CONCERNING THE ACQUISITION OF TALISMAN ENERGY INC. BY REPSOL S.A.

Transcription

1 25SEP NOTICE OF SPECIAL MEETING OF SHAREHOLDERS NOTICE OF ORIGINATING APPLICATION TO THE COURT OF QUEEN S BENCH OF ALBERTA INFORMATION CIRCULAR CONCERNING THE ACQUISITION OF TALISMAN ENERGY INC. BY REPSOL S.A. January 13, 2015

2 TABLE OF CONTENTS LETTER TO SHAREHOLDERS NOTICE OF SPECIAL MEETING OF SHAREHOLDERS NOTICE OF ORIGINATING APPLICATION INFORMATION CIRCULAR INTRODUCTORY INFORMATION... 1 INFORMATION CONCERNING General... 1 TALISMAN Forward-looking Information and General Statements... 1 Market for Shares Information for U.S. Shareholders... 2 Directors and Officers of the Company Currency... 3 Auditors GLOSSARY... 4 Additional Information SUMMARY INFORMATION INFORMATION CONCERNING REPSOL AND ACQUISITIONCO THE ARRANGEMENT GENERAL PROXY MATTERS Background to the Arrangement Solicitation of Proxies Recommendation of the Board of Appointment and Revocation of Proxies.. 61 Directors Signature of Proxy Reasons for the Arrangement Voting of Proxies Fairness Opinions Exercise of Discretion of Proxy Support Agreements Currency Election Summary of the Arrangement Voting Shares and Principal Holders Dividends on Common Shares Thereof Arrangement Steps Advice for Non-Registered Shareholders.. 63 Procedure for the Arrangement Becoming Procedure and Votes Required Effective Timing OTHER INFORMATION Sources of Funds for the Arrangement Interest of Informed Persons in Material Expenses Transactions Stock Exchange Delisting Directors Approval The Arrangement Agreement Key Regulatory Approvals Preferred Shares Interests of Directors and Executive Officers in the Arrangement Canadian Securities Law Matters APPENDICES Certain Canadian Federal Income Appendix A Arrangement Resolution.. A-1 Tax Considerations Appendix B Arrangement Agreement.. B-1 Certain United States Federal Income Appendix C Plan of Arrangement... C-1 Tax Considerations Appendix D Interim Order... D-1 Risk Factors Appendix E Opinions of Goldman Sachs Procedures for the Surrender of Common Canada Inc.... E-1 Shares and Preferred Shares and Receipt Appendix F Opinions of Nomura of the Consideration Securities International, Inc.... F-1 Rights of Dissent Appendix G Voting Information... G-1 Litigation Relating to the Arrangement Appendix H Section 190 of the Canada Legal Matters Business Corporations Act... H-1 i

3 25SEP LETTER TO SHAREHOLDERS January 13, 2015 Dear Shareholders: You are invited to attend a special meeting (the Meeting ) of the holders of Common Shares and the holders of Cumulative Redeemable Rate Reset First Preferred Shares, Series 1 (the Preferred Shares ) of Talisman Energy Inc. ( Talisman or the Company ) to be held in the Glen Room 202/203, South Building, Upper Level of the Calgary TELUS Convention Centre, Avenue S.E., Calgary, Alberta, Canada, on February 18, 2015 at 11:00 a.m. (Calgary time). At the Meeting, Talisman shareholders will be asked to consider and, if deemed advisable, to pass a special resolution approving an arrangement (the Arrangement ) under section 192 of the Canada Business Corporations Act which provides for the acquisition by TAPBC Acquisition Inc., an indirect wholly-owned subsidiary of Repsol S.A., of all of the outstanding Common Shares and Preferred Shares of Talisman. Full details of the Arrangement are set out in the accompanying Notice of Special Meeting of Shareholders and Information Circular. The following is a summary of the relevant terms of the Arrangement for the holders of outstanding shares: Common Shareholders (other than dissenting holders of Common Shares) will receive, for each Common Share held, U.S.$8.00 in cash; and Preferred Shareholders (other than dissenting holders of Preferred Shares), if they participate in the Arrangement, will receive, for each Preferred Share held, Cdn.$25.00 together with an amount equal to all accrued and unpaid dividends thereon up to, but excluding, the date of completion of the Arrangement, in cash. Talisman is also permitted to declare and pay aggregate cash dividends of up to U.S.$ per Common Share before the closing of the Arrangement. For additional details about the Arrangement, see The Arrangement in the Information Circular which accompanies this letter. The Arrangement is subject to customary closing conditions for a transaction of this nature, including court approval, approval of at least % of the votes cast by the Common Shareholders present in person or represented by proxy at the Meeting and applicable government and regulatory approvals by, among others, the relevant authorities in Canada, the United States and Europe. Approval of the Preferred Shareholders will also be sought at the Meeting to allow the Preferred Shareholders to participate in the Arrangement in the manner described above. The Preferred Shareholders will vote on the Arrangement as a separate class, and their participation in the Arrangement will require the approval of at least % of the votes cast by the Preferred Shareholders present in person or represented by proxy at the Meeting. However, completion of the Arrangement is not conditioned upon approval by the Preferred Shareholders; if the requisite approval of the Preferred Shareholders is not obtained, the Preferred Shares will be excluded from the Arrangement and will remain outstanding following the completion of the Arrangement. Goldman Sachs Canada Inc. and Nomura Securities International, Inc. have each provided the board of directors of the Company (the Board ) with opinions that, as of December 15, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration per Common Share to be paid to holders of Common Shares (other than Repsol and its affiliates) and the Consideration per Preferred Share to be paid to holders of Preferred Shares (other than Repsol and its affiliates), in each case under the Arrangement, was fair from a financial point of view to such holders.

