closely linked to the Norwegian Krone (NOK) than to the US$. Accordingly, effective September 1, 2015, these activities have been accounted for using a NOK functional currency. The impact of this change in functional currency during the third quarter of 2015 was to recognize a translation gain of $3 million included in other comprehensive income.

FINANCIAL AND OPERATING HIGHLIGHTS1,2

($ millions, unless otherwise	Nine Months Ended September 30				Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4
stated)	2015		2014		2015		2015		2015		2014		2014		2014		2014		2013
Total revenue and other income from continuing operations	1,322		3,305		334		551		437		(71	)	995		1,134		1,176		779
Total revenue and other income from discontinued operations3	182		414		38		83		61		115		141		108		165		150
Total revenue and other income	1,504		3,719		372		634		498		44		1,136		1,242		1,341		929
Net income (loss) from continuing operations	(2,184	)	813		(899	)	(888	)	(397	)	(1,154	)	439		(207	)	581		(830	)
Net income (loss) from discontinued operations3	(294	)	(134	)	112		(364	)	(42	)	(436	)	(14	)	(30	)	(90	)	(175	)
Net income (loss)	(2,478	)	679		(787	)	(1,252	)	(439	)	(1,590	)	425		(237	)	491		(1,005	)
Per common share ($)
Net income (loss)4	(2.39	)	0.65		(0.75	)	(1.20	)	(0.43	)	(1.54	)	0.41		(0.23	)	0.47		(0.98	)
Diluted net income (loss)5	(2.42	)	0.57		(0.75	)	(1.24	)	(0.43	)	(1.54	)	0.38		(0.24	)	0.43		(0.98	)
Income (loss) from continuing operations per common share
Basic	(2.11	)	0.78		(0.86	)	(0.85	)	(0.39	)	(1.12	)	0.42		(0.20	)	0.56		(0.81	)
Diluted	(2.14	)	0.70		(0.86	)	(0.89	)	(0.39	)	(1.12	)	0.39		(0.21	)	0.52		(0.81	)
Production (Daily Average - Gross)
Oil and liquids (mbbls/d)	123		126		120		127		124		125		119		132		125		120
Natural gas (mmcf/d)	1,314		1,282		1,299		1,321		1,325		1,328		1,276		1,308		1,268		1,312
Continuing operations (mboe/d)	358		354		351		362		360		362		345		365		351		354
Assets sold or held for sale (mboe/d)6	15		32		13		16		16		18		23		27		50		50
Total mboe/d (5.615mcf = 1boe)	373		386		364		378		376		380		368		392		401		404

1. Includes the Company’s proportionate interest in production from joint ventures.

2. In the second quarter of 2015, the Company changed the conversion ratio of barrels of oil equivalent (boe) of natural gas for one barrel of oil to a ratio of 5.615:1 from 6:1. Comparative periods have been adjusted to reflect the change in conversion.

3. Discontinued Operations are the results associated with the Norway disposition.

4. Net income (loss) per share includes an adjustment to the numerator for after-tax cumulative preferred share dividends.

5. Diluted net income (loss) per share computed under IFRS includes an adjustment to the numerator for the change in the fair value of stock options and after-tax cumulative preferred share dividends.

6. Includes discontinued operations.

During the third quarter of 2015, the Company had a net loss of $787 million compared to net income of $425 million in the same quarter in 2014 due principally to lower commodity prices, slightly lower volumes, increased losses from joint ventures, asset impairments and no gains from held-for-trading financial instruments. These were partially offset by lower royalties, reduction in operating and general and administration expenses and the recognition of foreign exchange gains upon the completed sale of substantially all of the assets and liabilities of the Company’s Norwegian operations.

Production volumes from continuing operations remained relatively consistent in the third quarter of 2015 compared to the third quarter of 2014, with a small increase in natural gas production.

DAILY AVERAGE PRODUCTION

	Three months ended September 30
	Gross before royalties		Net of royalties
	2015	2014	2015	2014
Oil and liquids from Consolidated Subsidiaries (mbbls/d)
North America	40	41	34	33
Southeast Asia	33	43	22	28
North Sea	10	14	10	14
Other	14	16	8	8
	97	114	74	83
Oil and liquids from Joint Ventures (mbbls/d)
TSEUK	20	12	20	12
Equion	13	9	11	7
	33	21	31	19
Total oil and liquids from Consolidated Subsidiaries and Joint Ventures (mbbls/d)	130	135	105	102
Natural gas from Consolidated Subsidiaries (mmcf/d)
North America	788	745	677	648
Southeast Asia	464	494	331	330
North Sea	18	21	18	21
	1,270	1,260	1,026	999
Natural gas from Joint Ventures (mmcf/d)
TSEUK	6	1	5	1
Equion	41	49	39	41
	47	50	44	42
Total natural gas from Consolidated Subsidiaries and Joint Ventures (mmcf/d)	1,317	1,310	1,070	1,041
Total Daily Production from Consolidated Subsidiaries (mboe/d)1
North America	180	173	154	148
Southeast Asia	116	131	81	87
North Sea	13	18	13	18
Other	14	16	8	8
	323	338	256	261
Total Daily Production from Joint Ventures (mboe/d)1
TSEUK	21	12	21	12
Equion	20	18	18	14
	41	30	39	26
Total daily production from Consolidated Subsidiaries and Joint Ventures (mboe/d)1	364	368	295	287
Less production from assets sold or held for sale (mboe/d)1
North America	—	2	—	1
Southeast Asia	—	3	—	3
North Sea	13	18	13	18
	13	23	13	22
Total production from continuing operations (mboe/d)1	351	345	282	265

1. In the second quarter of 2015, the Company changed the conversion ratio of barrels of oil equivalent (boe) of natural gas for one barrel of oil to a ratio of 5.615:1 from 6:1. Comparative periods have been adjusted to reflect the change in conversion.

	Nine months ended September 30
	Gross before royalties		Net of royalties
	2015	2014	2015	2014
Oil and liquids from Consolidated Subsidiaries (mbbls/d)
North America	42	43	36	35
Southeast Asia	37	44	25	28
North Sea	12	13	12	13
Other	14	16	9	8
	105	116	82	84
Oil and liquids from Joint Ventures (mbbls/d)
TSEUK	18	16	18	16
Equion	12	9	10	7
	30	25	28	23
Total oil and liquids from Consolidated Subsidiaries and Joint Ventures (mbbls/d)	135	141	110	107
Natural gas from Consolidated Subsidiaries (mmcf/d)
North America	788	801	683	696
Southeast Asia	481	510	345	344
North Sea	19	19	19	19
	1,288	1,330	1,047	1,059
Natural gas from Joint Ventures (mmcf/d)
TSEUK	4	2	4	2
Equion	41	47	34	38
	45	49	38	40
Total natural gas from Consolidated Subsidiaries and Joint Ventures (mmcf/d)	1,333	1,379	1,085	1,099
Total Daily Production from Consolidated Subsidiaries (mboe/d)1
North America	182	186	158	159
Southeast Asia	123	135	86	89
North Sea	15	16	15	16
Other	14	16	9	8
	334	353	268	272
Total Daily Production from Joint Ventures (mboe/d)1
TSEUK	19	16	19	16
Equion	20	17	16	14
	39	33	35	30
Total daily production from Consolidated Subsidiaries and Joint Ventures (mboe/d)1	373	386	303	302
Less production from assets sold or held for sale (mboe/d)1
North America	—	13	—	12
Southeast Asia	—	3	—	1
North Sea	15	16	15	16
	15	32	15	29
Total production from continuing operations (mboe/d)1	358	354	288	273

Production represents gross production before royalties, unless noted otherwise. Production identified as net is production after deducting royalties.

