REPSOL ACQUISITION OF TALISMAN ENERGY CREATES LEADING GLOBAL E&P COMPANY WITH ENHANCED GROWTH PLATFORM DECEMBER 2014

REPSOL ACQUISITION OF TALISMAN ENERGY CREATES LEADING GLOBAL E&P COMPANY WITH ENHANCED GROWTH PLATFORM DECEMBER 2014

TRANSACTION OVERVIEW Per Share Consideration All-cash price of US$8.00 per Talisman share All-cash price of C$25.00 per Talisman preferred share Transaction Value Approximately US$13 billion (including current debt) Structure Plan of Arrangement under Canada Business Corporations Act Board Action Unanimous approval from Talisman and Repsol Boards Talisman Board allowable to pay aggregate cash dividends up to $0.18/share Targeted Closing Second quarter 2015 Approval Process TLM shareholder approval (66 2/3 % of those voting) Court approval Applicable government and regulatory approvals 2

COMPELLING OPPORTUNITY Significant and immediate value return to stakeholders A premium of 75% to the seven-day volume weighted average share price A premium of 60% to Talisman s 30-day volume-weighted average share price Combination will create bigger, more competitive and diversified global energy company Combined company will possess the financial flexibility to maximize value of TLM s large undeveloped resource base Mitigates risks associated with execution of Talisman s business plan in challenging price and M&A environment Transaction underscores Repsol s belief in strength of Talisman assets and people 3

REPSOL OVERVIEW Norway Canada Netherlands Russia Nicaragua Operating in more than 35 countries USA Houston Colombia Ecuador Peru Bolivia Aruba Ireland Canaport LNG Spain Portugal Venezuela Morocco Trinidad & Tobago Mauritania Guyana Brasil Liberia Algeria Angola Namibia Italy Tunisia Libya Gabon Romania Bulgaria Iraq China Singapore Indonesia Malaysia Australia Exploration & Production (E&P) Pure Exploration Refining & Marketing (R&M) E&P/R&M Gas and Power Core Businesses Upstream Downstream Non Operated Shareholding Gas Natural Fenosa 4

COMPLEMENTARY CAPABILITIES World class explorer Experienced production operator Deepwater exploration experience and portfolio Broad international portfolio with strong focus on Latin America High growth exploration and development pipeline Unconventional experience and portfolio Broad international portfolio with strong focus on North America and Southeast Asia Great legacy assets and contingent resources High impact Upstream G&G capabilities and R&D Focus on operational capabilities With this transaction, Repsol will gain significant benefits by becoming a much stronger and balanced E&P player 5

MAXIMIZING VALUE FOR TALISMAN STAKEHOLDERS Going concern strategic pathways increasingly challenging Collapse in oil prices puts pressure on FCF gap North Sea and other legacy commitments limit ability to curtail capex Partial protection from hedges in 2015, but fully exposed 2016+ Dislocated M&A markets Large disconnect emerged in M&A markets Talisman inorganic transactions being re-traded Balance sheet Risk of rating agency action in current environment Absent major dispositions, maintaining debt covenants presents challenge Company undercapitalized would potentially need to raise equity 6

BENEFITS TO CANADA Repsol has identified Canada as a core area for growth and investment. Calgary to be one of Repsol s largest corporate centres outside of Spain Talisman s Canadian assets will continue to be managed locally in Canada The combination will accelerate the development of Talisman s assets in Canada, increasing opportunities for all Talisman employees. Repsol plans to leverage Talisman s assets and highly-skilled talent Repsol has committed to Talisman s social and environmental programs 7

COMPELLING OPPORTUNITY Significant and immediate value return to stakeholders A premium of 75% to the to the seven-day volume weighted average share price A premium of 60% to Talisman s 30-day volume-weighted average share price Combination will create bigger, more competitive and diversified global energy company Enlarged company will possess the financial flexibility to maximize value of TLM s large undeveloped resource base Mitigates risks associated with execution of Talisman s business plan in challenging price and M&A environment Transaction underscores Repsol s belief in strength of Talisman assets and people 8

