Forest Oil Announces First Quarter 2012 Results

First Quarter 2012 Net Sales Volumes of 337 MMcfe/d; 1% Decrease from First Quarter 2011 and Fourth Quarter 2011

First Quarter 2012 Oil Net Sales Volumes of 8.4 MBbls/d; 47% Increase from First Quarter 2011 and 4% Increase from Fourth Quarter 2011

First Quarter 2012 Natural Gas Liquids Net Sales Volumes of 9.5 MBbls/d; 7% Increase from First Quarter 2011 and 4% Increase from Fourth Quarter 2011

Oil and Natural Gas Liquids Account for 32% of Net Sales Volumes in First Quarter 2012; Highest Percentage since Early 2007

DENVER–(BUSINESS WIRE)–Apr. 30, 2012– Forest Oil Corporation (NYSE:FST) (Forest or the Company) today announced financial and operational results for the first quarter of 2012.

The comparative first quarter of 2011 information contained in this press release, unless otherwise indicated, relates only to the retained operations of Forest and excludes the operations of Lone Pine Resources Inc. (NYSE: LPR) (TSX: LPR), which was spun-off to Forest shareholders on September 30, 2011.

Forest reported the following highlights for the three months ended March 31, 2012:

  • Net sales volumes of 337 MMcfe/d decreased 1% from the first quarter of 2011 and from the fourth quarter of 2011 due to 9 MMcfe/d of production downtime associated primarily with a third-party plant outage in Oklahoma
  • Oil net sales volumes of 8.4 MBbls/d organically increased 47% from the first quarter of 2011 and 4% from the fourth quarter of 2011
  • Natural gas liquids net sales volumes of 9.5 MBbls/d organically increased 7% from the first quarter of 2011 and 4% from the fourth quarter of 2011
  • Oil and natural gas liquids accounted for 32% of net sales volumes in the first quarter of 2012 versus 26% in the first quarter of 2011 and 30% in the fourth quarter of 2011
  • Adjusted net earnings of $13 million decreased 39% from the corresponding 2011 period
  • Adjusted EBITDA of $126 million decreased 2% from the corresponding 2011 period
  • Adjusted discretionary cash flow of $95 million increased 3% from the corresponding 2011 period

H. Craig Clark, President and CEO, stated, “Our efforts to grow our oil and liquids production are evident from the first quarter results. We were able to achieve organic oil and liquids production growth of 24% compared to the first quarter of 2011, which resulted in oil and liquids comprising 32% of total first quarter 2012 production, our highest percentage in approximately five years. We have also decided to move the one rig we had in the Haynesville Shale to East Texas so our entire capital program is now dedicated to oil and liquids development.

“The Texas Panhandle Area continues to be the primary driver of our oil and liquids growth and we successfully completed a well in yet another oil interval in the first quarter, the Tonkawa, bringing the total intervals drilled horizontally to thirteen in this area. The Tonkawa well exceeded expectations and came online at 2,100 Boe/d (78% oil and 10% natural gas liquids). We have identified approximately 1,100 engineered, horizontal locations in the Texas Panhandle Area, providing a significant inventory of oil and liquids projects.

“Our Eagle Ford Shale program continues to evolve towards a full development opportunity. Our efforts to land the lateral in the uppermost part of the interval are yielding more consistent results, with 30-day initial production rates averaging 468 Boe/d, which approximates our type curve.

“Similar to the Texas Panhandle Area, the stacked-pay nature of our acreage in East Texas provides us with the opportunity to selectively target liquids-rich Cotton Valley intervals. Subsequent to the highly successful wells announced in East Texas in early 2012, Forest drilled an additional well that had a 24-hour initial production rate of 10.3 MMcfe/d with liquids comprising approximately 40% of the total. These liquids-rich wells continue to exceed our expectations and will be an increased focus for us in 2012 with a two rig drilling program.

“While in its development infancy, the Permian Basin program has yielded valuable information in well bore and completion design, and we look forward to utilizing the most effective drilling and completion techniques to unlock the valuable resource we believe to be in place.

“First quarter results have provided a solid foundation for us to build on for the remainder of 2012. While natural gas prices continue to languish, our efforts to grow our oil and liquids production should result in a successful year for Forest.”

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