Forest Oil Corporation (NYSE:FST):
Estimated proved reserves increased 26% to a record 2,668 Bcfe in 2008
Reserve replacement ratio in 2008 was 549% from all capital activities with finding, development, and acquisition costs of $2.61 per Mcfe
Organic reserve replacement ratio in 2008 was a record 281%, with finding and development costs of $2.54 per Mcfe
Net sales volumes for 2008 are estimated at a record 189.6 Bcfe, an increase of 22% compared to 2007
Anticipated non-cash ceiling test impairment of approximately $1.5 billion after-tax
Fourth quarter and year end 2008 teleconference scheduled for Tuesday, February 24, 2009, at 12:00 PM MT
Forest Oil Corporation (NYSE:FST) (Forest or the Company) today announced its estimated proved oil and gas reserves and estimated production results for the year ended December 31, 2008. The Company reported the following highlights:
* Record estimated proved reserves of 2,668 Bcfe, replacing 549% of production with finding, development and acquisition costs of $2.61 per Mcfe
* Net sales volumes are estimated to be a record 518 MMcfe/d for the year ended December 31, 2008, an increase of 22% compared to 2007
H. Craig Clark, President and CEO, stated, “Forest’s investment results for 2008 were very solid given the difficult cost environment seen by the industry. For the year, our drilling program added reserves organically at $2.54 per Mcfe, in line with our current three-year average of $2.26. Our acquisition program added reserves at $2.68 per Mcfe and includes all costs related to adding over 150,000 net undeveloped acres primarily in Forest’s core East Texas/N. Louisiana and Panhandle areas. Production grew 22% from total investments and 17% organically during 2008. Reserve replacement from all activities was 549% and a record 281% organically, both excellent, as the amount spent on our exploration and development capital program approximated discretionary cash flow.
Our estimated proved reserves at December 31, 2008 were a record 2,668 Bcfe despite a reduction of 212 Bcfe for revisions, which were predominately price related due to lower year end prices. In summary, we believe these to be excellent investment results. The resulting reserve base, our large undeveloped land position, and low cost structure provide us with a very solid foundation in our core areas with many investment options moving forward.”
2009 GUIDANCE
For the year ended December 31, 2009, Forest intends to invest between $500 million and $600 million on exploration and development activities, which the Company expects to be funded through internally generated discretionary cash flow in 2009. Forest will concentrate its drilling activities in its core areas with a focus in 2009 on its East Texas/North Louisiana corridor, including Haynesville/Bossier drilling, and Buffalo Wallow areas and will have limited spending throughout its other productive regions.
H. Craig Clark, President and CEO, further stated, “Our capital plan for 2009 reflects our desire to stay within anticipated cash flow, while our planned well count reflects a significant increase in capital employed in horizontal drilling. Over 33% of our capital is planned to be spent on drilling horizontal wells. Further, in 2009, we will rely almost exclusively on our Lantern rig fleet to drill our vertical and horizontal wells. In the fourth quarter of 2008, we employed as many as 43 third party rigs on our operated projects. We expect this number, which is now eight, to go to one in 2009 as Forest does not have long-term rig contracts. Our current operated rig count, including Lantern rigs, is 15.
Our capital plan is designed to deliver approximately the same net sales volumes and estimated proved reserves in 2009 as in 2008 and will keep our attractive land base intact while focusing on capital efficiency and reducing drilling costs.
It is critical for us to take all possible steps to protect our asset base in this difficult time to allow our shareholders to benefit from our large inventory of projects when more reasonable project economics and capital markets return. We believe the reduction in 2009 activity by us and the industry will ultimately help reduce service costs significantly. Our 2009 plan does not anticipate significant cost reductions at this time.”
FOURTH QUARTER AND YEAR END 2008 EARNINGS RELEASE DATE AND TELECONFERENCE
Forest has scheduled its fourth quarter and year end earnings release to be issued after the close of trading on the New York Stock Exchange on Monday, February 23, 2009.
A conference call is scheduled for Tuesday, February 24, 2009, at 12:00 PM MT to discuss the release. You may access the call by dialing toll free 800.399.6298 (for U.S./Canada) and 706.634.0924 (for International) and request the Forest Oil teleconference (ID # 84156257). A Q&A period will follow.
A replay will be available from Tuesday, February 24 through March 10, 2009. You may access the replay by dialing toll free 800.642.1687 (for U.S./Canada) and 706.645.9291 (for International), conference ID #84156257.
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Tuesday, February 3, 2009
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