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

Date: May 7, 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 ¨ Form 40-F þ

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): ¨

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):_ ¨____

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 FINANCIAL STATEMENTS
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: May 7, 2015	By: /s/ Daryn V. MacEachern
	Daryn V. MacEachern
	Assistant Corporate Secretary

Exhibit 99.1

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE PERIOD ENDED MARCH 31, 2015

(Unaudited)

Condensed Consolidated Balance Sheets

(Unaudited)
	March 31,		December 31,
(millions of US$)	2015		2014

Assets
Current
Cash and cash equivalents (note 22)		182		262
Accounts receivable		859		893
Risk management (note 16)		779		850
Income and other taxes receivable		82		80
Restricted cash (note 8)		111		149
Inventories		145		133
Prepaid expenses		28		34
		2,186		2,401
Other assets (note 7)		183		180
Investments (note 5)		603		604
Risk management (note 16)		177		421
Goodwill (note 6)		279		279
Property, plant and equipment (note 9)		8,825		9,064
Exploration and evaluation assets (note 9)		2,553		2,544
Deferred tax assets		1,818		1,837
		14,438		14,929
Total assets		16,624		17,330

Liabilities
Current
Bank indebtedness		-		9
Accounts payable and accrued liabilities		1,344		1,577
Current portion of Yme removal obligation (note 8)		148		186
Obligation to fund equity investee (note 5)		229		186
Risk management (note 16)		-		2
Income and other taxes payable		96		93
Loans from joint ventures (note 5)		34		15
Current portion of long-term debt (note 13)		1,362		1,109
		3,213		3,177
Decommissioning liabilities (note 11)		1,830		1,885
Other long-term obligations (note 14)		269		273
Long-term debt (note 13)		3,787		3,955
Deferred tax liabilities		584		635
		6,470		6,748

Contingencies and commitments (note 17)

Shareholders' equity
Common shares (note 15)		1,794		1,738
Preferred shares (note 15)		191		191
Contributed surplus		95		176
Retained earnings		4,050		4,489
Accumulated other comprehensive income		811		811
		6,941		7,405
Total liabilities and shareholders' equity		16,624		17,330

See accompanying notes.

Condensed Consolidated Statements of Income (Loss)

(Unaudited)
	Three months ended March 31,
(millions of US$)	2015			2014

Revenue
Sales		665			1,287
Other income (note 18)		40			48
Income (loss) from joint ventures, after tax (note 5)		(207	)		6
Total revenue and other income		498			1,341

Expenses
Operating		297			361
Transportation		54			49
General and administrative		86			105
Depreciation, depletion and amortization		454			469
Impairment (note 10)		53			130
Dry hole		13			16
Exploration		26			52
Finance costs (note 12)		91			91
Share-based payments recovery (note 15)		(3	)		(32	)
(Gain) Loss on held-for-trading financial instruments (note 16)		(193	)		60
(Gain) Loss on disposals (note 4)		5			(559	)
Other, net (note 19)		17			8
Total expenses		900			750
Income (loss) before taxes		(402	)		591
Income taxes (note 20)
Current income tax		69			131
Deferred income tax recovery		(32	)		(31	)
		37			100
Net income (loss)		(439	)		491


Per common share (US$):
Net income (loss)		(0.43	)		0.47
Diluted net income (loss)		(0.43	)		0.43
Weighted average number of common shares outstanding (millions)
Basic		1,033			1,032
Diluted		1,033			1,039

See accompanying notes.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)
	Three months ended March 31,
(millions of US$)		2015			2014


Net income (loss)			(439	)		491

Remeasurements relating to pension and other post-employment benefit plans1			2			-
Other comprehensive income not being reclassified to net income or loss in subsequent periods			2			-
Comprehensive income (loss)			(437	)		491
1. Net of tax of $nil (2014 - $nil)

See accompanying notes.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(Unaudited)
	Three months ended March 31,
(millions of US$)	2015			2014

Common shares (note 15)
Balance at beginning of period		1,738			1,723
Issued on exercise of stock options		-			5
Shares purchased and held in trust for long-term PSU plan		(30	)		-
Shares released from trust for long-term PSU plan		86			31
Balance at end of period		1,794			1,759

Preferred shares (note 15)
Balance at beginning of period		191			191
Issued		-			-
Balance at end of period		191			191

Contributed surplus
Balance at beginning of period		176			135
Settlement of long-term PSU plan grant		(86	)		(31	)
Share-based payments		5			10
Balance at end of period		95			114

Retained earnings
Balance at beginning of period		4,489			5,695
Net income (loss)		(439	)		491
Remeasurements of employee benefit plans transferred to retained earnings		2			-
Common share dividends (note 15)		-			(70	)
Preferred share dividends (note 15)		(2	)		(2	)
Balance at end of period		4,050			6,114

Accumulated other comprehensive income
Balance at beginning of period		811			811
Other comprehensive income		2			-
Remeasurements of employee benefit plans transferred to retained earnings		(2	)		-
Balance at end of period		811			811

See accompanying notes.

Condensed Consolidated Statements of Cash Flows

(Unaudited)
	Three months ended March 31,
(millions of US$)	2015			2014

Operating activities
Net income (loss)		(439	)		491
Add: Finance costs (cash and non-cash) (note 12)		91			91
Items not involving cash (note 21)		998			(7	)
		650			575
Changes in non-cash working capital		(94	)		(104	)
Cash provided by operating activities		556			471

Investing activities
Capital expenditures
Exploration, development and other		(295	)		(547	)
Proceeds of resource property dispositions (note 4)		-			1,340
Yme removal obligation, net of settlement (note 8)		(38	)		(16	)
Restricted cash, net of settlement (note 8)		38			16
Loan to joint venture, net of repayments (note 5)		-			(172	)
Investment in joint venture (note 5)		(163	)		-
Changes in non-cash working capital		(193	)		50
Cash provided by (used in) investing activities		(651	)		671

Financing activities
Long-term debt repaid (note 13)		(349	)		(877	)
Long-term debt issued (note 13)		452			-
Loans from joint ventures, net of repayments (note 5)		20			18
Common shares issued (note 15)		-			4
Common shares purchased (note 15)		(30	)		-
Finance costs (note 12)		(78	)		(76	)
Common share dividends (note 15)		-			(70	)
Preferred share dividends (note 15)		(2	)		(2	)
Deferred credits and other		(9	)		7
Changes in non-cash working capital		21			15
Cash provided by (used in) financing activities		25			(981	)
Effect of translation on foreign currency cash and cash equivalents		(1	)		3
Net increase (decrease) in cash and cash equivalents		(71	)		164
Cash and cash equivalents net of bank indebtedness, beginning of period		253			351
Cash and cash equivalents net of bank indebtedness, end of period		182			515

Cash and cash equivalents		182			532
Bank indebtedness		-			(17	)
Cash and cash equivalents net of bank indebtedness, end of period		182			515

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 public company incorporated pursuant to the laws of Canada and domiciled in Alberta, Canada, with common shares listed on the Toronto Stock Exchange and the New York Stock Exchange under the symbol ‘TLM’. The 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 month period ended March 31, 2015 were approved by the Audit Committee on May 6, 2015.

Repsol Acquisition of Talisman

On December 15, 2014, Talisman entered into an arrangement agreement (“Arrangement Agreement”) with Repsol S.A. and an indirect wholly-owned subsidiary of Repsol (collectively “Repsol”), providing for the acquisition of Talisman. Under the terms of the Arrangement Agreement, the acquisition is to be accomplished through a plan of arrangement (“Arrangement”) under the Canada Business Corporations Act. If the Arrangement is completed, common shareholders will receive US$8.00 for each common share that they own and preferred shareholders will receive C$25.00 plus accrued and unpaid dividends to the date of completion of the Arrangement for each preferred share that they own. The terms of the Arrangement Agreement contain certain restrictions on the Company’s activities without the approval of Repsol including, but not limited to, acquisitions and disposals of assets, certain actions related to employees, and the Company’s legal and organizational structures. The transaction was approved by the common shareholders on February 18, 2015 and regulatory approvals required under the arrangement agreement with Repsol have been obtained. The transaction is expected to close on May 8, 2015. Completion of the transaction remains subject to the satisfaction of customary closing deliverables.

Subsequent to March 31, 2015, Talisman and Repsol entered into a purchase and sale agreement whereby Repsol will acquire substantially all of the assets and liabilities of Talisman’s Norwegian operations. The transaction is subject to a number of conditions precedent, including the closing of Repsol’s acquisition of Talisman, a final determination of certain values in the purchase and sale agreement, and certain government approvals.