4 The Board, after consulting with its financial and legal advisors, has unanimously determined that the Arrangement is in the best interests of the Company and that the Arrangement is fair to the Common Shareholders and to the Preferred Shareholders. Accordingly, the Board unanimously recommends that the Common Shareholders and the Preferred Shareholders vote in favour of the Arrangement. The accompanying Notice of Special Meeting of Shareholders and Information Circular describe the Arrangement and include certain additional information to assist you in considering how to vote on the proposed special resolution. You are urged to read this information carefully and, if you require assistance, to consult your financial, legal, tax or other professional advisors. YOUR VOTE IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. Registered holders of Common Shares who are unable to attend the Meeting in person are requested to complete the enclosed form of proxy and return it in the envelope provided to the Company s transfer agent and registrar, Computershare Trust Company of Canada, 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1 by mail, by hand or by courier no later than 11:00 a.m. (Calgary time) on February 13, 2015, or 48 hours (excluding Saturdays, Sundays and holidays) before any adjournment of the Meeting. Alternatively, telephone and internet voting options are available. Please see the form of proxy for more details. Non-registered shareholders are advised to refer to the Information Circular and to the Voting Instruction Form provided to them for instructions relevant to them. Late proxies may be accepted or rejected by the Chairman of the Meeting at his sole discretion; the Chairman of the Meeting is under no obligation to accept or reject a late proxy. The Chairman of the Meeting may waive or extend the proxy cut-off without notice. Also, if you are a registered holder of Common Shares that are represented by share certificate(s), in order to receive the cash consideration that you are entitled to upon the completion of the Arrangement, you must complete and sign the letter of transmittal and return such letter of transmittal, together with your share certificate(s) and any other required documents and instruments, to the depositary named in the letter of transmittal. If your Common Shares are not represented by share certificate(s), but rather have been reported to you by a Direct Registration Advice, you are not required to submit your Direct Registration Advice in order to receive the cash consideration. You must complete and sign the applicable letter of transmittal and return such letter of transmittal and any other required documents and instruments to the depositary named in the letter of transmittal, in accordance with the procedures set out in the letter of transmittal. If the Arrangement is completed, you will receive payment for your Common Shares in U.S. dollars unless you make a currency election in the letter of transmittal, as described in the Information Circular. If you are a non-registered shareholder and hold your Common Shares or Preferred Shares through a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary, you should carefully follow the instructions of your intermediary to ensure that your Common Shares or Preferred Shares are voted at the Meeting in accordance with your instructions, to arrange for your intermediary to complete the necessary transmittal documents and to ensure that you receive payment for your shares if the Arrangement is completed. As all Preferred Shares are held in book-entry only form in the name of CDS & Co., there is no need for any Preferred Shareholder, other than CDS & Co., to deliver any share certificates. If the Arrangement is completed, and you are a non-registered Common Shareholder, you will receive payment for your Common Shares in U.S. dollars unless you arrange for your intermediary to make a currency election on your behalf. Preferred Shareholders will receive any payment in Canadian dollars. See Appendix G to the Information Circular, Voting Information, for additional information. If you have any questions or require more information with regard to voting your Common Shares or Preferred Shares, please contact the Company s proxy solicitation agent, Kingsdale Shareholder Services, by (i) toll-free telephone in North America at or collect call at , or (ii) at contactus@kingsdaleshareholder.com. Yours truly, 28FEB Harold N. Kvisle President and Chief Executive Officer Talisman Energy Inc.

