DISCONTINUED OPERATIONS

6 Months Ended

Jun. 30, 2012

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

On June 1, 2011, Forest completed an initial public offering of approximately 18% of the common stock of its then wholly-owned subsidiary, Lone Pine, which held Forest’s ownership interests in its Canadian operations. In May 2011, as part of a corporate restructuring in anticipation of Lone Pine’s initial public offering, Lone Pine Resources Canada Ltd. (“LPR Canada”), Forest’s former Canadian subsidiary, declared a stock dividend to Forest immediately before Forest’s contribution of LPR Canada to Lone Pine, with such stock dividend resulting in Forest incurring a dividend tax payable to Canadian federal tax authorities of $28.9 million, which Forest paid in June 2011. This dividend tax is classified within “Income tax” in the Condensed Consolidated Statement of Operations. The net proceeds from the initial public offering received by Lone Pine, after deducting underwriting discounts and commissions and offering expenses, were approximately $178.0 million.  Lone Pine used the net proceeds to pay $29.2 million to Forest as partial consideration for Forest’s contribution to Lone Pine of Forest’s direct and indirect interests in its Canadian operations.  Additionally, Lone Pine used the remaining net proceeds and borrowings under Lone Pine’s credit facility to repay Lone Pine’s outstanding indebtedness owed to Forest, consisting of a note payable, intercompany advances, and accrued interest, of $400.5 million.  On September 30, 2011, Forest distributed, or spun-off, its remaining 82% ownership in Lone Pine to Forest’s shareholders, by means of a special stock dividend whereby Forest shareholders received 0.61248511 of a share of Lone Pine common stock for every share of Forest common stock held.

The table below sets forth the effects of changes in Forest’s ownership interest in Lone Pine on Forest’s equity, during the three and six months ended June 30, 2011 when Forest had an ownership interest in Lone Pine.

	Three Months Ended June 30, 2011		Six Months Ended June 30, 2011
	(In Thousands)
Net earnings attributable to Forest Oil Corporation	$	38,910	$	35,580
Transfers from (to) the noncontrolling interest:
Increase in Forest Oil Corporation’s capital surplus for sale of 15 million Lone Pine Resources Inc. common shares	112,879		112,879
Change from net earnings attributable to Forest Oil Corporation and transfers from (to) noncontrolling interest	$	151,789	$	148,459

Lone Pine was a component of Forest with operations and cash flows clearly distinguishable both operationally and for financial reporting purposes from those of Forest. As a result of the spin-off, Lone Pine’s operations and cash flows have been eliminated from the ongoing operations of Forest, and Forest will not have any significant continuing involvement in the operations of Lone Pine. Accordingly, Forest has presented Lone Pine’s results of operations as discontinued operations in the Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2011.

The table below presents the major components of earnings from discontinued operations for the periods presented.

	Three Months Ended June 30, 2011			Six Months Ended June 30, 2011
	(In Thousands)
	(Unaudited)
Total revenues	$	51,263		$	87,536
Production expenses	13,993			26,448
General and administrative	2,377			5,591
Depreciation, depletion, and amortization	20,962			39,981
Interest expense	1,155			1,239
Unrealized gains on derivative instruments	(5,130		)	(5,130		)
Realized foreign currency exchange gains	(33,892		)	(33,892		)
Unrealized foreign currency exchange losses, net	36,360			28,540
Other, net	617			691
Earnings from discontinued operations before tax	14,821			24,068
Income tax	4,951			7,607
Net earnings from discontinued operations	$	9,870		$	16,461