-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, T2B+GxQD6wjOkENIiHljMkPz/iF/1+ahVCJ8dbdFhI/xLwg38Xhv/8SEFQDLJIPT JlYacaK98/MzVIinNC5Ohg== 0000912057-02-006271.txt : 20020414 0000912057-02-006271.hdr.sgml : 20020414 ACCESSION NUMBER: 0000912057-02-006271 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20020213 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOREST OIL CORP CENTRAL INDEX KEY: 0000038079 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 250484900 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13515 FILM NUMBER: 02548875 BUSINESS ADDRESS: STREET 1: 1600 BROADWAY STREET 2: 2200 COLORADO STATE BANK BLDG CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3038121400 8-K 1 a2070951z8-k.txt 8-K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) February 13, 2002 FOREST OIL CORPORATION (Exact name of registrant as specified in charter) New York 1-13515 25-0484900 (State or other juris- (Commission (IRS Employer diction of incorporation) file number) Identification No.) 2200 Colorado State Bank Building, 1600 Broadway, Denver, CO 80202 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 812-1400 ITEM 5. OTHER EVENTS. On February 13, 2002 the registrant announced financial results for 2001, which is attached to this Form 8-K as Exhibit 99.1. On February 13, 2002 the registrant announced operational results for 2001, which is attached to this Form 8-K as Exhibit 99.2. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) Financial Statements. Not applicable. (b) Pro Forma Financial Information. Not applicable. (c) Exhibits.
Exhibit Description ------- ----------- 99.1 Forest Oil Corporation press release dated February 13, 2002 entitled "Forest Oil Announces 2001 Financial Results" 99.2 Forest Oil Corporation press release dated February 13, 2002, entitled "Forest Oil Announces 2001 Operational Results"
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FOREST OIL CORPORATION (Registrant) Dated: February 14, 2002 By /s/ Joan C. Sonnen ---------------------------- Joan C. Sonnen Vice President - Controller and Chief Accounting Officer INDEX TO EXHIBITS FILED WITH THE CURRENT REPORT ON FORM 8-K
Exhibit Description - ------- ----------- 99.1 Forest Oil Corporation press release dated February 13, 2002, entitled "Forest Oil Announces 2001 Financial Results" 99.2 Forest Oil Corporation press release dated February 13, 2002, entitled "Forest Oil Announces 2001 Operational Results"
EX-99.1 3 a2070951zex-99_1.txt EXHIBIT 99.1 EXHIBIT 99.1 NEWS FOR FURTHER INFORMATION FOREST OIL CORPORATION CONTACT: DONALD H. STEVENS 1600 BROADWAY, SUITE 2200 VICE PRESIDENT AND TREASURER DENVER, COLORADO 80202 (303) 812-1500 FOR IMMEDIATE RELEASE FOREST OIL ANNOUNCES 2001 FINANCIAL RESULTS DENVER, COLORADO - FEBRUARY 13, 2002 - Forest Oil Corporation (NYSE:FST) (Forest) reported today pro forma net earnings, as adjusted for unusual and non-recurring items, of $143.4 million or $3.01 per basic share for the year ended December 31, 2001, compared to pro forma net earnings of $136.8 million or $2.86 per basic share in the corresponding 2000 period. Without pro forma adjustments, earnings were $103.7 million or $2.18 per basic share for 2001 compared to $130.6 million or $2.73 per share in 2000. Robert S. Boswell, Chairman and Chief Executive Officer of Forest, stated "2001 was a year of significant accomplishments for Forest Oil Corporation on a number of fronts. We discovered 445 BCFE and replaced 259% of 2001 production in North America at a cost of $1.27 per MCFE. During the year, we also completed the integration of a significant merger, began repositioning our asset portfolio and made important changes to our management team. These accomplishments, combined with high hydrocarbon prices, enabled Forest to achieve record cash flows. Most importantly, our net asset value per share grew for the fifth straight year. In 2001, we accomplished this while selling $153 million in assets, repurchasing 2.07 million shares of our common stock, decreasing our leverage to 39% debt to book capitalization, and increasing our liquidity to an amount in excess of $500 million at December 31, 2001. "2002 will be a year of challenges with the expectation for significantly lower hydrocarbon prices. Accordingly, we have designed our 2002 business plan to conserve capital, maintain investment returns and contribute to the continued growth of our net asset value per share. Even with the current price environment, we believe that we will be able to deliver significant accomplishments in 2002 and position Forest for further growth in 2003." For the quarter ended December 31, 2001, Forest reported pro forma net earnings of $4.8 million or $.10 per basic share compared to pro forma net earnings of $54.1 million or $1.13 per basic share in the fourth quarter of 2000. Without pro forma adjustments, Forest reported a net loss of $29.7 million or $.63 per basic share for the fourth quarter of 2001 compared to net earnings of $55.5 million or $1.16 per share for the fourth quarter of 2000. Page 2 of 9 A reconciliation of reported net earning (loss) to pro forma net earnings is shown below.
