Kurdamir-3

As operator of the Kurdamir-3 well, Talisman conducted four DSTs in the Oligocene reservoir at Kurdamir-3. DST #1 and #2 were conducted in the lower part of the Oligocene reservoir which exhibited poorer reservoir characteristics (including fewer fractures) than the main porous zone tested in Kurdamir-2. Both tests were conducted at depths below the base of DST #6 in the Kurdamir-2 well which produced light oil at 3,450 bbl/dand 8.8 mmcf/d of natural gas.   Although the testing operations took longer than anticipated due to mechanical difficulties, the results of the third and fourth drill stem tests (DST #3 and DST #4) confirmed the presence of light oil, with an oil-water contact at a depth of at least -2,049 metres subsea (“mSS”), which is a minimum of 33 metres deeper than the lowest known oil at -2,016 metres from the Kurdamir-2 well.  The results continue to confirm the scale of the Kurdamir oil discovery. Following the testing of Kurdamir-2, the Company’s independent resource evaluators confirmed that the Kurdamir Oligocene reservoir holds a mean estimate of 390 million barrels of gross unrisked contingent resources of oil, and an additional 327 million barrels of oil equivalent of gross unrisked contingent resources of gas and condensate. Although the Company has yet to present the latest findings to its independent resource evaluators, internal evaluations support that there is no material change to the contingent resource estimates.

DST #1 was conducted over a perforated interval of 12 metres, between -2,162 and -2,174 mSS, across a fracture zone below the base of the reservoir with the objective of proving new lowest known oil. After acidizing the interval, the zone produced a limited amount of oil and spent acid.

DST #2 was conducted over four perforated intervals within a gross interval of 105 metres from -2,000 to -2,105 mSS. After acidizing the zones, the well produced 38-degree API oil at low rates with an average water cut of 65 percent.

DST #3 was conducted over a perforated interval of 20 metres between -1,960 and -1,980 mSS and flowed 37 degree API light oil at a rate of 633 bbl/d with an average water cut of 55 percent.

DST #4 was conducted over a perforated interval of 11 metres between -1,925 and –1,941 mSS and flowed 885 bbl/d of 37 degree API light oil with an average water cut of 55 percent.

The gas-to-oil ratio was approximately 1,000 to 1,100 standard cubic feet per barrel, indicating that the oil leg is likely in connection with the gas cap on the crest of the structure. The total fluid volumes flowed in DST #3 and #4 contained approximately 55 percent water. Well log data and fluid composition supports that the water was a contaminant in the tests and was sourced from deeper than the tested intervals via channels in the cement behind well casing. Flow rates were lower than expected due to the lower density of fractures encountered in the Oligocene reservoir at Kurdamir-3 in comparison with Kurdamir 1 and 2.

Expert analysis by a third party has concluded that due to problems with cement bond integrity there was water channeling upwards through the cement in the well bore annulus that connects DST intervals #3 and #4 to the deeper DST #2 interval. DST #2 straddled an oil-water contact and tested both oil and water. The petrophysical analysis of the DST #3 and DST #4 intervals does not indicate the presence of movable formation water. This further supports that the source of the water in the DST #3 and #4 is from deeper within the DST #2 interval.