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 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) 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 new standards and interpretations 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 position or performance.

Share-based Payments

IFRS 2 Share-Based Payments - Amendments to IFRS 2. The standard amends the definitions of “vesting condition” and “market condition” and adds definitions for “performance condition” and “service condition”. The amendment is effective for annual periods beginning on or after July 1, 2014. The amendment does not have an impact on the Company as it reflects current accounting policy of the Company.

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.

b) 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. IFRS 15 will be effective for annual periods beginning on or after January 1, 2017. Application of the standard is mandatory and early adoption is permitted. The Company has not yet determined the impact of the standard on the Company’s financial statements.

4. DISPOSALS

North America Disposition

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).

5. INVESTMENTS

	March 31, 2015		December 31, 2014
Investments in Joint Ventures
Equity investment in Equion		522		523
		522		523
Available-for-sale investments
Transasia Pipeline Company Pvt. Ltd.		34		34
Other		47		47
		81		81
Total		603		604

	March 31, 2015			December 31, 2014
Obligation to Fund Equity Investee
Equity investment in TSEUK		(743	)		(700	)
Loan to TSEUK		514			514
		(229	)		(186	)

Investments in Joint Ventures

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

	Three months ended March 31, 2015			Year ended December 31, 2014
Balance, beginning of period		(186	)		206
Investment in TSEUK		163			961
Loan to TSEUK, net of repayments and settlements1		-			(298	)
Share of net loss and comprehensive loss		(206	)		(1,055	)
Balance, end of period		(229	)		(186	)

1.	Amount shown net of subscription of common shares which settled shareholder loan in June 2014.

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:

	Three months ended March 31, 2015			Year ended December 31, 2014
Balance, beginning of period		523			920
Share of net income (loss) and comprehensive income (loss)		(1	)		15
Dividend declared by Equion1		-			(279	)
Impairment		-			(133	)
Balance, end of period		522			523

1. The dividend declared 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 amongst 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.

Summarized Balance Sheets	March 31, 2015									December 31, 2014
	TSEUK1			Equion1			Total			TSEUK1			Equion1			Total
Cash and cash equivalents		37			211			248			37			141			178
Current assets		422			187			609			517			314			831
Loans receivable from shareholders		-			70			70			-			29			29
Non-current assets		4,792			1,189			5,981			4,812			1,246			6,058
Total assets		5,251			1,657			6,908			5,366			1,730			7,096
Current liabilities		1,001			337			1,338			1,073			392			1,465
Loans payable to shareholders		1,009			-			1,009			1,009			-			1,009
Non-current liabilities		4,849			314			5,163			4,807			329			5,136
Total liabilities		6,859			651			7,510			6,889			721			7,610
Net assets (liabilities)		(1,608	)		1,006			(602	)		(1,523	)		1,009			(514	)

Talisman’s interest		51	%		49	%					51	%		49	%
Talisman’s share of net assets (liabilities)		(820	)		493			(327	)		(777	)		494			(283	)
Goodwill		77			162			239			77			162			239
		(743	)		655			(88	)		(700	)		656			(44	)
Loan to TSEUK		514			-			514			514			-			514
Accumulated impairment on investment		-			(133	)		(133	)		-			(133	)		(133	)
Talisman’s investment (obligation to fund)		(229	)		522			293			(186	)		523			337

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

Summarized Statements of Income (Loss)	Three months ended March 31, 2015									Three months ended March 31, 2014
	TSEUK1			Equion1			Total			TSEUK1			Equion1			Total
Revenue		173			101			274			303			163			466

Operating		261			18			279			284			21			305
Transportation		6			7			13			3			10			13
General and administrative		20			-			20			7			-			7
Restructuring costs		5			-			5			-			-			-
Depreciation, depletion and amortization		172			67			239			80			64			144
Exploration expense		1			-			1			3			-			3
Finance costs		39			1			40			32			1			33
Other		59			11			70			12			(11	)		1
Income (loss) before tax		(390	)		(3	)		(393	)		(118	)		78			(40	)
Current income tax expense (recovery)		(30	)		(4	)		(34	)		(27	)		38			11
Deferred income tax expense (recovery)		44			3			47			(58	)		(7	)		(65	)
Net income (loss) and comprehensive income (loss)		(404	)		(2	)		(406	)		(33	)		47			14

Talisman’s interest		51	%		49	%					51	%		49	%
Talisman’s share of income (loss) after tax		(206	)		(1	)		(207	)		(17	)		23			6
Cash dividends received by Talisman		-			-			-			-			-			-

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

Summarized Statements of Cash Flows	Three months ended March 31, 2015									Three months ended March 31, 2014
	TSEUK1			Equion1			Total			TSEUK1			Equion1			Total
Operating activities
Net income (loss)		(404	)		(2	)		(406	)		(33	)		47			14
Add: Finance costs (cash and non-cash)		39			1			40			32			1			33
Items not involving cash		261			80			341			33			57			90
Changes in non-cash working capital		30			101			131			(148	)		(36	)		(184	)
Cash provided by (used in) operating activities		(74	)		180			106			(116	)		69			(47	)

Investing activities
Capital expenditures		(213	)		(21	)		(234	)		(321	)		(14	)		(335	)
Loans to shareholders		-			(41	)		(41	)		-			(37	)		(37	)
Other		(33	)		(48	)		(81	)		90			(3	)		87
Cash used in investing activities		(246	)		(110	)		(356	)		(231	)		(54	)		(285	)

Financing activities
Common shares issued		320			-			320			-			-			-
Loans from shareholders, net of repayments		-			-			-			337			-			337
Finance costs (cash)		(9	)		-			(9	)		(13	)		(1	)		(14	)
Other		9			-			9			(28	)		-			(28	)
Cash provided by (used in) financing activities		320			-			320			296			(1	)		295

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, 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, deferred tax assets and provisions.

TSEUK Joint Venture

As at March 31, 2015, the investment balance in the TSEUK joint venture was negative $229 million. The obligation to fund TSEUK 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 2015. In addition the Company has a guarantee to fund TSEUK’s decommissioning obligation if TSEUK is unable to. 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 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.

In addition, the shareholders of TSEUK provided an equity funding facility totaling $1.2 billion to TSEUK in June 2014, of which Talisman is committed to $612 million, for the purpose of funding capital, decommissioning and operating expenditures of TSEUK. TSEUK may fund operating expenditures under this facility to a maximum amount of $150 million. In March 2015, the shareholders of TSEUK amended this equity funding facility to increase the maximum available amount by $300 million to $1.5 billion, and the maximum amount allocated to operating expenditures by $150 million to $300 million. This facility expires 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 three month period ended March 31, 2015, the shareholders of TSEUK agreed to subscribe for common shares of TSEUK in the amount of $320 million under this facility, of which Talisman’s share was $163 million. As at March 31, 2015, the remaining facility commitment is $555 million, of which the Company’s share is $283 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. As at March 31, 2015, $1.0 billion has been drawn under this facility, of which Talisman’s share is $514 million (December 31, 2014 - $514 million).

Loans 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. All outstanding loans 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 under this facility. Remaining borrowing capacity under this facility:

	Three months ended March 31, 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

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 16.

During the quarter, 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).

The TSEUK deferred tax asset, which is recovered in UK pound sterling, decreased during the quarter by $160 million ($82 million net to Talisman), primarily as a result of the strengthening of the US dollar against the UK pound sterling during the three months ended March 31, 2015.

During the three month period ended March 31, 2015, TSEUK recognized additional provisions for onerous contracts related to drilling and vessel leases of $18 million ($9 million net to Talisman).

Equion Joint Venture

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 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 $34 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.

6. GOODWILL

Continuity of goodwill	Three months ended March 31, 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.

7. OTHER ASSETS

	March 31, 2015		December 31, 2014
Accrued pension asset		5		4
Decommissioning sinking fund		73		71
Transportation rights1		90		92
Other		15		13
Total		183		180

1.	Net of $18 million accumulated depreciation (December 31, 2014 - $16 million).

8. 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.

As at March 31, 2015, Talisman’s share of the liability associated with the Talisman Works in the amount of $148 million (December 31, 2014 - $186 million) has been recorded as the Yme removal obligation of which all (December 31, 2014 - $186 million) has been classified as current, as it is expected to be settled within the next twelve months. Talisman’s share of the cash held in the escrow account in the amount of $111 million (December 31, 2014 - $149 million) has been recorded as restricted cash of which all (December 31, 2014 - $149 million) has been classified as current. During the three months ended March 31, 2015, $38 million (2014 - $16 million) in eligible expenditures were incurred on the Talisman Works which reduced the Yme removal obligation and the restricted cash balance by an equal amount.

