Talisman Energy and Mitsubishi working together in Papua New Guinea

Source: Talisman Energy Inc.

Talisman Energy Inc. (TSX: TLM) (NYSE: TLM) and Mitsubishi Corporation (MC) have reached agreement on MC's entry into nine of Talisman's licences in Papua New Guinea's onshore Western Province, via a farmout from Talisman effective January 1, 2012, subject to approvals by government and joint venture partners. The deal is valued at approximately US$280 million and will be paid in the form of a capital carry. Following the farmout, Talisman and MC licensed equity positions will average 40% and 20%, respectively, in these nine licences.

Talisman and MC have agreed to work together closely to aggregate natural gas in the Western Province of PNG with a view to potential LNG export of approximately 3 million metric tonnes per annum. "Talisman is delighted to have MC as a strategic partner in our onshore licences in PNG," said Paul Blakeley, Executive Vice-President, International Operations East. "MC brings extensive experience in LNG development and marketing and I am confident they will be a key success factor in helping us unlock the value of our Papua New Guinea assets."

Talisman has been working in PNG since 2001. The company entered the onshore licences of the Papuan Foreland in 2009 and now has a portfolio comprising interests in nine petroleum prospecting licences (PPLs) and five petroleum retention licences (PRLs), covering 13.7 million acres. Talisman has participated in the acquisition of over 1,550 kilometres of 2D seismic and the drilling of eight wells in the PNG Foreland Basin to date. As one of the most active explorers in PNG over the past two years, Talisman has participated in a new gas discovery at Ubuntu in PRL 28 and the successful appraisal of the Stanley and Elevala gas discoveries in PRL 4 and PRL 21, respectively. Talisman intends to commence a four-well drilling program on PPLs 235 and 261 during 2012, as well as ongoing appraisal in PRL 21.

MC has held interests in LNG operations since 1969 and currently participates in nine major LNG projects. Most recently, MC has commenced construction of the Donggi-Senoro LNG project in Indonesia in its capacity as project lead in planning and operation. MC also has an extensive downstream marketing and LNG tanker business. Seeing PNG as a vast and under-explored country with huge LNG supply potential within the Asia Pacific region, MC aims to maximize its contribution by leveraging its experience, not only to promote economic growth for PNG, but also potentially linking this with securing a stable energy supply for Japan. MC will participate in five PPLs and four PRLs, including discovered resources in PRLs 4, 8, 21, 28 and PPL 235.

Talisman and MC have an aligned vision for the aggregation and monetization of gas and condensate liquids in the Western Province and intend to leverage their respective skills in upstream exploration, production and LNG project development to deliver development success for the benefit of all stakeholders, including the people and government of PNG and the Western Province.

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