5 25SEP NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON FEBRUARY 18, 2015 NOTICE IS HEREBY GIVEN that, pursuant to an order (the Interim Order ) of the Court of Queen s Bench of Alberta dated January 13, 2015, a special meeting (the Meeting ) of the holders of Common Shares and the holders of Cumulative Redeemable Rate Reset First Preferred Shares, Series 1 (the Preferred Shares ) of Talisman Energy Inc. (the Company ) will be held in the Glen Room 202/203, South Building, Upper Level of the Calgary TELUS Convention Centre, Avenue S.E., Calgary, Alberta, Canada, on February 18, 2015 at 11:00 a.m. (Calgary time) for the following purposes: (a) to consider and, if deemed advisable, to pass, with or without variation, a special resolution (the Arrangement Resolution ), the full text of which is set forth in Appendix A to the accompanying information circular of the Company (the Information Circular ), to approve an arrangement (the Arrangement ) under section 192 of the Canada Business Corporations Act (the CBCA ) involving the acquisition of the Company by an indirect wholly-owned subsidiary of Repsol S.A., all as more particularly described in the Information Circular; and (b) to transact such other business, including amendments to the foregoing, as may properly be brought before the Meeting or any adjournment or postponement thereof. Separate class votes for the holders of Common Shares and the holders of Preferred Shares will take place at the Meeting. The Arrangement is described in the Information Circular. The full text of the Arrangement Resolution is set out in Appendix A to the Information Circular. The Company has set January 9, 2015 as the record date for the determination of the shareholders entitled to receive notice of and to vote at the Meeting. Only the shareholders whose names were entered in the registers of the holders of Common Shares and Preferred Shares as at 5:00 p.m. (Calgary time) on January 9, 2015 will be entitled to receive notice of and to vote their shares at the Meeting. Pursuant to the Interim Order, registered shareholders have the right to dissent with respect to the Arrangement Resolution and, if the Arrangement becomes effective, to be paid the fair value of their Common Shares or Preferred Shares, as applicable, in accordance with the provisions of section 190 of the CBCA, as modified by the Interim Order and the Plan of Arrangement. A registered shareholder wishing to exercise rights of dissent with respect to the Arrangement must send to the Company a written objection to the Arrangement Resolution, which written objection must be received by the Company c/o Norton Rose Fulbright Canada LLP, Suite 3700, rd Avenue S.W., Calgary, Alberta, T2P 4H2, Attention: Steven Leitl, by no later than 4:00 p.m. (Calgary time) on February 17, 2015 (or the day that is one business day immediately preceding the date that any adjourned or postponed Meeting is reconvened or held, as the case may be), and must otherwise strictly comply with the dissent procedures described in the Information Circular. Notwithstanding the foregoing, no registered holder of Preferred Shares who has validly exercised the holder s right to dissent shall be entitled to be paid the fair value for the holder s Preferred Shares in the event that the approval of the Arrangement by the holders of the Preferred Shares is not obtained at the Meeting or that holders of Preferred Shares do not participate in the Arrangement. A shareholder s right to dissent is more particularly described in the Information Circular, and a copy of the Interim Order and the text of section 190 of the CBCA are set forth in Appendix D and Appendix H, respectively, to the Information Circular. Failure to strictly comply with the requirements set forth in section 190 of the CBCA, as modified by the Interim Order and the Plan of Arrangement, may result in the loss of any right of dissent. Persons who are beneficial owners of Common Shares or Preferred Shares registered in the name of a broker, investment dealer, bank, trust company, custodian, nominee, or other intermediary and who wish to dissent should be aware that only registered holders of Common Shares and Preferred Shares are entitled to dissent. Accordingly, a beneficial owner of Common Shares or Preferred Shares desiring to exercise this right must make arrangements for the Common Shares or Preferred Shares beneficially owned by such person to be registered in that person s name

6 prior to the time the written objection to the Arrangement Resolution is required to be received by the Company or, alternatively, make arrangements for the registered holder of such Common Shares or Preferred Shares to dissent on that person s behalf. It is recommended that any shareholder wishing to dissent seek independent legal advice, as the failure to comply strictly with the provisions of the CBCA as modified by the Interim Order and the Plan of Arrangement may prejudice such shareholder s right to dissent. A shareholder may attend the Meeting in person or may be represented by proxy. Registered holders of Common Shares who are unable to attend the Meeting and registered holders of Common Shares planning to attend the Meeting are encouraged to complete, sign, date, and return the accompanying form of proxy so that such shareholder s shares can be voted at the Meeting (or at any adjournments or postponements thereof) in accordance with such shareholder s instructions. To be effective, the enclosed proxy must be received by Computershare Trust Company of Canada at 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1, by mail, by hand or by courier no later than 11:00 a.m. (Calgary time) on February 13, 2015 or 48 hours (excluding Saturdays, Sundays and holidays) before any adjournment of the Meeting. Registered shareholders may also use the internet site at or telephone VOTE (8683) to transmit their voting instructions. The time limit for the deposit of proxies may be waived or extended by the Chairman of the Meeting at his discretion, without notice. Non-registered shareholders who hold their Common Shares or Preferred Shares through a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary, should carefully follow the instructions of their intermediary to ensure that their Common Shares or Preferred Shares, as applicable, are voted at the Meeting in accordance with such shareholder s instructions. Preferred Shares have been issued in the form of a global certificate in the name of CDS & Co. and, as such, CDS & Co. is the sole registered holder of the Preferred Shares. CDS & Co. may only vote the Preferred Shares in accordance with instructions received from the non-registered holders of the Preferred Shares. A shareholder that has questions or requires more information with regard to the voting of shares should contact the Company s proxy solicitation agent, Kingsdale Shareholder Services, by (i) toll-free telephone in North America at or collect call at , or (ii) at contactus@kingsdaleshareholder.com. Dated at the City of Calgary, in the Province of Alberta, this 13th day of January, BY ORDER OF THE BOARD OF DIRECTORS 6MAR C. Tamiko Ohta Vice President, Legal and Corporate Secretary