9. 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

Additions		243			48			291
Disposals and derecognition		(5	)		-			(5	)
Transfers from E&E assets to PP&E		17			(17	)		-
Change in decommissioning liabilities		-			(2	)		(2	)
Expensed to dry hole		-			(13	)		(13	)

At March 31, 2015		23,471			5,484			28,955


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		448			3			451
Disposals and derecognition		(3	)		-			(3	)
Transfers from E&E assets to PP&E		3			(3	)		-
Impairment losses (note 10)		46			7			53
					.
At March 31, 2015		14,646			2,931			17,577

Net book value
At March 31, 2015		8,825			2,553			11,378
At December 31, 2014		9,064			2,544			11,608
At December 31, 2013		9,752			3,165			12,917

10. IMPAIRMENT


	Three months ended March 31
	2015		2014
Impairment losses
E&E assets		7		130
PP&E assets		46		-
		53		130

During the three month period ended March 31, 2015, the Company fully impaired a property in Australia for $46 million.

During the three month period ended March 31, 2014, the Company 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.

11. DECOMMISSIONING LIABILITIES

Continuity of decommissioning liabilities	Three months ended March 31, 2015			Year ended December 31, 2014
Balance, beginning of period		1,928			1,769
Liabilities incurred during the period		4			75
Liabilities settled during the period		(10	)		(59	)
Accretion expense (note 12)		13			51
Revisions in estimated cash flows		(6	)		109
Change in discount rate		-			60
Disposals		-			(77	)
Balance, end of period		1,929			1,928
Expected to be settled within one year		99			43
Expected to be settled in more than one year		1,830			1,885
		1,929			1,928

The provision has been discounted using a weighted average credit-adjusted risk free rate of 3.5% at March 31, 2015 (December 31, 2014 – 3.5%), which excludes the impact of inflation.

12. FINANCE COSTS

	Three months ended March 31
	2015		2014
Interest on long-term debt		66		68
Miscellaneous interest expense and other fees		12		8
Accretion expense (note 11)		13		15
		91		91

13. LONG-TERM DEBT

	March 31, 2015			December 31, 2014
Bankers’ Acceptances		775			475
Commercial Paper		56			103
Tangguh Project Financing		43			43
Short-term LIBOR Loan		-			150
Debentures and Notes (Unsecured)
US$ denominated		3,905			3,905
UK£ denominated (UK£ million)		370			388
Gross debt		5,149			5,064
Less: current portion		(1,362	)		(1,109	)
Long-term debt		3,787			3,955

During the three month period ended March 31, 2015, Talisman repaid debt of $349 million, including $150 million of short-term loan and $199 million of commercial paper. The Company also issued debt of $452 million, including $300 million of bankers’ acceptances and $152 million of commercial paper. The current liability of $1,362 million consists of $775 million in bankers’ acceptances, $56 million in commercial paper, $375 million of 5.125% notes, $150 million of 8.50% notes, and $6 million in Tangguh project financing.

Bank Credit Facilities and Commercial Paper

At March 31, 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 March 31, 2015, borrowings from bank lines totaled $775 million in the form of bankers’ acceptances. There was also $84 million in letters of credit support outstanding at March 31, 2015. In addition, $56 million of commercial paper was outstanding. 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 March 31, 2015, available borrowing capacity under the bank credit facilities was $2.3 billion.

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.

14. OTHER LONG-TERM OBLIGATIONS

	March 31, 2015		December 31, 2014
Accrued pension and other post-employment benefits liability		131		135
Deferred credits		35		41
Long-term portion of discounted obligations under finance leases		40		41
Long-term portion of share-based payments liability (note 15)		-		1
Other		63		55
		269		273

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

15. 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

Continuity of common shares	Three months ended March 31, 2015						Year ended December 31, 2014
	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
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		1,035,842,444			1,794			1,031,525,988			1,738

Subsequent to March 31, 2015, no stock options were exercised for shares and the remaining 323,584 common shares previously held in trust for the long-term PSU plan were sold on the open market. There were 1,036,166,028 common shares outstanding at May 4, 2015.

During the three month period ended March 31, 2015, Talisman declared no common share dividends. On April 8, 2015, the Company declared common share dividends of $0.1125 per common share for an aggregate dividend of $117 million.

On February 18, 2015, the Arrangement Agreement was approved by the common and preferred shareholders of the Company as described in note 1. On April 30, 2015 the Company announced that the completion of the acquisition of Talisman by Repsol S.A. is scheduled to occur on May 8, 2015, whereby all outstanding common and preferred shares will be purchased by Repsol.

Preferred Shares Issued

Continuity of preferred shares

Three months ended

March 31, 2015

Year ended

December 31, 2014

Amount

Cumulative Redeemable Rate Reset First Preferred Shares, 4.2% Series 1:

Balance, beginning and end of period

8,000,000

191

8,000,000

191

During the three month period ended March 31, 2015, Talisman declared preferred share dividends of C$0.2625 per share for an aggregate dividend of $2 million.

Share-Based Payments1

	Options			Restricted Share Units (RSU)			Deferred Share Units (DSU)			Long-term Performance Share Units (PSU)
Continuity of share-based payment plans	Number of shares underlying options			Number of units			Number of units			Number of units
Outstanding at December 31, 2014		33,600,762			11,028,855			2,997,003			10,680,442
Granted		-			21,569			19,296			-
Exercised for common shares/settled		-			(83,690	)		(38,446	)		(8,110,395	)
Forfeited		(4,284,431	)		(192,077	)		-			(327,047	)
Outstanding at March 31, 2015		29,316,331			10,774,657			2,977,853			2,243,000
Exercisable at March 31, 2015		25,370,427

Weighted average grant price during period	$nil									$nil

1. Dollar amounts in share-based payments tables are provided in C$.

During the three month period ended March 31, 2015, the Company recorded a share-based payments recovery of $3 million (2014 - $32 million recovery) in respect of the following plans: stock options - $1 million recovery, cash units - $2 million recovery, PSUs - $3 million recovery, RSUs - $2 million expense, and DSUs - $1 million expense. The share-based payments expense includes cash payments of $nil (2014 - $2 million) to employees in settlement of fully accrued share-based payments liabilities for RSUs settled in the period. In general and administrative expense in the condensed Consolidated Statement of Income (Loss), the Company recognized no DSU expense relating to the director and executive deferrals.

For units that can be settled with cash or with cash or shares, which include stock option, cash unit, DSU and RSU plans, of the total combined liability of $119 million (December 31, 2014 – $111 million), the entire amount (December 31, 2014 – $110 million) is included in accounts payable and accrued liabilities on the interim condensed Consolidated Balance Sheets and $nil (December 31, 2014 – $1 million) is included in other long-term obligations.

Subsequent to March 31, 2015, 4,075,446 RSUs were released, 95,975 were granted in lieu of payment of dividends and 18,705 were forfeited, with 6,776,481 outstanding at May 4, 2015.

Upon closing of the transaction scheduled for May 8, 2015, all share-based payment units will be settled for cash. The payments will be paid within 60 days of closing.

16. FINANCIAL INSTRUMENTS

Talisman’s financial assets and liabilities at March 31, 2015 consisted of cash and cash equivalents, accounts receivable, available-for-sale investments, bank indebtedness, accounts payable and accrued liabilities, loans from joint ventures, 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 March 31, 2015 was $5.5 billion (December 31, 2014 - $5.3 billion), while the carrying value was $5.1 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 March 31, 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.

The following table presents the Company’s risk management assets and liabilities measured at fair value for each hierarchy level at March 31, 2015:

	Fair value measurements using
	Level 1 inputs		Level 2 inputs		Level 3 inputs		Total fair value
Assets
Interest rate swaps		-		7		-		7
Commodity contracts		-		949		-		949
Liabilities
Commodity contracts		-		-		-		-

Risk Management Assets, Liabilities, Gains and Losses

Derivative instrument	Balance sheet presentation	March 31, 2015		December 31, 2014
Interest rate swaps	Current assets		7		7
Commodity contracts	Current assets		772		843
Commodity contracts	Non-current assets		177		421
Risk management assets			956		1,271

Commodity contracts	Current liabilities		-		2
Risk management liabilities			-		2

During the three month period ended March 31, 2015, the Company recorded a gain on held-for-trading financial instruments of $193 million (2014 - $60 million loss).

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 March 31, 2015, a 1% strengthening of the US$ against the other currencies noted above, with all other variables assumed constant, would have resulted in a decrease of $5 million in net loss and a $5 million impact on other comprehensive loss during the three month period ended March 31, 2015. A similar weakening of the US$ 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. At March 31, 2015, the Company had fixed-to-floating interest rate swap contracts with a total notional amount of $300 million that expire on May 15, 2015. During the three month period ended March 31, 2015, the fair value of the fixed-to-floating interest rate swaps had no change.