Year Ended Three Months Ended December 31, December 31, -------------------- ----------------- 2001 2000 2001 2000 -------- ------- ------ ------ (in millions) Net earnings (loss) $ 103.7 130.6 (29.7) 55.5 Merger-related expenses (1) 9.8 31.6 1.6 31.6 Executive termination (2) 1.3 -- 1.3 -- Impairments of oil and gas properties (3) 18.1 5.9 18.1 5.9 Writedown of marketing contract value (4) 3.2 -- 3.2 -- Reserve for Enron receivables (5) 8.3 -- 8.3 -- Writeoff of Enron derivative contracts (6) 2.3 -- 2.3 -- Foreign currency translation loss (gain) (7) 7.9 7.1 .1 (.5) Unrealized loss (gain) on derivative instruments (8) (.4) -- 4.3 -- -------- ------- ------ ------ Net earnings before income taxes and extraordinary item 154.2 175.2 9.5 92.5 Income tax effects of adjustments (9) (16.4) (3.1) (7.9) (3.1) Merger-related income tax credit (10) -- (35.3) -- (35.3) -------- ------- ------ ------ Earnings before extraordinary item 137.8 136.8 1.6 54.1 Extraordinary loss on extinguishment of debt, net of tax (11) 5.6 -- 3.2 -- -------- ------- ------ ------ Pro forma net earnings $ 143.4 136.8 4.8 54.1 ======== ======= ====== ======
- ------------------- (1) Costs incurred to complete the merger with Forcenergy Inc ("Forcenergy"). During the fourth quarter of 2001, these amounts include termination benefits for a former Forcenergy operations executive. (2) General and administrative expense recorded in the fourth quarter of 2001 related to termination benefits for a former Forest operations executive. (3) Impairments of non-productive non-North American properties. In 2001, the costs relate primarily to an unsuccessful well in Albania ($10 million). (4) Impairment of marketing contracts related to the netback pool administered by ProMark, a wholly owned subsidiary engaged in gas marketing in Canada. The book value of the contracts was adjusted downward to more closely match the estimated discounted net present value of cash flows from the contracts. (5) Miscellaneous expense includes a reserve for 100% of receivables due from Enron for physical sales of natural gas. (6) Realized gains on derivatives were reduced by a writeoff of 100% of the asset value of derivative contracts where Enron was the counterparty. (7) Effects of foreign currency translation relating to the senior subordinated notes issued by Canadian Forest Oil, Ltd. (8) Amounts recorded for mark-to-market valuation of derivative instruments that are ineffective hedges under FAS 133. (9) Income tax effects, if applicable, at the effective tax rates recorded during the periods. (10) Adjustment to reduce the valuation allowance for deferred tax assets following the merger with Forcenergy. (11) Payments in excess of carrying value of debt securities retired during the period, net of related income tax effects. Page 3 of 9 COMPARATIVE FINANCIAL AND PRODUCTION DATA The following table sets forth certain of Forest's financial and production statistics for the year and three months ended December 31, 2001 and 2000: Year Ended Three Months Ended December 31, December 31, --------------------------- --------------------------- 2001 2000 Change 2001 2000 Change ------ ------ ------ ------ ------ ------ Daily natural gas production (MMCF): United States 266.9 279.5 (5)% 239.6 295.6 (19)% Canada 30.1 31.5 (4)% 33.0 28.2 17% Total 297.0 311.0 (5)% 272.6 323.8 (16)% Daily liquids production (MBBLS): United States 25.3 27.0 (6)% 26.9 26.4 2% Canada 3.7 4.2 (12)% 3.7 4.2 (12)% Total 29.0 31.2 (7)% 30.6 30.6 -- Net daily production (MMCFE) 471.2 498.4 (6)% 456.2 507.4 (10)% Total production (BCFE) 172.0 182.4 (6)% 42.0 46.7 (10)% Production revenue (millions) (1) $ 715 625 14% $ 124 191 (35)% Average gas sales price ($/MCF) (1) $ 4.32 3.23 34% $ 2.79 4.21 (34)% Average liquids sales price ($/BBL) (1) $ 23.31 22.46 4% $ 19.23 23.21 (17)% Cash flow before working capital changes, net of pro forma adjustments (millions) $ 464 393 18% 58 122 (52)% EBITDA (millions) (2) $ 515 454 13% $ 70 142 (51)% Long-term debt (millions) $ 594 622 (5)% $ 594 622 (5)% Shareholders' equity (millions) $ 924 859 8% $ 924 859 8% Weighted average shares outstanding (millions) 47.7 46.3 3% 46.7 47.0 (1)%