7 IN THE COURT OF QUEEN S BENCH OF ALBERTA JUDICIAL CENTRE OF CALGARY IN THE MATTER OF SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED, AND IN THE MATTER OF A PROPOSED ARRANGEMENT INVOLVING TALISMAN ENERGY INC. ET AL NOTICE IS HEREBY GIVEN that an originating application (the Application ) has been filed with the Court of Queen s Bench of Alberta, Judicial Centre of Calgary (the Court ) on behalf of Talisman Energy Inc. (the Company ) with respect to a proposed arrangement (the Arrangement ) under section 192 of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended (the CBCA ), involving the Company, Repsol S.A., TAPBC Acquisition Inc. ( AcquisitionCo ) and the holders of common shares of the Company (the Common Shareholders ), the holders of Cumulative Redeemable Rate Reset First Preferred Shares, Series 1 of the Company (the Preferred Shareholders and, together with the Common Shareholders, the Shareholders ) and the holders of certain other of the securities and incentive awards of the Company. The Arrangement is described in greater detail in the information circular of the Company dated January 13, 2015 (the Information Circular ) accompanying this Notice of Originating Application. (a) an order approving the Arrangement pursuant to the provisions of section 192 of the CBCA; (b) a declaration that the terms and conditions of the Arrangement, and the procedures relating thereto, are fair and reasonable, substantively and procedurally, to the Shareholders and other affected persons; (c) NOTICE OF ORIGINATING APPLICATION At the hearing of the Application, the Company intends to seek: a declaration that the Arrangement will, upon the filing of the Articles of Arrangement pursuant to the provisions of section 192 of the CBCA, become effective in accordance with its terms and will be binding on and after the Effective Time (as defined in the plan of arrangement setting forth the Arrangement); and (d) such other and further orders, declarations and directions as the Court may deem just. AND NOTICE IS FURTHER GIVEN that the said Application was directed to be heard before a Justice of the Court at the Calgary Courts Centre, 601 5th Street S.W., Calgary, Alberta, on February 20, 2015 at 10:00 a.m. (Calgary time), or as soon thereafter as counsel may be heard. Any Shareholder or any other interested party desiring to support or oppose the Application, may appear at the time of hearing in person or by counsel for that purpose. Any Common Shareholder, Preferred Shareholder or any other interested party desiring to appear at the hearing for the final order approving the Arrangement is required to file with the Court, and serve upon the Company at or before 4:00 p.m. (Calgary time) on February 13, 2015, a notice of intention to appear, including an address for service in the Province of Alberta, indicating whether such Common Shareholder, Preferred Shareholder or other interested party intends to support or oppose the application or make submissions at the hearing, together with a summary of the position such Common Shareholder, Preferred Shareholder or other interested party intends to advocate before the Court and any evidence or materials which are to be presented to the Court by such Common Shareholder, Preferred Shareholder or other interested party. Service on the Company shall be effected by delivery to the solicitors for the Company at the address below. If any Common Shareholder, Preferred Shareholder or other interested party does not attend, either in person or by counsel, at that time, the Court may approve the Arrangement as presented or may approve it subject to such terms and conditions as the Court shall deem fit, without any further notice. AND NOTICE IS FURTHER GIVEN that no further notice of the Application will be given by the Company and that, in the event the hearing of the Application is adjourned, only those persons who have appeared before the Court for the application at the hearing, or who have filed a notice of intention to appear as described above, shall be served with notice of the adjourned date. AND NOTICE IS FURTHER GIVEN that the Court, by the Interim Order, has given directions as to the calling and holding of a special meeting of Shareholders for the purpose of Shareholders voting upon a special resolution to approve the Arrangement and, in particular, has directed that registered Shareholders shall have

8 the right to dissent with respect to the Arrangement in accordance with the provisions of section 190 of the CBCA, as modified by such Interim Order and the plan of arrangement setting forth the Arrangement. AND NOTICE IS FURTHER GIVEN that a copy of the said Application and other documents in the proceedings will be furnished to any Shareholder or other interested party requesting the same by the undermentioned solicitors for the Company upon written request delivered to such solicitors as follows: Norton Rose Fulbright Canada LLP Suite rd Avenue S.W. Calgary, Alberta T2P 4H2 Attention: Steven Leitl Facsimile No.: DATED at the City of Calgary, in the Province of Alberta, this 13 th day of January, BY ORDER OF THE BOARD OF DIRECTORS OF TALISMAN ENERGY INC. 6MAR C. Tamiko Ohta Vice President, Legal and Corporate Secretary

9 25SEP INFORMATION CIRCULAR January 13, 2015

10 General This Information Circular is furnished in connection with the solicitation of proxies by and on behalf of the management of the Company for use at the Meeting and any adjournments or postponements thereof. No person has been authorized to give any information or make any representation in connection with the Arrangement or any other matters to be considered at the Meeting other than those contained in this Information Circular and, if given or made, any such information or representation must not be relied upon as having been authorized and should not be relied upon in making a decision as to how to vote on the Arrangement. Forward looking Information and Statements INFORMATION CIRCULAR INTRODUCTORY INFORMATION All summaries of, and references to, the Arrangement in this Information Circular are qualified in their entirety by reference to the complete text of the Plan of Arrangement, a copy of which is attached as Appendix C to this Information Circular. You are urged to carefully read the full text of the Plan of Arrangement. These Meeting materials are being sent to both registered and non-registered Shareholders. If you are a non-registered Shareholder, and the Company or its agent has sent these materials directly to you, your name and address and information about your holdings of Shares have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding such Shares on your behalf. All capitalized terms used in this Information Circular but not otherwise defined herein have the meanings set forth under Glossary. Information contained in this Information Circular is given as of January 13, 2015, unless otherwise specifically stated. This Information Circular 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: the anticipated benefits of the Arrangement to the Company and its securityholders; the timing and anticipated receipt of required regulatory, court and Shareholder approvals for the Arrangement; the ability of the Company and Repsol and AcquisitionCo to satisfy the other conditions to, and to complete, the Arrangement; and the anticipated timing for the completion of the Arrangement and delisting of the Common Shares from the TSX and NYSE and the Preferred Shares from the TSX. The factors, expectations or assumptions on which the forward looking information are based include: assumptions as to the ability of the Parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court, Shareholder and other third party approvals, including but not limited to the receipt of applicable foreign investment and/or competition approval required in Canada, the United States and elsewhere; the ability of the Parties to satisfy, in a timely manner, the other conditions to the closing of the Arrangement; and other expectations and assumptions concerning the Arrangement. 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. 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 the Company and described in the forward looking information contained in this Information Circular. The material risk factors include, but are not limited to: the failure of the Company and Repsol to obtain the necessary Shareholder, regulatory, court and other third party approvals, including those noted above, or to otherwise satisfy the conditions to the completion of the Arrangement, in a timely manner, or at all. Failure to obtain such approvals, or the failure of the Parties 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, if the Arrangement is not completed, and the Company continues as an independent entity, there are risks that the announcement of the Arrangement and the dedication of substantial resources of the Company to the completion of Arrangement could have an impact on 1