Total production from continuing operations was 351 mboe/d, an increase of 2% compared to 2014 due principally to increased Joint Venture liquids production in TSEUK and Equion, partially offset by decreased production in Southeast Asia.

In North America, total production increased by 4% compared to 2014. Oil and liquids production decreased by 2% due principally to operational downtime and natural declines in the Eagle Ford, partially offset by development activity in Bigstone. Natural gas production increased by 6% due principally to development activity in Marcellus and Edson.

In Southeast Asia, total production decreased by 11% compared to 2014. Total oil and liquids production decreased by 23% and natural gas production decreased by 6% due principally to reduced demand in Indonesia, planned maintenance activities and the sale of its 7.48% interest in the Southeast Sumatra PSC in 2014.

Total production in TSEUK increased by 9 mboe/d due principally to production at Claymore, Tartan and Monarb which were shut down in the prior period, partially offset by maintenance work in Buchan and Auk North.

In the Other segment, including the Equion joint venture, total production remained consistent compared to 2014 due primarily to new wells and better well performance in Colombia, partially offset by uneconomic wells in Colombia being shut in, and production restrictions and operational issues in Algeria.

For details on production and netbacks related to the discontinued operations, see the “Discontinued Operations” section in this MD&A.

VOLUMES PRODUCED INTO (SOLD OUT OF) INVENTORY1,2

	Three months ended September 30				Nine months ended September 30
	2015		2014		2015		2014
North America - bbls/d	739		(652	)	(84	)	(235	)
Southeast Asia - bbls/d	(4,398	)	7,062		1,779		4,617
Other — bbls/d	2,218		6,549		597		2,379
Total produced into (sold out of) inventory — bbls/d	(1,441	)	12,959		2,292		6,761
Total produced into (sold out of) inventory — mmbbls	(0.1	)	1.2		0.6		1.8
Inventory at September 30 - mmbbls	2.0		2.8		2.0		2.8

1. Gross before royalties.

2. Excludes results of discontinued operations associated with the Norway disposition.

In the Company’s international operations, produced oil is frequently stored in tanks until there is sufficient volume to be lifted. The Company recognizes revenue and the related expenses on crude oil production when liftings have occurred and title has transferred. Volumes presented in the “Daily Average Production” table represent production volumes in the period, which include oil volumes produced into inventory and exclude volumes sold out of inventory.

During the three month period ended September 30, 2015, volumes in inventory decreased to 2.0 mmbbls from 2.1 mmbbls at the end of the second quarter due principally to decreased inventories in Malaysia and Colombia, partially offset by increased inventories in Algeria and Australia.

COMPANY NETBACKS1,2

	Three months ended September 30
	Gross before royalties		Net of royalties
Continuing Operations3	2015	2014	2015	2014
Oil and liquids ($/bbl)
Sales price	36.07	86.38	36.07	86.38
Royalties	10.19	27.89	—	—
Transportation	1.97	2.00	2.64	2.78
Operating costs	12.79	17.45	17.12	24.26
	11.12	39.04	16.31	59.34
Natural gas ($/mcf)
Sales price	3.47	5.85	3.47	5.85
Royalties	0.79	1.50	—	—
Transportation	0.25	0.26	0.32	0.35
Operating costs	0.96	1.15	1.23	1.54
	1.47	2.94	1.92	3.96
Total $/boe (5.615mcf=1boe)4
Sales price	24.14	49.52	24.14	49.52
Royalties	6.05	14.46	—	—
Transportation	1.56	1.64	2.04	2.24
Operating costs	7.44	9.88	9.81	13.63
	9.09	23.54	12.29	33.65

	Nine months ended September 30
	Gross before royalties		Net of royalties
Continuing Operations3	2015	2014	2015	2014
Oil and liquids ($/bbl)
Sales price	41.91	89.93	41.91	89.93
Royalties	11.23	30.00	—	—
Transportation	2.00	1.56	2.60	2.20
Operating costs	12.08	16.51	15.73	23.29
	16.60	41.86	23.58	64.44
Natural gas ($/mcf)
Sales price	3.72	6.17	3.72	6.17
Royalties	0.83	1.50	—	—
Transportation	0.25	0.24	0.33	0.31
Operating costs	1.05	1.11	1.35	1.49
	1.59	3.32	2.04	4.37
Total $/boe (5.615mcf=1boe)4
Sales price	26.97	51.44	26.97	51.44
Royalties	6.58	14.97	—	—
Transportation	1.59	1.41	2.06	1.92
Operating costs	7.69	9.35	10.03	12.78
	11.11	25.71	14.88	36.74

1. Netbacks do not include pipeline operations.

2. Amounts shown only represent netbacks from consolidated subsidiaries and exclude netbacks from equity accounted entities.

3. Excludes results of discontinued operations associated with the Norway disposition.

4. In the second quarter of 2015, the Company changed the conversion ratio of barrels of oil equivalent (boe) of natural gas for one barrel of oil to a ratio of 5.615:1 from 6:1. Comparative periods have been adjusted to reflect the change in conversion.

During the quarter, the Company’s average gross netback was $9.09/boe, 61% lower than 2014 due principally to lower realized prices, partially offset by lower royalties and lower operating costs.

Talisman’s realized net sales price of $24.14/boe was 51% lower than 2014, due principally to lower commodity prices. Oil and liquids realized prices decreased by 58% and natural gas realized prices decreased by 41% from 2014. The Company’s composite royalty rate was 25%, down from 29% in 2014 due principally to lower commodity prices.

