10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
ý	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2008
Or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                                    to

Commission File Number 1-13515

FOREST OIL CORPORATION
(Exact name of registrant as specified in its charter)

New York (State or other jurisdiction of incorporation or organization)	25-0484900 (I.R.S. Employer Identification No.)
707 17th Street, Suite 3600 Denver, Colorado 80202 (Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 812-1400

        Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ý Yes    o No

        Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ý Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) Smaller reporting company o

        Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes    ý No

        As of July 31, 2008 there were 89,774,084 shares of the registrant's common stock, par value $.10 per share, outstanding.

FOREST OIL CORPORATION
INDEX TO FORM 10-Q
June 30, 2008

Part I—FINANCIAL INFORMATION
	Item 1—Financial Statements
		Condensed Consolidated Balance Sheets as of June 30, 2008 and December 31, 2007	1
		Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2008 and 2007	2
		Condensed Consolidated Statement of Shareholders' Equity for the Six Months Ended June 30, 2008	3
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2008 and 2007	4
		Notes to Condensed Consolidated Financial Statements	5
	Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations		32
	Item 3—Quantitative and Qualitative Disclosures About Market Risk		42
	Item 4—Controls and Procedures		46
Part II—OTHER INFORMATION
	Item 1A—Risk Factors		47
	Item 2—Unregistered Sales of Equity Securities and Use of Proceeds		49
	Item 4—Submission of Matters to a Vote of Security Holders		49
	Item 6—Exhibits		50
Signatures			51

i

PART I—FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS

FOREST OIL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands, Except Share Data)

				June 30, 2008		December 31, 2007
ASSETS
Current assets:
	Cash and cash equivalents			$	10,811		9,685
	Accounts receivable				273,270		201,617
	Derivative instruments				2,391		30,006
	Deferred income taxes				135,399		23,854
	Other investments				29,001		34,694
	Other current assets				80,747		61,518
		Total current assets			531,619		361,374
Property and equipment, at cost:
	Oil and gas properties, full cost method of accounting:
		Proved, net of accumulated depletion of $2,962,108 and $2,742,539			4,952,318		4,414,710
		Unproved			584,108		568,510
			Net oil and gas properties		5,536,426		4,983,220
	Other property and equipment, net of accumulated depreciation and amortization of $33,597 and $30,011				50,815		42,595
			Net property and equipment		5,587,241		5,025,815
Goodwill					265,798		265,618
Other assets					44,831		42,741
				$	6,429,489		5,695,548
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	409,680		361,089
	Accrued interest				7,908		7,693
	Derivative instruments				375,064		72,675
	Current portion of long-term debt				—		266,002
	Asset retirement obligations				2,555		2,562
	Other current liabilities				33,865		28,361
		Total current liabilities			829,072		738,382
Long-term debt					1,997,605		1,503,035
Asset retirement obligations					91,738		87,943
Derivative instruments					152,132		38,171
Deferred income taxes					950,432		853,427
Other liabilities					64,253		62,779
	Total liabilities				4,085,232		3,283,737
Shareholders' equity:
	Preferred stock, none issued and outstanding				—		—
	Common stock, 89,767,461 and 88,379,409 shares issued and outstanding				8,977		8,838
	Capital surplus				1,992,640		1,966,569
	Retained earnings				224,280		306,062
	Accumulated other comprehensive income				118,360		130,342
	Total shareholders' equity				2,344,257		2,411,811
				$	6,429,489		5,695,548

See accompanying Notes to Condensed Consolidated Financial Statements.

1

FOREST OIL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

			Three Months Ended June 30,						Six Months Ended June 30,
			2008			2007			2008			2007
			(In Thousands, Except Per Share Amounts)
Revenues			$	515,182			254,669			891,712			437,278
Operating expenses:
	Lease operating expenses			38,413			45,027			75,978			81,067
	Production and property taxes			24,148			12,808			44,199			20,718
	Transportation and processing costs			4,641			5,258			9,566			9,452
	General and administrative (including stock-based compensation)			19,832			13,407			39,120			26,378
	Depreciation and depletion			126,584			86,126			242,151			146,585
	Accretion of asset retirement obligations			1,967			1,292			3,751			2,567
	Gain on sale of assets			—			—			—			(7,176	)
		Total operating expenses		215,585			163,918			414,765			279,591
Earnings from operations				299,597			90,751			476,947			157,687
Other income and expense:
	Interest expense			27,979			29,103			55,836			53,456
	Unrealized losses (gains) on derivative instruments, net			319,640			(34,813	)		461,853			23,025
	Realized losses (gains) on derivative instruments, net			58,182			(9,270	)		61,845			(34,404	)
	Unrealized foreign currency exchange (gains) losses			(460	)		(6,271	)		2,315			(6,320	)
	Unrealized losses on other investments, net			276			—			7,367			—
	Other (income) expense, net			(1,862	)		1,122			(1,025	)		234
		Total other income and expense		403,755			(20,129	)		588,191			35,991
Earnings (loss) before income taxes				(104,158	)		110,880			(111,244	)		121,696
Income tax:
	Current			4,000			2,217			3,978			3,095
	Deferred			(40,140	)		31,864			(42,472	)		34,911
		Total income tax		(36,140	)		34,081			(38,494	)		38,006
Net earnings (loss)			$	(68,018	)		76,799			(72,750	)		83,690
Basic earnings (loss) per common share			$	(.78	)		1.11			(.83	)		1.27
Diluted earnings (loss) per common share			$	(.78	)		1.08			(.83	)		1.24

See accompanying Notes to Condensed Consolidated Financial Statements.

2

FOREST OIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(Unaudited)

		Common Stock												Accumulated Other Comprehensive Income
								Capital Surplus			Retained Earnings						Total Shareholders' Equity
		Shares			Amount
		(In Thousands)
Balances at December 31, 2007			88,379		$	8,838			1,966,569			306,062			130,342			2,411,811
	Exercise of stock options		727			73			14,217			—			—			14,290
	Employee stock purchase plan		18			2			749			—			—			751
	Restricted stock issued, net of cancellations		659			66			(66	)		—			—			—
	Amortization of stock-based compensation		—			—			11,980			—			—			11,980
	Adoption of EITF 06-4 and EITF 06-10		—			—			—			(9,032	)		—			(9,032	)
	Restricted stock redeemed and other		(16	)		(2	)		(809	)		—			—			(811	)
Comprehensive loss:
	Net loss		—			—			—			(72,750	)		—			(72,750	)
	Foreign currency translation		—			—			—			—			(11,982	)		(11,982	)
	Total comprehensive loss																	(84,732	)
Balances at June 30, 2008			89,767		$	8,977			1,992,640			224,280			118,360			2,344,257

See accompanying Notes to Condensed Consolidated Financial Statements.

3

FOREST OIL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

			Six Months Ended June 30,
			2008			2007
			(In Thousands)
Operating activities:
	Net earnings (loss)		$	(72,750	)		83,690
	Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
		Depreciation and depletion		242,151			146,585
		Accretion of asset retirement obligations		3,751			2,567
		Stock-based compensation expense		9,273			4,721
		Unrealized losses on derivative instruments, net		461,853			23,025
		Gain on sale of assets		—			(7,176	)
		Deferred income tax		(42,472	)		34,911
		Unrealized foreign currency exchange losses (gains)		2,315			(6,320	)
		Unrealized losses on other investments, net		7,367			—
		Other, net		(2,152	)		(1,134	)
	Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
		Accounts receivable		(66,692	)		32,757
		Other current assets		(21,588	)		726
		Accounts payable		(12,781	)		(20,503	)
		Accrued interest and other current liabilities		(18,007	)		(178	)
Net cash provided by operating activities				490,268			293,671
Investing activities:
	Acquisition of Houston Exploration, net of cash acquired (Note 2)			—			(775,960	)
	Capital expenditures for property and equipment:
		Exploration, development, and other acquisition costs		(789,303	)		(331,983	)
		Other fixed assets		(12,069	)		(15,539	)
	Proceeds from sales of assets			52,367			38,613
	Other, net			1,036			—
Net cash used by investing activities				(747,969	)		(1,084,869	)
Financing activities:
	Issuance of 71/4% senior notes, net of issuance costs			247,188			739,176
	Proceeds from bank borrowings			1,360,178			963,734
	Repayments of bank borrowings			(1,107,917	)		(647,527	)
	Redemption of 8% senior notes			(265,000	)		—
	Repurchases of 7% senior subordinated notes			(2,960	)		—
	Repayments of term loans			—			(111,250	)
	Repayments of bank debt assumed in acquisition			—			(176,885	)
	Proceeds from the exercise of options and from employee stock purchase plan			15,041			7,056
	Other, net			12,325			(1,712	)
Net cash provided by financing activities				258,855			772,592
Effect of exchange rate changes on cash				(28	)		1,172
Net increase (decrease) in cash and cash equivalents				1,126			(17,434	)
Cash and cash equivalents at beginning of period				9,685			33,164
Cash and cash equivalents at end of period			$	10,811			15,730
Cash paid during the period for:
	Interest		$	66,754			52,575
	Income taxes			3,352			1,278

See accompanying Notes to Condensed Consolidated Financial Statements.

4

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) BASIS OF PRESENTATION

        The Condensed Consolidated Financial Statements included herein are unaudited and include the accounts of Forest Oil Corporation and its consolidated subsidiaries (collectively, "Forest" or the "Company"). In the opinion of management, all adjustments, consisting of normal recurring accruals, have been made which are necessary for a fair presentation of the financial position of Forest at June 30, 2008, the results of its operations for the three and six months ended June 30, 2008 and 2007, and its cash flows for the six months ended June 30, 2008 and 2007. Interim results are not necessarily indicative of expected annual results because of the impact of fluctuations in prices received for liquids (oil, condensate, and natural gas liquids) and natural gas and other factors.

        In the course of preparing the Condensed Consolidated Financial Statements, management makes various assumptions, judgments, and estimates to determine the reported amounts of assets, liabilities, revenues, and expenses, and in the disclosures of commitments and contingencies. Changes in these assumptions, judgments, and estimates will occur as a result of the passage of time and the occurrence of future events and, accordingly, actual results could differ from amounts previously established.

        The more significant areas requiring the use of assumptions, judgments, and estimates relate to volumes of oil and gas reserves used in calculating depletion, the amount of future net revenues used in computing the ceiling test limitations, and the amount of future capital costs and abandonment obligations used in such calculations. Assumptions, judgments, and estimates are also required in determining impairments of undeveloped properties, valuing deferred tax assets, and estimating fair values of financial instruments, including derivative instruments.

        Certain amounts in the prior year financial statements have been reclassified to conform to the 2008 financial statement presentation.

        For a more complete understanding of Forest's operations, financial position, and accounting policies, reference is made to the consolidated financial statements of Forest, and related notes thereto, filed with Forest's Annual Report on Form 10-K for the year ended December 31, 2007, previously filed with the Securities and Exchange Commission.

(2) ACQUISITIONS AND DIVESTITURES

Acquisitions

Ark-La-Tex Properties Acquisition

        On May 2, 2008, Forest acquired producing oil and natural gas properties located primarily in its core Ark-La-Tex region in East Texas and North Louisiana. Forest paid approximately $281 million, subject to customary adjustments, for the assets using funds advanced from its credit facilities.

Acquisition of Houston Exploration

        On June 6, 2007, Forest completed the acquisition of The Houston Exploration Company ("Houston Exploration") in a cash and stock transaction totaling approximately $1.5 billion and the assumption of Houston Exploration's debt. Houston Exploration was an independent natural gas and oil producer engaged in the exploration, development, exploitation, and acquisition of natural gas and oil reserves in North America. Houston Exploration had operations in four producing regions within the United States: South Texas, East Texas, the Arkoma Basin of Arkansas, and the Uinta and DJ

5

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(2) ACQUISITIONS AND DIVESTITURES (Continued)

Basins in the Rocky Mountains. Pursuant to the terms and conditions of the agreement and plan of merger ("Merger Agreement"), Forest paid total merger consideration of $750 million in cash and issued approximately 24 million common shares, valued at $30.28 per share. The cash component of the merger consideration was financed from a private placement of $750 million of 7¹/4% senior notes due 2019 and borrowings under the Company's credit facilities. Immediately following the completion of the merger, Forest repaid all of Houston Exploration's outstanding bank debt totaling $177 million.

        The acquisition, which was accounted for using the purchase method of accounting, has been included in Forest's Condensed Consolidated Financial Statements since June 6, 2007, the date the acquisition closed. The following table represents the allocation of the total purchase price of Houston Exploration to the acquired assets and liabilities of Houston Exploration as of June 30, 2008. The allocation represents the estimated fair values assigned to each of the assets acquired and liabilities assumed.

			(In Thousands)
Fair value of Houston Exploration's net assets:
	Net working capital, including cash of $3.5 million		$	(3,739	)
	Proved oil and gas properties			1,741,823
	Unproved oil and gas properties			448,100
	Goodwill			177,428
	Other assets			14,537
	Derivative instruments			(45,170	)
	Long-term debt			(182,532	)
	Asset retirement obligations			(36,424	)
	Deferred income taxes			(590,504	)
	Other liabilities			(18,210	)
	Total fair value of net assets		$	1,505,309
Consideration paid for Houston Exploration's net assets:
	Forest common stock issued		$	726,412
	Cash consideration paid			749,694
	Aggregate purchase consideration paid to Houston Exploration stockholders			1,476,106
	Plus:
		Cash settlement for Houston Exploration stock options		20,075
		Direct merger costs incurred		9,128
	Total consideration paid		$	1,505,309

        Goodwill of $177.4 million has been recognized to the extent that the consideration paid exceeded the fair value of the net assets acquired and has been assigned to the U.S. geographical business segment. Goodwill is not expected to be deductible for tax purposes. The principal factors that contributed to the recognition of goodwill include the mix of complementary high-quality assets in certain of our existing core areas, lower-risk exploitation opportunities, expected increased cash flow

6

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(2) ACQUISITIONS AND DIVESTITURES (Continued)

from operations available for investing activities, and opportunities for cost savings through administrative and operational synergies.

        Included in the working capital assumed at the acquisition date was a severance accrual of $28.9 million for costs to involuntarily terminate employees of Houston Exploration. Management determined it would be necessary to eliminate certain overlapping positions to achieve cost savings through administrative and operational synergies. As of June 30, 2008, management has finalized its termination plan as a result of the acquisition and all severance payments have been made. The following table summarizes the activity in the severance accrual through June 30, 2008 since the acquisition date.

	(In Thousands)
Severance accrual at June 6, 2007	$	28,850
Cash payments(1)		(26,805	)
Net adjustment(2)		(2,045	)
Severance accrual at June 30, 2008	$	—

⁽¹⁾

Represents cash severance and excise tax payments to involuntarily terminated employees of Houston Exploration as well as the related employer tax payments paid by the Company.



⁽²⁾

Represents the net adjustment made to the accrual as the Company continued to finalize the termination plan. This net adjustment was made to the cost of the acquired company.

        The following summary pro forma combined statements of operations data of Forest for the three and six months ended June 30, 2007 has been prepared to give effect to the merger as if the merger had occurred on January 1, 2007. The pro forma financial information is not necessarily indicative of the results that might have occurred had the transaction taken place on January 1, 2007, and is not intended to be a projection of future results. Future results may vary significantly from the results reflected in the following pro forma financial information because of normal production declines, changes in commodity prices, future acquisitions and divestitures, future development and exploration activities, and other factors.

		Three Months Ended June 30, 2007		Six Months Ended June 30, 2007
		(In Thousands, Except Per Share Amounts)
Revenues		$	354,429		658,235
Earnings from continuing operations			87,908		95,975
Net earnings			87,908		95,975
Basic earnings per common share:
	From continuing operations	$	1.01		1.11
	Basic earnings per common share		1.01		1.11
Diluted earnings per common share:
	From continuing operations	$	1.00		1.09
	Diluted earnings per common share		1.00		1.09

7

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(2) ACQUISITIONS AND DIVESTITURES (Continued)

Divestitures

Sale of Alaska Assets

        On August 27, 2007, Forest sold all of its assets located in Alaska (the "Alaska Assets") to Pacific Energy Resources Ltd. ("PERL"). The total consideration received for the Alaska Assets included $400 million in cash, 10 million shares of PERL common stock (subject to certain restrictions) (the "PERL Shares"), and a zero coupon senior subordinated note from PERL due 2014 in the principal amount at stated maturity of $60.8 million (the "PERL Note"). A portion of the cash consideration, $269 million, was applied to prepay all amounts due under the Alaska term loan agreements, including accrued interest and prepayment premiums. Consideration received by Forest in the form of the PERL common stock and the zero coupon senior subordinated note are being held in other investments within the Condensed Consolidated Balance Sheets. Forest accounts for these investments as trading securities in accordance with Statement of Financial Accounting Standards ("SFAS") No. 115, Accounting for Certain Investments in Debt and Equity Securities. Investments in debt and equity securities classified as trading securities are recorded at fair value with unrealized gains and losses recognized in "Other income and expense" in the Condensed Consolidated Statements of Operations.

(3) EARNINGS (LOSS) PER SHARE AND COMPREHENSIVE EARNINGS (LOSS)

Earnings (Loss) per Share

        Basic earnings (loss) per share is computed by dividing net earnings (loss) attributable to common stock by the weighted average number of common shares outstanding during each period, excluding treasury shares. Diluted earnings per share is computed by adjusting the average number of common shares outstanding for the dilutive effect, if any, of stock options, unvested restricted stock grants, and unvested phantom stock units. Stock options, unvested restricted stock grants, and unvested phantom stock units were not included in the calculation of diluted loss per share for the three and six months ended June 30, 2008 as their inclusion would have an antidilutive effect. The following sets forth the calculation of basic and diluted earnings (loss) per share.

	Three Months Ended June 30,					Six Months Ended June 30,
	2008			2007		2008			2007
	(In Thousands, Except Per Share Amounts)
Net earnings (loss)	$	(68,018	)		76,799		(72,750	)		83,690
Weighted average common shares outstanding during the period		87,717			69,247		87,506			65,839
Add dilutive effects of stock options, unvested restricted stock grants, and unvested phantom stock units		—			1,580		—			1,444
Weighted average common shares outstanding, including the effects of dilutive securities		87,717			70,827		87,506			67,283
Basic earnings (loss) per share	$	(.78	)		1.11		(.83	)		1.27
Diluted earnings (loss) per share	$	(.78	)		1.08		(.83	)		1.24

8

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(3) EARNINGS (LOSS) PER SHARE AND COMPREHENSIVE EARNINGS (LOSS) (Continued)

Comprehensive Earnings (Loss)

        Comprehensive earnings (loss) is a term used to refer to net earnings (loss) plus other comprehensive income (loss). Other comprehensive income (loss) is comprised of revenues, expenses, gains, and losses that under generally accepted accounting principles are reported as separate components of shareholders' equity instead of net earnings (loss). Items included in Forest's other comprehensive income (loss) for the three and six months ended June 30, 2008 and 2007 are foreign currency gains (losses) related to the translation of the assets and liabilities of Forest's Canadian operations and changes in unfunded postretirement benefits.

        The components of comprehensive earnings (loss) are as follows:

		Three Months Ended June 30,						Six Months Ended June 30,
		2008			2007			2008			2007
		(In Thousands)
Net earnings (loss)		$	(68,018	)		76,799			(72,750	)		83,690
Other comprehensive income (loss):
	Foreign currency translation gains (losses)		2,308			25,921			(11,982	)		28,747
	Unfunded postretirement benefits, net of tax		—			(105	)		—			(209	)
Total comprehensive earnings (loss)		$	(65,710	)		102,615			(84,732	)		112,228

9

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(4) STOCK-BASED COMPENSATION

        The table below sets forth total stock-based compensation recorded during the three and six months ended June 30, 2008 and 2007 under the provisions of SFAS No. 123 (Revised), Share-Based Payment ("SFAS 123(R)") and the remaining unamortized amounts and the weighted average amortization period remaining as of June 30, 2008.

		Stock Options			Restricted Stock			Phantom Stock Units			Total(1)
		(In Thousands)
Three Months Ended June 30, 2008:
	Total stock-based compensation costs	$	694			5,756			3,165			9,615
	Less: stock-based compensation costs capitalized		(301	)		(2,083	)		(1,948	)		(4,332	)
	Stock-based compensation costs expensed	$	393			3,673			1,217			5,283
Six Months Ended June 30, 2008:
	Total stock-based compensation costs	$	1,529			10,192			3,818			15,539
	Less: stock-based compensation costs capitalized		(648	)		(3,536	)		(2,341	)		(6,525	)
	Stock-based compensation costs expensed	$	881			6,656			1,477			9,014
Unamortized stock-based compensation costs as of June 30, 2008		$	3,858			59,369			10,528	(2)		73,755
Weighted average amortization period remaining			1.7 years			2.4 years			2.2 years			2.4 years
Three Months Ended June 30, 2007:
	Total stock-based compensation costs	$	1,749			1,831			568			4,148
	Less: stock-based compensation costs capitalized		(329	)		(600	)		(366	)		(1,295	)
	Stock-based compensation costs expensed	$	1,420			1,231			202			2,853
Six Months Ended June 30, 2007:
	Total stock-based compensation costs	$	2,682			3,264			792			6,738
	Less: stock-based compensation costs capitalized		(638	)		(1,020	)		(504	)		(2,162	)
	Stock-based compensation costs expensed	$	2,044			2,244			288			4,576

⁽¹⁾

The Company also maintains an employee stock purchase plan (which is not included in the table) under which $.1 million and $.3 million of compensation cost was recognized for the three and six months ended June 30, 2008, respectively, under the provisions of SFAS 123(R). Compensation costs for the employee stock purchase plan during the three and six months ended June 30, 2007 were each $.1 million.

⁽²⁾

Based on the closing price of the Company's common stock on June 30, 2008.

10

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(4) STOCK-BASED COMPENSATION (Continued)

Stock Options

        The following table summarizes stock option activity in the Company's stock-based compensation plans for the six months ended June 30, 2008.

	Number of Shares			Weighted Average Exercise Price		Aggregate Intrinsic Value (In Thousands)(1)		Number of Shares Exercisable
Outstanding at January 1, 2008		2,941,506		$	21.35	$	87,816		2,275,314
Granted		—			—		—		—
Exercised		(732,041	)		19.96		29,315		—
Cancelled		(28,223	)		25.99		—		—
Outstanding at June 30, 2008		2,181,242			21.76		115,318		1,779,738

⁽¹⁾

The intrinsic value of a stock option is the amount by which the current market value of the underlying stock exceeds the exercise price of the option.

Restricted Stock and Phantom Stock Units

        The following table summarizes the restricted stock and phantom stock unit activity in the Company's stock-based compensation plans for the six months ended June 30, 2008.

	Restricted Stock					Phantom Stock Units
	Number of Shares			Weighted Average Grant Date Fair Value		Number of Shares			Weighted Average Grant Date Fair Value
Unvested at January 1, 2008		1,281,000		$	43.41		164,500		$	42.50
Awarded		702,845			64.46		69,854			64.66
Vested		(51,100	)		41.83		—			—
Forfeited		(43,550	)		44.13		(1,400	)		40.91
Unvested at June 30, 2008		1,889,195			51.27		232,954			49.15

        The phantom stock units can be settled in cash, shares of common stock, or a combination of both. The phantom stock units have been accounted for as a liability within the Condensed Consolidated Financial Statements.

11

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(5) DEBT

        Components of debt are as follows:

	June 30, 2008									December 31, 2007
	Principal		Unamortized Premium (Discount)			Other(3)		Total		Principal			Unamortized Premium (Discount)			Other(3)			Total
	(In Thousands)
U.S. Credit Facility	$	430,000		—			—		430,000		165,000			—			—			165,000
Canadian Credit Facility		112,781		—			—		112,781		129,126			—			—			129,126
8% Senior Notes due 2008(1)		—		—			—		—		265,000			(48	)		1,050			266,002
8% Senior Notes due 2011		285,000		4,521			2,897		292,418		285,000			5,167			3,315			293,482
7% Senior Subordinated Notes due 2013(2)		2,862		(71	)		—		2,791		5,822			(158	)		—			5,664
73/4% Senior Notes due 2014		150,000		(1,393	)		10,390		158,997		150,000			(1,512	)		11,275			159,763
71/4% Senior Notes due 2019(1)		1,000,000		618			—		1,000,618		750,000			—			—			750,000
Total debt		1,980,643		3,675			13,287		1,997,605		1,749,948			3,449			15,640			1,769,037
Less: current portion of long-term debt		—		—			—		—		(265,000	)		48			(1,050	)		(266,002	)
Long-term debt	$	1,980,643		3,675			13,287		1,997,605		1,484,948			3,497			14,590			1,503,035

⁽¹⁾

The 8% senior notes due 2008 became due and payable on June 15, 2008. In May 2008, the Company issued an additional $250 million in principal amount of 7¹/4% senior notes due 2019 at 100.25% of par for proceeds of $247.2 million (net of related offering costs) and used the net proceeds and borrowings under its credit facilities to redeem the $265 million in principal amount outstanding of 8% senior notes that matured on June 15, 2008. The Company had previously issued $750 million in principal amount of 7¹/4% senior notes due 2019 at par in connection with the Houston Exploration acquisition in June 2007.

