Fitch Rates Talisman Energy's CP Program 'F2'; Outlook Stable

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CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has assigned an 'F2' short-term Issuer Default Rating (IDR) to Talisman Energy Inc. (TLM) and an 'F2' rating to the company's commercial paper (CP) issued under its new US$1 billion program. The Rating Outlook is Stable.

In addition to cash and cash equivalents on hand (US$421 million at the close of 3Q'11) plus cash flow, TLM has available a C$3.85 billion extendible unsecured revolving credit facility to repay maturing commercial paper as needs arise (less US$226 million borrowed at the end of the third quarter). The facility matures in November 2014.

In assigning the 'F2' rating, Fitch also considered an analysis of TLM's liquidity over the course of the past four years. On average TLM's yearly funds from operations were 32.2 times (x) scheduled debt repayment for the following year. Year-end cash balances always exceeded short-term debt, and free cash flow plus year-end cash plus undrawn committed facilities averaged 23.7x scheduled debt repayment for the following year. Free cash flow, negative in the last two years, was the product of heavy exploration and development expenses to replace reserves produced and sold.

Fitch rates TLM's long-term senior unsecured debt and long-term IDR 'BBB'. Total proved developed and undeveloped reserves at the end of 2010 totaled 1,149 million barrels of oil equivalent. Total debt including asset retirement obligations was C$8.32 per barrel of oil equivalent of net proved developed reserves at last year-end, and debt/LTM EBITDA was approximately 0.80x.

TLM's ratings reflect the company's modest leverage, its discipline in spending capital, and the company's record of reserve replacement.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Short-Term Ratings Criteria for Non-Financial Corporates (Aug. 12, 2011);

--'Corporate Rating Methodology' (Aug. 12, 2011);

--'Rating Oil and Gas Exploration and Production Companies' (Aug. 5, 2011).

Applicable Criteria and Related Research:

Short-Term Ratings Criteria for Non-Financial Corporate

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647249

Corporate Rating Methodology

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=647229

Rating Oil and Gas Exploration and Production Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=645090

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Fitch RatingsPrimary AnalystDennis Ruggles, +1-312-606-2318DirectorFitch, Inc.70 West Madison StreetChicago, IL 60602orSecondary AnalystSean T. Sexton CFA, +1-312-368-3130Managing DirectororCommittee ChairpersonJason Pompeii, +1-312-368-3210Senior DirectororMedia Relations:Brian Bertsch, +1-212-908-0549Email: [email protected]

Source: Fitch Ratings

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