In respect of financial instruments existing at March 31, 2015, a 1% increase in interest rates would have resulted in a $6 million increase in net loss and a $6 million impact on other comprehensive loss during the three month period ended March 31, 2015.

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 March 31, 2015, approximately 90% of the Company's trade accounts receivable was aged less than 90 days and the largest single counterparty exposure, accounting for 3% 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, subject to restrictions in the Arrangement Agreement the Company entered into with Repsol on December 15, 2014, as described in note 1.

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 credit facilities. The Company has in place facilities totaling $3.2 billion, all of which are committed through 2019. At March 31, 2015, $775 million in the form of bankers’ acceptances were drawn, $56 million of commercial paper was outstanding, and there was also $84 million in letters of credit support outstanding. Available borrowing capacity was $2.3 billion at March 31, 2015.

In addition, the Company utilizes letters of credit pursuant to letter of credit facilities, most of which are uncommitted. At March 31, 2015, demand letters of credit guaranteed by the Company totaling $1.3 billion were issued, of which $1.2 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 $2.2 billion, representing corporate income taxes paid and recoverable since 2002.

At March 31, 2015, TSEUK has $2.4 billion of demand shared facilities in place under which letters of credit of $1.9 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 March 31, 2015, Talisman’s share of TSEUK’s total recorded decommissioning liabilities was $2.5 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.

Except for commodity price derivative contracts that mature as noted below, long-term debt that matures as outlined in note 13 and other long-term obligations detailed in note 14, 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 enters 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.

The Company had the following commodity price derivative contracts outstanding at March 31, 2015, none of which are designated as hedges:

Two-way collars (Oil)

Term

bbls/d

Floor/ceiling

$/bbl

Fair value asset

Dated Brent oil index

Apr-Dec 2015

5,000

90.00/100.01

NYMEX WTI oil index

Apr-Dec 2015

5,000

80.00/95.02

Dated Brent oil index

Apr-Dec 2015

20,000

90.00/106.16

177

Dated Brent oil index

Jan-Dec 2016

1,000

90.00/108.00

NYMEX WTI oil index

Jan-Dec 2016

5,000

85.00/95.95

319

Fixed priced swaps (Oil)	Term	bbls/d		$/bbl		Fair value asset
Dated Brent oil index	Apr-Dec 2015		10,000		100.46		117
Dated Brent oil index	Apr-Dec 2015		1,000		104.00		13
Dated Brent oil index	Apr-Dec 2015		9,000		100.59		106
NYMEX WTI oil index	Apr-Dec 2015		5,000		96.36		60
Dated Brent oil index	Jan-Dec 2016		8,000		98.01		100
Dated Brent oil index	Jan-Dec 2016		2,000		100.29		27
Dated Brent oil index	Jan-Dec 2016		2,000		102.98		28
							451

Two-way collars (Gas)

Term

mcf/d

Floor/ceiling

$/mcf

Fair value asset

NYMEX HH LD

May-Dec 20151

47,468

4.23/4.87

NYMEX HH LD

May-Dec 20151

94,936

4.21/5.06

NYMEX HH LD

Jan-Dec 2016

9,494

4.21/4.75

NYMEX HH LD

Jan-Dec 2016

18,987

4.21/4.87

Fixed priced swaps (Gas)	Term	mcf/d		$/mcf		Fair value asset
NYMEX HH LD	May-Dec 20151		47,468		4.54		18
NYMEX HH LD	May-Dec 20151		47,468		4.39		17
NYMEX HH LD	May-Dec 20151		47,468		4.39		17
NYMEX HH LD	May-Dec 20151		47,468		4.48		18
NYMEX HH LD	May-Dec 20151		47,468		4.53		18
NYMEX HH LD	May-Dec 20151		47,468		4.55		18
NYMEX HH LD	Jan-Dec 2016		23,734		4.48		10
NYMEX HH LD	Jan-Dec 2016		18,987		4.55		9
							125

Fixed priced swaps (Power)	Term	MWh		$CAD/MWh		Fair value asset
Alberta Power	2015 Apr - Dec		5		73.72		-
Alberta Power	2016 Jan - Dec		2		73.83		-
Alberta Power	2017 Jan - Dec		1		74.75		-
Alberta Power	2018 Jan - Dec		1		74.75		-
							-

1.	The fair value balances as at March 31, 2015 do not include April 2015 commodity derivative contracts that were settled in March.

In March 2015, the Company commenced monetization of its 2016 oil and gas derivative contracts, generating $251 million in proceeds during the quarter. Since the end of the quarter, the Company has monetized the remainder of its outstanding oil and gas derivative contracts for total proceeds of $818 million.

Subsequent to March 31, 2015, the Company has not entered into any new commodity price derivative contracts.

In respect of outstanding financial instruments and assuming forward commodity prices in existence at March 31, 2015, an increase of $1/bbl in the price of oil and an increase of $0.10/mcf in the price of gas would have reduced the net fair value of commodity derivatives, thereby resulting in an increase in net loss of $26 million for the three month period ended March 31, 2015. A similar decrease in commodity prices would result in a decrease in net loss of approximately $26 million for the three month period ended March 31, 2015.

17. 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.

Commitments

There have been no additional significant changes in the Company’s expected future commitments, and the timing of those payments, since December 31, 2014.

18. OTHER INCOME

	Three months ended March 31
	2015		2014
Pipeline and customer treating tariffs		15		17
Investment income		2		8
Interest on loan to TSEUK (note 5)		5		8
Marketing and other income		18		15
		40		48

19. OTHER EXPENSES, NET

	Three months ended March 31
	2015			2014
Foreign exchange gain		(23	)		(6	)
Restructuring		12			3
Other miscellaneous		28			11
		17			8

20. INCOME TAXES

Current Income Tax Expense

	Three months ended March 31
	2015			2014
North America		(8	)		(1	)
Southeast Asia		67			116
North Sea		(1	)		-
Other		11			16
Total		69			131

Deferred Income Tax (Recovery) Expense

	Three months ended March 31
	2015			2014
North America		(29	)		52
Southeast Asia		(26	)		(9	)
North Sea		27			(84	)
Other		(4	)		10
Total		(32	)		(31	)

21. SUPPLEMENTAL CASH FLOW

Items Not Involving Cash

	Three months ended March 31
	2015			2014
Depreciation, depletion and amortization		454			469
Impairment		53			130
Dry hole		13			16
Share-based payments recovery		(4	)		(31	)
Gains (loss) on disposals		5			(559	)
Unrealized loss on held-for-trading financial instruments		313			3
Deferred income tax recovery		(32	)		(31	)
Foreign exchange		(18	)		(5	)
(Income) loss from joint ventures, after tax		207			(6	)
Other		7			7
		998			(7	)

Other Cash Flow Information

	Three months ended March 31
	2015		2014
Cash interest paid		54		53
Cash interest received		-		23
Cash income taxes paid		72		181

22. CASH AND CASH EQUIVALENTS

Of the cash and cash equivalents balance of $182 million (December 31, 2014 - $262 million), $172 million (December 31, 2014 - $262 million) has been invested in bank deposits and the remainder in highly rated marketable securities with original maturities of less than three months.

23. INTERESTS 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 March 31, 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 Energy Norge AS	Norway		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.