⁽²⁾

In May 2008, the Company repurchased $3.0 million in principal amount of 7% senior subordinated notes due 2013 at 99.9375% of par value.

⁽³⁾

Represents the unamortized portion of gains realized upon termination of interest rate swaps that were accounted for as fair value hedges. The gains are being amortized as a reduction of interest expense over the terms of the notes.

Bank Credit Facilities

        On May 9, 2008, Forest entered into a first amendment (the "First Amendment") to its second amended and restated combined credit agreements, which increased lender commitments to $1.8 billion and established the global borrowing base at $1.8 billion. The amended credit agreements consist of a $1.65 billion U.S. credit facility through a syndicate of banks led by JPMorgan Chase Bank, N.A. (the "U.S. Credit Facility") and a $150 million Canadian credit facility through a syndicate of banks led by JPMorgan Chase Bank, N.A., Toronto Branch (the "Canadian Credit Facility," and together with the U.S. Credit Facility, the "Credit Facilities"). The Credit Facilities will mature in June 2012.

        Forest's availability under the Credit Facilities is governed by a borrowing base (the "Global Borrowing Base"), which currently is set at $1.8 billion, with $1.65 billion allocated to the U.S. Credit Facility and $150 million allocated to the Canadian Credit Facility. The determination of the Global Borrowing Base is made by the lenders in their sole discretion taking into consideration the estimated value of Forest's oil and gas properties in accordance with the lenders' customary practices for oil and gas loans. The Global Borrowing Base is redetermined semi-annually, and the available borrowing

12

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(5) DEBT (Continued)

amount could be increased or decreased as a result of such redeterminations. In addition, Forest and the lenders each have discretion at any time, but not more often than once during any calendar year, to have the Global Borrowing Base redetermined. In the event Forest issues senior notes after May 9, 2008, the Global Borrowing Base will immediately be reduced by an amount equal to $0.30 of every $1.00 principal amount of newly issued senior notes (excluding any senior notes that Forest may issue to refinance senior notes outstanding on May 9, 2008).

        The Credit Facilities include terms and covenants that place limitations on certain types of activities, including restrictions or requirements with respect to additional debt, liens, asset sales, hedging activities, investments, dividends, mergers, and acquisitions, and include financial covenants.

        Under certain conditions, amounts outstanding under the Credit Facilities may be accelerated. Bankruptcy and insolvency events with respect to Forest or certain of its subsidiaries will result in an automatic acceleration of the indebtedness under the Credit Facilities. Subject to notice and cure periods in certain cases, other events of default under either of the Credit Facilities will result in acceleration of the indebtedness under the facilities at the option of the lenders. Such other events of default include non-payment, breach of warranty, non-performance of obligations under the Credit Facilities (including financial covenants), default on other indebtedness, certain pension plan events, certain adverse judgments, change of control, a failure of the liens securing the Credit Facilities, and an event of default under the Canadian Credit Facility.

        The Credit Facilities include provisions and conditions linked to Forest's credit ratings. For example, the Company's collateral requirements will vary based on the Company's credit ratings. In general, Forest's ability to raise funds and the cost of any financing activities may be affected by the Company's credit ratings at the time any such activities are conducted.

        The Credit Facilities are collateralized by a portion of Forest's assets. The Company is also required to mortgage and grant a security interest in the greater of 75% of the present value of its consolidated proved oil and gas properties, or 1.875 multiplied by the allocated U.S. borrowing base. The Company also has pledged the stock of several subsidiaries to the lenders to secure the Credit Facilities. Under certain circumstances, the Company could be obligated to pledge additional assets as collateral. If Forest's corporate credit ratings by Moody's and S&P improve and meet pre-established levels, the collateral requirements would not apply and, at the Company's request, the banks would release their liens and security interests on its properties.

        From time to time, Forest and the syndication agents, documentation agents, global administrative agent, and the other lenders party to the Credit Facilities engage in other transactions, including securities offerings where such parties or their affiliates may serve as an underwriter or initial purchaser of Forest's securities and, or serve as counterparties to Forest's derivative agreements.

7¹/4% Senior Notes Due 2019

        On May 22, 2008, Forest issued an additional $250 million in principal amount of 7¹/4% senior notes due in 2019 (the "7¹/4% Notes") at 100.25% of par for net proceeds of $247.2 million, after deducting initial purchaser discounts. The additional 7¹/4% Notes were used to redeem a portion of the Company's 8% senior notes due 2008 that matured on June 15, 2008. The additional 7¹/4% Notes were issued under an existing indenture (the "Indenture") dated as of June 6, 2007 among Forest, Forest Oil

13

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(5) DEBT (Continued)

Permian Corporation, a wholly-owned subsidiary of Forest ("Forest Permian"), as subsidiary guarantor, and U.S. Bank National Association, as trustee. Forest previously issued an aggregate principal amount of $750 million in 7¹/4% Notes under the Indenture, and there is now a total of $1 billion in 7¹/4% Notes outstanding. The 7¹/4% Notes are jointly and severally guaranteed by Forest Permian on an unsecured basis. Interest is payable on June 15 and December 15 of each year, beginning June 15, 2008. The 7¹/4% Notes will mature on June 15, 2019.

        Forest may redeem up to 35% of the 7¹/4% Notes at any time prior to June 15, 2010, on one or more occasions, with the proceeds from certain equity offerings at a redemption price equal to 107.25% of the principal amount, plus accrued but unpaid interest. Forest may redeem the 7¹/4% Notes at any time beginning on or after June 15, 2012 at the prices set forth below, expressed as percentages of the principal amount redeemed, plus accrued but unpaid interest:

2012	103.6	%
2013	102.4	%
2014	101.2	%
2015 and thereafter	100.0	%

        Forest may also redeem the 7¹/4% Notes, in whole or in part, at a price equal to the principal amount plus a "make whole" premium, at any time prior to June 15, 2012, using a discount rate of the Treasury rate plus 0.50%, plus accrued but unpaid interest.

        Forest and its restricted subsidiaries are subject to certain negative covenants under the Indenture governing the 7¹/4% Notes. The Indenture limits the ability of Forest and each of its restricted subsidiaries to, among other things: incur additional indebtedness, create certain liens, make certain types of "restricted payments," make investments, sell assets, enter into agreements that restrict dividends or other payments from its subsidiaries to itself, consolidate, merge or transfer all or substantially all of its assets, engage in transactions with affiliates, and pay dividends or make other distributions on capital stock or subordinated indebtedness.

7% Senior Subordinated Notes Due 2013

        On May 22, 2008, Forest repurchased $3.0 million in principal amount of 7% senior subordinated notes due in 2013 (the "7% Notes") at 99.9375% of par value. As a result of the repurchase, Forest recorded a loss of $.1 million during the three and six months ended June 30, 2008.

8% Senior Notes Due 2008

        On June 15, 2008, Forest redeemed $265 million in principal amount of 8% senior notes due in 2008 (the "8% Notes due 2008") that matured as of that date. The Company used net proceeds received from the issuance of additional 7¹/4% Notes and borrowings under its credit facilities to fund the redemption of the 8% Notes due 2008.

14

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(6) PROPERTY AND EQUIPMENT

        The Company uses the full cost method of accounting for oil and gas properties. Separate cost centers are maintained for each country in which the Company has operations. During the periods presented, the Company's primary oil and gas operations were conducted in the United States and Canada. All costs incurred in the acquisition, exploration, and development of properties (including costs of surrendered and abandoned leaseholds, delay lease rentals, dry holes, and overhead related to exploration and development activities) and the fair value of estimated future costs of site restoration, dismantlement, and abandonment activities are capitalized. During the three months ended June 30, 2008 and 2007, Forest capitalized $14.8 million and $8.9 million of general and administrative costs (including stock-based compensation), respectively. For the six months ended June 30, 2008 and 2007, Forest capitalized $26.9 million and $17.1 million of general and administrative costs (including stock-based compensation), respectively. Interest costs related to significant unproved properties that are under development are also capitalized to oil and gas properties. During the three months ended June 30, 2008 and 2007, the Company capitalized $5.5 million and $1.4 million, respectively, of interest expense attributed to unproved properties. For the six months ended June 30, 2008 and 2007, the Company capitalized $10.7 million and $2.2 million, respectively, of interest expense attributed to unproved properties.

        Investments in unproved properties, including capitalized interest costs, are not depleted pending determination of the existence of proved reserves. Unproved properties are assessed periodically to ascertain whether impairment has occurred. Unproved properties whose costs are individually significant are assessed individually by considering the primary lease terms of the properties, the holding period of the properties, and geographic and geologic data obtained relating to the properties. Where it is not practicable to assess individually the amount of impairment of properties for which costs are not individually significant, such properties are grouped for purposes of assessing impairment. The amount of impairment assessed is added to the costs to be amortized, or is reported as a period expense, as appropriate.

        Pursuant to full cost accounting rules, the Company must perform a ceiling test each quarter on its proved oil and gas assets within each separate cost center. The ceiling test provides that capitalized costs less related accumulated depletion and deferred income taxes for each cost center may not exceed the sum of (1) the present value of future net revenue from estimated production of proved oil and gas reserves using current prices, excluding the future cash outflows associated with settling asset retirement obligations that have been accrued on the balance sheet, at a discount factor of 10%; plus (2) the cost of properties not being amortized, if any; plus (3) the lower of cost or estimated fair value of unproved properties included in the costs being amortized, if any; less (4) income tax effects related to differences in the book and tax basis of oil and gas properties. Should the net capitalized costs for a cost center exceed the sum of the components noted above, an impairment charge would be recognized to the extent of the excess capitalized costs. There were no provisions for impairment of proved oil and gas properties in 2008 or 2007, although the Company's ceiling test in each of its cost centers could be adversely impacted by declines in commodity prices.

        Gain or loss is not recognized on the sale of oil and gas properties unless the sale significantly alters the relationship between capitalized costs and estimated proved oil and gas reserves attributable to a cost center.

15

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(6) PROPERTY AND EQUIPMENT (Continued)

        Depletion of proved oil and gas properties is computed on the units-of-production method, whereby capitalized costs, as adjusted for future development costs and asset retirement obligations, are amortized over the total estimated proved reserves. Furniture and fixtures, leasehold improvements, computer hardware and software, and other equipment are depreciated on the straight-line or declining balance method, based upon estimated useful lives of the assets ranging from three to 15 years.

(7) ASSET RETIREMENT OBLIGATIONS

        Forest records estimated future asset retirement obligations pursuant to the provisions of SFAS No. 143, Accounting for Asset Retirement Obligations ("SFAS 143"). SFAS 143 requires entities to record the fair value of a liability for an asset retirement obligation in the period in which it is incurred with a corresponding increase in the carrying amount of the related long-lived asset. Subsequent to initial measurement, the asset retirement liability is required to be accreted each period to its present value. Capitalized costs are depleted as a component of the full cost pool using the units-of-production method. Forest's asset retirement obligations consist of costs related to the plugging of wells, the removal of facilities and equipment, and site restoration on oil and gas properties.

        The following table summarizes the activity for Forest's asset retirement obligations for the six months ended June 30, 2008 and 2007. The decrease in total asset retirement obligations at June 30, 2008 compared to June 30, 2007 is primarily due to the sale of the Alaska Assets in August 2007.

	Six Months Ended June 30,
	2008			2007
	(In Thousands)
Asset retirement obligations at beginning of period	$	90,505			64,102
Accretion expense		3,751			2,567
Liabilities incurred		6,353			1,256
Liabilities settled		(1,292	)		(818	)
Disposition of properties		(3,692	)		—
Liabilities assumed		1,096			40,073
Revisions of estimated liabilities		(1,945	)		(28	)
Impact of foreign currency exchange rate		(483	)		1,345
Asset retirement obligations at end of period		94,293			108,497
Less: current asset retirement obligations		(2,555	)		(6,232	)
Long-term asset retirement obligations	$	91,738			102,265

16

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(8) EMPLOYEE BENEFITS

Pension Plans and Postretirement Benefits

        The following table sets forth the components of the net periodic cost of Forest's defined benefit pension plans and postretirement benefits in the United States for the three and six months ended June 30, 2008 and 2007.

	Three Months Ended June 30,												Six Months Ended June 30,
	Pension Benefits						Postretirement Benefits						Pension Benefits						Postretirement Benefits
	2008			2007			2008			2007			2008			2007			2008			2007
	(In Thousands)
Service cost	$	—			57			127			102			—			57			254			205
Interest cost		569			581			110			94			1,138			1,134			220			188
Expected return on plan assets		(633	)		(640	)		—			—			(1,266	)		(1,281	)		—			—
Amortization of prior service cost		—			26			—			—			—			26			—			—
Recognized actuarial loss (gain)		181			195			(30	)		(21	)		363			390			(60	)		(43	)
Total net periodic expense	$	117			219			207			175			235			326			414			350

Split Dollar Life Insurance

        The Company provides life insurance benefits for certain retirees and former executives under split dollar life insurance plans. Under the life insurance plans, the Company is assigned a portion of the benefits. No current employees are covered by these plans. On January 1, 2008, the Company adopted Emerging Issues Task Force ("EITF") Issue No. 06-4, Accounting for Deferred Compensation and Postretirement Benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements ("EITF 06-4"), and EITF Issue No. 06-10, Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements ("EITF 06-10"). Pursuant to these pronouncements, the Company recognized a liability for the estimated cost of maintaining the insurance policies during the postretirement periods of the retirees and former executives in accordance with SFAS No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions ("SFAS 106"). Upon adoption, Forest recorded a $9.0 million liability as a change in accounting principle through a cumulative effect adjustment to retained earnings. The weighted average discount rate used to determine the postretirement benefit obligation and accretion expense was 5.55%. The Company's estimate of costs expected to be paid in 2008 to maintain these life insurance policies is $1.1 million. Accretion of the discounted life insurance obligations totaled $.1 million and $.3 million during the three and six months ended June 30, 2008, respectively. As of June 30, 2008, the Company's liability associated with the life insurance policies was $8.2 million. In addition, as of June 30, 2008, the Company had recorded a $2.9 million asset representing the estimated cash surrender value of the life insurance policies.

(9) FAIR VALUE MEASUREMENTS

        In September 2006, the Financial Accounting Standards Board ("FASB") issued SFAS No. 157, Fair Value Measurements ("SFAS 157"). This statement clarifies the definition of fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The

17

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(9) FAIR VALUE MEASUREMENTS (Continued)

Company adopted the provisions of SFAS 157 as of January 1, 2008 for all financial and nonfinancial assets and liabilities recognized or disclosed at fair value on a recurring basis. We will adopt SFAS 157 as it relates to all nonfinancial assets and liabilities that are not recognized or disclosed on a recurring basis as of January 1, 2009 pursuant to the provisions of FASB Staff Position No. FAS 157-2, Effective Date of FASB Statement No. 157. The adoption of SFAS 157 did not materially impact the Company's financial position, results of operations, or cash flow.

        SFAS 157 establishes a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value. These tiers include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions.

        As of June 30, 2008, the Company held certain financial assets and liabilities that are required to be measured at fair value on a recurring basis, including: (i) the Company's commodity derivative instruments and (ii) other investments, which are comprised of the PERL Note and the PERL Shares.

        The Company used the income approach in determining the fair value of its derivative instruments, utilizing present value techniques for valuing its swaps and basis swaps and option-pricing models for valuing its collars and three-way collars. The Company's derivative instruments are included within the Level 2 fair value hierarchy. The Company also used the income approach in determining the fair value of its PERL Note and PERL Shares, utilizing present value techniques for valuing its PERL Note and an option-pricing model for valuing its PERL Shares. Because the PERL Shares are restricted and not registered for public sale, they could not be valued within the Level 1 fair value hierarchy and are instead included within the Level 2 fair value hierarchy. The PERL Note is included within the Level 3 fair value hierarchy.

        The Company's assets and liabilities measured at fair value on a recurring basis at June 30, 2008, were as follows:

Description		Using Significant Other Observable Inputs (Level 2)			Using Significant Unobservable Inputs (Level 3)		Total
		(In Thousands)
Assets:
	Derivative instruments	$	2,391			—		2,391
	Other investments		12,259			16,742		29,001
Liabilities:
	Derivative instruments		(527,196	)		—		(527,196	)

18

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(9) FAIR VALUE MEASUREMENTS (Continued)

        The following table presents a reconciliation of the beginning and ending balances of the Company's assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2008.

			Three Months Ended June 30, 2008			Six Months Ended June 30, 2008
			(In Thousands)
Balance at beginning of period			$	16,069			15,023
	Total gains or (losses) (realized/unrealized):
		Included in earnings		673			1,719
		Included in other comprehensive income		—			—
		Purchases, sales, issuances, and settlements (net)		—			—
		Transfers in and/or out of Level 3		—			—
Balance at end of period			$	16,742			16,742
The amount of total gains or (losses) for the period included in earnings attributable to the change in unrealized gains or losses relating to assets still held at end of period			$	(193	)		45

        Gains and losses (realized and unrealized) included in earnings related to the Company's assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three and six months ended June 30, 2008 are reported in the Condensed Consolidated Statements of Operations as follows:

	Three Months Ended June 30, 2008					Six Months Ended June 30, 2008
	Unrealized Losses on Other Investments, Net		Other (Income) Expense, Net(1)			Unrealized Losses on Other Investments, Net			Other (Income) Expense, Net(1)
	(In Thousands)
Total losses or (gains) included in earnings for the period	$	193		(866	)		(45	)		(1,674	)
Change in unrealized losses or (gains) relating to assets still held at end of period	$	193		—			(45	)		—

⁽¹⁾

Represents imputed interest income on the PERL Note.

(10) DERIVATIVE INSTRUMENTS

Commodity Derivatives

        Forest periodically enters into derivative instruments such as swap, basis swap, and collar agreements in order to provide a measure of stability to Forest's cash flows in an environment of volatile oil and gas prices and to manage the exposure to commodity price risk. Forest's commodity

19

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(10) DERIVATIVE INSTRUMENTS (Continued)

derivative instruments generally serve as effective economic hedges of commodity price exposure; however, the Company has elected not to account for the derivatives as cash flow hedges. As such, the Company recognizes all changes in fair value of its derivative instruments in earnings rather than deferring such amounts in accumulated other comprehensive income included in shareholders' equity as would be done if cash flow hedge accounting was utilized. Forest is exposed to risks associated with swap and collar agreements arising from movements in the prices of oil and natural gas and from non-performance by the counterparties to the swap and collar agreements.

        The tables below set forth Forest's outstanding commodity swaps and collars as of June 30, 2008.

	Swaps
	Natural Gas (NYMEX HH)				Oil (NYMEX WTI)
	Bbtu per Day(1)		Weighted Average Hedged Price per MMBtu		Barrels per Day		Weighted Average Hedged Price per Bbl
Third Quarter 2008		70	$	9.02		6,500	$	69.72
Fourth Quarter 2008		70		9.02		6,500		69.72
Calendar 2009		110		9.33		4,500		69.01
Calendar 2010		—		—		1,500		72.95

⁽¹⁾

10 Bbtu per day is subject to a $6.00 written put for Calendar 2008.

	Costless Collars
	Natural Gas (NYMEX HH)
	Bbtu per Day		Weighted Average Hedged Floor and Ceiling Price per MMBtu
Third Quarter 2008		80	$	7.33/8.87
Fourth Quarter 2008		80		7.33/8.87
Calendar 2009		40		8.25/10.92
	Three-Way Costless Collars
	Natural Gas (NYMEX HH)
	Bbtu per Day		Weighted Average Hedged Lower Floor, Upper Floor, and Ceiling Price per MMBtu
Third Quarter 2008		30	$	6.00/8.00/10.00
Fourth Quarter 2008		30		6.00/8.00/10.00

        Forest also uses basis swaps in connection with natural gas swaps in order to fix the price differential between the NYMEX price and the index price at which the natural gas production is sold. As of June 30, 2008, Forest had basis swaps outstanding covering 80 Bbtu per day for the remainder of 2008.

        At June 30, 2008, the fair values of Forest's commodity derivative instruments are presented within the Condensed Consolidated Balance Sheet as liabilities of $527.2 million, of which $375.1 million is classified as current, and assets of $2.4 million, all of which is classified as current. Due to the volatility

20

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(10) DERIVATIVE INSTRUMENTS (Continued)

of oil and natural gas prices, the estimated fair values of Forest's commodity derivative instruments are subject to large fluctuations from period to period. Forest has experienced the effects of these commodity price fluctuations in prior periods and expects that this commodity price volatility will continue.

        The table below summarizes the realized and unrealized gains and losses Forest incurred related to its commodity derivatives for the periods indicated.

	Three Months Ended June 30,					Six Months Ended June 30,
	2008		2007			2008		2007
	(In Thousands)
Realized losses (gains) on derivatives(1)	$	57,577		(9,140	)		60,956		(34,273	)
Unrealized losses (gains) on derivatives(1)		329,144		(33,074	)		466,574		24,814
Net realized and unrealized losses (gains) recorded	$	386,721		(42,214	)		527,530		(9,459	)

⁽¹⁾

Included in "Other income and expense" in the Condensed Consolidated Statements of Operations.

Interest Rate Swaps

        The Company may enter into interest rate swap agreements in an attempt to normalize the mix of fixed and floating interest rates within its debt portfolio. During the three months ended June 30, 2008, the Company terminated all of its outstanding interest rate swaps for a net gain of $.4 million.

        The table below summarizes the realized and unrealized gains and losses Forest incurred related to its interest rate swaps for the periods indicated.

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
	(In Thousands)
Realized losses (gains) on derivatives(1)(2)	$	605			(130	)		889			(131	)
Unrealized gains on derivatives(1)		(9,504	)		(1,739	)		(4,721	)		(1,789	)
Net realized and unrealized gains recorded	$	(8,899	)		(1,869	)		(3,832	)		(1,920	)

⁽¹⁾

Included in "Other income and expense" in the Condensed Consolidated Statements of Operations.

⁽²⁾

The three and six months ended June 30, 2008 include $.4 million of net proceeds received upon termination of the interest rate swaps.

21

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(11) GEOGRAPHICAL SEGMENTS

        Segment information has been prepared in accordance with SFAS No. 131, Disclosures About Segments of an Enterprise and Related Information. At June 30, 2008, Forest conducted operations in one industry segment, that being the oil and gas exploration and production industry, and had three reportable geographical business segments: United States, Canada, and International. Forest's remaining activities were not significant and therefore were not reported as a separate segment, but have been included as a reconciling item in the information below. The segments were determined based upon the geographical location of operations in each business segment. The segment data presented below was prepared on the same basis as the Condensed Consolidated Financial Statements.

		Oil and Gas Operations
		Three Months Ended June 30, 2008									Six Months Ended June 30, 2008
		United States		Canada		International			Total Company		United States		Canada		International			Total Company
		(In Thousands)
Revenue		$	433,838		81,240		—			515,078		749,334		142,331		—			891,665
Expenses:
	Lease operating expenses		29,112		9,301		—			38,413		58,046		17,932		—			75,978
	Production and property taxes		23,297		851		—			24,148		42,471		1,728		—			44,199
	Transportation and processing costs		2,263		2,378		—			4,641		4,695		4,871		—			9,566
	Depletion		101,566		23,107		—			124,673		193,425		45,196		—			238,621
	Accretion of asset retirement obligations		1,624		323		20			1,967		3,099		611		41			3,751
Earnings (loss) from operations		$	275,976		45,280		(20	)		321,236		447,598		71,993		(41	)		519,550
Capital expenditures(1)		$	567,595		31,540		1,669			600,804		763,334		102,715		2,574			868,623
Goodwill		$	248,804		16,994		—			265,798		248,804		16,994		—			265,798

⁽¹⁾

Includes estimated discounted asset retirement obligations of $4.7 million and $5.5 million related to assets placed in service during the three and six months ended June 30, 2008, respectively.

