DBRS Assigns Rating of Pfd-3 (high) to Talisman Energy Inc. Preferred Share Issue

DBRS has today assigned a rating of Pfd-3 (high) with a Stable trend to the Cumulative Redeemable Rate Reset First Preferred Shares, Series 1 (Series 1 Preferred Shares), of Talisman Energy Inc. (Talisman or the Company), with a dividend rate of 4.2% per annum, payable quarterly for the initial five-year period ending December 31, 2016. The dividend rate will reset on December 31, 2016, and every five years thereafter at a rate equal to the sum of the then five-year Government of Canada bond yield plus 2.77%. The Series 1 Preferred Shares are redeemable by Talisman on December 31, 2016, and on December 31 every five years thereafter. Aggregate gross proceeds will increase from $200 million to a maximum of $250 million if the Underwriters’ Option is exercised.

Holders of the Series 1 Preferred Shares will have the right, at their option, to convert their shares into Cumulative Redeemable Rate Reset First Preferred Shares, Series 2 (Series 2 Preferred Shares), subject to certain conditions, on December 31, 2016, and on December 31 every five years thereafter. Holders of the Series 2 Preferred Shares will be entitled to receive cumulative quarterly dividends at a rate equal to the sum of the three-month Government of Canada Treasury Bill yield plus 2.77%.

The Series 1 Preferred Shares are being issued under the Prospectus Supplement dated December 5, 2011, to the Short Form Base Shelf Prospectus dated March 22, 2010, and are expected to close on or about December 13, 2011. The DBRS rating is based on the expectation that the Series 1 Preferred Shares will remain the most highly ranked preferred shares issued by Talisman and will rank equally with any future preferred shares of the Company. Net proceeds from the offering will be used to fund capital projects, reduce indebtedness and for general corporate purposes.

Notes:
All figures are in Canadian dollars unless otherwise noted.

The applicable methodology is Rating Oil and Gas Companies, which can be found on our website under Methodologies.