- ------------------- (1) Includes realized effects of hedging. (2) Earnings before interest, taxes, depreciation and depletion, net of pro forma adjustments. 2001 RESULTS The increase in pro forma net earnings for the year ended 2001 compared to 2000 was due primarily to higher oil and natural gas prices, realized gains on derivative instruments and lower interest expense, offset partially by increases in production expense and depreciation and depletion. The decrease in pro forma net earnings for the quarter ended December 31, 2001 compared to the corresponding period in 2000 was due primarily to lower production volumes and prices and higher production expense, offset partially by lower interest expense. All amounts discussed below are stated on a pro forma basis. Oil and gas sales increased 14% for the year ended December 31, 2001 compared to 2000 primarily as a result of higher product prices. For the quarter ended December 31, 2001, oil and gas sales decreased compared to the corresponding prior year quarter as a result of lower product prices and Page 4 of 9 volumes. Volume decreases were attributable primarily to normal declines and property sales affecting Gulf of Mexico properties. Lease operating expense for the year and quarter ended December 31, 2001 was $1.08 and $1.18 per MCFE, respectively, compared to $.77 and $.84 per MCFE in the corresponding periods in 2000. The increases in the per-unit rates for the 2001 periods were due primarily to general service cost increases, higher transportation costs, higher ad valorem tax expense and increased workover activity for platform refurbishment in the Gulf of Mexico and pipeline maintenance in Alaska. General and administrative expense was $.17 and $.20 per MCFE for the year and quarter ended December 31, 2001, respectively, compared to per-unit rates of $.20 and $.21 in the corresponding periods in 2000. The decreases in the rate for the year and quarter were due primarily to higher credits for exploration and development activities due to increased capital spending, higher credits for production operations and operating synergies associated with the merger with Forcenergy Inc ("Forcenergy"). Depreciation and depletion expense was $1.29 and $1.20 per MCFE for the year and quarter ended December 31, 2001, respectively, compared to per-unit rates of $1.15 and $1.24 per MCFE in the corresponding periods in 2000. The increase in the per-unit rates for 2001 compared to 2000 was due primarily to capital spending and higher estimates of future development costs during the first nine months of 2001. The decrease in the per unit rate in the fourth quarter of 2001 was due primarily to lower estimates of future development costs, credits to the full cost pool for fourth quarter property sales and increases to estimated proved reserves. Interest expense was $49.9 million and $12.1 million for the year and quarter ended December 31, 2001, respectively, compared to $60.3 million and $17.6 million in the corresponding periods in 2000. The decrease was due to lower average debt balances as well as lower rates on variable and fixed rate debt. There were realized gains on derivative instruments of $13.8 million and $2.0 million for the year and quarter ended December 31, 2001, respectively, because actual prices received for oil and natural gas were, in the aggregate, lower than the prices established in the related derivative contracts. These realized gains on derivative instruments are recorded separately in non-operating income since the instruments do not qualify as hedges under the accounting rules governing hedging activities that were adopted in 2001. RESERVES AND FINDING COSTS Forest reported year-end estimated proved reserves of 1,545 BCFE, consisting of 54% natural gas and 46% oil, condensate and natural gas liquids. Forest's pre-tax SEC PV10 value of estimated proved reserves was approximately $1.5 billion calculated based on year-end posted prices of $19.78 per barrel and $2.735 per MMBTU. The reported proved reserve base results in a three-year compounded annual growth rate for proved reserves of 26% and a three-year weighted average finding, development and acquisition cost of $1.17 per MCFE. Forest replaced 259% of production at a cost of $1.27 per MCFE from the drillbit. These results include all costs relating to frontier and emerging markets. CAPITAL EXPENDITURES. The following chart summarizes capital expenditures incurred in 2001 (in millions): Page 5 of 9