22

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(11) GEOGRAPHICAL SEGMENTS (Continued)

        A reconciliation of segment earnings from operations to consolidated earnings (loss) before income taxes is as follows:

	Three Months Ended June 30, 2008			Six Months Ended June 30, 2008
	(In Thousands)
Earnings from operations for reportable segments	$	321,236			519,550
Marketing and other		104			47
General and administrative expense (including stock-based compensation)		(19,832	)		(39,120	)
Administrative asset depreciation		(1,911	)		(3,530	)
Interest expense		(27,979	)		(55,836	)
Unrealized losses on derivative instruments, net		(319,640	)		(461,853	)
Realized losses on derivative instruments, net		(58,182	)		(61,845	)
Unrealized foreign currency exchange gains (losses)		460			(2,315	)
Unrealized losses on other investments, net		(276	)		(7,367	)
Other income, net		1,862			1,025
Earnings (loss) before income taxes	$	(104,158	)		(111,244	)

23

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(11) GEOGRAPHICAL SEGMENTS (Continued)

		Oil and Gas Operations
		Three Months Ended June 30, 2007									Six Months Ended June 30, 2007
		United States		Canada		International			Total Company		United States		Canada		International			Total Company
		(In Thousands)
Revenue		$	201,953		51,986		—			253,939		339,377		97,118		—			436,495
Expenses:
	Lease operating expenses		36,811		8,216		—			45,027		65,446		15,621		—			81,067
	Production and property taxes		12,063		745		—			12,808		19,283		1,435		—			20,718
	Transportation and processing costs		2,398		2,860		—			5,258		4,111		5,341		—			9,452
	Depletion		63,008		22,056		—			85,064		104,240		40,487		—			144,727
	Accretion of asset retirement obligations		1,026		254		12			1,292		2,028		515		24			2,567
Earnings (loss) from operations		$	86,647		17,855		(12	)		104,490		144,269		33,719		(24	)		177,964
Capital expenditures(1)		$	2,222,477		24,570		2,201			2,249,248		2,321,420		81,295		2,830			2,405,545
Goodwill		$	322,119		16,264		—			338,383		322,119		16,264		—			338,383

⁽¹⁾

Includes estimated discounted asset retirement obligations of $40.4 million and $41.3 million related to assets placed in service during the three and six months ended June 30, 2007, respectively.

24

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(11) GEOGRAPHICAL SEGMENTS (Continued)

        A reconciliation of segment earnings from operations to consolidated earnings before income taxes is as follows:

	Three Months Ended June 30, 2007			Six Months Ended June 30, 2007
	(In Thousands)
Earnings from operations for reportable segments	$	104,490			177,964
Marketing, processing, and other		730			783
General and administrative expense (including stock-based compensation)		(13,407	)		(26,378	)
Administrative asset depreciation		(1,062	)		(1,858	)
Interest expense		(29,103	)		(53,456	)
Unrealized gains (losses) on derivative instruments, net		34,813			(23,025	)
Realized gains on derivative instruments, net		9,270			34,404
Unrealized foreign currency exchange gains		6,271			6,320
Gain on sale of assets		—			7,176
Other expense, net		(1,122	)		(234	)
Earnings before income taxes	$	110,880			121,696

        The following tables set forth information regarding the Company's total assets by segment and long-lived assets by geographic area.

	Total Assets
	June 30, 2008		December 31, 2007
	(In Thousands)
United States	$	5,516,319		4,828,582
Canada		835,841		791,714
International		77,329		75,252
Total assets	$	6,429,489		5,695,548

	Long-Lived Assets(1)
	June 30, 2008		December 31, 2007
	(In Thousands)
United States	$	5,009,472		4,487,257
Canada		767,256		730,418
International		76,311		73,758
Total long-lived assets	$	5,853,039		5,291,433

⁽¹⁾

Includes net property and equipment and goodwill.

25

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(12) CONDENSED CONSOLIDATING FINANCIAL INFORMATION

        The Company's 8% senior notes due 2011, 7³/4% senior notes due 2014, and 7¹/4%senior notes due 2019 have been fully and unconditionally guaranteed by a wholly-owned subsidiary of the Company (the "Subsidiary Guarantor"). The Company's remaining subsidiaries (the "Non-Guarantor Subsidiaries") have not provided guarantees. Based on this distinction, the following presents condensed consolidating financial information as of June 30, 2008 and December 31, 2007 and for the three and six months ended June 30, 2008 and 2007 on an issuer (parent company), guarantor subsidiary, non-guarantor subsidiaries, eliminating entries, and consolidated basis. Elimination entries presented are necessary to combine the entities.

26

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(12) CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATING BALANCE SHEETS

(Unaudited)

(In Thousands)

				June 30, 2008													December 31, 2007
				Parent Company		Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated		Parent Company		Guarantor Subsidiary		Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
ASSETS
Current assets:
	Cash and cash equivalents			$	1,446		174			9,191			—			10,811		1,189		386		8,110			—			9,685
	Accounts receivable				175,707		14,507			101,961			(18,905	)		273,270		121,698		8,979		80,890			(9,950	)		201,617
	Deferred income taxes				135,399		—			—			—			135,399		23,854		—		—			—			23,854
	Other current assets				101,249		146			10,744			—			112,139		116,898		273		9,047			—			126,218
			Total current assets		413,801		14,827			121,896			(18,905	)		531,619		263,639		9,638		98,047			(9,950	)		361,374
Property and equipment, at cost					5,973,780		253,291			2,355,875			—			8,582,946		5,363,127		240,748		2,194,490			—			7,798,365
	Less accumulated depreciation, depletion and amortization				2,011,911		94,214			889,580			—			2,995,705		1,852,033		82,743		837,774			—			2,772,550
			Net property and equipment		3,961,869		159,077			1,466,295			—			5,587,241		3,511,094		158,005		1,356,716			—			5,025,815
Investment in subsidiaries					757,936		—			—			(757,936	)		—		740,964		—		—			(740,964	)		—
Note receivable from subsidiary					93,053		—			—			(93,053	)		—		73,307		—		—			(73,307	)		—
Goodwill					225,844		—			39,954			—			265,798		225,178		—		40,440			—			265,618
Due from (to) parent and subsidiaries					432,216		(16,624	)		(415,592	)		—			—		308,381		28,409		(336,790	)		—			—
Other assets					42,334		(1	)		2,498			—			44,831		39,424		1		3,316			—			42,741
				$	5,927,053		157,279			1,215,051			(869,894	)		6,429,489		5,161,987		196,053		1,161,729			(824,221	)		5,695,548
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable			$	353,929		11,900			62,756			(18,905	)		409,680		293,523		9,810		67,706			(9,950	)		361,089
	Current portion of long-term debt				—		—			—			—			—		266,002		—		—			—			266,002
	Other current liabilities				408,326		1,078			9,988			—			419,392		103,288		1,012		6,991			—			111,291
			Total current liabilities		762,255		12,978			72,744			(18,905	)		829,072		662,813		10,822		74,697			(9,950	)		738,382
Long-term debt					1,884,824		—			112,781			—			1,997,605		1,373,909		—		129,126			—			1,503,035
Notes payable to parent					—		—			93,053			(93,053	)		—		—		—		73,307			(73,307	)		—
Other liabilities					260,824		1,766			45,533			—			308,123		136,362		1,690		50,841			—			188,893
Deferred income taxes					674,893		47,733			227,806			—			950,432		577,092		62,509		213,826			—			853,427
		Total liabilities			3,582,796		62,477			551,917			(111,958	)		4,085,232		2,750,176		75,021		541,797			(83,257	)		3,283,737
Shareholders' equity					2,344,257		94,802			663,134			(757,936	)		2,344,257		2,411,811		121,032		619,932			(740,964	)		2,411,811
				$	5,927,053		157,279			1,215,051			(869,894	)		6,429,489		5,161,987		196,053		1,161,729			(824,221	)		5,695,548

27

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(12) CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Unaudited)

(In Thousands)

				Three Months Ended June 30,
				2008															2007
				Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues				$	350,896			33,664			133,169			(2,547	)		515,182			131,163			16,857			107,024			(375	)		254,669
Operating expenses:
	Lease operating expenses				24,667			2,906			10,805			35			38,413			16,661			3,585			24,754			27			45,027
	Other direct operating costs				20,845			2,313			5,631			—			28,789			11,511			1,400			5,155			—			18,066
	General and administrative (including stock-based compensation)				16,048			21			3,763			—			19,832			10,337			37			3,033			—			13,407
	Depreciation and depletion				83,548			6,037			37,001			(2	)		126,584			41,973			4,777			39,378			(2	)		86,126
	Accretion of asset retirement obligations				1,555			41			371			—			1,967			568			70			654			—			1,292
			Total operating expenses		146,663			11,318			57,571			33			215,585			81,050			9,869			72,974			25			163,918
Earnings from operations					204,233			22,346			75,598			(2,580	)		299,597			50,113			6,988			34,050			(400	)		90,751
Equity earnings in subsidiaries					(4,361	)		—			—			4,361			—			22,968			—			—			(22,968	)		—
Other income and expense:
	Interest expense				24,177			—			7,797			(3,995	)		27,979			16,711			2			16,133			(3,743	)		29,103
	Unrealized losses (gains) on derivative instruments, net				232,905			46,192			40,543			—			319,640			(38,631	)		(1,114	)		4,932			—			(34,813	)
	Realized losses (gains) on derivative instruments, net				43,663			8,108			6,411			—			58,182			(5,193	)		(1,820	)		(2,257	)		—			(9,270	)
	Other (income) expense, net				(4,304	)		7			(366	)		2,617			(2,046	)		(4,095	)		90			(4,910	)		3,766			(5,149	)
		Total other income and expense			296,441			54,307			54,385			(1,378	)		403,755			(31,208	)		(2,842	)		13,898			23			(20,129	)
Earnings (loss) before income taxes					(96,569	)		(31,961	)		21,213			3,159			(104,158	)		104,289			9,830			20,152			(23,391	)		110,880
		Income tax			(28,551	)		(11,599	)		4,010			—			(36,140	)		27,490			3,651			2,940			—			34,081
Net earnings (loss)				$	(68,018	)		(20,362	)		17,203			3,159			(68,018	)		76,799			6,179			17,212			(23,391	)		76,799

28

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(12) CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Unaudited)

(In Thousands)

				Six Months Ended June 30,
				2008														2007
				Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries		Eliminations			Consolidated			Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues				$	604,947			59,544			227,221		—			891,712			212,914			31,850			194,704			(2,190	)		437,278
Operating expenses:
	Lease operating expenses				48,810			6,053			21,071		44			75,978			29,479			8,100			43,530			(42	)		81,067
	Other direct operating costs				38,886			4,169			10,710		—			53,765			18,475			2,707			8,988			—			30,170
	General and administrative (including stock-based compensation)				32,924			27			6,169		—			39,120			20,240			68			6,070			—			26,378
	Depreciation and depletion				159,901			11,472			70,783		(5	)		242,151			66,118			8,894			71,578			(5	)		146,585
	Gain on sale of assets				—			—			—		—			—			—			—			(7,176	)		—			(7,176	)
	Accretion of asset retirement obligations				2,964			82			705		—			3,751			1,141			110			1,316			—			2,567
			Total operating expenses		283,485			21,803			109,438		39			414,765			135,453			19,879			124,306			(47	)		279,591
Earnings from operations					321,462			37,741			117,783		(39	)		476,947			77,461			11,971			70,398			(2,143	)		157,687
Equity earnings in subsidiaries					24,518			—			—		(24,518	)		—			31,906			—			—			(31,906	)		—
Other income and expense:
	Interest expense				48,369			—			15,782		(8,315	)		55,836			28,723			9			31,898			(7,174	)		53,456
	Unrealized losses (gains) on derivative instruments, net				372,879			66,355			22,619		—			461,853			(1,901	)		5,869			19,057			—			23,025
	Realized losses (gains) on derivative instruments, net				42,842			11,996			7,007		—			61,845			(21,952	)		(5,005	)		(7,447	)		—			(34,404	)
	Other (income) expense, net				(855	)		(27	)		1,409		8,130			8,657			(7,284	)		244			(6,243	)		7,197			(6,086	)
		Total other income and expense			463,235			78,324			46,817		(185	)		588,191			(2,414	)		1,117			37,265			23			35,991
Earnings (loss) before income taxes					(117,255	)		(40,583	)		70,966		(24,372	)		(111,244	)		111,781			10,854			33,133			(34,072	)		121,696
		Income tax			(44,505	)		(14,776	)		20,787		—			(38,494	)		28,091			3,924			5,991			—			38,006
Net earnings (loss)				$	(72,750	)		(25,807	)		50,179		(24,372	)		(72,750	)		83,690			6,930			27,142			(34,072	)		83,690

29

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(12) CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

			Six Months Ended June 30,
			2008												2007
			Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Consolidated			Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Consolidated
Operating activities:
	Net earnings (loss)		$	(97,122	)		(25,807	)		50,179			(72,750	)		49,618			6,930			27,142			83,690
	Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
		Depreciation and depletion		159,901			11,472			70,778			242,151			66,118			8,894			71,573			146,585
		Unrealized losses (gains) on derivative instruments, net		372,879			66,355			22,619			461,853			(1,901	)		5,869			19,057			23,025
		Deferred income tax		(44,350	)		(14,776	)		16,654			(42,472	)		27,489			3,924			3,498			34,911
		Other, net		15,886			82			4,586			20,554			2,371			110			(9,823	)		(7,342	)
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
	Accounts receivable			(47,894	)		(5,528	)		(13,270	)		(66,692	)		29,009			959			2,789			32,757
	Other current assets			(19,544	)		127			(2,171	)		(21,588	)		8,020			(529	)		(6,765	)		726
	Accounts payable			(8,238	)		(633	)		(3,910	)		(12,781	)		(7,195	)		137			(13,445	)		(20,503	)
	Accrued interest and other current liabilities			(16,185	)		22			(1,844	)		(18,007	)		1,621			(136	)		(1,663	)		(178	)
Net cash provided by operating activities				315,333			31,314			143,621			490,268			175,150			26,158			92,363			293,671
Investing activities:
	Acquisitions, net of cash acquired			—			—			—			—			(775,960	)		—			—			(775,960	)
	Capital expenditures for property and equipment			(580,537	)		(8,904	)		(211,931	)		(801,372	)		(160,207	)		(11,378	)		(175,937	)		(347,522	)
	Other, net			53,379			—			24			53,403			4,144			25,751			8,718			38,613
Net cash (used) provided by investing activities				(527,158	)		(8,904	)		(211,907	)		(747,969	)		(932,023	)		14,373			(167,219	)		(1,084,869	)
Financing activities:
	Issuance of 71/4% senior notes, net of issuance costs			247,188			—			—			247,188			739,176			—			—			739,176
	Proceeds from bank borrowings			1,212,000			—			148,178			1,360,178			875,000			—			88,734			963,734
	Repayments of bank borrowings			(947,000	)		—			(160,917	)		(1,107,917	)		(548,000	)		—			(99,527	)		(647,527	)
	Redemption of 8% senior notes			(265,000	)		—			—			(265,000	)		—			—			—			—
	Repurchases of 7% senior subordinated notes			(2,960	)		—			—			(2,960	)		—			—			—			—
	Repayments of debt			—			—			—			—			(176,885	)		—			(111,250	)		(288,135	)
	Net activity in investments from subsidiaries			(59,051	)		(21,745	)		80,796			—			(143,442	)		(40,631	)		184,073			—
	Other, net			26,905			(877	)		1,338			27,366			11,494			—			(6,150	)		5,344
Net cash provided (used) by financing activities				212,082			(22,622	)		69,395			258,855			757,343			(40,631	)		55,880			772,592
Effect of exchange rate changes on cash				—			—			(28	)		(28	)		—			—			1,172			1,172
Net increase (decrease) in cash and cash equivalents				257			(212	)		1,081			1,126			470			(100	)		(17,804	)		(17,434	)
Cash and cash equivalents at beginning of period				1,189			386			8,110			9,685			771			126			32,267			33,164
Cash and cash equivalents at end of period			$	1,446			174			9,191			10,811			1,241			26			14,463			15,730

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FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(13) RECENT ACCOUNTING PRONOUNCEMENTS

        In December 2007, the FASB issued SFAS No. 141 (Revised), Business Combinations ("SFAS 141(R)"), which significantly changes the financial accounting and reporting of business combination transactions. SFAS 141(R) establishes principles and requirements for how an acquirer in a business combination: (i) recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree, (ii) recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase, and (iii) determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. SFAS 141(R) applies prospectively to business combinations that are completed or close on or after the beginning of the first annual reporting period that begins on or after December 15, 2008. The adoption of this pronouncement may have a material impact on the accounting for any acquisition the Company may make after January 1, 2009.

        In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements—an amendment of ARB No. 51 ("SFAS 160"). This statement amends ARB No. 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. SFAS 160 clarifies that a noncontrolling interest in a subsidiary, which is sometimes referred to as minority interest, is an ownership interest in the consolidated entity that should be reported as a component of equity in the consolidated financial statements. Among other requirements, SFAS 160 requires consolidated net income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling interest. It also requires disclosure, on the face of the consolidated income statement, of the amounts of consolidated net income attributable to the parent and to the noncontrolling interest. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. The Company does not expect the adoption of this pronouncement to have a material impact on the Company's financial position or results of operations.

        In February 2008, the FASB issued FASB Staff Position No. 157-2, Effective Date of FASB Statement No. 157 ("FSP 157-2"). FSP 157-2 delays the effective date of SFAS No. 157, Fair Value Measurements, for one year for nonfinancial assets and nonfinancial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually). The Company is currently evaluating the impact the adoption of this pronouncement will have on the Company's financial position and results of operations.

        In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133 ("SFAS 161"). SFAS 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of and gains and losses on derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. This statement is effective for fiscal years and interim periods beginning after November 15, 2008. The adoption of this pronouncement will have no impact on the Company's financial position or results of operations, but may require expanded disclosures about derivative instruments.

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Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

        Forest Oil Corporation ("Forest") is an independent oil and gas company engaged in the acquisition, exploration, development, and production of natural gas and liquids in North America and selected international locations. Forest was incorporated in New York in 1924, as the successor to a company formed in 1916, and has been a publicly held company since 1969. Unless the context otherwise indicates, references in this quarterly report on Form 10-Q to "Forest," "we," "ours," "us," or like terms refer to Forest Oil Corporation and its subsidiaries.

        We currently conduct our operations in three geographical segments and five business units. Geographical segments include: the United States, Canada, and International. Business units include: Western, Eastern, Southern, Canada, and International. We conduct exploration and development activities in each of our geographical segments; however, substantially all of our estimated proved reserves and all of our producing properties are located in onshore North America. At December 31, 2007, approximately 85% of our estimated proved oil and natural gas reserves were in the United States, approximately 12% were in Canada, and approximately 3% were in Italy. See Note 11 to the Condensed Consolidated Financial Statements for additional information about our geographical segments.

        The following discussion and analysis should be read in conjunction with Forest's Condensed Consolidated Financial Statements and Notes thereto, the information under the heading "Forward-Looking Statements" below, and the information included in Forest's 2007 Annual Report on Form 10-K under the heading "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies, Estimates, Judgments, and Assumptions."

Second Quarter 2008 Highlights

Revenue and Production Increase

        Revenues increased 102% in the second quarter of 2008 to $515.2 million from $254.7 million in the second quarter of 2007 due to a 31% increase in production volumes and a 55% increase in average realized prices. These increases are discussed further in Results of Operations, Oil and Gas Production and Revenues, below.

Ark-La-Tex Acquisition

        On May 2, 2008, Forest acquired producing oil and natural gas properties including approximately 69,000 gross acres (47,000 net acres) located primarily in its core Ark-La-Tex region in East Texas and North Louisiana. Forest estimated the proved oil and gas reserves associated with these assets, which produced an average of 13 MMcfe per day in 2007, to be approximately 110 Bcfe as of the closing date. Forest paid approximately $281 million, subject to customary adjustments, for the assets using funds advanced under its credit facilities.

Amended Credit Facilities

        On May 9, 2008, Forest entered into an amendment to its second amended and restated combined credit facilities with existing and new lenders which increased the combined commitment amount from $1 billion to $1.8 billion and increased the global borrowing base to $1.8 billion.

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Senior Notes Offering

        On May 22, 2008, Forest issued an additional $250 million in principal amount of 7¹/4% senior notes due in 2019 (the "7¹/4% Notes") at 100.25% of par for net proceeds of $247.2 million, after deducting initial purchaser discounts. The additional 7¹/4% Notes were used to redeem a portion of Forest's $265 million in principal amount of 8% senior notes that matured on June 15, 2008.

RESULTS OF OPERATIONS

        Forest reported a net loss of $68.0 million in the second quarter of 2008 compared to net earnings of $76.8 million in the second quarter of 2007. Earnings from operations were $299.6 million in the second quarter of 2008 compared to $90.8 million in the second quarter of 2007. The second quarter of 2008 was negatively impacted by fair value adjustments on our derivative instruments, which primarily consisted of oil and natural gas swaps and collars. In the second quarter of 2008, we recognized unrealized losses on derivative instruments of $319.6 million compared to gains of $34.8 million in the second quarter of 2007.

        During the first six months of 2008, Forest reported a net loss of $72.8 million compared to net earnings of $83.7 million during the same period of 2007. Earnings from operations were $476.9 million during the first six months of 2008 compared to $157.7 million in the same period of 2007. Each period was negatively impacted by fair value adjustments on our derivative instruments, which primarily consisted of oil and natural gas swaps and collars. During the first six months of 2008, we recognized unrealized losses on derivative instruments of $461.9 million compared to $23.0 million in the same period of 2007.

        Discussion of the components of the changes in our quarterly and year to date results follows. Each period in 2008 as compared to the corresponding period in 2007 was significantly impacted by our acquisition of The Houston Exploration Company ("Houston Exploration") in June 2007, as well as the sale of our Alaska assets (the "Alaska Assets") in August 2007 to Pacific Energy Resources Ltd. ("PERL"). Details for each of these transactions are included in Note 2 to the Condensed Consolidated Financial Statements.

Oil and Gas Production and Revenues

        Production volumes, revenues, and weighted average sales prices by product and location for the three and six months ended June 30, 2008 and 2007 are set forth in the tables below. These tables do

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not include miscellaneous marketing revenues of $.1 million and $.7 million for the three months ended June 30, 2008 and 2007, respectively, and $.8 million for the six months ended June 30, 2007.

		Three Months Ended June 30,
		2008								2007
		Gas		Oil		NGLs		Total		Gas		Oil		NGLs		Total
		(MMcf)		(MBbls)		(MBbls)		(MMcfe)		(MMcf)		(MBbls)		(MBbls)		(MMcfe)
Production volumes:
	United States		28,261		944		748		38,413		15,714		1,334		516		26,814
	Canada		5,836		209		71		7,516		6,591		206		65		8,217
Totals			34,097		1,153		819		45,929		22,305		1,540		581		35,031
Revenues (in thousands):
	United States	$	276,064		115,750		42,024		433,838		102,367		81,350		18,236		201,953
	Canada		53,005		23,168		5,067		81,240		38,390		11,043		2,553		51,986
Totals		$	329,069		138,918		47,091		515,078		140,757		92,393		20,789		253,939
Average sales price:
	United States	$	9.77		122.62		56.18		11.29		6.51		60.98		35.34		7.53
	Canada		9.08		110.85		71.37		10.81		5.82		53.61		39.28		6.33
Totals		$	9.65		120.48		57.50		11.21		6.31		60.00		35.78		7.25

		Six Months Ended June 30,
		2008								2007
		Gas		Oil		NGLs		Total		Gas		Oil		NGLs		Total
		(MMcf)		(MBbls)		(MBbls)		(MMcfe)		(MMcf)		(MBbls)		(MBbls)		(MMcfe)
Production volumes:
	United States		54,619		1,883		1,424		74,461		26,061		2,444		957		46,467
	Canada		11,653		397		155		14,965		12,565		412		124		15,781
Totals			66,272		2,280		1,579		89,426		38,626		2,856		1,081		62,248
Revenues (in thousands):
	United States	$	469,364		205,360		74,610		749,334		166,441		141,956		30,980		339,377
	Canada		93,132		39,190		10,009		142,331		71,613		21,132		4,373		97,118
Totals		$	562,496		244,550		84,619		891,665		238,054		163,088		35,353		436,495
Average sales price:
	United States	$	8.59		109.06		52.39		10.06		6.39		58.08		32.37		7.30
	Canada		7.99		98.72		64.57		9.51		5.70		51.29		35.27		6.15
Totals		$	8.49		107.26		53.59		9.97		6.16		57.10		32.70		7.01

        Net oil and gas production in the second quarter of 2008 was 45.9 Bcfe or an average of 505 MMcfe per day, a 31% increase from 35.0 Bcfe or an average of 385 MMcfe per day in the second quarter of 2007. Net oil and gas production in the first six months of 2008 was 89.4 Bcfe or an average of 491 MMcfe per day, a 44% increase from 62.2 Bcfe or an average of 344 MMcfe per day in the same period in the prior year. The net increase in oil and gas production in both periods was primarily attributable to the Houston Exploration acquisition in June 2007 and the Ark-La-Tex acquisition in May 2008, which were partially offset by the sale of the Alaska Assets in August 2007.