COMMODITY PRICES AND EXCHANGE RATES1,2

		Three months ended September 30		Nine months ended September 30
Continuing Operations		2015	2014	2015	2014
Oil and liquids ($/bbl)
North America		27.82	67.90	29.00	67.32
Southeast Asia		44.44	102.24	53.85	107.91
Other		39.91	91.89	49.16	101.20
		36.07	86.38	41.91	89.93
Natural gas ($/mcf)
North America		2.22	3.72	2.34	4.34
Southeast Asia		5.61	9.07	5.97	9.05
		3.47	5.85	3.72	6.17
Company $/boe (5.615mcf=1boe)3		24.14	49.52	26.97	51.44
Benchmark prices and foreign exchange rates
WTI	(US$/bbl)	46.43	97.17	50.97	99.61
Dated Brent	(US$/bbl)	50.26	101.85	55.39	106.57
WCS	(US$/bbl)	33.16	77.20	37.80	78.59
LLS	(US$/bbl)	50.25	101.13	55.35	103.70
NYMEX	(US$/mmbtu)	2.77	4.07	2.80	4.51
AECO	(C$/gj)	2.65	4.00	2.66	4.32
C$/US$ exchange rate		1.31	1.09	1.26	1.09
UK£/US$ exchange rate		0.65	0.60	0.65	0.60

1. Amounts shown only represent consolidated subsidiaries and exclude prices from equity accounted entities.

2. Excludes results of discontinued operations associated with the Norway disposition.

3. In the second quarter of 2015, the Company changed the conversion ratio of barrels of oil equivalent (boe) of natural gas for one barrel of oil to a ratio of 5.615:1 from 6:1. Comparative periods have been adjusted to reflect the change in conversion.

The Company’s overall realized oil and liquids price of $36.07/bbl decreased by 58% compared to 2014. In North America, realized oil and liquids prices decreased 59% due principally to decreases in benchmark crude prices. In Southeast Asia, realized oil and liquids prices decreased 57% due principally to decreases in Brent pricing.

The Company’s overall realized natural gas price of $3.47/mcf decreased by 41% compared to 2014. In North America, realized natural gas prices decreased 40% due principally to decreases in benchmark prices. In Southeast Asia, realized natural gas prices decreased by 38% where a portion of natural gas pricing is sold via fixed-price contracts.

EXPENSES

Unit Operating Expenses1,2

	Three months ended September 30
Continuing Operations	Gross before royalties		Net of royalties
($/boe)3	2015	2014	2015	2014
North America	6.09	7.54	7.12	8.84
Southeast Asia	8.71	12.15	12.40	18.40
Other	14.48	16.87	25.60	31.64
	7.44	9.88	9.81	13.63

	Nine months ended September 30
Continuing Operations	Gross before royalties		Net of royalties
($/boe)3	2015	2014	2015	2014
North America	6.76	7.68	7.81	9.01
Southeast Asia	8.35	11.36	11.84	17.18
Other	13.99	11.93	20.95	22.98
	7.69	9.35	10.03	12.78

1. Represents operating expenses from consolidated subsidiaries, excluding operating expenses from equity investees.

2. Excludes results of discontinued operations associated with the Norway disposition.

3. In the second quarter of 2015, the Company changed the conversion ratio of barrels of oil equivalent (boe) to a ratio of 5.615:1 from 6:1. Comparative periods have been adjusted to reflect the change in conversion.

Total Operating Expenses1,2


Continuing Operations	Three months ended September 30		Nine months ended September 30
($ millions)	2015	2014	2015	2014
North America	103	128	344	396
Southeast Asia	97	114	266	366
Other	15	21	49	44
	215	263	659	806

1. Represents operating expenses from consolidated subsidiaries, excluding operating expenses from equity investees.

2. Excludes results of discontinued operations associated with the Norway disposition.

Total operating expenses decreased by 18% to $215 million due principally to cost reductions realized across the Company, favourable foreign exchange movements, the timing of liftings, and asset dispositions.

In North America, total operating expenses decreased by 20% to $103 million due principally to lower processing and operational costs in Eagle Ford and lower turnaround costs in Edson. Unit operating expenses in North America decreased by 19% due to lower costs and higher production.

In Southeast Asia, total operating expenses decreased by 15% to $97 million due principally to lower overall maintenance and operational costs, the renegotiation of contracts in Kitan resulting in reduced FPSO rates during shutdown periods, the sale of the Company’s 7.48% interest in the Southeast Sumatra PSC in 2014 and the completion of the jacket repair in Vietnam in 2014. Unit operating expenses decreased by 28% due to the reasons noted above which more than offset lower volumes.

In the Rest of the World, total operating expenses decreased by 29% to $15 million due principally to well shut-ins in Colombia, partially offset by the timing of liftings. Unit operating costs decreased by 14% due to the reasons noted above.

Unit Depreciation, Depletion and Amortization (DD&A) Expense1,2

	Three months ended September 30
Continuing Operations	Gross before royalties		Net of royalties
($/boe)3	2015	2014	2015	2014
North America	15.59	17.50	18.21	20.52
Southeast Asia	10.37	9.77	14.76	14.78
Other	11.98	8.98	21.19	16.85
	13.48	13.93	17.16	18.35

	Nine months ended September 30
Continuing Operations	Gross before royalties		Net of royalties
($/boe)3	2015	2014	2015	2014
North America	15.33	16.76	17.73	19.66
Southeast Asia	11.18	9.61	15.87	14.54
Other	11.73	10.12	17.57	19.49
	13.58	13.58	17.09	17.87

1. Represents unit DD&A expenses from consolidated subsidiaries, excluding unit DD&A from equity investees.

2. Excludes results of discontinued operations associated with the Norway disposition.

Total DD&A Expense1,2

Continuing Operations	Three months ended September 30		Nine months ended September 30
($ millions)	2015	2014	2015	2014
North America	258	282	767	844
Southeast Asia	122	111	372	341
Other	14	5	45	35
	394	398	1,184	1,220

1. Represents DD&A expenses from consolidated subsidiaries, excluding DD&A expense from equity investees.

2. Excludes results of discontinued operations associated with the Norway disposition.

Total DD&A expense in North America decreased by 9% due principally to a lower depletable base in Eagle Ford as a result of an impairment recognized in 2014, partially offset by an increase to the depletable base as a result of the change in discount rate used to measure the decommissioning liabilities, lower reserves in Edson and Chauvin and increased production in Marcellus, Edson and Duvernay. Unit DD&A expenses decreased 11% compared to 2014 due to the same reasons noted above.

In Southeast Asia, total DD&A expense increased 10% due principally to new well additions in Malaysia with higher DD&A rates, downward reserve revisions during 2014, increases to the depletable base in Indonesia as a result of the change in discount rate used to measure the decommissioning liabilities, partially offset by lower production in the current quarter and decreased production entitlement in HST/HSD. Unit DD&A expenses increased 6% compared to 2014 due to the same reasons noted above.

In the Rest of the World, total DD&A expense increased $9 million due principally to increases in the depletable base in Colombia, change in production mix in Algeria and timing of liftings. Unit DD&A expense increased by 33% due to the same reasons noted above.

Unit DD&A expense for the Company decreased by 3% to $13.48/boe due to the reasons noted above.