United Consolidated States Canada International Total -------- ------ ------------- ------------ Exploration $ 145.9 44.8 33.3 224.0 Development 322.5 18.1 -- 340.6 Acquisitions (.2) .2 -- -- -------- ---- ---- ----- Gross capital expenditures 468.2 63.1 33.3 564.6 Sales proceeds (147.3) (.5) (5.1) (152.9) -------- ---- ---- ----- Net capital expenditures $ 320.9 62.6 28.2 411.7 ======== ==== ==== =====
CAPITAL STRUCTURE. In the year ended December 31, 2001, Forest purchased 2,074,300 shares of common stock, or approximately 4.3% of common stock outstanding at the beginning of the year, for approximately $55.8 million. In addition, Forest issued approximately $425 million of Senior Notes in 2001, the proceeds of which were used to repurchase outstanding Senior Subordinated Notes and to repay borrowings under the Senior Credit Facility. At December 31, 2001, the outstanding borrowings under the $600 million Senior Credit Facility were $19 million. TELECONFERENCE CALL The Company's management will hold a teleconference on Thursday, February 14, 2002 at 11:00 a.m. Eastern Standard Time. If you would like to participate, please call toll-free 888/781-5307 (for U.S./Canada) and 706/634-0611 (for International). A replay will be available from Thursday, February 14th through Friday, February 22nd. You may access the replay by dialing toll free 800/642-1687 (for U.S./Canada) and 706/645-9291 (for International), reservation No. 2853562. Please note that the reservation number is not needed to access the teleconference. * * * * * Forest Oil Corporation is engaged in the exploration, acquisition, development, production and marketing of natural gas and crude oil in North America and selected international locations. Forest's principal reserves and producing properties are located in the United States in the Gulf of Mexico, Louisiana, Texas, Alaska and in Canada in Alberta and the Northwest Territories. Forest's common stock trades on the New York Stock Exchange under the symbol FST. February 13, 2002 ### Page 6 of 9 FOREST OIL CORPORATION Condensed Consolidated Balance Sheets (Unaudited)
December 31, December 31, 2001 2000 ----------- --------- (In Thousands) ASSETS Current assets: Cash and cash equivalents $ 8,387 14,003 Accounts receivable 134,090 203,245 Derivative instruments 31,632 -- Other current assets 27,856 21,580 ----------- --------- Total current assets 201,965 238,828 Net property and equipment, at cost 1,516,900 1,359,756 Deferred income taxes 43,930 119,300 Goodwill and other intangible assets, net 13,263 19,412 Other assets 20,311 15,082 ----------- --------- $ 1,796,369 1,752,378 =========== ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 209,163 192,200 Accrued interest 7,364 11,436 Current portion of deferred tax liability 11,154 -- Other current liabilities 12,617 36,301 ----------- --------- Total current liabilities 240,298 239,937 Long-term debt 594,178 622,234 Other liabilities 21,524 16,376 Deferred income taxes 16,426 14,865 Shareholders' equity: Common stock 4,883 4,840 Capital surplus 1,145,282 1,139,136 Accumulated deficit (165,824) (269,567) Accumulated other comprehensive gain (loss) (4,147) (12,177) Treasury stock, at cost (56,251) (3,266) ----------- --------- Total shareholders' equity 923,943 858,966 ----------- --------- $ 1,796,369 1,752,378 =========== =========
Page 7 of 9 FOREST OIL CORPORATION Condensed Consolidated Statements of Operations (Unaudited)
Three Months Ended Years Ended --------------------------- --------------------------- December 31, December 31, 2001 2000 2001 2000 ---------- --------- --------- --------- (In Thousands Except Per Share Amounts) Revenue: Marketing and processing $ 49,586 117,442 303,527 288,133 Oil and gas sales: Gas 69,992 125,501 467,767 368,245 Oil, condensate and natural gas liquids 54,141 65,338 247,085 256,680 ---------- --------- --------- --------- Total oil and gas sales 124,133 190,839 714,852 624,925 ---------- --------- --------- --------- Total revenue 173,719 308,281 1,018,379 913,058 Operating expenses: Marketing and processing 48,621 116,757 300,062 285,039 Oil and gas production 49,645 39,151 186,250 140,218 General and administrative 9,482 9,863 30,514 35,580 Merger and seismic licensing expense 1,575 31,577 9,836 31,577 Depreciation and depletion 51,712 58,742 226,033 212,480 Impairment of oil and gas properties 