        Oil and natural gas revenues were $515.1 million in the second quarter of 2008, reflecting a 103% increase as compared to $253.9 million in the second quarter of 2007. The increase in oil and natural gas revenues between the comparable three month periods was due to the 31% increase in daily

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production and a 55% increase in average realized sales prices. Oil and natural gas revenues were $891.7 million during the six months ended June 30, 2008, a 104% increase as compared to $436.5 million for the same period in the prior year. The increase in oil and natural gas revenues between the comparable six month periods was due to the 44% increase in daily production and a 42% increase in average realized sales prices. No hedging gains or losses were included in the average sales prices presented given our election not to utilize cash flow hedge accounting. See Realized and Unrealized Gains and Losses—Derivative Instruments below for information on gains and losses recognized on derivative instruments.

Oil and Gas Production Expense

        The table below sets forth the detail of oil and gas production expense for the three and six months ended June 30, 2008 and 2007.

		Three Months Ended June 30,				Six Months Ended June 30,
		2008		2007		2008		2007
		(In Thousands, Except Per Mcfe Data)
Production expense:
	Lease operating expenses	$	38,413		45,027		75,978		81,067
	Production and property taxes		24,148		12,808		44,199		20,718
	Transportation and processing costs		4,641		5,258		9,566		9,452
Production expense		$	67,202		63,093		129,743		111,237
Production expense per Mcfe:
	Lease operating expenses	$	.84		1.29		.85		1.30
	Production and property taxes		.53		.37		.49		.33
	Transportation and processing costs		.10		.15		.11		.15
Production expense per Mcfe		$	1.46		1.80		1.45		1.79

        Lease operating expenses in the second quarter of 2008 were $38.4 million, or $.84 per Mcfe, compared to $45.0 million, or $1.29 per Mcfe, in the second quarter of 2007. During the six month period ended June 30, 2008, lease operating expenses were $76.0 million, or $.85 per Mcfe, compared to $81.1 million, or $1.30 per Mcfe, in the same period in the prior year. The decrease in lease operating expense in both periods was primarily attributable to the sale of the Alaska Assets in August 2007 offset by the Houston Exploration acquisition in June 2007. On a per-Mcfe basis, the 35% decrease in both periods was primarily due to lower average per-unit lease operating expenses from the assets associated with the Houston Exploration acquisition and the divestiture of the Alaska Assets, which had higher average per-unit lease operating expenses.

        Production and property taxes, which primarily consist of severance taxes paid on the value of the oil and gas produced, generally fluctuate proportionately with our oil and gas revenues. As a percentage of oil and natural gas revenue, production and property taxes were 4.7% and 5.0% for the three months ended June 30, 2008 and 2007, respectively. For the six months ended June 30, 2008 and 2007, production and property taxes were 5.0% and 4.7%, respectively, of oil and natural gas revenue. Normal fluctuations will occur between periods based on the approval of incentive tax credits in Texas, changes in tax rates, and changes in the assessed values of oil and gas reserves and other property and equipment for purposes of ad valorem taxes.

        Transportation and processing costs decreased to $4.6 million, or $.10 per Mcfe, in the second quarter of 2008, from $5.3 million, or $.15 per Mcfe, in the second quarter of 2007. Transportation and processing costs were $9.6 million, or $.11 per Mcfe, in the six months ended June 30, 2008, compared

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to $9.5 million, or $.15 per Mcfe, for the corresponding 2007 period. The per-unit decrease in each period was primarily due to lower per-unit transportation costs recognized in 2008 as a result of the sale of the Alaska Assets in August 2007.

General and Administrative Expense

        The following table summarizes the components of general and administrative expense incurred during the periods indicated.

	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007
	(In Thousands, Except Per Mcfe Data)
Stock-based compensation costs	$	9,748			4,220			15,798			6,883
Other general and administrative costs		24,880			18,085			50,229			36,600
General and administrative costs capitalized		(14,796	)		(8,898	)		(26,907	)		(17,105	)
General and administrative expense	$	19,832			13,407			39,120			26,378
General and administrative expense per Mcfe	$	.43			.38			.44			.42

        General and administrative expense in the second quarter of 2008 was $19.8 million compared to $13.4 million in the second quarter of 2007. During the six month period ended June 30, 2008, general and administrative expense was $39.1 million compared to $26.4 million in the same period of 2007. The 48% increase in general and administrative expense in each period was primarily related to increased employee salary and benefit costs resulting from the acquisition of Houston Exploration in June 2007 and increased stock-based compensation. The percentage of general and administrative costs capitalized remained relatively constant between each of the periods presented, ranging from 39% to 43%.

Depreciation and Depletion

        Depreciation, depletion and amortization expense ("DD&A") in the second quarter of 2008 was $126.6 million, or $2.76 per Mcfe, compared to $86.1 million, or $2.46 per Mcfe, in the second quarter of 2007. During the six months ended June 30, 2008, DD&A was $242.2 million, or $2.71 per Mcfe, compared to $146.6 million, or $2.35 per Mcfe, for the same period in 2007. The per-unit increase in both periods was primarily due to the acquisition of the Houston Exploration properties in June 2007.

Gain on Sale of Assets

        In February 2007, Forest sold its overriding royalty interests in Australia for net proceeds of $7.2 million, which resulted in a gain on the sale of $7.2 million.

Interest Expense

        Interest expense in the second quarter of 2008 totaled $28.0 million compared to $29.1 million in the second quarter of 2007. During the six months ended June 30, 2008, interest expense totaled $55.8 million compared to $53.5 million for the same period in 2007. Interest costs related to significant unproved properties that are under development are capitalized to oil and gas properties under the full cost method of accounting. Forest capitalized interest of $5.5 million and $1.4 million during the three months ended June 30, 2008 and 2007, respectively. During the six months ended June 30, 2008, Forest capitalized interest of $10.7 million compared to $2.2 million for the same period in 2007. The increase in interest capitalized was primarily due to the acquisition of Houston Exploration in June 2007, which included a large investment in unproved properties.

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Realized and Unrealized Gains and Losses

Derivative Instruments

        The table below sets forth realized and unrealized gains and losses on derivatives recognized under "Other income and expense" in our Condensed Consolidated Statements of Operations for the periods indicated. See Notes 9 and 10 to the Condensed Consolidated Financial Statements for more information on our derivative instruments.

		Three Months Ended June 30,						Six Months Ended June 30,
		2008			2007			2008			2007
		(In Thousands)
Realized losses (gains) on derivatives, net:
	Oil	$	32,104			(3,687	)		48,806			(20,764	)
	Gas		25,473			(5,453	)		12,150			(13,509	)
	Interest		605			(130	)		889			(131	)
Total		$	58,182			(9,270	)		61,845			(34,404	)
Unrealized losses (gains) on derivatives, net:
	Oil	$	123,602			18,182			138,361			44,043
	Gas		205,542			(51,256	)		328,213			(19,229	)
	Interest		(9,504	)		(1,739	)		(4,721	)		(1,789	)
Total		$	319,640			(34,813	)		461,853			23,025

Other Investments

        Unrealized losses on other investments totaled $.3 million and $7.4 million for the three and six months ended June 30, 2008, respectively. The unrealized losses on other investments relate to fair value adjustments to the shares of PERL common stock and zero coupon senior subordinated note from PERL due 2014, which were received as a portion of the total consideration for the Alaska Assets. See Note 2 and Note 9 to the Condensed Consolidated Financial Statements for more information on these investments.

Foreign Currency Exchange

        Unrealized foreign currency exchange gains were $.5 million in the second quarter of 2008 compared to $6.3 million in the second quarter of 2007. During the six months ended June 30, 2008, unrealized foreign currency exchange losses were $2.3 million compared to gains of $6.3 million in the same period of 2007. The unrealized foreign currency exchange gains and losses relate to the outstanding intercompany indebtedness between Forest Oil Corporation and our Canadian subsidiary. The intercompany debt is denominated in U.S. dollars and with the recent strength in the U.S. dollar, an unrealized foreign exchange loss was recognized in the first six months of 2008.

Current and Deferred Income Tax

        Our effective income tax rate was approximately 34.6% for the three and six months ended June 30, 2008. This effective rate is based primarily on the expected mix of total 2008 pre-tax earnings between the United States and Canada which have statutory rates of approximately 36% and 28%, respectively. Our effective income tax rate was 30.7% and 31.2% for the three and six months ended June 30, 2007, respectively. The increase in the effective income tax rates in each 2008 period compared to the corresponding periods in 2007 is primarily due to the effects of statutory income tax

37

rate reductions in Canada in 2007 on our deferred income tax liabilities and the weighting of projected Canadian to United States earnings.

LIQUIDITY AND CAPITAL RESOURCES

        In 2008, as in 2007, we expect our cash flow from operations to be our primary source of liquidity to meet operating expenses and fund capital expenditures other than large acquisitions.

        The prices we receive for our oil and natural gas production have a significant impact on operating cash flows. While significant price declines would adversely affect the amount of cash flow generated from operations, we utilize a hedging program to partially mitigate that risk. As of August 1, 2008, Forest has hedged approximately 34 Bcfe of its remaining 2008 production. This level of hedging provides a measure of certainty of the cash flow we will receive for a large portion of our remaining production in 2008. Depending on changes in oil and gas futures markets and management's view of underlying oil and natural gas supply and demand trends, we may increase or decrease our current hedging positions. For further information concerning our hedging contracts, see Item 3—"Quantitative and Qualitative Disclosures about Market Risk—Commodity Price Risk," below.

        Our revolving U.S. and Canadian bank credit facilities provide another source of liquidity. On May 9, 2008, we entered into an amendment to our second amended and restated combined credit facilities, which increased the commitments from $1 billion to $1.8 billion and established the global borrowing base at $1.8 billion. These credit facilities, which mature in June 2012, are used to fund daily operating activities and certain acquisitions and debt refinancings in the United States and Canada as needed. See "Bank Credit Facilities" below for details.

        The public capital markets have been our principal source of funds to finance large acquisitions and other types of large expenditures outside ordinary operating activities. We have issued debt and equity securities in both public and private offerings in the past, and we expect that these sources of capital will continue to be available to us in the future for acquisitions. For example, in May 2008 we issued an additional $250 million principal amount of 7¹/4% senior notes due 2019 in a private offering. Nevertheless, ready access to capital on reasonable terms can be impacted by our debt ratings assigned by independent rating agencies and are subject to many uncertainties, including restrictions contained in our bank credit facilities and indentures for our senior notes, macroeconomic factors outside of our control, the price for oil and natural gas, the value and performance of Forest's debt and equity securities, and other risks as explained in Part 1, Item 1A—"Risk Factors" of our 2007 Annual Report on Form 10-K and Part II, Item 1A of this report.

        In addition, during the third quarter 2008 we plan to divest additional non-core assets that are part of our Western business unit. Funds that we may receive from any divestitures, in addition to the approximate $50 million which we have received relating to sales during the first half of 2008, may provide another source of liquidity in 2008.

        We believe that our available cash, cash provided by operating activities, and funds available under our bank credit facilities will be sufficient to fund our daily operating activities, interest, and general and administrative expense, our 2008 capital expenditure budget, and our short-term contractual obligations at current levels for the foreseeable future.

Bank Credit Facilities

        On May 9, 2008, we entered into a first amendment (the "First Amendment") to our second amended and restated combined credit agreements, which increased lender commitments to $1.8 billion and established the global borrowing base at $1.8 billion. The amended credit agreements consist of a $1.65 billion U.S. credit facility through a syndicate of banks led by JPMorgan Chase Bank, N.A. (the "U.S. Credit Facility") and a $150 million Canadian credit facility through a syndicate of banks led by

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JPMorgan Chase Bank, N.A., Toronto Branch (the "Canadian Credit Facility," and together with the U.S. Credit Facility, the "Credit Facilities"). The Credit Facilities will mature in June 2012.

        Forest's availability under the Credit Facilities is governed by a borrowing base (the "Global Borrowing Base"), which currently is set at $1.8 billion, with $1.65 billion allocated to the U.S. Credit Facility and $150 million allocated to the Canadian Credit Facility. The determination of the Global Borrowing Base is made by the lenders in their sole discretion taking into consideration the estimated value of Forest's oil and gas properties in accordance with the lenders' customary practices for oil and gas loans. The Global Borrowing Base is redetermined semi-annually, and the available borrowing amount could be increased or decreased as a result of such redeterminations. In addition, Forest and the lenders each have discretion at any time, but not more often than once during any calendar year, to have the Global Borrowing Base redetermined. In the event Forest issues senior notes after May 9, 2008, the Global Borrowing Base will immediately be reduced by an amount equal to $0.30 of every $1.00 principal amount of newly issued senior notes (excluding any senior notes that Forest may issue to refinance senior notes outstanding on May 9, 2008).

        The Credit Facilities include terms and covenants that place limitations on certain types of activities, including restrictions or requirements with respect to additional debt, liens, asset sales, hedging activities, investments, dividends, mergers, and acquisitions, and include financial covenants.

        Under certain conditions, amounts outstanding under the Credit Facilities may be accelerated. Bankruptcy and insolvency events with respect to Forest or certain of its subsidiaries will result in an automatic acceleration of the indebtedness under the Credit Facilities. Subject to notice and cure periods in certain cases, other events of default under either of the Credit Facilities will result in acceleration of the indebtedness under the facilities at the option of the lenders. Such other events of default include non-payment, breach of warranty, non-performance of obligations under the Credit Facilities (including financial covenants), default on other indebtedness, certain pension plan events, certain adverse judgments, change of control, a failure of the liens securing the Credit Facilities, and an event of default under the Canadian Credit Facility.

        The Credit Facilities include provisions and conditions linked to Forest's credit ratings. For example, our collateral requirements will vary based on our credit ratings. In general, Forest's ability to raise funds and the cost of any financing activities may be affected by our credit ratings at the time any such activities are conducted.

        The Credit Facilities are collateralized by a portion of Forest's assets. We are required to mortgage and grant a security interest in the greater of 75% of the present value of our consolidated proved oil and gas properties, or 1.875 multiplied by the allocated U.S. borrowing base. We also have pledged the stock of several subsidiaries to the lenders to secure the Credit Facilities. Under certain circumstances, we could be obligated to pledge additional assets as collateral. If Forest's corporate credit ratings by Moody's and S&P improve and meet pre-established levels, the collateral requirements would not apply and, at our request, the banks would release their liens and security interests on our properties.

        From time to time, Forest and the syndication agents, documentation agents, global administrative agent, and the other lenders party to the Credit Facilities engage in other transactions, including securities offerings where such parties or their affiliates may serve as an underwriter or initial purchaser of Forest's securities and, or serve as counterparties to Forest's derivative agreements.

        At June 30, 2008, there were outstanding borrowings of $430.0 million under the U.S. Credit Facility at a weighted average interest rate of 3.5%, and there were outstanding borrowings of $112.8 million under the Canadian Credit Facility at a weighted average interest rate of 4.5%. We also had used the Credit Facilities for approximately $2.6 million in letters of credit, leaving an unused borrowing amount under the Credit Facilities of approximately $1.25 billion at June 30, 2008. At July 31, 2008, there were outstanding borrowings of $493.0 million under the U.S. Credit Facility at a

39

weighted average interest rate of 3.6%, and there were outstanding borrowings of $92.8 million under the Canadian Credit Facility at a weighted average interest rate of 4.5%. We also had used the Credit Facilities for approximately $2.6 million in letters of credit, leaving an unused borrowing amount under the Credit Facilities of approximately $1.21 billion at July 31, 2008.

Credit Ratings

        Our credit risk is evaluated by two independent rating agencies based on publicly available information and information obtained during our ongoing discussions with the rating agencies. Moody's Investor Services and Standard & Poor's Rating Services currently rate each series of our senior notes and, in addition, they have assigned Forest a general credit rating. We do not have any credit rating triggers that would accelerate the maturity of amounts due under credit facilities or the debt issued under the indentures for our senior notes. Also, the indentures for the senior notes include terms that will allow us greater flexibility if our credit ratings improve to investment grade and other tests have been satisfied, in which event we would not be obligated to comply with certain restrictive covenants included in the indentures. Our ability to raise funds and the costs of any financing activities will be affected by our credit rating at the time any such financing activities are conducted.

Cash Flow

        Net cash provided by operating activities, net cash used by investing activities, and net cash provided by financing activities for the six months ended June 30, 2008 and 2007 were as follows:

	Six Months Ended June 30,
	2008			2007
	(In Thousands)
Net cash provided by operating activities	$	490,268			293,671
Net cash used by investing activities		(747,969	)		(1,084,869	)
Net cash provided by financing activities		258,855			772,592

        The increase in net cash provided by operating activities in the six months ended June 30, 2008 compared to the same period of 2007 was primarily due to higher net earnings before non-cash charges partially offset by an increased investment in net operating assets in 2008 as compared to 2007. The decrease in net cash used by investing activities in the six months ended June 30, 2008 compared to the same period of 2007 was primarily due to the acquisition of Houston Exploration in the second quarter of 2007. Net cash provided by financing activities in the six months ended June 30, 2008 included net bank proceeds of $252.3 million; the issuance of additional 7¹/4% senior notes, for net proceeds of $247.2 million; proceeds from the exercise of stock options and from the employee stock purchase plan of $15.0 million; and the redemption of our 8% senior notes of $265.0 million. Net cash provided by financing activities in the six months ended June 30, 2007 included net bank proceeds of $316.2 million; the issuance of 7¹/4% senior notes, for net proceeds of $739.2 million; proceeds from the exercise of stock options and from the employee stock purchase plan of $7.1 million; the repayment of Houston Exploration's bank debt of $176.9 million; and the repayment of $111.3 million of term loans.

40

Capital Expenditures

        Expenditures for property acquisition and exploration and development were as follows:

		Six Months Ended June 30,
		2008		2007
		(In Thousands)
Property acquisition costs:
	Proved properties	$	216,271		1,840,187
	Unproved properties		93,715		251,000
			309,986		2,091,187
Exploration and development costs:
	Direct costs		521,043		295,051
	Overhead capitalized		26,907		17,105
	Interest capitalized		10,687		2,202
			558,637		314,358
Total capital expenditures for property acquisition and exploration and development(1)(2)		$	868,623		2,405,545

⁽¹⁾

Total capital expenditures include cash expenditures, accrued cash expenditures, and non-cash capital expenditures including stock-based compensation capitalized under the full cost method of accounting.

⁽²⁾

Includes estimated discounted asset retirement obligations of $5.5 million and $41.3 million for the six months ended June 30, 2008 and 2007, respectively.

        For the six months ended June 30, 2008, expenditures for exploration and development activities totaled $558.6 million. Forest's anticipated expenditures for exploration and development in 2008 are estimated to range from $1.15 billion to $1.25 billion. Some of the factors impacting the level of capital expenditures in 2008 include crude oil and natural gas prices, the volatility in these prices, the cost and availability of oil field services, and weather disruptions.

Forward-Looking Statements

        The information in this Quarterly Report on Form 10-Q including "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I of this report, contains "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 or present facts, that address activities, events, outcomes, and other matters that Forest plans, expects, intends, assumes, believes, budgets, predicts, forecasts, projects, estimates, or anticipates (and other similar expressions) will, should, or may occur in the future are forward-looking statements. Generally, the words "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words, and similar expressions identify forward-looking statements, and any statements regarding Forest's future financial condition, results of operations, and business are also forward-looking statements. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading "Risk Factors" included in Part I of our 2007 Annual Report on Form 10-K and the risks described in Item 1A of Part II in this report.

41

        These forward-looking statements appear in a number of places in this report and include statements with respect to, among other things:

•

estimates of our oil and gas reserves;



•

estimates of our future natural gas and liquids production, including estimates of any increases in oil and gas production;



•

the amount, nature, and timing of capital expenditures, including future development costs, and availability of capital resources to fund capital expenditures;



•

the amount, nature, and timing of any synergies or other benefits expected to result from acquisitions;



•

our outlook on oil and gas prices;



•

the impact of political and regulatory developments;



•

our future financial condition or results of operations and our future revenues and expenses; and



•

our business strategy and other plans and objectives for future operations.

        We caution you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production, and sale of oil and gas. These risks include, but are not limited to, commodity price volatility, inflation, lack of availability of drilling and production equipment and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating proved oil and natural gas reserves and in projecting future rates of production, cash flow and access to capital, the timing of development expenditures, and the other risks described in the Form 10-K under the caption "Risk Factors." The financial results of our foreign operations are also subject to currency exchange rate risks.

        Reserve engineering is a process of estimating underground accumulations of oil and natural gas that cannot be measured in an exact way. The accuracy of any reserve estimate depends on the quality of available data, the interpretation of such data, and price and cost assumptions made by reservoir engineers. In addition, the results of drilling, testing, and production activities may justify revisions of estimates that were made previously. If significant, such revisions would change the schedule of any further production and development drilling. Accordingly, reserve estimates may differ significantly from the quantities of oil and natural gas that are ultimately recovered.

        Should one or more of the risks or uncertainties described above or elsewhere in this Form 10-Q occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

        All forward-looking statements, expressed or implied, included in this Form 10-Q and attributable to Forest are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that Forest or persons acting on its behalf may issue. Forest does not undertake to update any forward-looking statements to reflect events or circumstances after the date of filing this Form 10-Q with the Securities and Exchange Commission, except as required by law.

Item 3.    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

        We are exposed to market risk, including the effects of adverse changes in commodity prices, foreign currency exchange rates, and interest rates as discussed below.

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Commodity Price Risk

        We produce and sell natural gas, crude oil, and natural gas liquids for our own account in the United States and Canada. As a result, our financial results are affected when prices for these commodities fluctuate. Such effects can be significant.

Hedging Program

        In order to reduce the impact of fluctuations in commodity prices, or to protect the economics of property acquisitions, we make use of an oil and gas hedging strategy. Under our hedging strategy, we enter into commodity swaps, collars, and other financial instruments with counterparties who, in general, are participants in our credit facilities. These arrangements, which are based on prices available in the financial markets at the time the contracts are entered into, are settled in cash and do not require physical deliveries of hydrocarbons.

Swaps

        In a typical commodity swap agreement, we receive the difference between a fixed price per unit of production and a price based on an agreed upon published, third-party index if the index price is lower than the fixed price. If the index price is higher, we pay the difference. By entering into swap agreements, we effectively fix the price that we will receive in the future for the hedged production. Our current swaps are settled in cash on a monthly basis. As of June 30, 2008, we had entered into the following swaps:

	Swaps
	Natural Gas (NYMEX HH)							Oil (NYMEX WTI)
	Bbtu per Day(1)		Weighted Average Hedged Price per MMBtu		Fair Value (In Thousands)			Barrels per Day		Weighted Average Hedged Price per Bbl		Fair Value (In Thousands)
Third Quarter 2008		70	$	9.02	$	(27,317	)		6,500	$	69.72	$	(42,129	)
Fourth Quarter 2008		70		9.02		(30,190	)		6,500		69.72		(42,141	)
Calendar 2009		110		9.33		(120,151	)		4,500		69.01		(112,081	)
Calendar 2010		—		—		—			1,500		72.95		(32,117	)

⁽¹⁾

10 Bbtu per day is subject to a $6.00 written put for Calendar 2008.

Costless Collars

        Forest also enters into costless collar agreements with third parties. A collar agreement is similar to a swap agreement, except that we receive the difference between the floor price and the index price only if the index price is below the floor price and we pay the difference between the ceiling price and the index price only if the index price is above the ceiling price. As of June 30, 2008, we had entered into the following collars:

	Costless Collars
	Natural Gas (NYMEX HH)
	Bbtu per Day		Weighted Average Hedged Floor and Ceiling Price per MMBtu		Fair Value (In Thousands)
Third Quarter 2008		80	$	7.33/8.87	$	(32,457	)
Fourth Quarter 2008		80		7.33/8.87		(36,341	)
Calendar 2009		40		8.25/10.92		(32,540	)

43

Three-Way Costless Collars

        Forest also enters into three-way costless collars with third parties. These instruments establish two floors and one ceiling. Upon settlement, if the index price is below the lowest floor, Forest receives the difference between the two floors. If the index price is between the two floors, Forest receives the difference between the higher of the two floors and the index price. If the index price is between the higher floor and the ceiling, Forest does not receive or pay any amounts. If the index price is above the ceiling, Forest pays the excess over the ceiling price. As of June 30, 2008, we had entered into the following three-way collars:

	Three-Way Costless Collars
	Natural Gas (NYMEX HH)
	Bbtu per Day		Weighted Average Hedged Lower Floor, Upper Floor, and Ceiling Price per MMBtu		Fair Value (In Thousands)
Third Quarter 2008		30	$	6.00/8.00/10.00	$	(9,069	)
Fourth Quarter 2008		30		6.00/8.00/10.00		(10,663	)

Basis Swaps

        Forest also uses basis swaps in connection with natural gas swaps in order to fix the price differential between the NYMEX price and the index price at which the natural gas production is sold. As of June 30, 2008, we had entered into the following basis swaps:

	Basis Swaps
	Bbtu per Day		Fair Value (In Thousands)
Third Quarter 2008		80	$	275
Fourth Quarter 2008		80		2,116

Interest Rate Swaps

        Forest may enter into interest rate swap agreements in an attempt to normalize the mix of fixed and floating interest rates within its debt portfolio. During the second quarter of 2008, Forest terminated all of its outstanding interest rate swaps for a net gain of $.4 million.