ADVISORIES ADVISORY This presentation contains information that constitutes forward-looking information or forward-looking statements (collectively forward-looking information ) within the meaning of applicable securities legislation. The use of any of the words ability, believe, continue, create deliver, expect, mitigate, plans, provide, will and similar expressions are intended to identify forward-looking information. Forward-looking information includes, without limitation, statements concerning: the anticipated benefits of the Arrangement to Talisman, its shareholders and stakeholders and to Alberta and Canada respectively; the production, reserves and activities of the combined company; the accelerated development of Talisman's assets in Canada or elsewhere; the timing and anticipated receipt of required government and regulatory, shareholder and court approvals for the Arrangement; the ability of Talisman and Repsol to satisfy the other conditions to, and to complete, the Arrangement; and the anticipated timing of the mailing of the information circular regarding the Arrangement, the timing of the special meeting of the shareholders of Talisman and the closing of the Arrangement. In respect of the forward-looking statements and information concerning the anticipated completion and benefits of the proposed Arrangement and the anticipated timing for completion of the Arrangement, Talisman has provided such in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the time required to prepare and mail Talisman shareholder meeting materials, including the required information circular; the ability of the parties to receive, in a timely manner, the required government and regulatory, shareholder, court and other third party approvals; the assets and employees of Talisman and Repsol; the plans of the combined company; and the ability of the parties to satisfy, in a timely manner, the other conditions to the closing of the Arrangement. Dates may change for a number of reasons, including unforeseen delays in preparing meeting materials, inability to secure necessary government and regulatory, shareholder, court or other third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Arrangement. In general, actual outcomes may vary from the forward-looking information contained in this presentation. Accordingly, readers should not place undue reliance on the forward-looking statements and information contained in this presentation. Since forward-looking information addresses future events and conditions, by its very nature it involves inherent risks and uncertainties. Risks and uncertainties inherent in the nature of the Arrangement include, but are not limited to, the failure of Talisman or Repsol to obtain necessary government and regulatory, shareholder, court and other third party approvals, or to otherwise satisfy the conditions to the Arrangement, in a timely manner, or at all; and failure to successfully execute the plans of the combined company. Failure to obtain approvals, or the failure of Talisman or Repsol to otherwise satisfy the conditions to the Arrangement, may result in the Arrangement not being completed on the proposed terms, or at all. In addition, the failure of Talisman to comply with the terms of the Arrangement Agreement may result in Talisman being required to pay a termination payment to Repsol, the result of which could have a material adverse effect on Talisman s financial position and its ability to fund growth prospects and current operations. Readers are cautioned that the foregoing list of risk factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of Talisman are included in reports on file with Canadian securities regulatory authorities and the United States Securities and Exchange Commission, including but not limited to: Talisman s Annual Information Form for the year ended December 31, 2013 dated March 3, 2014 and the Talisman s Notice of Meeting and Annual Proxy Circular dated May 7, 2014, as well as subsequent reports which may be filed from time to time and may be accessed on Talisman s company profile on SEDAR at www.sedar.com and Talisman s filings with the United States Securities and Exchange Commission available at www.sec.gov. Unless the context indicates otherwise, references to Talisman or the Company include the direct or indirect subsidiaries of Talisman Energy Inc., partnership interests held by Talisman Energy Inc. and its subsidiaries and Talisman s equity interests in Equion Energıa Limited and Talisman Sinopec Energy UK Limited. Such use of Talisman or the Company to refer to these other legal entities, partnership interests and equity interests does not constitute a waiver by Talisman Energy Inc. or such entities or partnerships of their separate legal status, for any purpose. The forward-looking information contained in this presentation is made as of the date hereof and Talisman undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws. 9

REPSOL ACQUISITION OF TALISMAN ENERGY CREATES LEADING GLOBAL E&P COMPANY WITH ENHANCED GROWTH PLATFORM DECEMBER 2014