Impairment1,2

Continuing Operations	Three months ended September 30		Nine months ended September 30
($ millions)	2015	2014	2015	2014
Impairment losses
North America	325	—	325	—
Southeast Asia	—	—	48	—
	325	—	373	—
Impairment reversals
North America	—	—	—	(32	)
	—	—	—	(32	)
Net Impairment	325	—	373	(32	)

1. Represents impairment expenses from consolidated subsidiaries, excluding impairment expenses from equity investees.

2. Excludes results of discontinued operations associated with the Norway disposition.

Income (Loss) from Joint Ventures1

	Three months ended September 30				Nine months ended September 30
($ millions)	2015		2014		2015		2014
TSEUK	(208	)	(30	)	(529	)	(107	)
Equion	(23	)	17		(16	)	63
	(231	)	(13	)	(545	)	(44	)

1. Represents the Company’s proportionate interest in joint ventures.

The after-tax net loss in TSEUK is $178 million higher compared to 2014 due principally to lower realized commodity prices, increased DD&A expense from increased production, and deferred taxes, partially offset by lower operating costs and G&A.

The after-tax net loss in Equion of $23 million as compared to net income of $17 million in 2014 is due principally to lower realized commodity prices, increased DD&A expense from higher production and a higher depletable base, and increased deferred taxes, partially offset by lower operating costs and lower current tax.

Corporate and Other 1,2

	Three months ended September 30			Nine months ended September 30
($ millions)	2015	2014		2015		2014
General and administrative (G&A) expense	61	92		228		297
Dry hole expense	1	36		14		64
Exploration expense	20	44		142		127
Finance costs	83	79		246		245
Share-based payments expense (recovery)	—	(16	)	(24	)	(25	)
(Gain) loss on held-for-trading financial instruments	—	(428	)	(62	)	(197	)
(Gain) loss on asset disposals	—	(6	)	9		(560	)
Other income	24	35		105		112
Other expenses, net	34	(7	)	180		37

1. Represents corporate and other expense from consolidated subsidiaries, excluding corporate and other expense from equity investees.

2. Excludes results of discontinued operations associated with the Norway disposition.

G&A expense decreased by $31 million compared to 2014 due principally to lower workforce expenses, reduced reliance on contractors in North America and Southeast Asia, and lower office expenses.

Exploration expense of $20 million consists primarily of seismic related costs in Southeast Asia and the Rest of the World.

Finance costs include interest on long-term debt (including current portion), other finance charges and accretion expense relating to decommissioning liabilities. Finance costs were relatively stable as compared to 2014.

Share-based payments recovery during the three month period ended September 30, 2015 was $nil due to the settlement of share-based payments in conjunction with the acquisition of the Company by Repsol in the second quarter of 2015.

There were no significant fair value changes to the Company’s held-for-trading financial instruments during the period ended September 30, 2015.

Other income of $24 million consists primarily of marketing and other income of $14 million and pipeline and customer treating tariffs of $6 million.

Other expense of $34 million includes a $14 million legal provision based on a proposed settlement agreement, a foreign exchange loss of $3 million and other miscellaneous expenses.

INCOME TAXES1,2

	Three months ended September 30				Nine months ended September 30
($ millions)	2015		2014		2015		2014
Income (loss) from continuing operations before taxes	(846	)	493		(1,764	)	1,195
Less: Petroleum Revenue Tax (PRT)
Current	2		(1	)	6		6
Deferred	2		3		(1	)	2
Total PRT	4		2		5		8
	(850	)	491		(1,769	)	1,187
Income tax expense (recovery)
Current income tax	(361	)	66		(230	)	324
Deferred income tax	410		(14	)	645		50
Total income tax expense	49		52		415		374
Effective income tax rate (%)	(6	)	11		(23	)	32

1. Represents income taxes from consolidated subsidiaries, excluding income taxes from equity investees.

2. Excludes results of discontinued operations associated with the Norway disposition.

The effective tax rate is expressed as a percentage of income before taxes adjusted for PRT, which is deductible in determining taxable income. The effective tax rate in the third quarter of 2015 was impacted by pre-tax losses of $474 million in North America where tax rates are between 27% and 39%, after-tax losses of $208 million in the TSEUK joint venture, partially offset by pre-tax income of $38 million in Southeast Asia where tax rates range from 30% to 58%.

For the three month period ended September 30, 2015, the current tax recovery was $361 million compared to current tax expense of $66 million in 2014 due principally to the sale of the Norwegian operations for a $419 million recovery and reduced operating income in Southeast Asia, partially offset by a recovery of $38 million from a settlement of an appeal with Canada Revenue Agency in 2014.

For the three month period ended September 30, 2015, the deferred tax expense was $410 million compared to a deferred tax recovery of $14 million in 2014 due principally to the sale of the Norwegian operations.

Impacts to the effective tax rate and the deferred tax expense are principally due to:

· Jurisdictional mix of income;

· Foreign exchange on foreign denominated tax pools;

· Completed sale of the Norwegian operations to Repsol Exploration Norge AS;

· The non-recognition of the tax benefit associated with losses in the United States and exploration blocks.

CAPITAL EXPENDITURES1

	Three months ended September 30			Nine months ended September 30
($ millions)	2015	2014		2015	2014
North America	224	348		555	949
Southeast Asia	55	125		163	308
Other	8	29		37	126
Exploration and development expenditure from subsidiaries2	287	502		755	1,383
Corporate, IS and Administrative	3	10		22	30
Acquisitions	3	—		11	36
Proceeds of dispositions	—	(102	)	—	(1,494	)
Net capital expenditure for subsidiaries	293	410		788	(45	)

TSEUK	80	121		290	454
Equion	11	30		32	64
Exploration and development expenditure from joint ventures3	91	151		322	518

Net capital expenditure for consolidated subsidiaries and joint ventures	384	561		1,110	473

1. Excludes results of discontinued operations associated with the Norway disposition.

2. Excludes exploration expense of $20 million (2014 - $44 million) for the three month period ended September 30, 2015 and $142 million (2014 - $127 million) for the nine month period ended September 30, 2015.

3. Represents the Company’s proportionate interest, excluding exploration expensed of $1 million net in TSEUK (2014 - $3 million) for the three month period ended September 30, 2015 and $2 million net in TSEUK (2014 - $5 million) for the nine month period ended September 30, 2015.

Capital expenditures, excluding exploration expense, decreased in the third quarter of 2015 compared to the same quarter in 2014 due principally to decreased spending across all regions.

North America capital expenditures during the quarter totalled $224 million, a decrease of 36% from 2014. Of this, $179 million related to development activity, with the majority spent in the Marcellus, Eagle Ford, Edson and Chauvin areas. The remaining capital was mainly invested in exploration drilling activities, primarily in the Duvernay.

In Southeast Asia, capital expenditures of $55 million included $46 million on development, with the majority spent in Vietnam and Indonesia. The majority of the remaining expenditures were exploration costs focused in Vietnam and Papua New Guinea.