24. 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 and Norway. 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)					North Sea (3)						Other (4)					Total
	Three months ended March 31,					Three months ended March 31,					Three months ended March 31,						Three months ended March 31,					Three months ended March 31,
(millions of US$)	2015			2014		2015			2014		2015			2014			2015			2014		2015			2014
Revenue
Sales		244			532		324			541		61			164			36			50		665			1,287
Other income		22			20		1			1		5			9			12			18		40			48
Income (loss) from joint ventures, after tax		-			-		-			-		(206	)		(17	)		(1	)		23		(207	)		6
Total revenue and other income		266			552		325			542		(140	)		156			47			91		498			1,341
Segmented expenses
Operating		127			134		109			122		46			98			15			7		297			361
Transportation		28			21		15			15		4			7			7			6		54			49
DD&A		257			266		138			116		43			77			16			10		454			469
Impairment		-			-		48			-		5			130			-			-		53			130
Dry hole		-			-		(1	)		17		-			(1	)		14			-		13			16
Exploration		2			6		18			17		2			13			4			16		26			52
Other		29			9		2			1		2			(1	)		7			5		40			14
Total segmented expenses		443			436		329			288		102			323			63			44		937			1,091
Segmented income (loss) before taxes		(177	)		116		(4	)		254		(242	)		(167	)		(16	)		47		(439	)		250
Non-segmented expenses
General and administrative																							86			105
Finance costs																							91			91
Share-based payments recovery																							(3	)		(32	)
Currency translation																							(23	)		(6	)
(Gain) Loss on held-for-trading financial instruments																							(193	)		60
(Gain) Loss on disposals																							5			(559	)
Total non-segmented expenses																							(37	)		(341	)
Income (loss) before taxes																							(402	)		591
Capital expenditures
Exploration		26			14		5			29		-			7			13			49		44			99
Development		172			314		38			78		23			45			9			5		242			442
Exploration and development		198			328		43			107		23			52			22			54		286			541
Proceeds on dispositions																							-			(1,340	)
Other non-segmented																							3			4
Net capital expenditures																							289			(795	)
Property, plant and equipment		6,252			6,321		2,081			2,223		233			256			259			264		8,825			9,064
Exploration and evaluation assets		1,364			1,345		665			667		120			125			404			407		2,553			2,544
Goodwill		110			110		169			169		-			-			-			-		279			279
Investments in joint ventures		-			-		-			-		-			-			522			523		522			523
Other		649			555		650			740		1,958			2,051			229			301		3,486			3,647
Segmented assets		8,375			8,331		3,565			3,799		2,311			2,432			1,414			1,495		15,665			16,057
Non-segmented assets																							959			1,273
Total assets (5)																							16,624			17,330
Decommissioning liabilities (5)		380			381		334			334		1,181			1,176			34			37		1,929			1,928

1. North America	2015	2014	3. North Sea	2015		2014		4. Other	2015	2014
Canada	114	261	UK	5		8		Algeria	24	35
US	152	291	Norway	61		165		Colombia6	23	56
Total revenue and other income	266	552	Loss from TSEUK	(206	)	(17	)	Total revenue and other income	47	91
Canada	2,445	2,507	Total revenue and other income	(140	)	156		Algeria	215	224
US	3,807	3,814	UK	-		-		Colombia	44	40
Property, plant and equipment5	6,252	6,321	Norway	233		256		Property, plant and equipment5	259	264
Canada	896	871	Property, plant and equipment5	233		256		Colombia	206	208
US	468	474	UK	-		-		Kurdistan Region of Iraq	198	199
Exploration and evaluation assets5	1,364	1,345	Norway	120		125		Exploration and evaluation assets5	404	407
			Exploration and evaluation assets5	120		125
2. Southeast Asia	2015	2014
Indonesia	175	263	5. Current period represents balances at March 31,
Malaysia	88	154	Prior year represents balances at December 31.
Vietnam	39	102
Australia	23	23	6. Balances include after-tax equity income from Equion.
Total revenue and other income	325	542
Indonesia	926	941
Malaysia	668	698
Vietnam	275	308
Papua New Guinea	139	143
Australia	73	133
Property, plant and equipment5	2,081	2,223
Indonesia	37	37
Malaysia	44	41
Vietnam	189	191
Papua New Guinea	395	398
Exploration and evaluation assets5	665	667

Exhibit 99.2

INTERIM MANAGEMENT’S DISCUSSION AND ANALYSIS

FOR THE PERIOD ENDED MARCH 31, 2015

Management’s Discussion and Analysis (MD&A)

(May 7, 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 month periods ended March 31, 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 March 31, 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.

FIRST QUARTER 2015 PERFORMANCE HIGHLIGHTS

Production from ongoing operations averaged 360,000 boe/d in the first quarter of 2015, up 2% from the first quarter of 2014. Liquids production was 137,000 bbl/d, down 4% from the first quarter of 2014.

General and administrative (G&A) expense for the quarter was $86 million, down 18% from the first quarter of 2014.

Operating expenses were $297 million, down 18% from the first quarter of 2014.

FINANCIAL AND OPERATING HIGHLIGHTS

	Q1		Q4		Q3	Q2		Q1	Q4		Q3		Q2
($ millions, unless otherwise stated)	2015		2014		2014	2014		2014	2013		2013		2013
Total revenue and other income1	498		44		1,136	1,242		1,341	929		1,244		1,190
Net income (loss)	(439	)	(1,590	)	425	(237	)	491	(1,005	)	(54	)	97
Per common share ($)
Net income (loss)2	(0.43	)	(1.54	)	0.41	(0.23	)	0.47	(0.98	)	(0.05	)	0.09
Diluted net income (loss)3	(0.43	)	(1.54	)	0.38	(0.24	)	0.43	(0.98	)	(0.08	)	0.06
Production4 (Daily Average - Gross)
Oil and liquids (mbbls/d)	137		140		135	145		142	137		134		126
Natural gas (mmcf/d)	1,342		1,347		1,310	1,380		1,452	1,505		1,423		1,414
Total mboe/d (6mcf = 1boe)	360		365		353	375		384	387		371		361

1.	Includes other income and income (loss) from joint ventures and associates, after tax.

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

3.	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.

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

During the first quarter of 2015, the Company had a net loss of $439 million compared to net income of $491 million in the same quarter in 2014 principally due to lower gas, and oil and liquids prices in 2015, increased losses from joint ventures as well as higher gains on dispositions in 2014. This was partially offset by gains on held-for-trading instruments, lower impairment expenses and lower operating expenses.

Higher production volumes from ongoing operations in the first quarter of 2015 were primarily driven by increased volumes in North America, partially offset by decreased production from Southeast Asia.

DAILY AVERAGE PRODUCTION

	Three months ended March 31
	Gross before royalties				Net of royalties
	2015		2014		2015		2014
Oil and liquids from Consolidated Subsidiaries (mbbls/d)
North America		45		42		38		34
Southeast Asia		39		44		27		28
North Sea		13		14		13		14
Other		14		15		9		7
		111		115		87		83
Oil and liquids from Joint Ventures (mbbls/d)
TSEUK		15		18		15		18
Equion		11		9		9		7
		26		27		24		25
Total oil and liquids from Consolidated Subsidiaries and Joint Ventures (mbbls/d)		137		142		111		108
Natural gas from Consolidated Subsidiaries (mmcf/d)
North America		798		867		695		759
Southeast Asia		483		522		347		351
North Sea		17		15		17		15
Other		-		-		-		-
		1,298		1,404		1,059		1,125
Natural gas from Joint Ventures (mmcf/d)
TSEUK		2		2		2		2
Equion		42		46		32		38
		44		48		34		40
Total natural gas from Consolidated Subsidiaries and Joint Ventures (mmcf/d)		1,342		1,452		1,093		1,165
Total Daily Production from Consolidated Subsidiaries (mboe/d)
North America		177		186		153		161
Southeast Asia		119		131		85		86
North Sea		16		17		16		17
Other		14		15		9		7
		326		349		263		271
Total Daily Production from Joint Ventures (mboe/d)
TSEUK		16		18		16		18
Equion		18		17		14		14
		34		35		30		32
Total daily production from Consolidated Subsidiaries and Joint Ventures (mboe/d)		360		384		293		303
Less production from assets sold or held for sale (mboe/d)
North America		-		28		-		26
Southeast Asia		-		3		-		2
		-		31		-		28
Total production from ongoing operations (mboe/d)		360		353		293		275

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

Production from ongoing operations increased by 2% compared to 2014 due primarily to increased production in North America.

In North America, total production decreased by 5%, and production from ongoing operations increased by 12% compared to 2014. Oil and liquids production from ongoing operations increased by 7% due principally to increased production from the Edson area primarily as a result of new development wells in the Wildrich play. Natural gas production from ongoing operations increased by 14% primarily due to increased production from the Marcellus and Edson areas.

In Southeast Asia, total production decreased by 9%, and production from ongoing operations decreased by 7%. Oil and liquids production from ongoing operations decreased by 5% due principally to a reduction in the Company’s production entitlement at HST/HSD due to partner’s carrying costs being fully recouped in 2014. These declines were partially offset by higher production at Kinabalu following a multi-well infill program in 2014. Natural gas production from ongoing operations decreased by 7% due principally to reduced gas demand at Corridor and PM3.

Production in Norway decreased by 6% due principally to reduced production at Varg due to shutdown of the Armada platform, partially offset by increased production at Veslefrikk. In the TSEUK joint venture, production decreased by 11% due principally to shutdowns for a workover at Tweedsmuir and for repairs at Auk.

In the Rest of the World, including the Equion joint venture, production was stable compared to prior year.