Fair Value Reconciliation

        The table below sets forth the changes that occurred in the fair values of our open derivative contracts during the six months ended June 30, 2008, beginning with the fair value of our derivative contracts on December 31, 2007. Due to the volatility of oil and natural gas prices, the estimated fair values of our commodity derivative instruments are subject to large fluctuations from period to period. It has been our experience that commodity prices are subject to large fluctuations and we expect this volatility to continue. Actual gains and losses recognized related to our commodity derivative

44

instruments will likely differ from those estimated at June 30, 2008 and will depend exclusively on the price of the commodities on the specified settlement dates provided by the derivative contracts.

	Fair Value of Derivative Contracts
	Commodity			Interest Rate			Total
	(In Thousands)
As of December 31, 2007	$	(76,119	)		(4,721	)		(80,840	)
Settlements of acquired derivatives		17,888			—			17,888
Net (decrease) increase in fair value		(527,530	)		3,832			(523,698	)
Net contract losses recognized		60,956			889			61,845
As of June 30, 2008	$	(524,805	)		—			(524,805	)

Foreign Currency Exchange Risk

        We conduct business in several foreign currencies and thus are subject to foreign currency exchange rate risk on cash flows related to sales, expenses, financing, and investing transactions. In the past, we have not entered into any foreign currency forward contracts or other similar financial instruments to manage this risk. Expenditures incurred relative to the foreign concessions held by Forest outside of North America have been primarily United States dollar-denominated, as have cash proceeds related to property sales and farmout arrangements. Substantially all of our Canadian revenues and costs are denominated in Canadian dollars. While the value of the Canadian dollar does fluctuate in relation to the U.S. dollar, we believe that any currency risk associated with our Canadian operations would not have a material impact on our results of operations.

Interest Rate Risk

        The following table presents principal amounts and related weighted average fixed interest rates by year of maturity for Forest's debt obligations and the fair value of our debt obligations at June 30, 2008.

		2011			2012			2013			2014			2019			Total			Fair Value
		(Dollar Amounts in Thousands)
Bank credit facilities:
	Variable rate	$	—			542,781			—			—			—			542,781			542,781
	Average interest rate(1)		—			3.70	%		—			—			—			3.70	%
Long-term debt:
	Fixed rate	$	285,000			—			2,862			150,000			1,000,000			1,437,862			1,407,133
	Coupon interest rate		8.00	%		—			7.00	%		7.75	%		7.25	%		7.45	%
	Effective interest rate(2)		7.71	%		—			7.00	%		6.56	%		7.25	%		7.27	%

⁽¹⁾

As of June 30, 2008.

⁽²⁾

The effective interest rate on the 8% senior notes due 2011 and the 7³/4% senior notes due 2014 is reduced from the coupon rate as a result of amortization of gains related to the termination of related interest rate swaps.

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Item 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

        We have established disclosure controls and procedures to ensure that material information relating to Forest and its consolidated subsidiaries is made known to the Officers who certify Forest's financial reports and the Board of Directors.

        Our Chief Executive Officer, H. Craig Clark, and our Chief Financial Officer, David H. Keyte, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a—15(e) and 15d—15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as of the end of the quarterly period ended June 30, 2008 (the "Evaluation Date"). Based on this evaluation, they believe that as of the Evaluation Date our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 (i) is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms; and (ii) is accumulated and communicated to Forest's management, including the Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Changes in Internal Control Over Financial Reporting

        There has not been any change in our internal control over financial reporting that occurred during our quarterly period ended June 30, 2008 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1A.    RISK FACTORS

        The following risk factors update the Risk Factors included in our Annual Report on Form 10-K for fiscal year ended December 31, 2007 ("Annual Report"). Except as set forth below and as disclosed in our Form 10-Q for the period ended March 31, 2008, there have been no material changes to the risks described in Part I, Item 1A, of our Annual Report.

We have substantial indebtedness and may incur more debt in the future, and our leverage may materially affect our operations and financial condition.

        We have incurred substantial debt. At June 30, 2008, the principal amount of our outstanding consolidated debt was approximately $2.0 billion, including $543 million outstanding under our combined U.S. and Canadian credit facilities. Our outstanding consolidated debt represented approximately 46% of our total capitalization at June 30, 2008. Further, we may incur more debt in the future. For example, on May 9, 2008 we entered into an amendment to our second amended and restated combined credit facilities with existing and new lenders, which increased the combined commitment amount from $1 billion to $1.8 billion and established the global borrowing base at $1.8 billion. We may elect to borrow additional amounts under the amended credit facilities including in connection with acquisitions and debt refinancings or we may elect to seek other sources of debt financing in the capital markets. Also, on May 22, 2008 we issued $250 million principal amount of additional 7¹/4% senior notes due 2019 and used a portion of the proceeds to repay $265 million in principal amount of 8% senior notes that came due on June 15, 2008. The level of our debt has several important effects on our business and operations; among other things, it may:

•

require us to use a significant portion of our cash flow to pay principal and interest on the debt, which will reduce the amount available to fund working capital, capital expenditures, and other general purposes;



•

increase our costs as our access to the capital markets and our cost of borrowing is predicated on the credit ratings assigned by third party rating agencies, which have in the past and may in the future downgrade their ratings of our debt and other obligations due to changes in market conditions, our debt level or our financial condition;



•

limit our access to the capital markets, increase our borrowing costs, and impact the terms, conditions, and restrictions contained in our debt agreements, including the addition of more restrictive covenants;



•

impact our flexibility in planning for and reacting to changes in our business as covenants and restrictions contained in our existing and possible future debt arrangements may require that we meet certain financial tests and place restrictions on the incurrence of additional indebtedness;



•

place us at a disadvantage compared to similar companies in our industry that have less debt; and



•

make us more vulnerable to economic downturns and adverse developments in our business.

        Our ability to meet our debt obligations and other expenses will depend on our future performance, which will be affected by financial, business, domestic and foreign economic conditions, the regulatory environment, and other factors, many of which we are unable to control. If our cash flow is not sufficient to service our debt, we may be required to refinance the debt, sell assets, or sell shares of our stock on terms that we do not find attractive, if it can be done at all. Further, our failure to comply with the financial and other restrictive covenants relating to our credit facilities and the indentures pertaining to our outstanding senior notes could result in a default under these agreements, which could adversely affect our business, financial condition, and results of operations.

47

        If we do not have sufficient funds available, we may need to access the capital markets. Over the recent months, the capital markets have limited the availability of funds due to distressed conditions in the credit markets and other factors. We cannot predict whether we will need to access the capital markets or whether the market conditions existing at such time will allow us to obtain the necessary funds.

         Our use of hedging transactions could result in financial losses or reduce our income.    To reduce our exposure to fluctuations in oil and natural gas prices, we have and expect in the future to enter into derivative instruments (or, hedging agreements) for a portion of our oil and natural gas production. Our commodity hedging agreements are limited in duration, usually for periods of one year or less; however, in conjunction with acquisitions, we sometimes enter into or acquire hedges for longer periods. As of August 1, 2008, we had hedged, via commodity swaps and collar instruments, approximately 34 Bcfe of our remaining 2008 production and 65 Bcfe of our 2009 production. Our hedging transactions expose us to certain risks and financial losses, including, among others:

•

we may be limited in receiving the full benefit of increases in oil and natural gas prices as a result of these transactions;



•

we may hedge too much or too little production depending on how oil and natural gas prices fluctuate in the future;



•

there is a change to the expected differential between the underlying price and the actual price received; and



•

a counterparty to a hedging arrangement may default on its obligations to Forest.

        Due to the volatility of oil and natural gas prices, the estimated fair value of our commodity derivative instruments are subject to significant fluctuations from period to period. The amount of any actual gains or losses recognized related to our commodity derivative instruments will likely differ from our period to period estimates and will be a function of the actual price of the commodities on the settlement date provided in the underlying derivative contracts. For example, during the first six months of 2008, we reported a net loss of $72.8 million. The net loss reported for the six months ended June 30, 2008 was affected by the non-cash effect of unrealized losses relating to recording our derivative instruments at fair value. We expect that commodity prices will continue to fluctuate in the future and, as a result, our periodic financial results will continue to be subject to fluctuations related to our derivative instruments. For further information concerning our commodity price hedging transactions and information concerning prices, market conditions, and our swap and collar hedging agreements, see Part I, Item 3—"Qualitative and Quantitative Disclosures about Market Risk," in this report.

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Item 2.    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Unregistered Sales of Securities

        There were no sales of unregistered equity securities during the period covered by this report.

Issuer Purchases of Equity Securities

        The table below sets forth information regarding repurchases of our common stock during the second quarter of 2008. The shares repurchased represent shares of our common stock that employees elected to surrender to Forest to satisfy their tax withholding obligations upon the vesting of shares of restricted stock. Forest does not consider this a share buyback program.

Period	Total # of Shares Purchased		Average Price Per Share		Total # of Shares (or units) Purchased as Part of Publicly Announced Plans or Programs		Maximum # (or Approximate Dollar Value) of Shares that May yet be Purchased Under the Plans or Programs
April 2008		1,804	$	56.81		—		—
May 2008		1,644		64.45		—		—
June 2008		932		71.27		—		—
Second Quarter Total		4,380	$	62.75		—		—

Item 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        On May 8, 2008, Forest held its Annual Meeting of Shareholders ("Annual Meeting") in Denver, Colorado. A total of 75,369,916 shares of common stock were present at the Annual Meeting, either in person or by proxy, constituting a quorum. The matters voted upon at the Annual Meeting consisted of two proposals set forth in Forest's Proxy Statement dated March 24, 2008. The two proposals submitted to a vote of shareholders are set forth below. The proposals were each adopted by the shareholders by the indicated margins.

         Proposal No. 1:    Election of two Class II directors.

	Shares Voted for		Shares Withheld
H. Craig Clark		63,866,887		11,503,029
James H. Lee		63,862,841		11,507,075

        In addition to the two Class II directors noted above, the other directors of Forest whose terms did not expire at the 2008 Annual Meeting include: William L. Britton, Loren K. Carroll, Dod A. Fraser, James D. Lightner, and Patrick R. McDonald.

         Proposal No. 2:    Ratification of the appointment of Ernst & Young LLP as independent registered public accountants.

Shares Voted for		Shares Against		Abstentions
	75,304,206		58,455		7,255

        There were no broker non-votes.

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Item 6.    EXHIBITS

(a)

Exhibits.

3.1*	Bylaws of Forest Oil Corporation Restated as of February 14, 2001 as amended by Amendments No. 1, No. 2, No. 3 and No. 4.
4.1*	Registration Rights Agreement by and among Forest Oil Corporation, Forest Oil Permian Corporation and Banc of America Securities LLC, for itself and on behalf of the several Initial Purchasers dated as of May 22, 2008.
4.2	First Amendment dated May 9, 2008 to Second Amended and Restated Combined Credit Agreements dated June 6, 2007 among Forest Oil Corporation, Canadian Forest Oil Ltd., each of the lenders that is a party thereto, JPMorgan Chase Bank, N.A., as Global Administrative Agent, and JPMorgan Chase Bank, N.A., Toronto Branch, as Canadian Administrative Agent, incorporated by reference to Exhibit 10.1 to Forest's Current Report on Form 8-K dated May 9, 2008 (File No. 001-13515).
10.1*/**	Amendment No. 1 to Forest Oil Corporation 2007 Stock Incentive Plan.
10.2*/**	Form of Restricted Stock Agreement pursuant to the Forest Oil Corporation 2001 and 2007 Stock Incentive Plans, as amended.
10.3*/**	Form of Phantom Stock Unit Stock Agreement pursuant to the Forest Oil Corporation 2001 and 2007 Stock Incentive Plans, as amended.
10.4*/**	Form of Non-Employee Director Phantom Stock Unit Agreement pursuant to the Forest Oil Corporation 2007 Stock Incentive Plan, as amended.
31.1*	Certification of Principal Executive Officer of Forest Oil Corporation as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of Principal Financial Officer of Forest Oil Corporation as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
32.1+	Certification of Chief Executive Officer of Forest Oil Corporation pursuant to 18 U.S.C. §1350.
32.2+	Certification of Chief Financial Officer of Forest Oil Corporation pursuant to 18 U.S.C. §1350.

*

Filed herewith.

**

Contract or compensatory plan or arrangement in which directors and/or officers participate.

+

Not considered to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.

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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 thereunto duly authorized.

	FOREST OIL CORPORATION (Registrant)
August 7, 2008
	By:	/s/ DAVID H. KEYTE David H. Keyte Executive Vice President and Chief Financial Officer (on behalf of the Registrant and as Principal Financial Officer)
	By:	/s/ VICTOR A. WIND Victor A. Wind Corporate Controller (Principal Accounting Officer)

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Exhibit Index

Exhibit Number		Description
	3.1*	Bylaws of Forest Oil Corporation Restated as of February 14, 2001 as amended by Amendments No. 1, No. 2, No. 3 and No. 4.
	4.1*	Registration Rights Agreement by and among Forest Oil Corporation, Forest Oil Permian Corporation and Banc of America Securities LLC, for itself and on behalf of the several Initial Purchasers dated as of May 22, 2008.
	10.1*	Amendment No. 1 to Forest Oil Corporation 2007 Stock Incentive Plan.
	10.2*	Form of Restricted Stock Agreement pursuant to the Forest Oil Corporation 2001 and 2007 Stock Incentive Plans, as amended.
	10.3*	Form of Phantom Stock Unit Stock Agreement pursuant to the Forest Oil Corporation 2001 and 2007 Stock Incentive Plans, as amended.
	10.4*	Form of Non-Employee Director Phantom Stock Unit Agreement pursuant to the Forest Oil Corporation 2007 Stock Incentive Plan, as amended.
	31.1*	Certification of Principal Executive Officer of Forest Oil Corporation as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
	31.2*	Certification of Principal Financial Officer of Forest Oil Corporation as required by Rule 13a-14(a) of the Securities Exchange Act of 1934, as amended.
	32.1+	Certification of Chief Executive Officer of Forest Oil Corporation, pursuant to 18 U.S.C. §1350.
	32.2+	Certification of Chief Financial Officer of Forest Oil Corporation, pursuant to 18 U.S.C. §1350.

*

Filed herewith.

⁺

Not considered to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section.

EX-3.1

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Exhibit 3.1

BYLAWS

OF

FOREST OIL CORPORATION

RESTATED AS OF FEBRUARY 14, 2001

AS AMENDED BY

AMENDMENTS NO. 1, NO. 2, NO. 3 and NO. 4

ARTICLE I

MEETINGS OF SHAREHOLDERS

        Section 1.    Annual meetings of shareholders shall be held on the second Wednesday in May of each year if not a legal holiday, and if a legal holiday, then on the next business day following, at 10 a.m., or at such other date and time as may be fixed from time to time by the board of directors at such place within or without the State of New York as may be fixed from time to time by the board of directors and all as stated in the notice of the meeting, at which meeting the shareholders shall elect by a plurality of the votes cast at such meeting persons nominated to serve on the board of directors and transact such other business as may be properly brought before the meeting.

        Section 2.    Special meetings of shareholders for any purpose or purposes may be held at such place within or without the State of New York as shall be fixed from time to time by the board of directors, or if no such place is so fixed, or whenever shareholders entitled to call a special meeting shall call the same, at Denver, Colorado. Except as otherwise prescribed by these bylaws, by statute or by the certificate of incorporation, special meetings of shareholders may be called by the board of directors or the chairman of the board or the chief executive officer, at such time as may be fixed by the person or persons calling the same and as shall be stated in the notice of said meeting, except when the New York Business Corporation Law confers upon the shareholders the right to demand the call of such meeting and fix the time thereof.

        Section 3.    Written notice of each annual or special meeting of shareholders shall specify the place, date and hour thereof and, if such meeting is a special meeting, the purpose or purposes for which the meeting is called, and that the call is being issued by or at the direction of the person or persons calling the meeting. Such notice shall be given personally, by electronic transmission or by mail, postage prepaid, not less than ten (10) nor more than sixty (60) days before the date of the meeting, to each shareholder of record entitled to vote thereat, or who, by reason of any action proposed at such meeting, would be entitled to have his stock voted or appraised if such action were taken. If such notice shall be by mail, it shall be directed to such shareholder at his post office address, as it appears in the record of shareholders of the corporation or, if he shall have filed with the secretary of the corporation a written request that notice to him be mailed to some other address, then directed to him at such other address.

        Section 4.    All matters to be considered and brought before any annual or special meeting of shareholders of the corporation, whether or not such matter is to be included in the corporation's proxy statement prepared pursuant to the federal securities laws, including the proxy rules set forth in the Securities Exchange Act of 1934, as amended (the "Exchange Act"), shall be properly brought before any such meeting only if in compliance with the procedures set forth in this Section 4.

        (A)    Annual Meetings of Shareholders.

        (1)   Nominations of persons for election to the board of directors and the proposal of other business to be considered by the shareholders may be made at an annual meeting of shareholders (a) pursuant to the corporation's notice of meeting, (b) by or at the direction of the board of directors or (c) by any shareholder of the corporation who (i) was a shareholder

of record at the time of giving of notice provided for in this bylaw and at the time of the annual meeting, (ii) is entitled to vote at the meeting and (iii) complies with the notice procedures set forth in this Section 4 as to such business or nomination; clause (c) shall be the exclusive means for a shareholder to make nominations or submit other business before an annual meeting of shareholders.

        (2)   Without qualification, for any nominations or any other business to be properly brought before an annual meeting by a shareholder pursuant to Section 4(A)(1)(c) of this Section 4, the shareholder must have given timely notice thereof in writing to the Secretary of the corporation and such other business must otherwise be a proper matter for shareholder action. To be timely, a shareholder's notice shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the first anniversary date on which the corporation first mailed its proxy materials and, or its notice of access to proxy materials for the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after the anniversary date of the preceding year's annual meeting, notice by the shareholder to be timely must be so delivered not earlier than the close of business on the 120th day prior to the date of such annual meeting and not later than the close of business on the later of the 100th day prior to the date of such annual meeting or, if the first public announcement of the date of such annual meeting is less than 100 days prior to the date of such annual meeting, the 10th day following the day on which public announcement of the date of such meeting is first made by the corporation. In no event shall any adjournment or postponement of an annual meeting or the announcement thereof commence a new time period for the giving of a shareholder's notice as described above.

To be in proper form, a shareholder's notice (whether given pursuant to this Section 4(A)(2) or Section 4(B)) to the Secretary must:

        (a)   set forth, as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the corporation's books, and of such beneficial owner, if any, (ii) (A) the class or series and number of shares of the corporation which are, directly or indirectly, owned beneficially and of record by such shareholder and such beneficial owner, (B) any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the corporation or with a value derived in whole or in part from the value of any class or series of shares of the corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of capital stock of the corporation or otherwise (a "Derivative Instrument") directly or indirectly owned beneficially by such shareholder and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of the corporation, (C) any proxy, contract, arrangement, understanding, or relationship pursuant to which such shareholder has a right to vote any shares of any security of the corporation, (D) any short interest in any security of the corporation (for purposes of this bylaw a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any decrease in the value of the subject security), (E) any rights to dividends on the shares of the corporation owned beneficially by such shareholder that are separated or separable from the underlying shares of the corporation, (F) any proportionate interest in shares of the corporation or Derivative Instruments held,

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directly or indirectly, by a general or limited partnership in which such shareholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner and (G) any performance-related fees (other than an asset-based fee) that such shareholder is entitled to based on any increase or decrease in the value of shares of the corporation or Derivative Instruments, if any, as of the date of such notice, including without limitation any such interests held by members of such shareholder's immediate family sharing the same household (which information shall be supplemented by such shareholder and beneficial owner, if any, not later than 10 days after the record date for the meeting to disclose such ownership as of the record date), and (iii) any other information relating to such shareholder and beneficial owner, if any, that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for, as applicable, the proposal and/or for the election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder;

        (b)   if the notice relates to any business other than a nomination of a director or directors that the shareholder proposes to bring before the meeting, set forth (i) a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest of such shareholder and beneficial owner, if any, in such business and (ii) a description of all agreements, arrangements and understandings between such shareholder and beneficial owner, if any, and any other person or persons (including their names) in connection with the proposal of such business by such shareholder;

        (c)   set forth, as to each person, if any, whom the shareholder proposes to nominate for election or reelection to the board of directors (i) all information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors in a contested election pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected) and (ii) a description of all direct and indirect compensation and other material monetary agreements, arrangements and understandings during the past three years, and any other material relationships, between or among such shareholder and beneficial owner, if any, and their respective affiliates and associates, or others acting in concert therewith, on the one hand, and each proposed nominee, and his or her respective affiliates and associates, or others acting in concert therewith, on the other hand, including, without limitation all biographical and related party transaction and other information that would be required to be disclosed pursuant to the federal and state securities laws if the shareholder making the nomination and any beneficial owner on whose behalf the nomination is made, if any, or any affiliate or associate thereof or person acting in concert therewith, were the "registrant" for purposes of such rule and the nominee were a director or executive officer of such registrant; and

        (d)   with respect to each nominee for election or reelection to the board of directors, include a completed and signed questionnaire, representation and agreement required by Section 4(D) below.

The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as an independent director of the corporation or that could be material to a reasonable shareholder's understanding of the independence, or lack thereof, of such nominee.

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        (3)   Notwithstanding anything in the second sentence of Section 4(A)(2) to the contrary, in the event that the number of directors to be elected to the board of directors is increased and there is no public announcement by the corporation naming all of the nominees for director or specifying the size of the increased board of directors at least 100 days prior to the first anniversary of the preceding year's annual meeting, a shareholder's notice required by this Section 4 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the corporation.

        (B)    Special Meetings of Shareholders.    Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the corporation's notice of meeting. Nominations of persons for election to the board of directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the corporation's notice of meeting (i) by or at the direction of the Board of Directors or (ii) provided that the Board of Directors has determined that directors shall be elected at such meeting, by any shareholder of the corporation who (a) is a shareholder of record at the time of giving of notice provided for in this bylaw and at the time of the special meeting, (b) is entitled to vote at the meeting, and (c) complies with the notice procedures set forth in this Section 4 as to such nomination. In the event the corporation calls a special meeting of shareholders for the purpose of electing one or more directors to the board of directors, any such shareholder may nominate a person or persons (as the case may be) for election to such position(s) as specified in the corporation's notice of meeting, if the shareholder's notice required by Section 4(A)(2) with respect to any nomination (including the completed and signed questionnaire, representation and agreement required by Section 4(D) below) shall be delivered to the Secretary at the principal executive offices of the corporation not earlier than the close of business on the 120th day prior to the date of such special meeting and not later than the close of business on the later of the 100th day prior to the date of such special meeting or, if the first public announcement of the date of such special meeting is less than 100 days prior to the date of such special meeting, the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the board of directors to be elected at such meeting. In no event shall any adjournment or postponement of a special meeting or the announcement thereof commence a new time period for the giving of a shareholder's notice as described above.