11 the Company s current business relationships (including with future and prospective employees, customers, suppliers and partners) and could have a material adverse effect on the current and future operations, financial condition and prospects of the Company. Furthermore, the failure of the Company to comply with the terms of the Arrangement Agreement may, in certain circumstances, result in the Company being required to pay a fee to Repsol, the result of which could have a material adverse effect on the Company s financial position and results of operations and its ability to fund growth prospects and current operations. The foregoing list of risk factors is not exhaustive. Additional information on these and other factors which could affect the Company s operations, financial results or strategy are included in the Company s most recent Annual Information Form. In addition, information is available in the Company s other reports on file with Canadian securities regulatory authorities and the United States Securities and Exchange Commission. 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. Information for U.S. Shareholders The Company is a corporation organized under the laws of Canada. The solicitation of proxies and the transaction contemplated in this Information Circular involve securities of a Canadian issuer and are being effected in accordance with Canadian corporate and securities laws. The solicitation of proxies for the Meeting is not subject to the requirements applicable to proxy statements under the 1934 Act. Accordingly, this Information Circular has been prepared solely in accordance with disclosure requirements applicable in Canada. Shareholders in the United States should be aware that such requirements are different from those of the United States applicable to proxy statements under the 1934 Act. Specifically, information contained herein has been prepared in accordance with Canadian disclosure standards, which are not comparable in all respects to U.S. disclosure standards. Shareholders should also be aware that requirements under Canadian laws may differ from requirements under U.S. corporate and securities laws relating to U.S. corporations. The enforcement by Shareholders of civil liabilities under the U.S. federal or state securities laws may be affected adversely by the fact that the Company is organized under the laws of Canada, that the majority of the executive officers and directors of the Company are residents of countries other than the United States, that some of the experts named in this Information Circular are residents of countries other than the United States, and that a large portion of the assets of the Company and such persons are, or will be, located outside the United States. In addition, the courts of Canada may not enforce judgments of U.S. courts obtained in actions against such persons predicated upon civil liabilities under the federal and state securities legislation in the United States and all rules, regulations and orders promulgated thereunder. The Arrangement has not been approved or disapproved by the SEC or any other securities regulatory authority, nor has any securities regulatory authority passed upon the fairness or the merits of the Arrangement or upon the accuracy or adequacy of the information contained in this Information Circular. Shareholders that are U.S. Holders (as defined under The Arrangement Certain United States Federal Income Tax Considerations ) are advised to consult their own tax advisors regarding the U.S. federal, state, local and foreign tax consequences to them of participating in the Arrangement and should carefully read the information under The Arrangement Certain United States Federal Income Tax Considerations. 2

12 Currency Except as otherwise indicated, all dollar amounts indicated in this Information Circular are expressed in U.S. dollars. The following table sets forth, for the periods indicated, the high, low, average and period-end noon spot rates of exchange for the U.S. dollar, expressed in U.S. dollars per Canadian dollar, based on the data published by the Bank of Canada. Year Ended December 31 (U.S.$) Rate at end of Period Average rate during Period High during Period Low during Period On January 13, 2015, the noon rate published by the Bank of Canada for the conversion of U.S. dollars into Canadian dollars was U.S.$1.00 = Cdn.$ and for Canadian dollars into U.S. dollars was Cdn.$1.00 = U.S.$ Payments to the Common Shareholders under the Arrangement will be denominated in U.S. dollars. However, Common Shareholders who hold their Common Shares in Canadian dollar-denominated accounts with a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary may have such payments automatically exchanged into Canadian dollars based on the exchange rate available to such intermediary on the date the funds are converted. Common Shareholders who wish to receive Canadian dollars in such circumstances are advised to contact the broker, investment dealer, bank, trust company, custodian, nominee or other intermediary through which they hold their Common Shares in advance of closing of the Arrangement to make appropriate arrangements. Any payments to the Preferred Shareholders under the Arrangement will be denominated in Canadian dollars. 3