VOLUMES PRODUCED INTO (SOLD OUT OF) INVENTORY1,2

	Three months ended March 31
	2015			2014
North America - bbls/d		278			533
Southeast Asia - bbls/d		(356	)		2,922
North Sea - bbls/d		1,907			(1,333	)
Other - bbls/d		402			3,694
Total produced into (sold out of) inventory - bbls/d		2,231			5,816
Total produced into (sold out of) inventory - mmbbls		0.2			0.5
Inventory at March 31 - mmbbls		1.7			1.7

1. Gross before royalties.

2. North Sea volumes only include Norway.

The Company's 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. 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 March 31, 2015, volumes in inventory increased from 1.5 mmbbls at December 31, 2014 to 1.7 mmbbls at March 31, 2015 due principally to increased inventories in North America, Southeast Asia and Norway, partially offset by decreased inventories in the Rest of the World.

COMPANY NETBACKS1,2

	Three months ended March 31
	Gross before royalties				Net of royalties
	2015		2014		2015		2014
Oil and liquids ($/bbl)
Sales price		40.39		93.35		40.39		93.35
Royalties		9.50		26.95		-		-
Transportation		2.12		1.45		2.77		2.04
Operating costs		15.95		21.40		20.85		30.09
		12.82		43.55		16.77		61.22
Natural gas ($/mcf)
Sales price		4.00		6.50		4.00		6.50
Royalties		0.85		1.49		-		-
Transportation		0.28		0.27		0.35		0.35
Operating costs		1.21		1.15		1.54		1.50
		1.66		3.59		2.11		4.65
Total $/boe (6mcf=1boe)
Sales price		29.54		56.92		29.54		56.92
Royalties		6.61		14.86		-		-
Transportation		1.82		1.56		2.34		2.11
Operating costs		10.20		11.70		13.08		15.56
		10.91		28.80		14.12		39.25

1.	Netbacks do not include pipeline operations.

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

During 2015, the Company’s average gross netback was $10.91/boe, 62% lower than 2014 due principally to lower realized prices, partially offset by lower royalties and lower operating costs.

Talisman’s realized net price of $29.54/boe was 48% lower than 2014, due principally to lower commodity prices. Oil and liquids realized prices decreased by 57% and natural gas realized prices decreased by 38% from 2014.

The Company’s realized net sales price includes the impact of physical commodity contracts, but does not include the impact of financial commodity price derivatives discussed in the “Risk Management” section of this MD&A.

The corporate royalty rate was 22%, down from 26% in 2014 due principally to lower royalty rates in Southeast Asia.

COMMODITY PRICES AND EXCHANGE RATES

	Three months ended March 31
	2015		2014
Oil and liquids sales prices ($/bbl)1
North America		23.51		68.05
Southeast Asia		53.09		110.34
North Sea		50.39		103.82
Other		48.65		104.17
		40.39		93.35
Natural gas sales prices ($/mcf)1
North America		2.60		4.87
Southeast Asia		6.20		9.13
North Sea		7.57		9.79
Other		-		-
		4.00		6.50
Company $/boe (6mcf=1boe)		29.54		56.92
Quarterly average benchmark prices and foreign exchange rates
WTI (US$/bbl)		48.63		98.68
Dated Brent (US$/bbl)		53.97		108.22
WCS (US$/bbl)		33.82		75.56
LLS (US$/bbl)		52.75		104.44
NYMEX (US$/mmbtu)		2.96		4.90
AECO (C$/gj)		2.80		4.51
C$/US$ exchange rate		1.24		1.10
UK£/US$ exchange rate		0.66		0.60

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

In North America, realized oil and liquids prices decreased by 65% in 2015, principally due to price declines and increased liquids production in the product mix. In Southeast Asia, North Sea and the Rest of the World realized oil and liquids prices decreased consistent with decreases in Brent pricing.

In North America, realized natural gas prices decreased by 47% in 2015 and in Southeast Asia, realized natural gas prices decreased by 32%. A significant portion of natural gas in Southeast Asia is sold via fixed-price contracts or linked to oil based indices. Because of volumes sold under fixed-price contracts the decline in gas prices was less than the decline in benchmark oil prices. Due to these reasons, Talisman’s overall realized natural gas price of $4.00/mcf decreased by 38% compared to 2014.

EXPENSES

Unit Operating Expenses1

	Three months ended March 31
	Gross before royalties				Net of royalties
($/boe)	2015		2014		2015		2014
North America		7.91		8.23		9.13		9.56
Southeast Asia		9.60		11.39		13.55		17.29
North Sea		36.35		55.02		36.35		55.02
Other		14.04		8.57		22.12		17.24
		10.20		11.70		13.08		15.56

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

Total Operating Expenses1

	Three months ended March 31
	2015		2014
($ millions)
North America		127		134
Southeast Asia		109		122
North Sea		46		98
Other		15		7
		297		361

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

Total operating expenses decreased by 18% to $297 million due principally to operating expense reductions being implemented across the Company, the timing of liftings, asset dispositions and favourable foreign exchange changes.

In North America, total operating expenses decreased by 5% to $127 million principally due to dispositions of non-core western Canadian properties in 2014, partially offset by increased production activity in remaining properties and the timing of liftings. Unit operating expenses in North America decreased by 4% due principally to a change in product mix as remaining assets have lower operating costs than assets disposed of in western Canada.

In Southeast Asia, total operating expenses decreased by 11% due primarily to the implementation of operating expense reductions, the disposition of Southeast Sumatra assets in 2014 and completion of the jacket repair in HST/HSD during 2014, partially offset by the timing of liftings. Unit operating expenses in Southeast Asia decreased by 16% due to the reasons noted above.

In the North Sea, total operating expenses in Norway decreased by 53% due principally to the timing of liftings, foreign exchange gains, and reduced costs associated with the cessation of production at Rev. Unit operating costs in Norway decreased by 34% due to the reasons noted above.

In the Rest of the World, total operating expenses increased by $8 million due principally to higher crude treatment costs in Colombia and the timing of liftings in Algeria. Unit operating costs rose by 64% due to the reasons above.

Unit operating expense for the Company decreased by 13% due to the reasons noted above.

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

	Three months ended March 31
	Gross before royalties				Net of royalties
($/boe)	2015		2014		2015		2014
North America		15.99		15.91		18.46		18.46
Southeast Asia		12.60		10.06		17.78		15.39
North Sea		32.18		46.87		32.18		46.87
Other		11.25		10.47		17.73		19.71
		15.35		15.20		19.06		19.46

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

Total DD&A Expense1

	Three months ended March 31
	2015		2014
($ millions)
North America		257		266
Southeast Asia		138		116
North Sea		43		77
Other		16		10
		454		469

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

Total DD&A expense decreased by 3% primarily due to decreased expense in the North Sea, partially offset by increased expense in Southeast Asia.

DD&A expense in North America decreased by 3% principally due to a lower depletable base in Eagle Ford as a result of impairment expenses recognized in 2014, partially offset by increased production from ongoing operations and higher DD&A rates in Canada. Unit DD&A expense was stable compared to 2014.

In Southeast Asia, DD&A expense increased by 19% principally due to 2014 well additions that have higher DD&A rates, as well as downward reserve revisions during 2014, partially offset by lower production and decreased production entitlement in HST/HSD. Unit DD&A expense increased by 25%, due principally to new wells with higher DD&A rates and downward reserve revisions as mentioned above.

In the North Sea, DD&A expense for Norway decreased by 44% due principally to 2014 impairment expenses at Gyda and Varg, which reduced the book value of those properties to $nil, as well as decreased production. Unit DD&A expense decreased by 31% due to the reasons noted above.

In the Rest of the World, DD&A expense increased by $6 million due principally to the timing of liftings in Algeria. Unit DD&A expense increased by 7% principally due to an increased depletable base in Colombia and change in production mix in Algeria.

Unit DD&A expense for the Company was stable compared to 2014 due to the reasons noted above.

Impairment1

	Three months ended March 31
	2015		2014
($ millions)
Impairment losses
Southeast Asia		48		-
North Sea		5		130
		53		130

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

During the three month period ended March 31, 2015, the Company fully impaired a property in Australia for $46 million.

During the three month period ended March 31, 2014 in Norway, the Company recorded $130 million of impairment expense 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.

Income (Loss) from Joint Ventures1

	Three months ended March 31
	2015			2014
($ millions)
TSEUK		(206	)		(17	)
Equion		(1	)		23
		(207	)		6

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

The net loss in TSEUK increased by $189 million due principally to decreased revenue from lower realized oil prices, decreased income tax recoveries, and increased DD&A expense as a result of capital expenditures during the three months ended March 31, 2015 being fully depleted on certain producing assets that have no proved reserves.