18,072 5,876 18,072 5,876 Impairment of contract value 3,239 -- 3,239 -- ---------- --------- --------- --------- Total operating expenses 182,346 261,966 774,006 710,770 ---------- --------- --------- --------- Earnings (loss) from operations (8,627) 46,315 244,373 202,288 Other income and expense: Other (income) expense, net 7,724 243 9,592 (1,757) Interest expense 12,147 17,610 49,910 60,269 Translation (gain) loss on subordinated debt 106 (536) 7,872 7,102 Realized (gain) loss on derivative instruments, net 270 -- (11,556) -- Unrealized (gain) loss on derivative instruments, net 4,329 -- (376) -- ---------- --------- --------- --------- Total other income and expense 24,576 17,317 55,442 65,614 ---------- --------- --------- --------- Earnings (loss) before income taxes and extraordinary item (33,203) 28,998 188,931 136,674 Income tax expense (benefit): Current (356) 1,035 2,365 1,666 Deferred (6,370) (27,577) 77,212 4,400 ---------- --------- --------- --------- (6,726) (26,542) 79,577 6,066 ---------- --------- --------- --------- Net earnings (loss) before extraordinary item (26,477) 55,540 109,354 130,608 Extraordinary loss on extinguishment of debt (3,194) -- (5,611) -- ---------- --------- --------- --------- Net earnings (loss) $ (29,671) 55,540 103,743 130,608 ========== ========= ========= ========= Earnings (loss) attributable to common stock $ (29,671) 54,403 103,743 126,440 ========== ========= ========= =========
Page 8 of 9 FOREST OIL CORPORATION Condensed Consolidated Statements of Operations (Unaudited) (continued)
Three Months Ended Twelve Months Ended ---------------------- ---------------------- December 31, December 31, 2001 2000 2001 2000 ------ ------ ------ ------ (In Thousands Except Per Share Amounts) Weighted average number of common shares outstanding: Basic 46,738 47,034 47,674 46,330 ====== ====== ====== ====== Diluted 46,738 48,201 49,282 47,508 ====== ====== ====== ====== Basic earnings per common share: Earnings (loss) attributable to common stock before extraordinary item $ (.56) 1.16 2.30 2.73 Extraordinary loss on extinguishment of debt (.07) -- (.12) -- ------ ------ ------ ------ Earnings (loss) attributable to common stock $ (.63) 1.16 2.18 2.73 ====== ====== ====== ====== Diluted earnings per common share: Earnings (loss) attributable to common stock before extraordinary item $ (.56) 1.13 2.22 2.66 Extraordinary loss on extinguishment of debt (.07) -- (.11) -- ------ ------ ------ ------ Earnings (loss) attributable to common stock $ (.63) 1.13 2.11 2.66 ====== ====== ====== ======
Page 9 of 9 FOREST OIL CORPORATION Condensed Consolidated Statements of Cash Flows (Unaudited)
Years Ended December 31, ----------------------------- 2001 2000 ----------- -------- (In Thousands) Cash flows from operating activities: Net earnings before extraordinary item $ 109,354 130,608 Adjustments to reconcile earnings to net cash provided by operating activities: Depreciation and depletion 226,033 212,480 Impairment of oil and gas properties 18,072 5,876 Impairment of contract value 3,239 -- Amortization of deferred debt costs 1,793 1,517 Translation loss on subordinated debt 7,872 7,102 Unrealized loss on derivative instruments, net 1,353 -- Deferred income tax expense 77,212 4,400 Stock and stock option compensation 595 2,531 Other, net (59) (372) Decrease (increase) in accounts receivable 66,358 (97,195) Decrease (increase) in other current assets (5,341) 2,983 Increase in accounts payable 50,241 10,661 Increase (decrease) in accrued interest and other current liabilities (58,709) 37,177 ----------- -------- Net cash provided by operating activities before reorganization item 498,013 317,768 Decrease in accrued reorganization costs -- (11,236) ----------- -------- Net cash provided by operating activities after reorganization item 498,013 306,532 Cash flows from investing activities: Capital expenditures for property and equipment (569,188) (389,992) Proceeds from sales of assets 152,872 17,304 Increase in other assets, net (4,880) (3,373) ----------- -------- Net cash used by investing activities (421,196) (376,061) Cash flows from financing activities: Proceeds from bank borrowings 766,986 638,407 Repayments of bank borrowings (1,080,546) (690,413) Proceeds from issuance of 8% senior notes, net of issuance costs 420,550 -- Proceeds from issuance of