In the Rest of the World, capital expenditures of $8 million consisted primarily of development spending on facilities in Colombia.

In the TSEUK joint venture, net capital expenditures of $80 million consisted primarily of development activities in the Montrose area and at Flyndre/Cawdor. In the Equion joint venture, net capital expenditures of $11 million related primarily to new development wells and facilities expansion in Piedemonte.

DISCONTINUED OPERATIONS

Operating results related to the Disposal Group have been included in net income (loss) from discontinued operations in the condensed Consolidated Statements of Income (Loss). Comparative period balances of the condensed Consolidated Statements of Income (Loss) and Cash Flows have been restated. During the three months ended June 30, 2015, the Disposal Group was remeasured to its recoverable amount of $47 million and as a result, a loss on remeasurement of discontinued operations of $472 million pre-tax ($292 million after-tax) was recorded in Norway. When the acquisition closed on September 1, 2015, an additional $10 million pre-tax loss on remeasurement of discontinued operations ($2 million after-tax) was recorded. Foreign exchange gains of $114 million relating to the Disposal Group previously recognized in accumulated other comprehensive income was included in the “Net income (loss) from discontinued operations” on the condensed Consolidated Statements of Income (Loss).

Net income (loss) from discontinued operations reported on the condensed Consolidated Statements of Income (Loss) is composed of the following:

Three months ended September 30	2015		2014
Revenue	38		141
Expenses	(28	)	(167	)
	10		(26	)
Loss on remeasurement of discontinued operations	(10	)	—
Realized accumulated translation adjustments on disposition of foreign operation	114		—
Income (loss) from discontinued operations before taxes	114		(26	)
Income taxes
Current income tax recovery	(1	)	(7	)
Deferred income tax expense (recovery)	3		(5	)
Net income (loss) from discontinued operations	112		(14	)

Nine months ended September 30	2015		2014
Revenue	182		414
Expenses	(429	)	(714	)
	(247	)	(300	)
Loss on remeasurement of discontinued operations	(482	)	—
Realized accumulated translation adjustments on disposition of foreign operation	114		—
Loss from discontinued operations before taxes	(615	)	(300	)
Income taxes
Current income tax recovery	(8	)	(12	)
Deferred income tax recovery	(313	)	(154	)
Net loss from discontinued operations	(294	)	(134	)

decommissioning obligation and asset caused by a 1.5% decrease in the credit-adjusted discount rate used to measure decommissioning liabilities.

The cash flows from discontinued operations, including changes in related non-cash working capital items, are as follows:

	Three months ended September 30				Nine months ended September 30
	2015		2014		2015		2014
Operating	(5	)	7		(29	)	44
Investing	46		(35	)	9		(160	)
Cash flows from discontinued operations	41		(28	)	(20	)	(116	)

Netbacks for Discontinued Operations1,2

	Three months ended September 30			Nine months ended September 30
Discontinued Operations	2015	2014		2015		2014
Total $/boe (5.615mcf=1boe)
Sales price	37.05	80.79		48.19		89.58
Transportation	2.97	5.88		3.07		4.80
Operating costs	26.99	43.27		33.18		52.83
DD&A	—	35.70		21.56		41.52
	7.09	(4.06	)	(9.62	)	(9.57	)

2. Production before royalties and net of royalties are the same as Norway does not have any royalties. Thus, the netback table presented would be the same for both ‘gross before royalties’ and ‘net of royalties’ for the periods noted.

Commodity Pricing for Discontinued Operations

	Three months ended September 30		Nine months ended September 30
Discontinued Operations	2015	2014	2015	2014
Oil and liquids ($/bbl)	36.51	91.59	50.60	100.53
Natural gas ($/mcf)	6.90	7.22	7.04	8.11
Sales price ($/boe)1	37.05	80.79	48.19	89.58

LIQUIDITY AND CAPITAL RESOURCES

Talisman’s gross debt at September 30, 2015 was $4.9 billion, including loans from related parties of $959 million, compared to $5.1 billion at December 31, 2014.

During the quarter, the Company generated $169 million of cash provided by operating activities and incurred capital expenditures of $295 million.

Talisman’s capital structure consists of shareholder’s equity and debt. The Company makes adjustments to its capital structure based on changes in economic conditions and its planned requirements.

On May 8, 2015, TE Holdings SARL., a subsidiary of Talisman, entered into a $500 million revolving facility with Repsol Tesoreria Y Gestion Financiera, S.A. The facility matures on May 8, 2016 and bears an interest rate of LIBOR+0.80%. On September 30, 2015, the facility agreement was amended to extend the maturity date to May 8, 2018. See the “Transactions with Related Parties” section.

In May 2014, the Company renewed its universal shelf prospectus under the Multi-Jurisdictional Disclosure System pursuant to which it may issue up to $3.5 billion of debt securities, common shares, preferred shares, subscription receipts, warrants and units. The Company simultaneously renewed its medium-term note shelf prospectus in Canada pursuant to which it may issue up to C$1.0 billion of medium-term notes in Canada. Both shelf prospectuses remain valid over a 25-month period.

Talisman manages its liquidity requirements by use of both short-term and long-term cash forecasts, and by maintaining appropriate undrawn capacity under committed bank and related parties credit facilities. The Company has in place committed bank facilities totaling $3.2 billion, all of which are committed through 2019.

At September 30, 2015, there were no drawings in the form of bankers’ acceptance or commercial paper, and there was $79 million in letters of credit support outstanding. Available borrowing capacity under committed bank facilities was $3.1 billion at September 30, 2015. In addition, the Company also has in place related party facilities from Repsol subsidiaries totaling $1.5 billion, all of which are committed through 2018. At September 30, 2015, $959 million were drawn under these facilities.

The authorized amount under the Company’s commercial paper program is $1.0 billion, but the amount available under this program is limited to the availability of backup funds under the Company’s Facility No. 1. For additional information regarding the Company’s Facilities, refer to note 18 to the Company’s 2014 audited Consolidated Financial Statements and note 14 in the Company’s interim condensed Consolidated Financial Statements.

The UK government passed legislation in 2013 which provides for a contractual instrument, known as a Decommissioning Relief Deed, for the Government to guarantee tax relief on decommissioning costs at 50%, allowing security under DSAs to be posted on an after-tax basis and reducing the amount of letters of credit required to be posted by 50%. TSEUK has entered into a Decommissioning Relief Deed with the UK government and continues to negotiate with counterparties to amend all DSAs accordingly. Tax relief guaranteed by the UK government is limited to corporate tax paid since 2002. Under the limitation, TSEUK’s tax relief is capped at $2.1 billion, representing corporate income taxes paid and recoverable since 2002.