13 GLOSSARY The following is a glossary of certain terms used in this Information Circular, including the Summary Information section hereof: 1934 Act means the United States Securities Exchange Act of 1934, as amended; Acquisition Proposal means any proposal, inquiry or offer (written or oral) from any third party or group relating to: (a) any merger, consolidation, amalgamation, take-over bid, tender offer, exchange offer, arrangement, business combination, joint venture, reorganization, recapitalization, liquidation, dissolution, share exchange, spin-off or sale of assets (including any lease, long-term supply agreement or other arrangement having the same economic effect as a sale of assets) involving or relating to the Company and/or its Subsidiaries; (b) any purchase or sale of shares, other securities or assets of the Company and/or its Subsidiaries and/or any right or interests therein; (c) any voting agreement, trust, partnership, proxy or other arrangement with respect to the Company and/or its Subsidiaries; or (d) any transactions or arrangements similar to, or having the same economic effect or consequences, as the foregoing, which, in each case, in one or a series of related transactions, represents; (e) 20% or more of the voting or equity securities of the Company (in terms of number of securities or voting power); or (f) 15% or more of the (i) voting or equity securities of the Company s Subsidiaries (in terms of number of securities or voting power) or (ii) consolidated assets, consolidated revenue or consolidated income of the Company and the Company s Subsidiaries taken as a whole (provided that for the purposes of the Termination Fee, the foregoing reference to 20% or more in paragraph (e) above and 15% or more in subparagraph (f)(i) above shall be deemed to be 100% and the reference to 15% or more in subparagraph (f)(ii) above shall be deemed to be all or substantially all ), excluding the Arrangement and the transactions contemplated by the Arrangement Agreement; AcquisitionCo means TAPBC Acquisition Inc., a corporation incorporated under the CBCA and an indirect wholly-owned Subsidiary of Repsol; affiliate has the meaning ascribed thereto in the Securities Act; Arrangement means the arrangement under section 192 of the CBCA on the terms and subject to the conditions set forth in the Plan of Arrangement, subject to any amendments or variations thereto made in accordance with the provisions of the Arrangement Agreement and the Plan of Arrangement or made at the direction of the Court in the Final Order; Arrangement Agreement means the arrangement agreement dated as of December 15, 2014 among Repsol, AcquisitionCo and the Company, as amended on January 12, 2015, pursuant to which Repsol, AcquisitionCo and the Company have proposed to implement the Arrangement, a copy of which is attached as Appendix B to this Information Circular, as such agreement may be further amended or amended and restated in accordance with its terms; Arrangement Resolution means the special resolution to approve the Arrangement to be presented to the Common Shareholders and Preferred Shareholders at the Meeting in the form attached as Appendix A to this Information Circular; Articles of Arrangement means the articles of arrangement of the Company in respect of the Arrangement, required under subsection 192(6) of the CBCA to be sent to the Director after the Final Order is made giving effect to the Arrangement, in form and substance satisfactory to the Parties, acting reasonably; associate has the meaning ascribed thereto in the Securities Act; Board means the board of directors of the Company; business day means any day, other than a Saturday, a Sunday or a statutory holiday in Calgary, Canada; Madrid, Spain; or the State of New York, United States; Canadian Dollar Equivalent means, with respect to any amount that is denominated in United States dollars, the amount of Canadian dollars that is equivalent to such United States dollar-denominated amount based on the noon exchange rate of United States dollars to Canadian dollars on the date that is three Business Days preceding the Effective Date, as reported by the Bank of Canada; 4

14 Cash Consideration means the cash amount to be paid pursuant to the Arrangement for: (i) each Common Share, being the Consideration per Common Share and (ii) each Preferred Share, being the Consideration per Preferred Share; Cash Unit Plans means the long-term cash unit plans and agreements of certain of the Company Subsidiaries governing the Cash Units; Cash Units means the outstanding stock appreciation rights of the Company granted under the Cash Unit Plans; CBCA means the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended, including the regulations promulgated thereunder; Certificate of Arrangement means the certificate of arrangement to be issued by the Director pursuant to subsection 192(7) of the CBCA in respect of the Articles of Arrangement giving effect to the Arrangement; CFIUS means the Committee on Foreign Investment in the United States, which, as the context may require, includes any member agency or governmental subdivision of the United States government that is a member of the Committee on Foreign Investment in the United States as specified in Exon-Florio and otherwise in accordance with the requirements of Exon-Florio; CFIUS Clearance means the giving of notice to the Parties with respect to the transactions contemplated hereby in accordance with the requirements of Exon-Florio and its applicable regulations and the receipt by the Parties of written notice from CFIUS of its (a) determination that the transactions contemplated hereby are not subject to section 721 of Exon-Florio, (b) determination to the effect that review of all of the transactions contemplated hereby has been concluded and that a determination has been made that there are no unresolved national security concerns, or (c) following an investigation conducted by CFIUS pursuant to 31 C.F.R , CFIUS reports the transactions contemplated hereby to the President of the United States and the President of the United States makes a decision not to suspend or prohibit such transactions pursuant to his authorities under Exon-Florio; Commissioner of Competition means the Commissioner of Competition appointed pursuant to section 7(1) of the Competition Act or his designee; Common Shareholder Approval means the requisite approval of the Arrangement Resolution by the Common Shareholders as set forth in the Interim Order, being at least % of the votes cast on the Arrangement Resolution by the Common Shareholders, voting as a separate class, present in person or represented by proxy at the Meeting; Common Shareholders means the holders of the Common Shares; Common Shares means common shares in the capital of the Company; Company or Talisman means Talisman Energy Inc., a corporation amalgamated under the CBCA; Company Investees means Equion Energia Limited and Talisman Sinopec Energy (UK) Limited; Company Option Plan means the employee stock option plan of the Company dated May 2004; Company Options means the outstanding options to purchase Common Shares granted under the Company Option Plan; Company Performance Share Unit Plan means the performance share unit plan for eligible employees of the Company and its affiliates dated April 1, 2009; Company PSUs means the outstanding performance share units granted under the Company Performance Share Unit Plan; Competition Act means the Competition Act, R.S.C. 1985, c. C-34, as amended; Competition Act Approval means any of: (a) the Commissioner of Competition having issued an advance ruling certificate pursuant to section 102 of the Competition Act in respect of the transactions contemplated by the Arrangement Agreement; (b) the Commissioner of Competition having waived the obligation to file notifications under section 114 of the Competition Act and having issued a No Action Letter; or (c) the Parties 5