The net loss in Equion of $1 million after-tax as compared to income of $23 million in 2014 is principally due to lower commodity prices, partially offset by an income tax recovery of $1 million versus tax expense of $15 million in 2014.

Corporate and Other 1

	Three months ended March 31
	2015			2014
($ millions)
General and administrative (G&A) expense		86			105
Dry hole expense		13			16
Exploration expense		26			52
Finance costs		91			91
Share-based payments recovery		(3	)		(32	)
(Gain) loss on held-for-trading financial instruments		(193	)		60
(Gain) loss on asset disposals		5			(559	)
Other income		40			48
Other expenses, net		17			8

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

G&A expense decreased by $19 million relative to 2014, due principally to lower workforce costs.

In the first quarter of 2015, Talisman recorded dry hole expense of $13 million principally due to the write-off of exploration wells in Colombia.

Exploration expense decreased by $26 million due principally to reduced spending in North America, the North Sea 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 stable as compared to prior year.

Share-based payments recovery during the three month period ended March 31, 2015 decreased by $29 million principally due to Talisman’s share price declining by less in 2015 than in 2014.

Talisman recorded a gain on held-for-trading financial instruments of $193 million, due principally to decreases in oil and gas forward prices in comparison to the fourth quarter of 2014. See the ‘Risk Management’ section of this MD&A for further details concerning the Company’s financial instruments.

Other income of $40 million consists primarily of marketing and other income of $18 million and pipeline and customer treating tariffs of $15 million.

Other expense of $17 million includes restructuring costs of $12 million and other miscellaneous expenses of $28 million partially offset by foreign exchange gains of $23 million.

INCOME TAXES 1

	Three months ended March 31
	2015			2014
($ millions)
Income (loss) before taxes		(402	)		591
Less: PRT
Current		2			8
Deferred		(2	)		3
Total PRT		-			11
		(402	)		580
Income tax expense (recovery)
Current income tax		67			123
Deferred income tax		(30	)		(34	)
Total income tax expense		37			89
Effective income tax rate (%)		(9	)		15

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

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 first quarter of 2015 was impacted by pre-tax losses of $177 million in North America where tax rates are between 25% and 39% and pre-tax losses of $36 million in the North Sea where tax rates are principally 78%.

In addition to the jurisdictional mix of income, the effective tax rate was also impacted by:

Non-taxable portion of hedging gains;

Foreign exchange on foreign denominated tax pools;

Non-recognition of losses in the United States and exploration blocks.

The decrease of $56 million in current income taxes was primarily driven by lower net revenues in Southeast Asia.

The decrease of $4 million in deferred tax recovery was due principally to foreign exchange on tax pools, offset by deferred tax expense on the gains associated with the Company’s Montney disposition, and losses in Canada.

CAPITAL EXPENDITURES1,2

	Three months ended March 31
	2015		2014
($ millions)
North America		198		328
Southeast Asia		43		107
North Sea		23		52
Other		22		54
Exploration and development expenditure from subsidiaries2		286		541
Corporate, IS and Administrative		3		4
Proceeds of dispositions		-		(1,340	)
Net capital expenditure for subsidiaries		289		(795	)
TSEUK		109		164
Equion		10		7
Exploration and development expenditure from joint ventures3		119		171
Net capital expenditure for consolidated subsidiaries and joint ventures		408		(624	)

1. Capital expenditures in the North Sea only relate to Norway.

2. Excludes exploration expense of $26 million (2014 - $52 million).

3. Represents the Company’s proportionate interest, excluding exploration expensed of $1 million net in TSEUK (2014 - $1 million).

Capital expenditure, excluding exploration expense and after adjusting for proceeds of dispositions, decreased by $308 million or 43% in the first quarter of 2015 compared to the same quarter in 2014 due to decreased spending across all regions.

North America capital expenditures during the quarter totalled $198 million, a decrease of 40% from 2014. Of this, $172 million related to development activity, with the majority spent in the Eagle Ford, Marcellus and Edson areas. The remaining $26 million of capital was mainly invested in appraisal drilling activities in the Duvernay.

In Southeast Asia, capital expenditures of $43 million included $38 million on development, with the majority spent in Malaysia and Indonesia. The majority of the exploration spend was in Malaysia.

In Norway, capital expenditures of $23 million were for development activities, primarily related to Brynhild, Brage and Veslefrikk.

In the Rest of the World, capital expenditures of $22 million included $9 million of development spend in Colombia and $13 million of exploration spend in Colombia and the Kurdistan Region of Iraq.

In the TSEUK joint venture, net capital expenditures of $109 million consisted primarily of development activity at Montrose, Tweedsmuir and Flyndre/Cawdor. In the Equion joint venture, net capital expenditures of $10 million were principally for development wells.

ASSET DISPOSALS

North America Dispositions

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).

LIQUIDITY AND CAPITAL RESOURCES

Talisman’s gross debt at March 31, 2015 was $5.1 billion ($5.0 billion, net of cash and cash equivalents and bank indebtedness), compared to $5.1 billion ($4.8 billion, net of cash and cash equivalents and bank indebtedness) at December 31, 2014.

During the quarter, the Company generated $556 million of cash provided by operating activities and incurred capital expenditures of $295 million.

Talisman’s capital structure consists of shareholders’ equity and debt. The Company makes adjustments to its capital structure based on changes in economic conditions and its planned requirements. Talisman has the ability to adjust its capital structure by issuing new equity or debt, selling assets to reduce debt, controlling the amount it returns to shareholders and making adjustments to its capital expenditure program, subject to restrictions in the Arrangement Agreement the Company entered into with Repsol on December 15, 2014, as filed on www.sedar.com.

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 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 credit facilities. At March 31, 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.

In addition, the Company utilizes letters of credit pursuant to letter of credit facilities, most of which are uncommitted. At March 31, 2015, demand letters guaranteed by the Company totaling $1.3 billion were issued of which $1.2 billion were issued from uncommitted facilities. Of that total, $0.9 billion is provided as security for the costs of decommissioning obligations in the United Kingdom (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.

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 $2.2 billion, representing corporate income taxes paid and recoverable since 2002.

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

The Company also has obligations to fund 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 2015. In addition the Company has a guarantee to fund TSEUK’s decommissioning obligation if TSEUK is unable to. 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. During the second half of 2014, Talisman was downgraded by Moody’s, Standard & Poor’s, Fitch and Dominion Bond Rating Service to Baa3 (negative), BBB- (stable), BBB- (stable), and BBB under review with developing implications, respectively. The Company remains investment grade and believes it will continue to have access to capital, as and when needed, at a reasonable cost of funds.

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. The debt-to-cash flow ratio is calculated using debt (calculated by adding the gross debt and bank indebtedness, production payments and finance leases) 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 March 31, 2015, the debt-to-cash flow ratio was 2.2:1.

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 March 31, 2015, approximately 90% of the Company's trade accounts receivable were aged less than 90 days and the largest single counterparty exposure, accounting for 3% 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 consisting primarily of highly rated counterparties.

At March 31, 2015, there were 1,036,166,028 common shares outstanding, of which 323,584 were held in trust by the Company resulting in 1,035,842,444 common shares outstanding for accounting purposes. During the three month period ended March 31, 2015, Talisman declared no common share dividends. Subsequent to March 31, 2015, no stock options were exercised for shares and 323,584 common shares previously held in trust for the long-term PSU plan were sold on the open market resulting in 1,036,166,028 common shares outstanding for accounting purposes. On April 8, 2015, the Company declared common share dividends of $0.1125 per common share for an aggregate dividend of $117 million.

On February 18, 2015 the Arrangement Agreement was approved by the common and preferred shareholders of the Company as described in this interim MD&A.

At March 31, 2015, there were 8,000,000 Series 1 preferred shares outstanding. Holders of Series 1 preferred shares are entitled to receive cumulative quarterly fixed dividends of 4.2% per annum for the initial period ending December 31, 2016, if, as, and when declared by the Board of Directors. Thereafter, the dividend rate will be reset every five years at a rate equal to the five-year Government of Canada bond yield plus 2.77%. During the three month period ended March 31, 2015, Talisman declared preferred share dividends of C$0.2625 per share for an aggregate dividend of $2 million.

At March 31, 2015, there were 29,316,331 stock options, 10,774,657 RSUs, 2,977,853 deferred share units (DSUs) and 2,243,000 long-term PSUs outstanding.

Subsequent to March 31, 2015, 4,075,446 RSUs were released, 95,975 were granted in lieu of payment of dividends and 18,705 were forfeited, with 6,776,481 outstanding at May 4, 2015.

Upon closing of the transaction scheduled for May 8, 2015, all share-based payment units will be settled for cash. The payments will be paid within 60 days of closing.