The Company also has obligations to fund, in proportion of its shareholding, the losses and net asset deficiency of TSEUK which arises from the Company’s past practice of funding TSEUK’s cash flow deficiencies, and the expectation that cash flow deficiencies will continue to be funded through 2016. In addition, the Company, in proportion of its shareholding, has provided certain guarantees to fund TSEUK’s decommissioning obligation if TSEUK is unable to, and the shareholders of TSEUK have provided equity funding facilities to TSEUK which include funding decommissioning liabilities. As such, the Company has recognized a negative investment value from the application of equity accounting. The Company’s obligation to fund TSEUK will increase to the extent future losses are generated within TSEUK. In addition, future contributions to the TSEUK joint venture could be impaired to the extent recoverability is not probable.

Any changes to decommissioning estimates influence the value of letters of credit to be provided pursuant to the DSAs. In addition, the extent to which shared facility capacity is available, and the cost of that capacity, is influenced by the Company’s investment grade credit rating.

Talisman monitors its balance sheet with reference to its liquidity and a debt-to-cash flow ratio. The main factors in assessing the Company’s liquidity are cash flow, including cash flow from equity accounted entities (defined in accordance with the Company’s debt covenant as cash provided by operating activities before adjusting for changes in non-cash working capital, and exploration expenditure), cash provided by and used in investing activities and available bank credit facilities and related parties facilities. The debt-to-cash flow ratio is calculated using debt (calculated by adding the gross debt and bank indebtedness, loans from related parties, production payments and finance lease) divided by cash flow for the year.

The Company is in compliance with all of its debt covenants. The Company’s principal financial covenant under its primary bank credit facility is a debt-to-cash flow ratio of less than 3.5:1, calculated quarterly on a trailing 12-month basis as of the last day of each fiscal quarter. For the trailing 12-month period ended September 30, 2015, the debt-to-cash flow ratio was 1.7. Considering the current commodity price environment, Talisman may require support from Repsol to ensure continued compliance with its liquidity and covenant requirements.

During the nine month period ended September 30, 2015, Talisman declared common share dividends of $0.1125 per common share for an aggregate dividend of $117 million. Subsequent to September 30, 2015, there was no movement in the number of common shares outstanding resulting in 1,044,166,028 common shares outstanding at November 10, 2015.

In the first quarter of 2015, Talisman declared preferred share dividends of C$0.2625 per share for an aggregate dividend of $2 million. On May 8, 2015, Repsol’s acquisition of Talisman was completed, whereby Repsol acquired all outstanding common and preferred shares of Talisman. The outstanding preferred shares were subsequently converted on a 1:1 basis into common shares. Consequently there were no preferred shares outstanding at September 30, 2015.

Subsequent to the acquisition of Talisman by Repsol on May 8, 2015, all share-based payment units have been settled and paid by May 29, 2015. At September 30, 2015 there were no stock options, RSUs, deferred share units (DSU) or long-term PSUs outstanding.

Talisman continually monitors its portfolio of assets and investigates business opportunities in the oil and gas sector. The Company may make acquisitions, investments or dispositions, some of which may be material. In connection with any acquisition or investment, Talisman may incur debt.

For additional information regarding the Company’s liquidity and capital resources, refer to note 20 to the Company’s 2014 audited Consolidated Financial Statements and notes 14, 16 and 17 in the Company’s interim condensed Consolidated Financial Statements.

SENSITIVITIES1

Talisman’s financial performance is affected by factors such as changes in production volumes, commodity prices and exchange rates. The estimated annualized impact of these factors for 2015 (excluding the effect of derivative contracts) is summarized in the following table, based on a Dated Brent oil price of approximately $54.84/bbl, a NYMEX natural gas price of approximately $2.85/mmbtu and exchange rates of US$0.79=C$1 and UK£1=US$1.51.

(millions of $)	Net Income		Cash Provided by Operating Activities2
Volume changes
Oil — 10,000 bbls/d	22		102
Natural gas — 60 mmcf/d	4		42
Price changes
Oil — $1.00/bbl	26		31
Natural gas (North America)3 — $0.10/mcf	23		25
Exchange rate changes
US$/C$ decreased by US$0.01	(4	)	(6	)
US$/UK£ increased by US$0.02	(8	)	6

1. Excludes results of discontinued operations associated with the Norway disposition.

2. Changes in cash flow provided by operating activities excludes TSEUK and Equion due to the application of equity accounting.

3. Price sensitivity on natural gas relates to North America natural gas only. The Company’s exposure to changes in the natural gas prices in Vietnam and Colombia is not material. Most of the natural gas prices in Indonesia and Malaysia are based on the price of crude oil or high-sulphur fuel oil and, accordingly, have been included in the price sensitivity for oil. Most of the remaining part of Indonesia natural gas production is sold at a fixed price.

COMMITMENTS AND OFF-BALANCE SHEET ARRANGEMENTS

As part of its normal business, the Company has entered into arrangements and incurred obligations that will impact the Company’s future operations and liquidity, some of which are reflected as liabilities in the audited Consolidated Financial Statements at year-end. The principal commitments of the Company are in the form of debt repayments, decommissioning obligations, lease commitments relating to corporate offices and ocean-going vessels, firm commitments for gathering, processing and transmission services, minimum work commitments under various international agreements, other service contracts and fixed price commodity sales contracts.

Additional disclosure of the Company’s decommissioning liabilities, debt repayment obligations and significant commitments can be found in notes 8, 16, 18, 19 and 24 to the 2014 audited Consolidated Financial Statements. A discussion of the Company’s derivative financial instruments and commodity sales contracts can be found in the “Risk Management” section of this MD&A.

	2015	2016	2017	2018	2019	Subsequent to 2019	Total
Office leases	2	2	—	—	—	—	4
Vessel leases	5	2	2	2	—	—	11
Transportation and processing commitments	55	3	—	—	—	—	58
Decommissioning liabilities	73	134	174	230	132	567	1,310
Yme removal obligation	186	—	—	—	—	—	186
PP&E and E&E assets	61	—	—	—	—	—	61
Other service contracts	18	—	—	—	—	—	18
	400	141	176	232	132	567	1,648

TRANSACTIONS WITH RELATED PARTIES

Repsol

Repsol’s acquisition of Talisman closed on May 8, 2015. During the period from May 8, 2015 to September 30, 2015, Talisman has entered into the following transactions, with Repsol and/or subsidiaries of Repsol.

On September 1, 2015, Talisman and Repsol completed the purchase and sale agreement, whereby Repsol acquired substantially all of the assets and liabilities of Talisman’s Norwegian operations. For further information, see the “Discontinued Operations” section in this MD&A and note 4 in the Company’s interim condensed Consolidated Financial Statements.

The nature and scope of related party transactions could increase in future periods as integration activities with Repsol continue. Specifically, changes for technical and administrative support as well as further asset transactions may occur.