        (C)    General.

        (1)   Only such persons who are nominated in accordance with the procedures set forth in this bylaw shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 4. Except as otherwise provided by law, or the corporation's Certificate of Incorporation or its Bylaws, the Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 4 and, if any proposed nomination or business is not in compliance with this Section 4, to declare that such defective proposal or nomination shall be disregarded.

        (2)   For purposes of this Section 4, "public announcement" shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act and the rules and regulations promulgated thereunder.

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        (3)   Notwithstanding the foregoing provisions of this Section 4, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 4; provided, however, that any references in the corporation's Bylaws to the Exchange Act or the rules promulgated thereunder are not intended to and shall not limit the requirements applicable to nominations or proposals as to any other business to be considered pursuant to Section 4(A)(1)(c) or Section 4(B) above. Nothing in this Section 4 shall eliminate or limit any obligations of any shareholder pursuant to Rule 14a-8 under the Exchange Act or any other applicable federal or state securities law with respect to that shareholder's request to include proposals in the corporation's proxy statement.

        (D)    Submission of Questionnaire, Representation and Agreement.    To be eligible to be a nominee for election or reelection as a director of the corporation, a person must deliver (in accordance with the time periods prescribed for delivery of notice under this Section 4) to the Secretary at the principal executive offices of the corporation a written questionnaire with respect to the background and qualification of such person and the background of any other person or entity on whose behalf the nomination is being made (which questionnaire shall be provided by the Secretary upon written request) and a written representation and agreement (in the form provided by the Secretary upon written request) that such person (i) is not and will not become a party to (a) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the corporation, will act or vote on any issue or question (a "Voting Commitment") that has not been disclosed to the corporation or (b) any Voting Commitment that could limit or interfere with such person's ability to comply, if elected as a director of the corporation, with such person's fiduciary duties under applicable law, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director that has not been disclosed therein, and (iii) in such person's individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the corporation, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality and stock ownership and trading policies and guidelines of the corporation.

ARTICLE II

QUORUM AND VOTING OF STOCK

        Section 1.    The holders of a majority of the shares of stock issued and outstanding and entitled to vote, present in person, or represented by proxy, shall constitute a quorum at all meetings of the shareholders for the transaction of business except as otherwise provided by law or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the shareholders, the shareholders present in person or represented by proxy may adjourn the meeting from time to time to another time or place without notice, other than announcement at the meeting at which the adjournment is taken, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified.

        Section 2.    If a quorum is present the affirmative vote of the holders of a majority of the votes represented at the meeting by shares of stock entitled to vote shall be the act of the shareholders, unless a greater or lesser vote is required or permitted by law, by the certificate of incorporation or by these bylaws.

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        Section 3.    A shareholder may vote either in person or by proxy executed in writing or by electronic means by the shareholder or by his duly authorized attorney-in-fact. No proxy shall be valid after eleven (11) months from the date thereof, unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the person executing it or by his personal representatives or assigns except in those cases where an irrevocable proxy is permitted by law.

        Section 4.    The chairman of any meeting of the shareholders shall determine the method of voting (which may be viva voce, by rising, by show of hands or by ballot) upon each matter submitted to the meeting for action unless a shareholder present and entitled to vote upon any matter shall request a ballot vote thereon, in which case such matter shall be voted upon by ballot.

ARTICLE III

DIRECTORS

        Section 1.    The business of the corporation shall be conducted and managed by a board of directors which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these bylaws directed or required to be exercised by the shareholders. The number of directors which shall constitute the whole board shall not be less than six (6) and not more than fifteen (15) as shall be established from time to time by resolution passed by a majority of the whole board of directors, provided that no decrease shall shorten the term of any incumbent director.

        Section 2.    The directors shall be classified with respect to their terms of office by dividing them into three (3) classes established by action of the shareholders or of the board of directors.

        At each Annual Meeting of Shareholders, directors to replace those whose terms expire at such Annual Meeting shall be elected to hold office until the third succeeding Annual Meeting.

        Any director may resign at any time. The board of directors may, by majority vote of all directors then in office, remove a director for cause. A director may be removed without cause by the affirmative vote of the holders of two-thirds of the votes represented by all the outstanding shares entitled to vote thereon at a meeting of shareholders called for that purpose.

        Section 3.    Except as otherwise provided in the certificate of incorporation, vacancies occurring in the board of directors shall be filled in the following manner:

        (a)   If the vacancy is caused by reason of the removal of a director without cause, it shall be filled by election at a special meeting of shareholders entitled to vote on the matter called for that purpose (which may be the meeting called for the purpose of removing a director), or at any annual meeting without notice;

        (b)   If the vacancy occurring in the board of directors is caused in any other way, or if new directorships are created, all of the directors then in office, although less than a quorum, may by majority vote choose a successor or successors, or fill each newly created directorship;

        (c)   In case the entire board shall die or resign or become incapacitated to act, any shareholder may call a special meeting in the same manner that the chief executive officer may call such meetings and directors for the unexpired term may be elected at such special meeting in the manner prescribed for their election at annual meetings.

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ARTICLE IV

MEETINGS OF THE BOARD OF DIRECTORS

        Section 1.    The first meeting of each newly elected board of directors may be held without notice immediately following the annual meeting of shareholders, at the same place at which the annual meeting was held or at such time and place as shall be stated in a duly executed waiver of notice of such meeting.

        Section 2.    Regular meetings of the board of directors may be held upon such notice, or without notice, and at such time and at such place as shall from time to time be determined by the board of directors. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the board of directors need be specified in the notice or waiver of notice of such meeting.

        Section 3.    Special meetings of the board of directors may be called by the chairman of the board, the president, the secretary or any two (2) directors and notice thereof may be oral or in writing and in the latter case may be given by telegraph. If notice is given orally, it shall be given not less than forty-eight (48) hours before such meeting and if given electronically, the electronic transmission notifying each director shall be sent not less than two (2) full days before the meeting, except where a Saturday, Sunday or other holiday intervenes between the time when the notice is given and the date of the meeting in which event the time for such notice shall be increased by one day for each such day so intervening. If written notice, other than by telegraph, is given it shall be mailed to each director not less than five (5) days before the meeting.

        Section 4.    Whenever there are six (6) directors or less, two (2) directors shall constitute a quorum, but whenever there are more than six (6) directors one-third (¹/3) of the directors shall constitute a quorum for the transaction of business unless a greater number is required by law, by the certificate of incorporation or by these bylaws. The act of a majority of the directors present at any meeting at which a quorum is present shall be the act of the board of directors, unless the act of a greater number is required by law, by the certificate of incorporation or by these bylaws. If a quorum shall not be present at any meeting of directors, the directors present may adjourn the meeting from time to time to another time or place, without notice other than announcement at the meeting at which the adjournment is taken, until a quorum shall be present.

        Section 5.    Subject to the provisions of the certificate of incorporation or any provisions of these bylaws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee.

        Section 6.    Any one or more members of the board of directors or any committee thereof may participate in any meeting of such board or committee by means of a conference telephone or similar communication equipment allowing all persons participating in the meeting to hear each other at the same time. Participation by such means shall constitute presence in person at such meeting.

ARTICLE V

COMMITTEES

        Section 1.    The board of directors, by resolution adopted by a majority of the entire board, may designate from among its members an executive committee of the board and/or other committees, each consisting of two (2) or more directors or such other number of directors as required by applicable legal or exchange listing requirements and each of which, to the extent provided in such resolution, shall have all the authority of the board, except as otherwise provided by law. Vacancies in the membership of any committee may be filled by the board at a regular or special meeting.

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        Section 2.    Each committee so designated by the board, by vote of a majority of its members, shall fix its own times and places of meeting, shall determine the number of its members constituting a quorum (but not less than two (2) members of the committee) for the transaction of business, and shall prescribe its own rules of procedure, no change in which shall be made save by a majority vote of its members. All committees shall keep regular minutes of their proceedings and report the same to the board when required, and their actions shall be subject to review by the board, provided that no rights of third parties shall be affected by such review.

ARTICLE VI

OFFICERS

        Section 1.    The board of directors shall, at its meeting following the annual meeting of shareholders, choose such of the following officers and fill any additional office that it may at such time designate:

Chairman of the Board
Chief Executive Officer
President
Secretary
Treasurer
Controller

        One or more other Vice Presidents and Assistant Officers as determined by the Board.

        The chief executive officer may, but need not be, chosen from among the directors. The chairman of the board shall be chosen from among the directors.

        Section 2.    The term of office of all officers shall be one year or until the next annual meeting of shareholders and until their respective successors have been elected and qualified, but any officer may be removed from office, either with or without cause, at any time by the board of directors. A vacancy in any office arising from any cause may be filled for the unexpired portion of the term by the board of directors.

        Section 3.    The chairman of the board shall be an ex-officio member or a member of all committees and shall freely consult with the board of directors and keep them fully informed concerning the business of the corporation. The chairman of the board shall preside at all meetings of the board of directors and shall perform such other duties from time to time conferred upon him by the board of directors, including without limitation, the responsibility for internal auditing.

        Section 4.    The chief executive officer shall have the responsibility for the general and active management of the business of the corporation and shall preside at all meetings of the shareholders and, in the absence of the chairman of the board, as the case may be, at all meetings of the board of directors and shall perform such other duties as may be assigned to him by the board of directors.

        Section 5.    The president, any executive vice president, or senior vice president shall, when required, perform the duties and exercise the powers of the chief executive officer.

        Section 6.    The chairman of the board may, but need not be, chairman of the executive committee. The chairman of the executive committee may be any director appointed by the board. He shall preside at all meetings of such committee and shall have such other powers and duties as may, from time to time, be prescribed by the executive committee of the board.

        Section 7.    The secretary shall keep the minutes of all meetings of the board of directors, and the minutes of all meetings of the shareholders and all outstanding committees, in books provided for that

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purpose; he shall attend to the giving and serving of all required notices of meetings of the shareholders and of the board of directors; he shall affix the seal of the corporation to all contracts, documents and other instruments when so ordered by the board of directors; he shall have charge of the certificate books, transfer books and share ledgers, and such other books and papers as the board of directors may direct, and he shall perform all the duties incident to the office of secretary.

        Section 8.    The treasurer shall have the care and custody of the funds and other valuable effects, including the securities of the corporation, shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as have heretofore been or hereafter may be designated by the board of directors. He shall disburse the funds of the corporation as ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the chairman of the board, as the case may be, and the board of directors, as required, an account of all his transactions as treasurer and of the financial condition of the corporation.

        Section 9.    The controller shall be responsible for the books of account, for the preparation of financial statements, budgets and forecasts. The controller shall be responsible for the supervision of the accounting department and shall, under the supervision of the controller, be responsible for the books of account and for the preparation of such other financial data as shall be assigned to him from time to time by the controller. The board of directors may divide the powers, duties and responsibilities of the controller and assign them to two or more persons and designate them controller of the assigned area or areas of responsibility, but regardless of such special designation each such Controller shall be considered an "officer" for all purposes.

        Section 10.    The assistant vice presidents, assistant secretaries, assistant treasurers, assistant controllers shall, when required, perform the duties and exercise the power of any vice president, the secretary, treasurer or controller, respectively.

        Section 11.    All other officers of the corporation shall have such powers and duties as generally pertain to their respective offices, and as from time to time may be prescribed by the board of directors.

        Section 12.    Unless otherwise ordered by the board of directors, the chairman of the board, the president, or, when required, any vice president shall have full power and authority on behalf of the corporation to attend and to act and to vote at any meetings of security holders of corporations in which the corporation may hold securities, and at such meetings shall possess and may exercise any and all rights and powers incident to the ownership of such securities, and which as the owner thereof the corporation might have possessed and exercised, if present. The board of directors by resolution from time to time may confer like powers upon any other person or persons.

        Section 13.    Assumption of the authority and the exercise of the power of any officer by a subordinate officer shall be deemed to be required under Sections 5, 10 and 12 of this Article VI when the superior officer shall be absent, disabled or incapacitated or when he shall request such subordinate officer to assume such authority or exercise such power.

        Section 14.    Certain vice presidents of this corporation may, from time to time, have titles or designations conferred upon them by the board of directors which distinguish them from other vice presidents of this corporation, but regardless of such special title or designation each such officer shall be considered a "vice president" for all purposes, including the execution of any and all instruments and the exercise of any and all power and authority provided for elsewhere in these bylaws or conferred upon him from time to time by the shareholders or the board of directors of this corporation, notwithstanding the fact that such power and authority shall be provided for or conferred upon a "vice president". Each such officer may, therefore, execute instruments and exercise such power

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and authority as is conferred upon him either as a "vice president" or in his elected or designated capacity and any such action taken by such officer in either capacity shall be the valid and binding act of this corporation.

ARTICLE VII

CERTIFICATES REPRESENTING SHARES

        Section 1.    The certificates for shares of the corporation shall be in such form as shall be determined by the board of directors and shall be numbered consecutively and entered in the books of the corporation as they are issued. Each certificate shall exhibit the registered holder's name and the number and class of shares, and shall be signed by the chairman of the board, the president or a vice president and the treasurer or an assistant treasurer or the secretary or an assistant secretary, and shall bear the seal of the corporation or a facsimile thereof. Where any such certificate is countersigned by a transfer agent or registered by a registrar (other than the corporation or an employee of the corporation), the signature of any of the officers referred to in the preceding sentence may be a facsimile signature. In case any officer who signed, or whose facsimile signature or signatures were placed on any such certificate shall have ceased to be such officer before such certificate is issued, it may nevertheless be issued by the corporation with the same effect as if he were such officer at the date of issue.

        Section 2.    The corporation may issue a new share certificate or certificates in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to give the corporation a bond in such sum and with such sureties as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost or destroyed.

        Section 3.    Upon surrender to the corporation or any transfer agent of the corporation of a certificate for shares duly indorsed or accompanied by proper evidence of succession, assignment or authority to transfer, and by funds required for transfer stamps and transfer taxes, it shall be the duty of the corporation or such transfer agent to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

        Section 4.    Except as otherwise provided by law, the corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends or other distributions, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or legal claim to or interest in such share or shares on the part of any other person.

        Section 5.    For the purpose of determining the shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or to express consent to or dissent from any proposal without a meeting or for the purpose of determining shareholders entitled to receive payment of any dividend or the allotment of any rights, or for the purpose of any other action affecting the interests of shareholders, the board of directors may fix, in advance, a record date. Such date shall not be more than sixty (60) nor less than ten (10) days before the date of any such meeting nor more than sixty (60) days prior to any other action.

        In each such case, except as otherwise provided by law, only such persons as shall be shareholders of record on the date so fixed shall be entitled to notice of, and to vote at, such meeting and any adjournment thereof, or to express such consent or dissent, or to receive payment of such dividend, or such allotment of rights, or otherwise to be recognized as shareholders for the related purpose,

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notwithstanding any registration of transfer of shares on the books of the corporation after any such record date so fixed.

        Section 6.    Notwithstanding any provision of this Article VII to the contrary, the board of directors of the corporation, in its sole discretion, may provide by resolution that some or all of any or all classes and series of the corporation's shares shall be uncertificated shares, provided that such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation. Except as otherwise expressly provided by law, the rights and obligations of holders of uncertificated shares and the rights and obligations of the holders of certificates representing shares of the same class and series shall be identical. The board may further provide by resolution for the duties and responsibilities of the corporation's transfer agent concerning the issue, transfer and registration of uncertificated stock of the corporation, in addition to any other requirements under applicable law, the certificate of incorporation and these Bylaws.

ARTICLE VIII

GENERAL PROVISIONS

        Section 1.    The seal of the corporation shall be in the form of two concentric circles and between such circles the words "FOREST" and "OIL" and the numerals "19" and "16" shall be inserted at the top, bottom left and right thereof respectively. In the center of the inner circle there shall be a derrick lamp with a keystone inscribed on its face and in the middle of the keystone the initials "F 0" shall be inscribed vertically, all in accordance with the form impressed upon the margin of this page.

(FORM OF SEAL)

        Section 2.    Whenever a notice is required to be given by any statute, the certificate of incorporation, or these bylaws, a waiver thereof in writing signed by the person or persons entitled thereto, whether before or after the time stated therein, shall be deemed equivalent to such notice. In addition, any shareholder attending a meeting of shareholders in person or by proxy without protesting prior to the conclusion of the meeting the lack of notice thereof to him, and any director attending a meeting of the board of directors without protesting prior to the meeting or at its commencement such lack of notice shall be conclusively deemed to have waived notice of such meeting.

        Section 3.    All checks and drafts on the corporation's bank accounts and all bills of exchange and promissory notes, and all acceptances, obligations and other instruments for the payment of money, and all endorsements thereof, executed on behalf of the corporation, shall be signed by such officer or officers, agent or agents or such other person or persons as may have heretofore been or hereafter may be thereunto authorized by these bylaws or by the board of directors, which may in its discretion authorize any such signatures to be facsimile.

        All contracts, agreements, endorsements, assignments, transfers, stock powers, or other instruments shall be signed by such officer or officers, agent or agents or such other person or persons as may have heretofore been or hereafter may be thereunto, authorized by these bylaws or from time to time by the board of directors.

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        Such officer or officers as may have heretofore been or hereafter may be designated by the board of directors shall be authorized to sign and issue proxies to vote the shares of stock of other companies standing in the name of the corporation, or consents to action taken or to be taken by such other companies. All such proxies and consents shall be signed in the name of the corporation.

        Section 4.    The fiscal year of the corporation shall begin on the first day of January and end on the thirty-first day of December in each year.

ARTICLE IX

INDEMNIFICATION

        Except to the extent expressly prohibited by the New York Business Corporation Law, the corporation shall indemnify each person made or threatened to be made a party to any action or proceeding whether civil or criminal and whether by or in the right of the corporation or otherwise, by reason of the fact that such person or such person's testator or intestate is or was either (a) a director or officer of the corporation (including a director or officer who serves or served as an officer of any operating or service division of the corporation), or (b) a director or officer of the corporation who serves or served at the request of the corporation any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise in any capacity (any such person described in clause (a) or (b) or any other person indemnified by the board of directors of the corporation pursuant to the authority hereinafter provided is herein referred to as an "Indemnified Person"), against judgments, fines, penalties, amounts paid in settlement and reasonable expenses, including attorneys' fees, incurred in connection with such action or proceeding or any appeal therein; provided, however, that no such indemnification shall be made if a judgment or other final adjudication adverse to such Indemnified Person establishes that either (i) such Indemnified Person's acts were committed in bad faith, or were the result of active and deliberate dishonesty, and were material to the cause of action so adjudicated, or (ii) such Indemnified Person personally gained in fact a financial profit or other advantage to which he or she was not legally entitled; and provided further that no such indemnification shall be required with respect to any settlement or other nonadjudicated disposition of any threatened or pending action or proceeding unless ordered by a court or if not so ordered shall be authorized in the specific case:

        (1)   By the board of directors of the corporation acting by a quorum consisting of directors who are not parties to such action or proceeding upon a finding that the Indemnified Person has met the standard of conduct set forth above, or

        (2)   If such a quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs:

        (a)   By the board of directors upon the opinion in writing of independent legal counsel that indemnification is proper in the circumstances because the standard of conduct set forth above has been met by the Indemnified Person, or

        (b)   By the shareholders upon a finding that the Indemnified Person has met the applicable standard of conduct set forth in such paragraph, or

        (3)   In any other manner which may be provided by, or permitted pursuant to, the New York Business Corporation Law.

        The corporation shall advance or promptly reimburse upon request any Indemnified Person for all expenses, including attorneys' fees, reasonably incurred in defending any action or proceeding in advance of the final disposition thereof upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if such Indemnified Person is ultimately found not to be entitled to indemnification or, where indemnification is granted, to the extent the expenses so advanced or reimbursed exceed the amount to which such Indemnified Person is entitled; provided, however, that

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such Indemnified Person shall cooperate in good faith with any request by the corporation that common counsel be utilized by the parties to an action or proceeding who are similarly situated unless to do so would be inappropriate due to actual or potential differing interests between or among such parties.

        The board of directors of the corporation is authorized to provide indemnification and advancement of expenses to such other persons as the board shall determine from time to time in its sole discretion.

        It is not intended that this bylaw shall be deemed to be the exclusive method of indemnification for an Indemnified Person. Any Indemnified Person shall be entitled to seek indemnification and advancement of expenses under any statute, rule, regulation, certificate of incorporation, bylaw, insurance policy, contract or otherwise, which may be available to such Indemnified Person.

        Anything in these bylaws to the contrary notwithstanding, no elimination of this bylaw, and no amendment of this bylaw adversely affecting the right of any Indemnified Person to indemnification or advancement of expenses hereunder shall be effective until the 60th day following notice to such Indemnified Person of such action, and no elimination of or amendment to this bylaw shall deprive any Indemnified Person of his or her rights hereunder arising out of alleged or actual occurrences, acts or failures to act which had their origin prior to such 60th day.

        The corporation shall not, except by elimination or amendment of this bylaw in a manner consistent with the preceding paragraph, take any corporate action or enter into any agreement which prohibits, or otherwise limits the rights of any Indemnified Person to indemnification or advancement of expenses in accordance with the provisions of this bylaw. If the corporation fails within 30 days after a written claim has been received by the corporation to make any payment in accordance with the indemnification and advancement of expenses provision of this bylaw, the Indemnified Person may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the Indemnified Person shall be entitled to be paid also the expense of prosecuting such claim. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the corporation) that the Indemnified Person has not met the standards of conduct which make it permissible under this bylaw to indemnify the Indemnified Person for the amount claimed, but the burden of proving such defense shall be on the corporation. Neither the failure of the corporation (including its board of directors, legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the Indemnified Person is proper in the circumstances because he or she has met the applicable standard of conduct set forth in this bylaw, nor an actual determination by the corporation (including its board of directors, legal counsel, or its stockholders), that the Indemnified Person has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that the Indemnified Person has not met the applicable standard of conduct.

        The indemnification and right to advancement of expenses of any Indemnified Person provided by this bylaw shall continue after such Indemnified Person has ceased to be a director, officer or employee of the corporation and shall inure to the benefit of such Indemnified Person's heirs, executors, administrators and legal representatives.

        The corporation is authorized to enter into agreements with any of its directors, officers, employees or other persons extending rights to indemnification and advancement of expenses to such person to the fullest extent permitted by applicable law, but the failure to enter into any such agreement shall not affect or limit the rights of such person pursuant to this bylaw, it being expressly recognized hereby that all directors and officers of the corporation, by serving as such after adoption hereof, are acting in reliance hereon and that the corporation is estopped to contend otherwise.

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        In case any provision in this bylaw shall be determined at any time to be unenforceable in any respect, the other provisions shall not in any way be affected or impaired thereby, and the affected provision shall be given the fullest possible enforcement in the circumstances, it being the intention of the corporation to afford Indemnification and advancement of expenses to Indemnified Persons to the fullest extent permitted by law.

        For purposes of this bylaw, the term "corporation" shall include any legal successor to the corporation, including any corporation which acquires: all or substantially all of the assets of the corporation in one or more transactions.

ARTICLE X

AMENDMENTS

        Section 1.    The board of directors shall have the power to amend, repeal or adopt bylaws at any regular or special meeting of the board. However, any bylaws adopted by the board may be amended or repealed by vote of the holders of shares entitled at the time to vote for the election of directors.

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Exhibit 3.1

EX-4.1

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Exhibit 4.1

EXECUTION COPY

REGISTRATION RIGHTS AGREEMENT

by and among

Forest Oil Corporation
Forest Oil Permian Corporation

and

Banc of America Securities LLC
BNP Paribas Securities Corp.
Credit Suisse Securities (USA) LLC
Deutsche Bank Securities Inc.
J.P. Morgan Securities Inc.
TD Securities (USA) LLC
Scotia Capital (USA) Inc.
Wells Fargo Securities, LLC

Dated as of May 22, 2008

TABLE OF CONTENTS

Section	Page
1.     Definitions	1
2.     Securities Subject to this Agreement	3
3.     Registered Exchange Offer	4
4.     Shelf Registration	5
5.     Additional Interest	6
6.     Registration Procedures	6
7.     Registration Expenses	12
8.     Indemnification	13
9.     Rule 144 and 144A Information	15
10.   Participation in Underwritten Registrations	15
11.   Selection of Underwriters	15
12.   Miscellaneous	16

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REGISTRATION RIGHTS AGREEMENT

        This Registration Rights Agreement (this "Agreement") is made and entered into as of May 22, 2008, by and among Forest Oil Corporation, a New York corporation (the "Company"), Forest Oil Permian Corporation, a Delaware corporation (the "Guarantor") and Banc of America Securities LLC, BNP Paribas Securities Corp., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc., J.P. Morgan Securities Inc., TD Securities (USA) LLC, Scotia Capital (USA) Inc. and Wells Fargo Securities, LLC (collectively, the "Initial Purchasers"), who have agreed to purchase the Company's 7.25% Senior Notes due 2019 (the "Initial Notes") fully and unconditionally guaranteed by the Guarantor (the "Guarantee") pursuant to the Purchase Agreement (as defined below). The Initial Notes and the Guarantee are herein collectively referred to as the "Initial Securities."