To satisfy its obligation to deliver common shares to settle long-term PSUs, the Company may purchase shares on the open market, which are held in trust. The 2012 long-term PSU grant vested on December 31, 2014 and was settled in March 2015 based on the vesting of 100% of the PSUs granted, as approved by the Board of Directors.

During the three month period ended March 31, 2015, 3,793,939 common shares were purchased on the open market for $30 million and held in trust for the long-term PSU plan (During the same period in 2014 – no common shares were purchased). Between April 1 and May 4, 2015, no common shares were purchased on the open market.

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 or issue equity. Any acquisitions, investments, dispositions, or issuance of debt or equity are subject to restrictions in the Arrangement Agreement the Company entered into with Repsol on December 15, 2014, as filed on www.sedar.com.

For additional information regarding the Company’s liquidity and capital resources, refer to note 20 to the 2014 audited Consolidated Financial Statements and notes 13, 15 and 16 to the interim condensed Consolidated Financial Statements.

SENSITIVITIES

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 $55/bbl, a NYMEX natural gas price of approximately $3.00/mmbtu and exchange rates of US$0.84=C$1 and UK£1=US$1.55.

(millions of $)	Net Income			Cash Provided by Operating Activities3
Volume changes
Oil – 10,000 bbls/d		25			100
Natural gas – 60 mmcf/d		(1	)		40
Price changes1
Oil – $1.00/bbl		25			30
Natural gas (North America)2 – $0.10/mcf		25			25
Exchange rate changes
US$/C$ decreased by US$0.01		(5	)		(5	)
US$/UK£ increased by US$0.02		(5	)		-

1.	The impact of price changes excludes the effect of commodity derivatives. See specific commodity derivative terms in the ‘Risk Management’ section of this MD&A, and note 16 to the interim condensed Consolidated Financial Statements.

Price sensitivity on natural gas relates to North America natural gas only. The Company’s exposure to changes in the natural gas prices in Norway, 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.

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

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 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.

There have been no additional significant changes in the Company’s expected future commitments, and the timing of those payments, since December 31, 2014.

TRANSACTIONS WITH RELATED PARTIES

During the three months ended March 31, 2015, the shareholders of TSEUK agreed to subscribe for common shares of TSEUK in the amount of $320 million, of which Talisman’s share was $163 million.

RISK MANAGEMENT

Talisman monitors its exposure to variations in commodity prices, interest rates and foreign exchange rates. In response, Talisman periodically enters 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. The Company has established a system of internal controls to minimize risks associated with its derivatives program and credit risk associated with derivatives counterparties.

The accounting policy with respect to derivative financial instruments and commodity sales contracts is set out in note 3(q) to the 2014 audited Consolidated Financial Statements. Derivative financial instruments and commodity sales contracts outstanding at March 31, 2015, including their respective fair values, are detailed in note 16 to the interim condensed Consolidated Financial Statements.

The Company has elected not to designate as hedges for accounting purposes any commodity price derivative contracts entered into. These derivatives are classified as held-for-trading financial instruments and are measured at fair value with changes in fair value recognized in net income. This can potentially increase the volatility of net income.

Commodity Price Derivative Financial Instruments

The Company had the following commodity price derivative contracts outstanding at March 31, 2015, none of which are designated as hedges:

Two-way collars (Oil)	Term		bbls/d		Floor/ceiling $/bbl
Dated Brent oil index	2015 Apr - Dec			5,000		90.00/100.01
NYMEX WTI oil index	2015 Apr - Dec			5,000		80.00/95.02
Dated Brent oil index	2015 Apr - Dec			20,000		90.00/106.16
Dated Brent oil index	2016 Jan - Dec			1,000		90.00/108.00
NYMEX WTI oil index	2016 Jan - Dec			5,000		85.00/95.95
Fixed priced swaps (Oil)	Term	bbls/d			$/bbl
Dated Brent oil index	2015 Apr - Dec			10,000		100.46
Dated Brent oil index	2015 Apr - Dec			1,000		104.00
Dated Brent oil index	2015 Apr - Dec			9,000		100.59
NYMEX WTI oil index	2015 Apr - Dec			5,000		96.36
Dated Brent oil index	2016 Jan - Dec			8,000		98.01
Dated Brent oil index	2016 Jan - Dec			2,000		100.29
Dated Brent oil index	2016 Jan - Dec			2,000		102.98

Two-way collars (Gas)	Term		mcf/d		Floor/ceiling $/mcf
NYMEX HH LD	2015 Apr - Dec			47,468		4.23/4.87
NYMEX HH LD	2015 Apr - Dec			94,936		4.21/5.06
NYMEX HH LD	2016 Jan - Dec			9,494		4.21/4.75
NYMEX HH LD	2016 Jan - Dec			18,987		4.21/4.87

Fixed priced swaps (Gas)	Term		mcf/d		$/mcf
NYMEX HH LD	2015 Apr - Dec			47,468		4.54
NYMEX HH LD	2015 Apr - Dec			47,468		4.39
NYMEX HH LD	2015 Apr - Dec			47,468		4.39
NYMEX HH LD	2015 Apr - Dec			47,468		4.48
NYMEX HH LD	2015 Apr - Dec			47,468		4.53
NYMEX HH LD	2015 Apr - Dec			47,468		4.55
NYMEX HH LD	2016 Jan - Dec			23,734		4.48
NYMEX HH LD	2016 Jan - Dec			18,897		4.55


Fixed priced swaps (Power)	Term	MWh		C$/MWh
Alberta Power	2015 Apr - Dec		5		73.72
Alberta Power	2016 Jan - Dec		2		73.83
Alberta Power	2017 Jan - Dec		1		74.75
Alberta Power	2018 Jan - Dec		1		74.75

In order to strengthen its balance sheet, the Company commenced monetization of its 2016 oil and gas derivative contracts, generating $251 million in proceeds during the quarter. Since the end of the quarter, the Company has monetized the remainder of its outstanding oil and gas derivative contracts for total proceeds of $818 million.

Interest Rate Swaps

In order to swap a portion of the $375 million 5.125% notes due 2015 to floating interest rates, the Company entered into fixed-to-floating interest rate swap contracts with a total notional amount of $300 million that expire on May 15, 2015. These swap contracts require Talisman to pay interest at a rate of three month US$ LIBOR plus 0.433% while receiving payments of 5.125% semi-annually.

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. During the three month period ended March 31, 2015, no accounting items were impacted by changes in management’s estimates and judgments.

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

CHANGES IN ACCOUNTING POLICIES

a) Accounting Policies Used

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

Employee Benefits

Operating Segments

Share-based Payments

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 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.

b) Accounting Pronouncements Not Yet Adopted

The Company continues to assess the impact of adopting the following pronouncements.

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 March 31, 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

LEGAL PROCEEDINGS

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 expected to have a material impact on the Company's financial position.

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 closing of the corporate transaction with Repsol;

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;

Potential effects of the hedging program;

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, including share-based payments expense in future periods;

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: 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; commodity price and cost assumptions; 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. Closing of the Repsol transaction is subject to satisfaction of customary closing deliverables.

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:

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;

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

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;

Risks associated with the completion of the corporate transaction with Repsol;

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 and any hedging 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.

Non-Core Assets

In this MD&A, all references to “core” or “non-core” assets and properties align with the Company’s current public disclosures regarding its assets and properties.

Use of ‘boe’

Throughout this interim MD&A, the calculation of barrels of oil equivalent (boe) is at a conversion rate of six thousand cubic feet (mcf) of natural gas for one barrel of oil and is based on an energy equivalence conversion method. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6mcf:1bbl is based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent a value equivalence at the wellhead.

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
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
G&A	General and administrative
GAAP	Generally Accepted Accounting Principles
GHG	Greenhouse gas emissions
gj	gigajoule
HH LD	Henry Hub Last Day
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 kroner
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

March 31, 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 March 31, 2015.

March 31, 2015
Interest coverage (times)
Income1	(5.24)

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

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

I, Harold N. Kvisle, President 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 March 31, 2015.

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.

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.

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 January 1, 2015 and ended on

March 31, 2015 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: May 7, 2015

/s/ Harold N. Kvisle

Harold N. Kvisle

President and Chief Executive Officer

Exhibit 99.5

I, Paul R. Smith, Executive Vice-President, Finance 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 March 31, 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

(ii)

(b)

5.1.1

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 January 1, 2015 and ended on March 31, 2015 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.

Date: May 7, 2015

/s/ Paul R. Smith

Paul R. Smith

Executive Vice-President, Finance

and Chief Financial Officer

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