15 having filed notifications under section 114 of the Competition Act and the applicable waiting period under section 123 of the Competition Act having expired or been terminated and the Commissioner of Competition having issued a No Action Letter; Competition Tribunal means the Competition Tribunal established under subsection 3(1) of the Competition Tribunal Act, R.S.C. 1985, c. 19 (2nd Supp.), as amended; Consideration per Common Share means $8.00; Consideration per Preferred Share means Cdn.$25.00, together with an amount equal to all accrued and unpaid dividends thereon up to, but excluding, the Effective Date; Court means the Court of Queen s Bench of Alberta; DDSU Plan means the Company s Director Deferred Share Unit Plan amended and restated as of May 4, 2010; DDSUs means deferred share units issued under the DDSU Plan; Demand for Payment means a written notice of a Dissenting Shareholder containing his or her name and address, the number and class of Dissenting Shares and a demand for payment of the fair value of such Shares, submitted to the Company; Depositary means Computershare Trust Company of Canada, as depositary for the Shares in connection with the Arrangement; Director means the Director appointed pursuant to section 260 of the CBCA; Director of Investments means the Director of Investments appointed under section 6 of the Investment Canada Act; Dissent Rights means the rights of dissent in favour of the registered holders of Common Shares and Preferred Shares in respect of the Arrangement described in the Plan of Arrangement; Dissenting Shareholders means registered Common Shareholders or registered Preferred Shareholders who validly exercise Dissent Rights; Dissenting Shares means Shares in respect of which a Dissenting Shareholder has validly exercised Dissent Rights; EDGAR means the Electronic Data Gathering, Analysis and Retrieval System; EDSU Plan means the Company s Executive Deferred Share Unit Plan dated December 9, 2011; EDSUs means deferred share units issued under the EDSU Plan; Effective Date means the date shown on the Certificate of Arrangement giving effect to the Arrangement; Effective Time means the time on the Effective Date at which the Articles of Arrangement are sent to the Director pursuant to subsection 192(6) of the CBCA; EU Approval means the approvals described under Part C European Union in Schedule C to the Arrangement Agreement; EU Merger Regulation means Council Regulation (EU) No.139/2004 of 20th January 2004 on the control of concentrations between undertakings; Exchanges means the TSX and the NYSE; Exon-Florio means section 721 of Title VII of the Defense Production Act of 1950, as amended by the Foreign Investment and National Security Act of 2007, P.L , 121 Stat. 246 (codified at 50 U.S.C. App. 2170) and regulations thereto, codified at 31 C.F.R. Part 800, et seq., as amended; Fairness Opinions means, collectively, the Goldman Sachs Fairness Opinions and the Nomura Fairness Opinions; Final Order means the final order of the Court approving the Arrangement pursuant to paragraph 192(3) of the CBCA, in a form acceptable to the Company and the Purchaser Parties, acting reasonably, as such order 6

16 may be amended by the Court (with the written consent of both the Company and the Purchaser Parties, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to both the Company and the Purchaser Parties, each acting reasonably) on appeal; GAAP means generally accepted accounting principles as contemplated by the Handbook of the Canadian Institute of Chartered Accountants; Goldman Sachs means Goldman Sachs Canada Inc., one of the financial advisors to the Company; Goldman Sachs Fairness Opinions means the opinions of Goldman Sachs dated December 15, 2014 set forth in Appendix E to this Information Circular, one of which relates to the Common Shares and one of which relates to the Preferred Shares; Governmental Entity means (a) any multinational, federal, provincial, territory, state, regional, municipal, local or other government, governmental or public department, ministry, central bank, court, tribunal, arbitral body, commission, board, bureau or agency, domestic or foreign, (b) any subdivision, agency, commission, board, agent or authority of any of the foregoing, (c) any stock exchange or (d) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing; HSR Act means the United States Hart-Scott-Rodino Antitrust Improvements Act of 1976; HSR Approval means the expiration or early termination of any waiting period, and any extension thereof, applicable to the completion of the transactions contemplated by the Arrangement Agreement under the HSR Act; Incentive Awards means, collectively, the Company Options and Company PSUs; Information Circular means this information circular of the Company dated January 13, 2015, together with all Appendices hereto, distributed by the Company to Shareholders in connection with the Meeting; Interim Order means the interim order of the Court dated January 13, 2015 pursuant to the CBCA, containing declarations and directions with respect to the Arrangement and the Meeting, a copy of which order is attached as Appendix D to this Information Circular; Investment Canada Act means the Investment Canada Act, R.S.C. 1985, c. 28 (1st Supp.), as amended; Investment Canada Approval means the responsible Minister under the Investment Canada Act having sent a notice to Repsol or to AcquisitionCo (or to the Purchaser Parties) stating that the Minister is satisfied that the transactions contemplated by the Arrangement Agreement are likely to be of net benefit to Canada, or the Minister having been deemed to be satisfied that the transactions contemplated by the Arrangement Agreement are likely to be of net benefit to Canada; Key Regulatory Approvals means the approvals set forth in Schedule C to the Arrangement Agreement, and such other approvals agreed to by the Parties; Law or Laws means all laws (including common law), statutes, by-laws, rules, regulations, principles of law and equity, orders, codes, protocols, guidelines, rulings, ordinances, judgments, injunctions, determinations, awards, decrees or other requirements, whether domestic or foreign, and the terms and conditions of any grant of approval, permission, authority or license of any Governmental Entity or self-regulatory authority (including the Exchanges), and the term applicable with respect to such Laws and in a context that refers to one or more Parties, means such Laws as are applicable to such Party or its business, undertaking, property or securities and emanate from a person having jurisdiction over the Party or Parties or its or their business, undertaking, property or securities; Letter of Transmittal means the letter of transmittal enclosed with this Information Circular pursuant to which a Common Shareholder is required to deliver certificates representing Common Shares in order to receive the Consideration per Common Share payable in respect of such Commons Shares under the Arrangement; Material Adverse Effect means, with respect to the Company, any fact or state of facts, circumstance, change, effect, occurrence or event that individually is or in the aggregate are, or would reasonably be expected 7