Southeast Asia

Talisman entered into a commitment in 2001 to sell gas of 367.5 mmbtu daily in the Corridor Block in Indonesia to Gas Supply Pte. Ltd (“GSPL”), a subsidiary of Repsol’s significant shareholder Temasek Holdings Limited (“Temasek”). The commitment matures in 2023. As a result of Repsol’s acquisition of Talisman on May 8, 2015, GSPL and Temasek became Talisman’s related parties. Since May 8, 2015, Talisman gas sales to GSPL totaled $93 million (net Talisman’s share). As at September 30, 2015, the amount included in accounts receivable as a result of this commitment was $20 million.

Other

TSEUK

In July 2015, the shareholders of TSEUK agreed to subscribe for common shares of TSEUK in the amount of $1.1 billion, of which Talisman’s share was $541 million, which settled remaining shareholder loans of $1.0 billion and accrued interest of $52 million, of which Talisman’s share was $514 million and $27 million, respectively. There was no loan balance outstanding as at September 30, 2015.

RISK MANAGEMENT

Talisman monitors its exposure to variations in commodity prices, interest rates and foreign exchange rates. In response, Talisman may periodically enter into physical delivery transactions for commodities of fixed or collared prices and into derivative financial instruments to reduce exposure to unfavourable movements in commodity prices, interest rates and foreign exchange rates. The terms of these contracts or instruments may limit the benefit of favourable changes in commodity prices, interest rates and currency values, and may result in financial or opportunity loss due to delivery commitments, royalty rates and counterparty risks associated with contracts.

Subsequent to September 30, 2015, the Company has not entered into any additional new commodity price risk management derivative contracts.

USE OF ESTIMATES AND JUDGMENTS

The preparation of financial statements requires management to make estimates and assumptions that affect reported assets and liabilities, disclosures of contingencies and revenues and expenses. Management is required to adopt accounting policies that require the use of significant estimates and judgment. Actual results could differ materially from those estimates. Judgments and estimates are reviewed by management on a regular basis.

As a result of Repsol’s acquisition of Talisman in May 2015, credit-adjusted rates specific to Repsol have been used to discount Talisman’s decommissioning liabilities. The provision has been calculated using the current estimated cost to retire the asset inflated to the estimated retirement date and then discounted using a weighted average credit-adjusted rate of 4.3% at September 30, 2015.

For additional information regarding the use of estimates and judgments refer to the notes to the Company’s audited Consolidated Financial Statements and Annual MD&A for the year ended December 31, 2014.

SIGNIFICANT ACCOUNTING POLICIES

a) Changes in Accounting Policies

Foreign Currency Translation

b) Accounting Policies Used

The interim condensed Consolidated Financial Statements have been prepared following the same accounting policies and methods of computation as the Company’s audited annual Consolidated Financial Statements as at and for the year ended December 31, 2014, except for adoption of the following amendments to standards effective as of January 1, 2015:

Employee Benefits

· IAS 19 Employee Benefits - Amendments to IAS 19. The amended standard clarified the requirements that relate to how contributions from employees or third parties that are linked to service should be attributed to periods of service. In addition, it permits a practical expedient if the amount of the contributions is independent of the number of years of service, in that contributions can be, but are not required to be recognized as a reduction in the service cost in the period in which the related service is rendered. The amendment is effective for annual periods beginning on or after July 1, 2014. Application of the amended standard does not have an impact on the Company’s financial statements as it reflects current accounting policy of the Company.

Operating Segments

· IFRS 8 Operating Segments - Amendments to IFRS 8. The amended standard requires (i) disclosure of judgments made by management in aggregating segments, and (ii) a reconciliation of segmented assets to the Company’s assets when segment assets are reported. The amendment is effective for annual periods beginning on or after July 1, 2014. The amendment does not have an impact on the Company’s financial statements.

Fair Value Measurement

· IFRS 13 Fair Value Measurement - Amendments to IFRS 13. The amended standard clarifies that short-term receivables and payables with no stated interest rates can be measured at invoice amounts if the effect of discounting is immaterial. It also clarifies that the portfolio exception can be applied not only to financial assets and liabilities, but also to other contracts within scope of IAS 39 and IFRS 9. The amendment is effective for annual periods beginning on or after July 1, 2014. The application does not have a significant impact on the Company’s financial statements.

Related Parties

· IAS 24 Related Parties - Amendments to IAS 24. The amended standard (i) revises the definition of related party to include an entity that provides key management personnel services to the reporting entity or its parent, and (ii) clarifies related disclosure requirements. The amendment does not have an impact on the Company’s financial statements, as there is no entity performing key management services for the Company.

c) Accounting Pronouncements Not Yet Adopted

The Company continues to assess the impact of adopting the pronouncements from the IASB as described below:

Financial Instruments

Revenue from Contracts with Customers

INTERNAL CONTROL OVER FINANCIAL REPORTING

There have been no significant changes in Talisman’s internal control over financial reporting during the three month period ended September 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

LEGAL PROCEEDINGS AND CONTINGENCIES

Galley Pipeline

In August 2012, a portion of the Galley pipeline, in which TSEUK has a 67.41% interest, suffered an upheaval buckle.

determination.

TSEUK has sent additional information to Oleum that is being reviewed by external counsel.

Addax Arbitration

Government and Legal Proceedings with Tax Implications

Specific tax claims which Talisman and its subsidiaries are parties to at September 30, 2015 are as follows:

Canada

As part of these proceedings, the CRA has questioned certain restructuring transactions, although this line of questioning has not resulted in court proceedings to date.

Indonesia

Malaysia

Timor-Leste

ADVISORIES

Forward-Looking Statements

This interim MD&A contains information that constitutes “forward-looking information” or “forward-looking statements” (collectively “forward-looking information”) within the meaning of applicable securities legislation.

This forward-looking information includes, but is not limited to, statements regarding:

· Business strategy, plans, and priorities;

· Expected capital expenditures, timing and planned focus of such spending;

· The estimated impact on Talisman’s financial performance from changes in production volumes, commodity prices and exchange rates;

· Expected sources of capital to fund the Company’s capital program and potential acquisitions, investments or dispositions;

· Anticipated funding of the decommissioning liabilities;

· Expected future payment commitments and the estimated timing of such payments;

· Matters with respect to continued compliance with covenants of credit facilities; and

· Other expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, results of operations or performance.

Statements concerning oil and gas reserves contained in this interim MD&A may be deemed to be forward-looking information as they involve the implied assessment that the resources described can be profitably produced in the future.

The factors or assumptions on which the forward-looking information is based include: commodity price and cost assumptions; projected capital investment levels; the flexibility of capital spending plans and the associated sources of funding; the successful and timely implementation of capital projects; the continuation of tax, royalty and regulatory regimes; ability to obtain regulatory and partner approval; and other risks and uncertainties described in the filings made by the Company with securities regulatory authorities. The Company believes the material factors, expectations and assumptions reflected in the forward-looking information are reasonable but no assurance can be given that these factors, expectations and assumptions will prove to be correct. Forward-looking information for periods past 2015 assumes escalating commodity prices.