        This Agreement is made pursuant to the Purchase Agreement, dated May 19, 2008 (the "Purchase Agreement"), among the Company, the Guarantor and the Initial Purchasers (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the Holders from time to time of the Initial Securities, including the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Initial Securities, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 5(k) of the Purchase Agreement.

        The parties hereby agree as follows:

SECTION 1.    Definitions.    As used in this Agreement, the following capitalized terms shall have the following meanings:

        Additional Interest:    As defined in Section 5(a) hereof.

        Advice:    As defined in the last paragraph of Section 6(c) hereof.

        Affiliates:    As defined in Rule 144 under the Securities Act.

        Agreement:    As defined in the preamble hereto.

        Blackout Period:    As defined in the last paragraph of Section 4(a) hereof.

        Broker-Dealer:    Any broker or dealer registered under the Exchange Act.

        Business Day:    As defined in the Indenture.

        Closing Date:    The date of this Agreement.

        Commission:    The Securities and Exchange Commission.

        Company:    As defined in the preamble hereto.

        Consummate:    The Exchange Offer shall be deemed "Consummated" for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 3(b) hereof, and (iii) the delivery by the Company to the Registrar under the Indenture of Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Initial Securities that were tendered by Holders thereof pursuant to the Exchange Offer.

        Exchange Act:    The Securities Exchange Act of 1934, as amended.

        Exchange Offer:    The Company's offer to the Holders of all outstanding Transfer Restricted Securities of the opportunity to exchange all such outstanding Transfer Restricted Securities held by such Holders for Exchange Securities in an aggregate principal amount equal to the aggregate principal amount of the Transfer Restricted Securities tendered in such exchange offer by such Holders.

        Exchange Offer Registration Statement:    The Registration Statement relating to the Exchange Offer, including the related Prospectus.

        Exempt Resales:    The transactions in which the Initial Purchasers propose to sell the Initial Securities to certain "qualified institutional buyers," as such term is defined in Rule 144A under the Securities Act and to certain non-U.S. persons pursuant to Regulation S under the Securities Act.

        Exchange Securities:    The 7.25% Senior Notes due 2019, of the same series under the Indenture as the Initial Notes, and the Guarantee related thereto, issued to Holders in exchange for Transfer Restricted Securities pursuant to this Agreement.

        FINRA:    The Financial Industry Regulatory Authority.

        Guarantee:    As defined in the preamble hereto.

        Holder:    As defined in Section 2(b) hereof.

        Indemnified Holder:    As defined in Section 8(a) hereof.

        Indenture:    The Indenture, dated as of June 6, 2007 by and among the Company, the Guarantor and the Trustee, pursuant to which the Securities are to be issued, as such Indenture is amended or supplemented from time-to-time in accordance with the terms thereof.

        Initial Purchasers:    As defined in the preamble hereto.

        Initial Notes:    As defined in the preamble hereto.

        Initial Placement:    The issuance and sale by the Company of the Initial Securities to the Initial Purchasers pursuant to the Purchase Agreement.

        Initial Securities:    As defined in the preamble hereto.

        Majority Holders:    The Holders of a majority of the aggregate principal amount of the outstanding Transfer Restricted Securities; provided, however, that whenever the consent or approval of Holders of a specified percentage of Transfer Restricted Securities is required hereunder, any Transfer Restricted Securities owned directly or indirectly by the Company or any of its Affiliates shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage or amount; and provided, further, that if the Company shall issue any additional 7.25% Senior Notes due 2019 under the Indenture in a transaction not registered with the Commission prior (a) the date on which the restrictive legend on the Initial Securities has been removed and the Initial Securities are freely tradable (by Persons other than Affiliates of the Company) pursuant to Rule 144 under the Securities Act, (b) consummation of the Exchange Offer or (c) if applicable, the effectiveness of any Shelf Registration Statement, such additional 7.25% Senior Notes due 2019 and the Transfer Restricted Securities to which this Agreement relates shall be treated together as one class for purposes of determining whether the consent or approval of Holders of a specified percentage of Transfer Restricted Securities has been obtained.

        NASD:    The National Association of Securities Dealers, Inc.

        Person:    An individual, partnership, limited liability company, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

        Prospectus:    The prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus.

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        Registration Default:    Any of the following events:

        (a)   the Initial Securities are not freely tradable (by Persons other than Affiliates of the Company) pursuant to Rule 144 under the Securities Act as of the 366th day after the Closing Date;

        (b)   the restrictive legend on the Initial Securities has not been removed as of the 366th day after the Closing Date; or

        (c)   after a Shelf Registration Statement is declared (or becomes automatically) effective (i) such Shelf Registration Statement thereafter ceases to be effective or (ii) such Shelf Registration Statement or the related Prospectus ceases to be usable in connection with resales of Transfer Restricted Securities during the periods specified herein (but excluding any Blackout Period) because either (A) any event occurs as a result of which the related Prospectus forming part of such Shelf Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, (B) it shall be necessary to amend such Shelf Registration Statement or supplement the related Prospectus, to comply with the Securities Act or the Exchange Act or the respective rules thereunder or (C) such Shelf Registration Statement has expired before a replacement Shelf Registration Statement has become effective.

        Registration Statement:    Any registration statement of the Company relating to (a) an offering of Exchange Securities pursuant to the Exchange Offer or (b) the registration for resale of Transfer Restricted Securities pursuant to a Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case, including the Prospectus.

        Securities:    The Initial Securities and the Exchange Securities.

        Securities Act:    The Securities Act of 1933, as amended.

        Shelf Registration Statement:    As defined in Section 4(a)(x) hereof.

        Trustee:    U.S. Bank National Association.

        Trust Indenture Act:    The Trust Indenture Act of 1939, as amended.

        Transfer Restricted Securities:    Each Initial Security, until the earliest to occur of (a) the date on which such Initial Security is exchanged in the Exchange Offer for an Exchange Security entitled to be resold to the public by the Holder thereof without complying with the prospectus delivery requirements of the Securities Act, (b) the date on which such Initial Security has been effectively registered under the Securities Act and disposed of in accordance with a Shelf Registration Statement, (c) the date on which the restrictive legend on such Initial Security has been removed and the Initial Security is freely tradable (by Persons other than Affiliates of the Company) pursuant to Rule 144 under the Securities Act, (d) the date on which such Initial Security is distributed to the public by a Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the Exchange Offer Registration Statement (including delivery of the Prospectus contained therein) and (e) the date on which such Initial Security ceases to be outstanding for purposes of the Indenture.

        Underwritten Registration or Underwritten Offering:    A registration in which securities of the Company are sold to an underwriter for reoffering to the public.

SECTION 2.    Securities Subject to this Agreement.

        (a)    Transfer Restricted Securities.    The Transfer Restricted Securities are entitled to the benefits of this Agreement.

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        (b)    Holders of Transfer Restricted Securities.    A Person is deemed to be a holder of Transfer Restricted Securities (each, a "Holder") whenever such Person owns Transfer Restricted Securities.

SECTION 3.    Registered Exchange Offer.

        (a)   If the restrictive legend on the Initial Securities has not been removed and the Initial Securities are not freely tradable pursuant to Rule 144 under the Securities Act (by Persons other than Affiliates of the Company) as of the 366th day after the Closing Date, each of the Company and the Guarantor shall, at their cost, (i) cause to be filed with the Commission, a Registration Statement under the Securities Act relating to the Exchange Securities (other than Transfer Restricted Securities acquired by any Broker-Dealer directly from the Company) and the Exchange Offer, (ii) use commercially reasonable efforts (which shall include the filing of all necessary amendments to such Registration Statement) to cause such Registration Statement to be declared effective by the Commission and (iii) upon the effectiveness of such Registration Statement, promptly commence the Exchange Offer. The Exchange Offer shall be on the appropriate form permitting registration of the Exchange Securities to be offered in exchange for the Transfer Restricted Securities (other than Transfer Restricted Securities acquired by any Broker-Dealer directly from the Company) and to permit resales of Initial Securities held by Broker-Dealers as contemplated by Section 3(c) hereof. Neither the Company nor the Guarantor shall have any obligation under this Agreement to file a Registration Statement with the Commission or commence an Exchange Offer or any other offer pursuant to this Agreement if there are no Transfer Restricted Securities as of the 366th day after the Closing Date.

        (b)   If the Company and the Guarantor are required to commence the Exchange Offer pursuant to Section 3(a) above, the Company and the Guarantor shall cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than 20 Business Days (or longer if required under applicable law) after the date that notice of the Exchange Offer is mailed to Holders. The Company shall cause the Exchange Offer to comply with all applicable federal and state securities laws. No securities other than the Exchange Securities shall be included in the Exchange Offer Registration Statement.

        (c)   If the Company and the Guarantor are required to commence the Exchange Offer pursuant to Section 3(a) above, the Company shall indicate in a "Plan of Distribution" section contained in the Prospectus forming a part of the Exchange Offer Registration Statement that any Broker-Dealer who holds Initial Securities that are Transfer Restricted Securities that were acquired for its own account as a result of market-making activities or other trading activities (other than Transfer Restricted Securities acquired directly from the Company) may exchange such Initial Securities pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be an "underwriter" within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Securities received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such "Plan of Distribution" section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such "Plan of Distribution" shall not name any such Broker-Dealer or disclose the amount of Initial Securities held by any such Broker-Dealer except to the extent required by the Commission.

        If the Company and the Guarantor are required to commence the Exchange Offer pursuant to Section 3(a) above, each of the Company and the Guarantor shall use commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 6(c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as

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announced from time to time, for a period ending on the earlier of (i) 180 days after the Consummation of the Exchange Offer and (ii) the date on which a Broker-Dealer is no longer required to deliver a prospectus in connection with market-making or other trading activities.

        If the Company and the Guarantor are required to commence the Exchange Offer pursuant to Section 3(a) above, the Company shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 180-day (or shorter as provided in the foregoing sentence) period in order to facilitate such resales.

SECTION 4.    Shelf Registration.

        (a)    Shelf Registration.

        If (i) because of any change in law or in applicable interpretations thereof by the staff of the Commission, the Company is not permitted to effect an Exchange Offer that is required by Section 3 hereof, (ii) for any reason the Exchange Offer is required by Section 3 hereof to be but is not Consummated within one year and 90 days of the Closing Date, (iii) any Initial Purchaser so requests with respect to the Initial Securities not eligible to be exchanged for Exchange Securities in any Exchange Offer required by Section 3 hereof and held by it following Consummation of such Exchange Offer or (iv) any Holder (other than a Broker-Dealer who holds Transfer Restricted Securities that were acquired for its own account as a result of market-making activities or other trading activities) is not eligible to participate in any Exchange Offer required by Section 3 hereof or, in the case of any Holder (other than a Broker-Dealer who holds Transfer Restricted Securities that were acquired for its own account as a result of market-making activities or other trading activities) that participates in any such Exchange Offer, such Holder does not receive freely tradable Exchange Securities on the date of the exchange, then the Company and the Guarantor shall, at their cost:

        (x)   promptly cause to be filed a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the "Shelf Registration Statement"), which Shelf Registration Statement shall provide for resales of all Transfer Restricted Securities the Holders of which shall have provided the information required pursuant to Section 4(b) hereof; and

        (y)   use commercially reasonable efforts to cause such Shelf Registration Statement to be declared effective by the Commission on or before the 90th day after the date on which the filing obligation arises.

        Each of the Company and the Guarantor shall use commercially reasonable efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities by the Holders of Transfer Restricted Securities entitled to the benefit of this Section 4(a) and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period of at least one year following the effective date of the Shelf Registration Statement or such shorter period that will terminate when all the Initial Securities covered by such Shelf Registration Statement (A) have been sold pursuant to such Shelf Registration Statement or (B) may be sold (by Persons who are not Affiliates of the Company) without a restrictive legend pursuant to Rule 144 under the Securities Act or any successor rule thereof. Each of the Company and the Guarantor shall be deemed not to have used commercially reasonable efforts to keep the Shelf Registration Statement effective during the requisite period if any of the Company or the Guarantor voluntarily takes any action that would result in Holders of Transfer Restricted Securities covered thereby not being able to offer and sell such Transfer Restricted Securities during that period, unless (X) such action is required by applicable law; or (Y) such action is taken by any of the Company or Guarantor in good faith and for valid business reasons (not including avoidance of the Company or the Guarantor obligations

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hereunder) including, but not limited to, the acquisition or divestiture of assets, so long as the Company and the Guarantor promptly thereafter comply with the requirements of the last paragraph of Section 6(c) hereof (the period during which the Shelf Registration Statement is not available under clauses (X) or (Y) above, the "Blackout Period"). The Blackout Period shall not exceed 45 days in any three-month period or 90 days in any twelve-month period.

        (b)    Provision by Holders of Certain Information in Connection with the Shelf Registration Statement.    No Holder of Transfer Restricted Securities may include any of its Transfer Restricted Securities in any Shelf Registration Statement pursuant to this Agreement unless and until such Holder furnishes to the Company in writing, within 20 Business Days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading.

SECTION 5.    Additional Interest.

        (a)   If any Registration Default shall occur, the Company hereby agrees that the interest rate borne by the Transfer Restricted Securities shall be increased by 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period, but in no event shall such increase exceed 1.00% per annum. Such additional interest to be paid pursuant to a Registration Default as set forth in this Section 5 is herein referred to as "Additional Interest."

        (b)   Registration Defaults shall be cured on the date that (i) the Initial Securities are freely tradable (by Persons other than Affiliates of the Company) pursuant to Rule 144 under the Securities Act and the restrictive legend on the Initial Securities has been removed, (ii) the Exchange Offer has been effected (provided that this clause (ii) shall not cure a Registration Default if a Shelf Registration Statement is required to be filed pursuant to clause (i), (iii) or (iv) of the first paragraph of Section 4(a)) or (iii) a Shelf Registration Statement is declared (or automatically becomes) effective under the Securities Act, unless subsequent to the date it was last declared effective it fails to remain effective or usable for the time period contemplated by Section 4(a) after taking into account all other periods during which such Shelf Registration Statement was effective. Following the cure of all Registration Defaults relating to any particular Transfer Restricted Securities in accordance with this Section 5(b), the interest rate borne by the relevant Transfer Restricted Securities will be reduced to the original interest rate borne by such Transfer Restricted Securities; provided, however, that, if after any such reduction in interest rate, a different Registration Default occurs, the interest rate borne by the relevant Transfer Restricted Securities shall again be increased pursuant to the foregoing provisions. The Company shall not be required to pay Additional Interest for more than one Registration Default at any given time.

        (c)   All Additional Interest accrued pursuant to this Section 5 shall be paid in the manner provided for in the Indenture. All Additional Interest shall be in addition to any other interest payable from time to time with respect to the Initial Securities and the Exchange Securities. All obligations of the Company and the Guarantor set forth in Section 5(a) that are outstanding with respect to any Transfer Restricted Security at the time such security ceases to be a Transfer Restricted Security shall survive until such time as all such obligations with respect to such security shall have been satisfied in full.

SECTION 6.    Registration Procedures.

        (a)    Exchange Offer Registration Statement.    In connection with the Exchange Offer, the Company and the Guarantor shall comply with all of the provisions of Section 6(c) hereof, shall use commercially

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reasonable efforts to effect such exchange to permit the sale of Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof. As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Transfer Restricted Securities shall furnish, upon the request of the Company, prior to the Consummation thereof, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate (within the meaning of Rule 405 under the Securities Act) of any of the Company or the Guarantor, (B) it is not engaged in, and does not intend to engage in, and has no arrangement or understanding with any Person to participate in, a distribution of the Exchange Securities to be issued in the Exchange Offer and (C) it is acquiring the Exchange Securities in its ordinary course of business. In addition, all such Holders of Transfer Restricted Securities shall otherwise cooperate in the Company's preparations for the Exchange Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters, and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Exchange Securities obtained by such Holder in exchange for Initial Securities acquired by such Holder directly from the Company.

        (b)    Shelf Registration Statement.    In connection with any Shelf Registration Statement, each of the Company and the Guarantor shall comply with all the provisions of Section 6(c) hereof and shall use commercially reasonable efforts to effect such registration to permit the sale of the Transfer Restricted Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto each of the Company and the Guarantor will as expeditiously as possible prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Transfer Restricted Securities in accordance with the intended method or methods of distribution thereof.

        (c)    General Provisions.    In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Transfer Restricted Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Initial Securities by Broker-Dealers), each of the Company and the Guarantor shall:

        (i)    use commercially reasonable efforts to keep such Registration Statement continuously effective and provide all requisite financial statements (including, if required by the Securities Act or any regulation thereunder, financial statements of the Guarantor) for the period specified in Section 3 or 4 hereof, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Transfer Restricted Securities during the period required by this Agreement, the Company and the Guarantor shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use commercially reasonable efforts to cause such amendment to be declared effective and such Registration Statement and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter;

        (ii)   prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep the Registration Statement

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effective for the applicable period set forth in Section 3 or 4 hereof, as applicable, or such shorter period as set forth in this Agreement; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner; and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during the applicable period in accordance with the intended method or methods of distribution by the sellers thereof set forth in such Registration Statement or supplement to the Prospectus;

        (iii)  advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Transfer Restricted Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes, (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein (with respect to the Prospectus, in the light of the circumstances under which they were made) not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Transfer Restricted Securities under state securities or blue sky laws, each of the Company and the Guarantor shall use commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time;

        (iv)  furnish without charge to the Initial Purchasers, each selling Holder named in any Registration Statement, and each of the underwriter(s), if any, before filing with the Commission, copies of any Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Registration Statement), which documents will be subject to the review and comment of such Holders and underwriter(s) in connection with such sale, if any, for a period of at least two Business Days; make the Company's and the Guarantor's representatives available for discussion of such document and other customary due diligence matters, and include such information in such document prior to the filing thereof as such selling Holders or underwriter(s), if any, reasonably request; and not file any such Registration Statement or Prospectus or any amendment or supplement to any such Registration Statement or Prospectus (including all such documents incorporated by reference) to which an Initial Purchaser of Transfer Restricted Securities covered by such Registration Statement or the underwriter(s), if any, shall reasonably object in writing within two Business Days after the receipt thereof (such objection to be deemed timely made upon confirmation of telecopy transmission within such period); provided, that this clause (iv) shall not apply to any filing by the Company of any annual report on Form 10-K, quarterly report on Form 10-Q or Current Report on Form 8-K with respect to matters unrelated to the Securities and the offering or exchange therefor.

        (v)   in the case of a Shelf Registration Statement, make available during normal business hours for inspection by the Initial Purchasers, the managing underwriter(s), if any, participating in any disposition pursuant to such Shelf Registration Statement and any attorney or accountant

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retained by the Initial Purchasers or any of the underwriter(s), all financial and other records, pertinent corporate documents and properties of each of the Company and the Guarantor and cause the Company's and the Guarantor's officers, directors and employees to supply all information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Shelf Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness and to participate in meetings with investors to the extent requested by the managing underwriter(s), if any;

        (vi)  in the case of a Shelf Registration Statement, if requested by any Holder, promptly incorporate in such Prospectus, pursuant to a supplement, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the "Plan of Distribution" of the Transfer Restricted Securities, information with respect to the principal amount of Transfer Restricted Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Transfer Restricted Securities to be sold in such offering; and make all required filings of such Prospectus supplement as soon as practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement;

        (vii) in the case of a Shelf Registration Statement, furnish to each Initial Purchaser, each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of such Shelf Registration Statement, as first filed with the Commission, and of each amendment thereto, including, if they so request, financial statements and schedules, all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference);

        (viii)  deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; each of the Company and the Guarantor hereby consents to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Transfer Restricted Securities covered by the Prospectus or any amendment or supplement thereto;

        (ix)  enter into such agreements (including an underwriting agreement), and make such representations and warranties, and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Transfer Restricted Securities pursuant to any Shelf Registration Statement contemplated by this Agreement, all to such extent as may be requested by any Initial Purchaser or by any Holder of Transfer Restricted Securities or underwriter in connection with any sale or resale pursuant to any Shelf Registration Statement contemplated by this Agreement; and whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, each of the Company and the Guarantor shall:

        (A)  furnish to each Initial Purchaser, each selling Holder and each underwriter, if any, in such substance and scope as they may request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the effectiveness of the Shelf Registration Statement:

        (1)   a certificate, dated the date of effectiveness of the Shelf Registration Statement signed by (y) any two authorized officers of the Company and (z) a principal financial or accounting officer of each of the Company and the Guarantor, confirming, as of the date thereof, the matters set forth in paragraphs (i), (ii) and (iii) of Section 5(d) of the Purchase Agreement and such other matters as such parties may reasonably request;

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        (2)   an opinion, dated the date of effectiveness of the Shelf Registration Statement of counsel for the Company and the Guarantor, covering the relevant matters set forth in Section 5(g) of the Purchase Agreement and such other matter as such parties may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company and the Guarantor, representatives of the independent public accountants for the Company and the Guarantor, representatives of the underwriter(s), if any, and counsel to the underwriter(s), if any, in connection with the preparation of such Registration Statement and the related Prospectus at which the content of the Registration Statement and Prospectus were discussed and, although such counsel has not independently verified the accuracy, completeness or fairness of such statements contained in the Registration Statement and Prospectus; and that such counsel advises that, on the basis of the foregoing, no facts came to such counsel's attention that caused such counsel to believe that the Shelf Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. Without limiting the foregoing, such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial or statistical data included in any Shelf Registration Statement contemplated by this Agreement or the related Prospectus; and

        (3)   a customary comfort letter, dated the date of effectiveness of the Shelf Registration Statement, from the Company's independent accountants, in the customary form and covering matters of the type customarily requested to be covered in comfort letters by underwriters in connection with primary underwritten Offerings, and covering or affirming the matters set forth in the comfort letters delivered pursuant to Section 5(e) of the Purchase Agreement, without exception;

        (B)  set forth in full or incorporate by reference in the underwriting agreement, if any, the indemnification provisions and procedures of Section 8 hereof with respect to all parties to be indemnified pursuant to said Section; and

        (C)  deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with Section 6(c)(ix)(A) hereof and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Company or the Guarantor pursuant to this Section 6(c)(ix), if any.

        If at any time the representations and warranties of the Company and the Guarantor contemplated in Section 6(c)(ix)(A)(1) hereof cease to be true and correct, the Company or the Guarantor shall so advise the Initial Purchasers and the underwriter(s), if any, and each selling Holder promptly and, if requested by such Persons, shall confirm such advice in writing;

        (x)   prior to any public offering of Transfer Restricted Securities pursuant to a Shelf Registration Statement, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Transfer Restricted Securities under the state securities or blue sky laws of such jurisdictions as the selling Holders or underwriter(s), if any, may request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Transfer Restricted Securities covered by the

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Shelf Registration Statement; provided, however, that none of the Company or the Guarantor shall be required to register or qualify as a foreign corporation where it is not then so qualified or to take any action that would subject it to the service of process in suits or to taxation in any jurisdiction where it is not then so subject;

        (xi)  issue, upon the request of any Holder of Initial Securities covered by a Shelf Registration Statement, Exchange Securities having an aggregate principal amount equal to the aggregate principal amount of Initial Securities surrendered to the Company by such Holder in exchange therefor or being sold by such Holder; such Exchange Securities, if in certificated form, to be registered in the name of such Holder or in the name of the purchaser(s) of such Securities, as the case may be; in return, the Initial Securities held by such Holder, if in certificated form, shall be surrendered to the Company for cancellation;

        (xii) cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Transfer Restricted Securities to be sold and not bearing any restrictive legends; and enable such Transfer Restricted Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two Business Days prior to any sale of Transfer Restricted Securities made by such Holders or underwriter(s);

        (xiii)  use commercially reasonable efforts to cause the Transfer Restricted Securities covered by the Registration Statement to be registered with or approved by such domestic other governmental agencies or authorities as may be necessary to enable the seller or sellers thereof or the underwriter(s), if any, to consummate the disposition of such Transfer Restricted Securities, subject to the proviso contained in Section 6(c)(x) hereof;

        (xiv) if any fact or event contemplated by Section 6(c)(iii)(D) hereof shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Transfer Restricted Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading;

        (xv) provide a CUSIP number for all Securities not later than the effective date of the Registration Statement covering such Securities and provide the Trustee under the Indenture with certificates for such Securities which are in a form eligible for deposit with The Depository Trust Company and take all other action necessary to ensure that all such Securities are eligible for deposit with The Depository Trust Company;

        (xvi) cooperate and assist in any filings required to be made with FINRA and in the performance of any due diligence investigation by any underwriter (including any "qualified independent underwriter") that is required to be retained in accordance with the rules and regulations of FINRA or the NASD;

        (xvii)  otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as practicable, a consolidated earnings statement meeting the requirements of Rule 158 (which need not be audited) for the twelve-month period (A) commencing at the end of any fiscal quarter in which Transfer Restricted Securities are sold to underwriters in a firm commitment or best efforts Underwritten Offering or (B) if not sold to underwriters in such an offering, beginning with the first month of the Company's first fiscal quarter commencing after the effective date of the Registration Statement;

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        (xviii)  cause the Indenture to be qualified under the Trust Indenture Act not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Securities to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and to execute and use commercially reasonable efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner; and

        (xix) cause all Securities covered by a Shelf Registration Statement to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed if requested by the Majority Holders or the managing underwriter(s), if any.

