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QEC Partner : Forest Oil Corporation (NYSE:FST) News

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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SuperBowl Finally Lives Up To Its Name

The Toes On The Ground Prior To Being Pushed Out Of Bounds= Touchdown!

Following the greatest Super Bowl in history, we offer the generally anticlimactic Monday morning musings and meditations on the world of sports:

- In a word, omigod. The morning after, it's still hard to put Sunday's showdown in Tampa in perspective.

I mean, James Harrison makes maybe the greatest individual play in Super Bowl history. And by the end of the game, it was almost forgotten. The Arizona Cardinals were dead and buried twice. They were this close to authoring one of the great comebacks in the annals of "The Big Game." Then the Pittsburgh Steelers came off the canvas and delivered the knockout blow.
It was like the 14th round of the "Thrilla in Manilla" played out over four hours with a Bruce Springsteen concert thrown in and it really was that good.
Then again, it wasn't like the NFL didn't owe us one of these.
- The tendency is to look at the Steelers and compare them to the NHL's New Jersey Devils. They play a system. They plug interchangeable parts into that system. The system keeps rolling along.

That's true to a point. But it also diminished the sheer genius of the Steelers organization. Following their win over the Cardinals -- which had more than a few nervous moments -- their defence will be rated among the best in NFL history. That unit features just one first-round draft pick in safety Troy Polamalu. Linebacker Harrison is also the first undrafted player to be named the NFL's defensive player of the year.

Think about that one for a moment.

I mean, it seems the Steelers have had the same team since Bill Cowher took over in '92. Greg Lloyd and Kevin Greene gave way to Joey Porter, who gave way to Harrison and Lamarr Woodley. Rod Woodson gave way to Polamalu.

And the quarterbacks. The Steelers went to the Super Bowl with Neil O'Donnell. They went to the playoffs with Kordell Stewart and Tommy Maddox. Since '92, they've recorded at least 10 wins in 11 of the 17 seasons and they had precisely two losing years in that time.

Add it up and it's one thing to make those changes and stay competitive. But the Steelers have made those changes and stayed on top for the better part of two decades in the NFL's salary-cap era.

That's impressive.

- As much as the drama over coach Alain Vigneault's future has been the hot-button issue in this marketplace for the last two weeks, the more important story for the Vancouver Canucks will take place in and around the trade deadline.

At that point, GM Mike Gillis has to decide if this team is worth keeping together or if he has to blow it up and start all over. And there's no safe play here. It's either/or because Gillis can't risk losing the Sedins and/or Mattias Ohlund on the unrestricted market this summer.
Put it this way. As bad as things are now, can you imagine the nightmare the organization would face if a team -- say the Toronto Maple Leafs with their new GM Brian Burke -- signed the twins on July 1.

It's a very difficult decision, as tough as any in the history of the franchise. But the potential take for those three players could be massive and this opportunity isn't going to repeat itself any time soon for the Canucks.

If Gillis believes he can win with the Sedins and Ohlund now and in the future, he has to sign them before they become UFAs. If he believes the team has to go in a different direction, he has to move them.

Either way, we're about to find something out about the Canucks' first-year GM.
- And then there's the world in which the Detroit Red Wings live.

While much has been made about Henrik Zetterberg's staggering 12-year, $73-million US contract, the cap hit for the Wings works out to $6 million per season.
That, in turn, might allow them to sign pending UFAs Marian Hossa and Johan Franzen this summer.

"Yeah. it's possible," GM Ken Holland said. "If both [Hossa and Franzen] want to stay, and if the cap goes up a little, there's an outside chance. It'll still be tough, but if other players are as motivated to make it work as Henrik was, there's a chance."

Complicating things are reports that the NHL salary cap might fall as much as 20 per cent in two years. That will leave it in the $45-million range and even the Wings might have trouble making that work.

- Interesting scene at GM Place on Saturday morning where six players showed up for the Canucks' optional morning skate before the game with Minnesota.
Five of those players were healthy scratches that night. The sixth was Roberto Luongo, who put in a full practice.

- Sign of the times: Remember when a Colorado Avalanche home game used to be among the toughest tickets in the NHL?

The Avs haven't been above 16,000 in their last 10 games at Pepsi Center.
- Colin Campbell has the perfect opportunity to send a message about head shots with Los Angeles's Denis Gauthier. The hit on Montreal's Josh Gorges, where Gauthier left his feet to deliver an elbow, is exactly the kind of hit the NHL has to eradicate.

Gauthier is also a repeat offender. This suspension has to hit double digits.
- Heard this one at the gym the other day:

Guy walks into a bar with his dog and says to the bartender: "The cable's out at my place and the dog and I always watch Canucks games together. Can we watch it here?"
Bartender says: "OK, but you'll have to go to the end of the bar."
Game starts. Canucks score. Dog jumps up, races the length of the bar, does a back flip in front of the bartender and gives him a high five.

Bartender says: "That's amazing. What does he do if the Canucks win."
Guy says: "I don't know. I've only had him three years."

OK, it isn't the greatest joke in the world. But the point is people are now making jokes about the Canucks and that's dangerous.