Undue reliance should not be placed on forward-looking information. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks which could cause actual results to vary and in some instances to differ materially from those anticipated by Talisman and described in the forward-looking information contained in this MD&A. The material risk factors include, but are not limited to:

· Fluctuations in oil and gas prices, foreign currency exchange rates, interest rates and tax or royalty rates;

· 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;

· Risks associated with project management, project delays and / or cost overruns;

· Uncertainty related to securing sufficient egress and access to markets;

· The uncertainty of reserves and resources estimates, reserves life and underlying reservoir risk;

· The uncertainty of estimates and projections relating to production, costs and expenses, including decommissioning liabilities;

· Risks related to strategic and capital allocation decisions, including potential delays or changes in plans with respect to exploration or development projects or capital expenditures;

· The outcome and effects of any future acquisitions and dispositions;

· Health, safety, security and environmental risks, including risks related to the possibility of major accidents;

· Environmental regulatory and compliance risks, including with respect to greenhouse gases and hydraulic fracturing;

· Uncertainties as to access to capital, including the availability and cost of credit and other financing, and changes in capital markets;

· Risks in conducting foreign operations (for example, civil, political and fiscal instability and corruption);

· Risks related to the attraction, retention and development of personnel;

· Changes in general economic and business conditions;

· The possibility that government policies, regulations or laws may change or governmental approvals may be delayed or withheld; and

· Results of the Company’s risk mitigation strategies, including insurance activities.

The foregoing list of risk factors is not exhaustive. Additional information on these and other factors which could affect the Company’s operations or financial results are included in the Company’s most recent AIF. In addition, information is available in the Company’s other reports on file with Canadian securities regulatory authorities and the SEC.

Forward-looking information is based on the estimates and opinions of the Company’s management at the time the information is presented. The Company assumes no obligation to update forward-looking information should circumstances or management’s estimates or opinions change, except as required by law.

Advisory — Oil and Gas Information

Talisman makes reference to production volumes throughout this interim MD&A. Where not otherwise indicated, such production volumes are stated on a gross basis, which means they are stated prior to the deduction of royalties and similar payments. In the US, net production volumes are reported after the deduction of these amounts.

Talisman also discloses netbacks in this interim MD&A. Netbacks per boe are calculated by deducting from sales price associated royalties, operating and transportation costs.

ABBREVIATIONS AND DEFINITIONS

The following abbreviations and definitions are used in this MD&A:

AIF		Annual Information Form
bbl		barrel
bbls		barrels
bbls/d		barrels per day
bcf		billion cubic feet
boe		barrels of oil equivalent
boe/d		barrels of oil equivalent per day
COSO		Committee of the Sponsoring Organizations of the Treadway Commission
C$		Canadian dollar
DD&A		Depreciation, depletion and amortization
DSA		Decommissioning Security Agreements
DSU		Deferred share unit
E&E		Exploration and evaluation
EU		European Union
FPSO		Floating production storage and offloading
G&A		General and administrative
GAAP		Generally Accepted Accounting Principles
GHG		Greenhouse gas emissions
gj		Gigajoule
IFRS		International Financial Reporting Standards
LIBOR		London Interbank Offered Rate
LLS		Light Louisiana Sweet
LNG		Liquefied Natural Gas
mbbls/d		thousand barrels per day
mboe/d		thousand barrels of oil equivalent per day
mcf		thousand cubic feet
mcf/d		thousand cubic feet per day
mmbbls		million barrels
mmboe		million barrels of oil equivalent
mmbtu		million British thermal units
mmcf/d		million cubic feet per day
mmcfe/d		million cubic feet equivalent per day
MWh		megawatt hour
NGL		Natural Gas Liquids
NI		National Instrument
NOK		Norwegian krone
NYMEX		New York Mercantile Exchange
PP&E		Property, plant and equipment
PRT		Petroleum Revenue Tax
PSC		Production Sharing Contract
PSU		Performance share unit
RSU		Restricted share unit
SEC		US Securities and Exchange Commission
tcf		trillion cubic feet
UK		United Kingdom
UK£		Pound sterling
US		United States of America

US$ or $		United States dollar
WCS		Western Canadian Select
WTI		West Texas Intermediate

Gross acres means the total number of acres in which Talisman has a working interest. Net acres means the sum of the fractional working interests owned in gross acres expressed as whole numbers and fractions thereof.

Gross production means Talisman’s interest in production volumes (through working interests and royalty interests) before the deduction of royalties. Net production means Talisman’s interest in production volumes after deduction of royalties payable by Talisman.

Gross wells means the total number of wells in which the Company has a working interest. Net wells means the sum of the fractional working interests owned in gross wells expressed as whole numbers and fractions thereof.

Conversion and equivalency factors
Imperial	Metric
1 ton	=	0.907 tonnes
1 acre	=	0.40 hectares
1 barrel	=	0.159 cubic metres
1 cubic foot	=	0.0282 cubic metres

Exhibit 99.3

Talisman Energy Inc.

Consolidated Financial Ratio

September 30, 2015

(unaudited)

The following financial ratios are provided in connection with the Company’s shelf prospectuses filed with Canadian and US securities regulatory authorities and are based on the Company’s Consolidated Financial Statements that are prepared in accordance with International Financial Reporting Standards.

The interest coverage ratio is for the 12-month period ended September 30, 2015.

September 30, 2015
Interest coverage (times)
Income1	(12.62	)
Income from continuing operations2	(9.47	)

1 Net income plus income taxes and interest expense, divided by the sum of interest expense and capitalized interest.

2 Income from continuing operations plus income taxes and interest expense from continuing operations; divided by the sum of interest expense and capitalized interest from continuing operations.

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

I, Luis Cabra Dueñas, Vice-Chairman and Chief Executive Officer of Talisman Energy Inc., certify the following:

1. I have reviewed the interim financial report and interim MD&A (together the “interim filings”) of Talisman Energy Inc. (the “issuer”) for the interim period ended September 30, 2015.

2. Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings:

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) (2013 framework).

5.2 N.A.

5.3 N.A.

6. The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on July 1, 2015 and ended on September 30, 2015 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: November 13, 2015

/s/ Luis Cabra Dueñas

Luis Cabra Dueñas
Vice-Chairman and Chief Executive Officer

Exhibit 99.5

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

I, David Newby, Senior Vice-President Finance, Treasurer and Chief Financial Officer of Talisman Energy Inc., certify the following:

1. I have reviewed the interim financial report and interim MD&A (together the “interim filings”) of Talisman Energy Inc. (the “issuer”) for the interim period ended September 30, 2015.

5. Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer and I have, as at the end of the period covered by the interim filings:

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that:

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial

reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.2 N.A.

5.3 N.A.

Date: November 13, 2015


/s/ David Newby

David Newby
Senior Vice-President Finance, Treasurer and
and Chief Financial Officer

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