preferred stock -- 38,800 Redemption of 8 3/4% senior subordinated notes (131,933) (7,184) Redemption of 10 1/2% senior subordinated notes (9,350) (3,067) Proceeds from the exercise of options and warrants 8,430 12,556 Purchase of treasury stock (55,803) (2,818) Increase (decrease) in other liabilities, net 470 (2,453) ----------- -------- Net cash used by financing activities (81,196) (16,172) Effect of exchange rate changes on cash (1,237) 43 ----------- -------- Net decrease in cash and cash equivalents (5,616) (85,658) Cash and cash equivalents at beginning of period 14,003 99,661 ----------- -------- Cash and cash equivalents at end of period $ 8,387 14,003 =========== ========
EX-99.2 4 a2070951zex-99_2.txt EXHIBIT 99.2 EXHIBIT 99.2 NEWS FOR FURTHER INFORMATION FOREST OIL CORPORATION CONTACT: DONALD H. STEVENS 1600 BROADWAY, SUITE 2200 VICE PRESIDENT AND TREASURER DENVER, COLORADO 80202 (303) 812-1500 FOR IMMEDIATE RELEASE FOREST OIL ANNOUNCES 2001 OPERATIONAL RESULTS DENVER, COLORADO - FEBRUARY 13, 2002 - - Forest Oil Corporation (NYSE:FST) (Forest) today announced operational results for 2001 and upcoming projects for its North American and International operations. RESERVE ADDITIONS AND CAPITAL ACTIVITIES As previously announced, Forest had year-end 2001 estimated proved oil and gas reserves of 828 billion cubic feet of natural gas (bcf) and 119.5 million barrels of liquids for a total of 1,545 bcfe. All of the Company's proved oil and gas reserves are located in North America. In 2001, discoveries and extensions were 445 bcfe, replacing 259 percent of production for the year. The Company's 2001 reserves are 12 percent greater than the previous year, despite property sales during 2001 of 99 bcfe which represents approximately 7 percent of the total 2000 reserve base. During 2001, the Company spent approximately $565 million on operations capital expenditures and received proceeds from the sale of properties of approximately $153 million, for net capital expenditures of $412 million. During 2001, Forest drilled a total of 120 wells (108 exploratory and 12 development) and achieved an 88 percent success rate with 60 percent of the capital expenditures dedicated to exploratory and 40 percent to development activity. Peak rig activity during 2001 reached 28 rigs in the third quarter of 2001 and has currently dropped to 12 rigs (combined operated and non-operated). In 2002, Forest plans to drill 24 exploratory wells utilizing approximately 31 percent of the 2002 capital budget. The Company plans to devote the remaining 69 percent of the budget to development activities and the construction of facilities. Approximately 50 percent of the Company's capital budget for 2002 will be dedicated to projects in the Cook Inlet, Alaska. PRODUCTION During the fourth quarter, the Company's daily production averaged 456 mmcfe/d, as compared to 507 mmcfe/d for the same period in 2000. The daily production for fourth quarter 2001 compared to the same period in 2000 by business unit is as follows:
BUSINESS UNIT (MMCFE/D) 2001 2000 ---- ---- Gulf of Mexico Offshore 227 297 Gulf of Mexico Onshore 39 32 Western 62 75 Alaska 73 50 Canada 55 53 ---- ---- TOTAL 456 507
ALASKA For the full year 2001, the Alaska Business Unit completed 11 of 11 wells for a 100 percent success rate. ~ REDOUBT SHOAL (100% WORKING INTEREST) Redoubt #4 currently is directionally drilling at 19,025 feet. This will be the deepest directional well drilled in the Cook Inlet to date. This well will define the eastern limit for this field. Shallow gas pay was logged in the Tyonek interval, which is correlative to the gas sand tested earlier this year in the Redoubt #3 at 8 mmcf/d. The Company is proceeding with the development of this field. ~ TRADING BAY FIELD (46.8% WORKING INTEREST) The A-15RD well currently is drilling from the Monopod Platform at a depth of 12,013 feet. This well is a follow up to the highly successful K-13RD horizontal well, which at year-end 2001 was producing in excess of 6,000 barrels of oil per day (bbls/d). ~ COSMOPOLITAN PROSPECT (25% WORKING INTEREST) The Hansen #1 wildcat test was drilled to a total depth of 18,630 feet. It is currently testing the Hemlock and lower Tyonek intervals. 