17 to be, material and adverse to the business, operations, results of operations, assets, properties, capitalization, condition (financial or otherwise), liabilities (contingent or otherwise) or cash flows of the Company, its Subsidiaries and the Company Investees, taken as a whole, other than any fact or state of facts, circumstance, change, effect, occurrence or event resulting from or arising in connection with: (a) conditions affecting the oil and gas industry as a whole; (b) general political, economic, financial, currency exchange, securities, credit or commodity market conditions; (c) changes in the market price of crude oil or natural gas or related hydrocarbons; (d) the announcement of the execution of the Arrangement Agreement or the transactions contemplated thereby; (e) any change in applicable Laws, GAAP or IFRS; (f) terrorism, war (whether or not declared), armed hostilities, riots, insurrection, civil disorder, military conflicts, political instability or other armed conflict, national calamity, crisis or emergency or any government response to any of the foregoing in any one or more of the jurisdictions agreed to by the Parties; (g) the failure of the Company to meet any internal or published projections, forecasts or estimates of revenues, earnings, cash flow or production of petroleum substances for any period ending on or after the date of the Arrangement Agreement (provided, however, that the causes underlying such failure may be considered to determine whether such causes constitute a Material Adverse Effect); (h) any action or inaction taken by the Company that is expressly permitted in the Arrangement Agreement or to which the Purchaser Parties have provided prior written consent; or (i) any decline in the trading price or trading volumes of Common Shares, Preferred Shares or other securities of the Company (provided, however, that the causes underlying such decline may be considered to determine whether such causes constitute a Material Adverse Effect) (and where, in the case of (a), (b), (c), (e) and (f), such effect relating to or resulting from the foregoing does not: (i) primarily relate only to (or have the effect of primarily relating to) the Company; or (ii) have a materially disproportionate effect on the business, operations, results of operations, assets, properties, capitalization, condition (financial or otherwise), liabilities (contingent or otherwise) or cash flows of the Company, its Subsidiaries and the Company Investees, taken as a whole, as compared to the corresponding effect on persons in comparable situations engaged in the oil and gas industry generally) and references in certain sections of the Arrangement Agreement to dollar amounts are not intended to be, and shall not be deemed to be, illustrative for purposes of determining whether a Material Adverse Effect has occurred; Meeting means the special meeting of Shareholders to be held on February 18, 2015, and any adjournment(s) or postponement(s) thereof, to consider and to vote on the Arrangement Resolution and the other matters referred to in the Notice of Meeting; MI means Multilateral Instrument Protection of Minority Security Holders in Special Transactions; Nomura means Nomura Securities International, Inc., one of the financial advisors to the Company; Nomura Fairness Opinions means the opinions of Nomura dated December 15, 2014 set forth in Appendix F to this Information Circular, one of which relates to the Common Shares and one of which relates to the Preferred Shares; Notice of Meeting means the Notice of Special Meeting of Shareholders that accompanies this Information Circular; NYSE means the New York Stock Exchange; Offer to Pay means the written offer of AcquisitionCo to each Dissenting Shareholder who has sent a Demand for Payment to pay for its Shares in an amount considered by AcquisitionCo to be the fair value of the Shares; Outside Date means July 31, 2015, or such later date as may be agreed to in writing by the Parties, subject to the right of any Party to postpone the Outside Date for up to an additional 90 days (in 30-day increments) if the Key Regulatory Approvals have not been obtained and have not been denied by a non-appealable decision of a Governmental Entity, by giving written notice to the other Parties to such effect no later than 5:00 p.m. (Calgary time) on the date that is not less than 10 days prior to the original Outside Date (and any subsequent Outside Date); provided that notwithstanding the foregoing, a Party shall not be permitted to postpone the Outside Date if it has failed to fulfill any of its obligations in the Arrangement Agreement in relation to obtaining such Key Regulatory Approval; 8