2 CANADA For the full year 2001, Canadian Forest Oil completed 17 of 20 wells for an 85 percent success rate. THE FOOTHILLS Forest drilled a total of 19 wells in the Cutpick, Narraway, Ojay and Waterton areas with a 90 percent success rate. Two wells are currently drilling. One is being completed and another is being tied into the sales pipeline. The Company increased activity in the fourth quarter to take advantage of the winter access. During fourth quarter 2001, the Company also added 6,325 net acres to its Foothills inventory, bringing the total position to over 40,000 net acres. The most significant event in this area occurred in February 2002, when the Narraway Field came on stream ahead of schedule. Four wells are currently producing a gross volume of 20 mmcf/d with one well remaining to be tied into the pipeline and another well completing. NORTHWEST TERRITORIES ~ FT. LIARD AREA (33% - 65% WORKING INTEREST) The Company's farmout to Anadarko commenced in fourth quarter 2001 with the 2-D and 3-D seismic operations underway. ~ MATTSON AREA (33.33% WORKING INTEREST) The a-96-J Maxhamish wildcat spudded in January 2002, and is currently drilling in the objective interval. The well is expected to reach total depth by end of February 2002 and upon successful testing will be tied-in for immediate production. GULF OF MEXICO OFFSHORE For the full year 2001, the Offshore Business Unit completed 41 of 49 wells for an 84 percent success rate. Most of this activity was performed during the first three quarters of the year. On November 30, 2001, the Company closed its transaction with Unocal for properties in the South Marsh Island and Vermilion areas. The fourth quarter production volumes reflect the working interest being sold to Unocal commencing December 1, 2001. Forest received an adjusted purchase price of $118 million and retained a 50 percent interest in the properties. Unocal took over operations and control of the jointly owned properties on January 1, 2002. 3 ~ WEST CAMERON 110 (38% WORKING INTEREST) The West Cameron 110 #16 was drilled to total depth of 12,873 feet and logged 250 feet of gas pay in 9 sand intervals during the fourth quarter of 2001. The well was tested at a rate of 13.7 mmcf/d. A satellite platform was installed and, in February 2002, the well tied into sales. ~ EAST BREAKS 164 (100% WORKING INTEREST) Forest's first deepwater well, EB 164 #2, was a sub-sea completion which was tied into the host platform in October 2001. The current production rate is 15 mmcf/d. ~ EUGENE ISLAND 53 (100% WORKING INTEREST) The Eugene Island 53 #12 Miocene completion was tied in to sales in November 2001 at a rate of 12 mmcf/d. GULF COAST ONSHORE For the year 2001, the Gulf Coast Onshore Business Unit completed 8 of 9 wells for an 89 percent success rate. ~ MCALLEN RANCH FIELD, TEXAS (50% WORKING INTEREST) The field exploitation program continued in 2001 with the McAllen #36 and #38 wells. The McAllen #38 was a successful step out well. The wells were completed during the third quarter 2001 and are currently producing at a combined rate of 6 mmcfe/d. ~ BONUS FIELD, TEXAS (82% WORKING INTEREST) Forest initiated a drilling program at the Bonus Field during second quarter 2001. Initial production occurred during September 2001. A total of four wells were drilled and completed as commingled producers from Wilcox Sands. The gross field production was increased to over 26 mmcfe/d at year-end. Peak rate reached 37 mmcfe/d during fourth quarter 2001. ~ S.E. TIGRE LAGOON FIELD, TEXAS (78% WORKING INTEREST) The E. Broussard Heirs #1 exploratory well was drilled to 14,153 feet and logged 90 feet of gas pay in four Miocene Sands. The initial completion was made in the Plan 8 Sand and the well was placed on production in October 2001. The well was producing 4.1 mmcfe/d with 7,000 psi FTP at year-end 2001. ~ KATY FIELD, TEXAS (53.3% WORKING INTEREST) Drilling operations on the Upper Wilcox were started with an exploitation well during December 2001. This is the first drilling activity in the Katy Field since 1990. The well has logged pay in two of the Upper Wilcox field pays. The lower-most fracture stimulated completion is flowing at 4.3 mmcfe/d with 3,100 psi FTP. Forest currently plans to commingle this with a second pay sand following fracture treatment. 4 WESTERN REGION For the full year 2001, the Western Business Unit completed 26 of 27 wells for a 96 percent success rate. ~ WILD ROSE, WYOMING (100% WORKING INTEREST) Forest drilled and completed five 11,000 foot Lewis and Almond wells in fourth quarter 2001. These are the first wells in an expected 15-30 well program that the Company is continuing in 2002. Each well had initial producing rates ranging from 1-2 mmcfe/d. ~ EAST ECHO SPRINGS, WYOMING (25% WORKING INTEREST) Forest participated in three successful 11,000 foot Lewis wells. The wells began production in January 2002 at average rates of 2.5 mmcfe/d. ~ EAST APACHE FIELD, OKLAHOMA (43%-83% WORKING INTEREST) Two 20,000-foot Springer sand development wells were drilled in 2001 in the East Apache Field. Both wells are currently being completed and should begin production by the end of February 2002 with expected gross rates of 6-10 mmcfe/d per well. ~ WEST TEXAS (92% WORKING INTEREST) The Ophal Dunlap #18-1 was completed in October 2001 in the fractured Wolfcamp with an initial rate of 7.8 mmcfe/d. The well has declined to a current rate of 1.0 mmcfe/d. Additional upper pay is expected to be perforated to increase the producing rate to 4-8 mmcfe/d. INTERNATIONAL ~ IBHUBESI, SOUTH AFRICA (70% WORKING INTEREST) Commercialization efforts continue with the primary focus directed onto two offtake agreements which are expected to be concluded in 2002 and may be sufficient to commercialize the reserves. Forest is currently negotiating gas sales agreements, and does not expect to book any reserves until these agreements are concluded and the project is determined to be commercially viable. Forest has engaged a third party to perform reserve estimates based on its 2000 - 2001 drilling program and other work currently in progress. 5 EARNINGS RELEASE AND TELECONFERENCE CALL Forest Oil Corporation will release year-end results on Wednesday, February 13, 2002, after market close. The Company's management will hold a teleconference call on Thursday, February 14, 2002, at 11:00 a.m. EST (9:00 MST) to review the year-end 2001 results. If you would like to participate, please call 888/781-5307 (for U.S./Canada) and 706/634-0611 (for International) and request the Forest Oil teleconference. A replay will be available from Thursday, February 14th through Friday, February 22nd. You may access the replay by dialing toll free 800/642-1687 (for U.S./Canada) and 706/645-9291 (for International), reservation #2853562. Please note that the reservation number is not needed to access the teleconference, only the replay. FORWARD-LOOKING STATEMENTS This news release contains certain statements that may be regarded as "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, that address activities that the Company plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. The forward-looking statements provided in this press release are based on management's examination of historical operating trends and its current belief as to the outcome and timing of future events. Forest cautions that its future natural gas and liquids production, revenues and expenses and other forward-looking statements are subject to all of the risks and uncertainties normally incident to the exploration for and production and sale of oil and gas. These risks include, but are not limited to price volatility, inflation or lack of availability of goods and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating future oil and gas production and reserves, and other risks as described in Forest's 2000 Annual Report on Form 10-K as filed with the Securities and Exchange Commission. Also, the financial results of Forest's foreign operations are subject to currency exchange rate risks. Any of these factors could cause Forest's actual results and plans to differ materially from those in the forward-looking statements. * * * * * * Forest Oil Corporation is engaged in the acquisition, exploration, development, production and marketing of natural gas and crude oil in North America and selected international locations. Forest's principal reserves and producing properties are located in the United States in the Gulf of Mexico, Louisiana, Texas and Alaska, and in Canada in Alberta and the Northwest Territories. Forest's common stock trades on the New York Stock Exchange under the symbol FST. For more information about the Company please visit our website at www.ForestOil.com. # # # February 13, 2002 6 -----END PRIVACY-ENHANCED MESSAGE-----