        Each Holder agrees by acquisition of a Transfer Restricted Security that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Section 6(c)(iii)(D) hereof or any Blackout Period described in Section 4(a) hereof, such Holder will forthwith discontinue disposition of Transfer Restricted Securities pursuant to the applicable Registration Statement until such Holder's receipt of the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xiv) hereof, or until it is advised in writing (the "Advice") by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company, each Holder will deliver to the Company (at the Company's expense) all copies, other than permanent file copies then in such Holder's possession, of the Prospectus covering such Transfer Restricted Securities that was current at the time of receipt of such notice. In the event the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 3 or 4 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6(c)(iii)(D) hereof or notice of any Blackout Period to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 6(c)(xiv) hereof or shall have received the Advice.

SECTION 7.    Registration Expenses.

        (a)   All expenses incident to the Company's and the Guarantor's performance of or compliance with this Agreement will be borne by the Company and the Guarantor, jointly and severally, regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchaser or Holder with the FINRA (and, if applicable, the fees and expenses of any "qualified independent underwriter" and its counsel that may be required by the rules and regulations of FINRA or the NASD)); (ii) all fees and expenses of compliance with federal securities and state securities or blue sky laws; (iii) all expenses of printing (including printing certificates for the Exchange Securities to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements of counsel for the Company, the Guarantor and, subject to Section 7(b) hereof, the Holders of Transfer Restricted Securities; (v) all application and filing fees in connection with listing the Exchange Securities on a securities exchange or automated quotation system pursuant to the requirements thereof; (vi) all fees and disbursements of independent certified public accountants of the Company and the Guarantor (including the expenses of any special audit and comfort letters required by or incident to such performance) and (vii) all fees and disbursements of the Trustee and its counsel.

        Each of the Company and the Guarantor will, in any event, bear its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or

12

accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or the Guarantor.

        (b)   In connection with any Registration Statement required by this Agreement (including, without limitation, the Exchange Offer Registration Statement and the Shelf Registration Statement), the Company and the Guarantor, jointly and severally, will reimburse the Initial Purchasers and the Holders of Transfer Restricted Securities being tendered in the Exchange Offer and/or resold pursuant to the "Plan of Distribution" contained in the Exchange Offer Registration Statement or registered pursuant to the Shelf Registration Statement, as applicable, for the reasonable fees and disbursements of not more than one counsel, who shall be Simpson Thacher & Bartlett LLP or such other counsel as may be chosen by the Holders of a majority in principal amount of the Transfer Restricted Securities for whose benefit such Registration Statement is being prepared.

SECTION 8.    Indemnification.

        (a)   The Company and the Guarantor, jointly and severally, agree to indemnify and hold harmless (i) each Initial Purchaser, (ii) each Holder and (iii) each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any such Initial Purchaser or Holder (any of the Persons referred to in this clause (iii) being hereinafter referred to as a "controlling person") and (iv) the respective officers, directors, partners, employees, representatives and agents of any Initial Purchaser, Holder or any controlling person (any Person referred to in clause (i), (ii), (iii) and (iv) may hereinafter be referred to as an "Indemnified Holder"), to the fullest extent lawful, from and against any and all losses, claims, damages or liabilities (or actions in respect thereof) (including, without limitation, and as incurred, reimbursement of each such Indemnified Holder for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action), joint or several, directly or indirectly arising out of or based upon any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement or Prospectus (or any amendment or supplement thereto), or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (with respect to the Prospectus, in the light of the circumstances under which they were made) not misleading, except insofar as such losses, claims, damages, liabilities or actions are caused by an untrue statement or omission or alleged untrue statement or omission that is made in reliance upon and in conformity with information relating to any of the Holders furnished in writing to the Company by any of the Holders expressly for use therein. This indemnity agreement shall be in addition to any liability that the Company or the Guarantor may otherwise have.

        In case any action or proceeding (including any governmental or regulatory investigation or proceeding) shall be brought or asserted against any of the Indemnified Holders with respect to which indemnity may be sought against the Company or the Guarantor, such Indemnified Holder (or the Indemnified Holder controlled by such controlling person) shall promptly notify the Company and the Guarantor in writing; provided, however, that the failure to give such notice shall not relieve any of the Company or the Guarantor of its obligations pursuant to this Agreement. Such Indemnified Holder shall have the right to employ its own counsel in any such action and the fees and expenses of such counsel shall be paid, as incurred, by the Company and the Guarantor (regardless of whether it is ultimately determined that an Indemnified Holder is not entitled to indemnification hereunder). The Company and the Guarantor shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for such Indemnified Holders. Any such separate firm (x) for any Initial Purchaser, its affiliates, directors and officers and any controlling persons of such Initial Purchaser shall be designated in writing by Banc of America Securities LLC, (y) for any Holder, its directors and officers and any controlling persons of such Holder shall be designated in writing by the Majority Holders and (z) in all other cases shall be

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designated in writing by the Company. The Company and the Guarantor shall be liable for any settlement of any such action or proceeding effected with the Company's and the Guarantor's prior written consent, which consent shall not be withheld unreasonably, and each of the Company and the Guarantor agrees to indemnify and hold harmless any Indemnified Holder from and against any loss, claim, damage, liability or action by reason of any settlement of any action effected with the written consent of the Company and the Guarantor. The Company and the Guarantor shall not, without the prior written consent of each Indemnified Holder, settle or compromise or consent to the entry of judgment in or otherwise seek to terminate any pending or threatened action, claim, litigation or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not any Indemnified Holder is a party thereto), unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Holder from all liability arising out of such action, claim, litigation or proceeding.

        (b)   Each Holder of Transfer Restricted Securities agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantor, the Initial Purchasers and the other selling Holders and the respective directors, officers of the Company and the Guarantor who sign a Registration Statement, and any Person controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company, the Guarantor any Initial Purchaser or any other selling Holder, and the respective officers, directors, partners, employees, representatives and agents of each such Person, to the same extent as the foregoing indemnity from the Company and the Guarantor to each of the Indemnified Holders, but only with respect to claims and actions based on information relating to such Holder furnished in writing by such Holder expressly for use in any Registration Statement or Prospectus. In case any action or proceeding shall be brought against the Company, the Guarantor or their respective directors or officers or any such controlling person in respect of which indemnity may be sought against a Holder of Transfer Restricted Securities, such Holder shall have the rights and duties given the Company and the Guarantor, and the Company, the Guarantor, their respective directors and officers and such controlling person shall have the rights and duties given to each Holder by the preceding paragraph. This indemnity agreement shall be in addition to any liability that the Holders of Transfer Restricted Securities may otherwise have.

        (c)   If the indemnification provided for in this Section 8 is unavailable to an indemnified party under Section 8(a) or (b) hereof (other than by reason of exceptions provided in those Sections) in respect of any losses, claims, damages, liabilities or actions referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantor, on the one hand, and the Holders, on the other hand, from the Initial Placement, the amount of Additional Interest which did not become payable as a result of the filing of the Registration Statement resulting in such losses, claims, damages, liabilities or actions, and such Registration Statement, or if such allocation is not permitted by applicable law, the relative fault of the Company and the Guarantor, on the one hand, and the Holders, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or actions, as well as any other relevant equitable considerations. The relative fault of the Company and the Guarantor on the one hand and of the Indemnified Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or the Guarantor, on the one hand, or the Indemnified Holders, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities or actions referred to above shall be deemed to include, subject to the limitations set forth in the second

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paragraph of Section 8(a) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.

        The Company, the Guarantor and each Holder of Transfer Restricted Securities agree that it would not be just and equitable if contribution pursuant to this Section 8(c) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or actions referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 8, none of the Holders (and its related Indemnified Holders) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total discount received by such Holder with respect to the Initial Securities exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders' obligations to contribute pursuant to this Section 8(c) are several in proportion to the respective principal amount of Initial Securities held by each of the Holders hereunder and not joint.

SECTION 9.    Rule 144 and 144A Information.    The Company shall use its reasonable best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Initial Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rules 144 and 144A. The Company agrees that it will take such further action as any Holder of Initial Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Initial Securities without registration under the Securities Act within the limitation of the exemptions provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)). The Company, upon request by the Initial Purchasers, will provide a copy of this Agreement to prospective purchasers of Initial Securities identified to the Company by the Initial Purchasers. Upon the request of any Holder of Initial Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 9 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act.

SECTION 10.    Participation in Underwritten Registrations.    No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements.

SECTION 11.    Selection of Underwriters.    The Holders of Transfer Restricted Securities covered by the Shelf Registration Statement who desire to do so may sell such Transfer Restricted Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker(s) and managing underwriter(s) that will administer such offering will be selected by the Holders of a majority in aggregate principal amount of the Transfer Restricted Securities included in such offering; provided, however, that such investment banker(s) and managing underwriter(s) must be reasonably satisfactory to the Company.

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SECTION 12.    Miscellaneous.

        (a)    Remedies.    Each of the Company and the Guarantor hereby agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive the defense in any action for specific performance that a remedy at law would be adequate.

        (b)    No Inconsistent Agreements.    Each of the Company and the Guarantor will not on or after the date of this Agreement enter into any agreement with respect to its securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. Neither the Company nor the Guarantor has previously entered into any agreement granting any registration rights with respect to the Securities to any Person. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company's or any of the Guarantor's securities under any agreement in effect on the date hereof.

        (c)    Amendments and Waivers.    The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Company have (i) in the case of Section 5 hereof and this Section 12(c)(i), obtained the written consent of Holders of all outstanding Transfer Restricted Securities and (ii) in the case of all other provisions hereof, obtained the written consent of the Majority Holders. Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose Initial Securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose Initial Securities are not being tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Transfer Restricted Securities being tendered or registered; provided, however, that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Company shall obtain the written consent of each such Initial Purchaser with respect to which such amendment, qualification, supplement, waiver, consent or departure is to be effective.

        (d)    Notices.    All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery:

        (i)    if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture;

        (ii)   if to the Company or the Guarantor:

Forest Oil Corporation
707 17^th Street, Suite 3600
Denver, Colorado 80202
Facsimile: (303) 812-1445
Attention: General Counsel

with a copy to:

Vinson & Elkins L.L.P.
666 Fifth Avenue
26^th Floor
New York, NY 10103
Facsimile: (917) 849-5337
Attention: Alan P. Baden

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and

        (iii)  if to the Initial Purchasers:

Banc of America Securities LLC
9 West 57th Street, 6th Floor
New York, New York 10019
Facsimile: (212) 901-7897
Attention: Legal Department

with a copy to:

Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile: (212) 455-2205
Attention: Walter A. Looney

        All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

        Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture.

        (e)    Successors and Assigns.    This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without limitation, and without the need for an express assignment, subsequent Holders of Transfer Restricted Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Transfer Restricted Securities from such Holder.

        (f)    Counterparts.    This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

        (g)    Headings.    The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

        (h)    Governing Law.    THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

        (i)    Severability.    In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

        (j)    Entire Agreement.    This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Transfer Restricted Securities. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter.

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        IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

		FOREST OIL CORPORATION
		By:	/s/ Cyrus D. Marter IV
		Name:	Cyrus D. Marter IV Senior Vice President,
		Title:	General Counsel and Secretary
		FOREST OIL PERMIAN CORPORATION
		By:	/s/ Cyrus D. Marter IV
		Name:	Cyrus D. Marter IV
		Title:	Vice President and Secretary
Confirmed and accepted as of the date first above written:
BANC OF AMERICA SECURITIES LLC
For itself and on behalf of the several Initial Purchasers
By	/s/ Lex Maultsby Authorized Signatory

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Exhibit 4.1
EXECUTION COPY

TABLE OF CONTENTS

EX-10.1

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Exhibit 10.1

AMENDMENT NO. 1 TO
FOREST OIL CORPORATION
2007 STOCK INCENTIVE PLAN

WHEREAS, Forest Oil Corporation (the "Company") has heretofore adopted the Forest Oil Corporation 2007 Stock Incentive Plan (the "Plan"); and

WHEREAS, pursuant to Paragraph XII of the Plan, the Company desires to amend the Plan in certain respects;

NOW, THEREFORE, the Plan shall be amended as follows, effective as of May 8, 2008:

        1.     Paragraph II(k) of the Plan shall be deleted in its entirety and the following shall be substituted therefor:

        "(k) "Director Stock Award" means a Restricted Stock Award or a Phantom Stock Award, as applicable, granted under Paragraph VIII(b) of the Plan to a Non-Employee Director."

        2.     The last two sentences of Paragraph VIII(b) of the Plan shall be deleted and the following shall be substituted therefor:

"Notwithstanding the foregoing, the Board, in its sole discretion, may elect to grant a Phantom Stock Award in lieu of any Restricted Stock Award that a Non-Employee Director would otherwise be entitled to receive pursuant to the preceding provisions of this Subparagraph VIII(b). In the event the Board elects to grant a Non-Employee Director a Phantom Stock Award in lieu of a Restricted Stock Award pursuant to this Subparagraph VIII(b), the Phantom Stock Award shall provide the Non-Employee Director the right to acquire an equivalent number of shares of Common Stock as the Non-Employee Director would otherwise have been entitled to receive under such Restricted Stock Award as described in the preceding provisions of this Subparagraph VIII(b). In the discretion of the Board (and on such terms as the Board may determine), any such Phantom Stock Award may include the right to receive dividend equivalents with respect to such Award. If, as of any date that the Plan is effect, there are not sufficient shares of Common Stock available under the Plan to allow for the grant to each Non-Employee Director of a Restricted Stock Award or Phantom Stock Award, as applicable, for the number of shares provided herein, each Non-Employee Director shall receive a Restricted Stock Award or Phantom Stock Award, as applicable, for his or her pro-rata share of the total number of shares of Common Stock then available under the Plan. Each Restricted Stock Award and Phantom Stock Award granted to a Non-Employee Director pursuant to this Subparagraph VIII(b) shall be subject to Forfeiture Restrictions determined in the discretion of the Committee prior to the time of grant of such Award."

        3.     As amended hereby, the Plan is specifically ratified and reaffirmed.

IN WITNESS WHEREOF, the undersigned, acting pursuant to authority granted to him by the Board of Directors of the Company, has caused this Amendment No. 1 to Forest Oil Corporation 2007 Stock Incentive Plan to be executed this 8th day of May, 2008.

FOREST OIL CORPORATION
By:	/s/ CYRUS D. MARTER IV Cyrus D. Marter IV Vice President, General Counsel & Secretary

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Exhibit 10.1

EX-10.2

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Exhibit 10.2

RESTRICTED STOCK AGREEMENT

THIS RESTRICTED STOCK AGREEMENT (this "Agreement") is made as of the        day of                        , 200    , between Forest Oil Corporation, a New York corporation (the "Company"), and (the "Employee").

1.    Award.    Pursuant to the Forest Oil Corporation 2001 [2007] Stock Incentive Plan, as amended (the "Plan"), as of the date of this Agreement,                        shares of the Company's common stock, par value $.10 per share (the "Restricted Stock"), shall be issued as hereinafter provided in the Employee's name subject to certain restrictions thereon, in consideration of services that the Employee has performed for the Company in 20    and services to be provided to the Company in the future. The Restricted Stock shall be issued upon acceptance of this Agreement by the Employee and upon satisfaction of the conditions of this Agreement. This award of Restricted Stock shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, which is available on http://corpweb1/. For paper copies of the Plan and prospectus please contact Stock Administration, 707 Seventeenth Street, Suite 3600, Denver, CO 80202, or call 303.812.1502. In the event of any conflict between the terms of this Agreement and the Plan, the Plan shall control.

2.    Restricted Stock.    The Employee hereby accepts the Restricted Stock when issued and agrees with respect thereto as follows:

        (a)    Forfeiture Restrictions.    The Restricted Stock may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of to the extent then subject to the Forfeiture Restrictions (as hereinafter defined), and in the event of termination of the Employee's employment with the Company for any reason other than death, Disability, or Involuntary Termination (as such terms are hereinafter defined), the Employee shall, for no consideration, forfeit to the Company all Restricted Stock to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Restricted Stock to the Company upon termination of employment are herein referred to as the "Forfeiture Restrictions." The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Restricted Stock. For purposes of this Agreement, the following capitalized words and terms shall have the meanings indicated below:

        (i)    "Board" shall mean the Board of Directors of the Company.

        (ii)   "Code" shall mean the Internal Revenue Code of 1986, as amended.

        (iii)  "Committee" shall mean the committee of the Board that is selected by the Board to administer the Plan as provided in the Plan.

        (iv)  "Corporate Change" shall mean the occurrence of any one or more of the following events:

        (A)  the Company shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company);

        (B)  the Company sells, leases or exchanges all or substantially all of its assets to any other person or entity (other than a wholly-owned subsidiary of the Company);

        (C)  the Company is to be dissolved and liquidated;

        (D)  any person or entity, including a "group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of more than 50% of the outstanding shares of the Company's voting stock (based upon voting power); or

        (E)  as a result of or in connection with a contested election of directors, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board.

        Notwithstanding the foregoing, the term "Corporate Change" shall not include any reorganization, merger or consolidation involving solely the Company and one or more previously wholly-owned subsidiaries of the Company.

        (v)   "Disability" shall mean that, as a result of the Employee's incapacity due to physical or mental illness, he shall have been absent from the full-time performance of his duties for six consecutive months, and he shall not have returned to full-time performance of his duties within 30 days after written notice of termination is given to the Employee by the Company (provided, however, that such notice may not be given prior to 30 days before the expiration of such six-month period).

        (vi)  "Involuntary Termination" shall mean any termination of the Employee's employment with the Company which does not result from a resignation by the Employee; provided, however, that the term "Involuntary Termination" shall not include a termination as a result of death, Disability, or a termination of the Employee's employment by the Company (or its subsidiaries) by reason of the Employee's unsatisfactory performance of his duties, to be determined by the Company in its sole discretion, or final conviction of a misdemeanor involving moral turpitude or a felony.

        (vii) "Section 16 Person" shall mean an officer, director or affiliate of the Company or a former officer, director or affiliate of the Company who is subject to section 16 of the Securities Exchange Act of 1934, as amended.

        (b)    Lapse of Forfeiture Restrictions.    The Forfeiture Restrictions shall lapse as to the Restricted Stock in accordance with the following schedule provided that the Employee has been continuously employed by the Company from the date of this Agreement through the lapse date:

Lapse Date Percentage of Total Number of
Shares of Restricted Stock as to
Which Forfeiture Restrictions Lapse

        Notwithstanding the foregoing, the Forfeiture Restrictions shall lapse as to all of the Restricted Stock then subject to the Forfeiture Restrictions on (i) the date of a Corporate Change provided that the Employee has been continuously employed by the Company from the date of this Agreement to the date of such Corporate Change or (ii) the date the Employee's employment with the Company is terminated by reason of death, Disability, or Involuntary Termination.

        (c)    Certificates.    A certificate evidencing the Restricted Stock shall be issued by the Company in Employee's name, pursuant to which Employee shall have all of the rights of a shareholder of the Company with respect to the Restricted Stock, including, without limitation, voting rights and the right to receive dividends; provided, however, that dividends paid in shares of the Company's stock shall be subject to the Forfeiture Restrictions. The Employee may not sell, transfer, pledge, exchange, hypothecate or otherwise dispose of the Restricted Stock until the Forfeiture Restrictions have expired and a breach of the terms of this Agreement shall cause a forfeiture of the Restricted Stock. The Company, in its discretion, may elect to complete the delivery of the Restricted Stock by means of electronic, book-entry statement, instead of issuing physical share certificates.

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        Certificates, if any, shall be delivered upon issuance to the Secretary of the Company or to such other depository as may be designated by the Committee as a depository for safekeeping until the forfeiture of such Restricted Stock occurs or the Forfeiture Restrictions lapse pursuant to the terms of the Plan and this award. Upon the lapse of the Forfeiture Restrictions, the Company shall cause a new certificate or certificates to be issued without legend (except for any legend required pursuant to applicable securities laws or any other agreement to which the Employee is a party) in the name of the Employee in exchange for the certificate evidencing the Restricted Stock, or, as may be the case, it shall issue appropriate instructions to the transfer agent if the electronic, book-entry method is utilized. In any event, the Company, in its discretion, may elect to deliver the shares in certificate form or electronically to a brokerage account established for the Employee's benefit at a brokerage financial institution selected by the Company. At the Company's request, the Employee shall deliver to the Company a stock power, endorsed in blank, relating to the Restricted Stock and the Employee agrees to complete and sign any other documents and take additional action that the Company may request to enable it to deliver the Restricted Stock on the Employee's behalf.

        (d)    Corporate Acts.    The existence of the Restricted Stock shall not affect in any way the right or power of the Board or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding. The prohibitions of Section 2(a) hereof shall not apply to the transfer of Restricted Stock pursuant to a plan of reorganization of the Company, but the stock, securities or other property received in exchange therefore shall also become subject to the Forfeiture Restrictions and provisions governing the lapsing of such Forfeiture Restrictions applicable to the original Restricted Stock for all purposes of this Agreement and the certificates representing such stock, securities or other property shall include a legend to show such restrictions.

3.    Withholding of Tax.    To the extent that the receipt of the Restricted Stock or the lapse of any Forfeiture Restrictions results in compensation income or wages to the Employee for federal, state or local income tax purposes, the Employee shall deliver to the Company at the time of such receipt or lapse, as the case may be, such amount of shares of common stock of the Company or money as the Company may require to meet its obligation under applicable tax laws or regulations, in accordance with the sub-sections below.

        (a)    Non Section 16 Persons.    The Employee shall automatically surrender to the Company shares of stock of the Company subject to this Agreement and with respect to which the Forfeiture Restrictions lapse (valued at their fair market value on the date of surrender of such shares) to satisfy any tax required to be withheld by reason of compensation income or wages resulting under this Agreement, unless the Employee elects to deliver to the Company a check in the amount of the required taxes at the time of the lapse of the Forfeiture Restrictions. An election pursuant to the preceding sentence shall be referred to herein as a "Withholding Election," and the Company retains the right to impose conditions on the withholding election right. All Withholding Elections shall be made by written notice to the Company at its principal executive office addressed to the attention of the Secretary. So long as the Employee is not a Section 16 Person, the Employee may revoke such election by delivering to the Secretary written notice of such revocation at least 5 business days prior to the date such election is implemented through actual surrender or withholding of shares of stock of the Company.

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        (b)    Section 16 Persons.    Notwithstanding the foregoing, if the Employee is a Section 16 Person, the Employee must provide the Company with an election form that must:

        (i)    be in writing, signed, irrevocable and delivered at least six months prior to the date any tax withholding is required by reason of this Agreement (the "Withholding Date") and either (1) authorize the surrender to the Company by the Employee of shares of stock of the Company subject to this Agreement and with respect to which the Forfeiture Restrictions lapse sufficient to satisfy any tax required to be withheld by reason of compensation income or wages resulting under this Agreement, or (2) confirm that the Employee will deliver to the Company a check in the amount of the required taxes at the time of the lapse of the Forfeiture Restrictions, or

        (ii)   (a) be approved by the Committee, either before or after such election is made, (b) be made, and the Withholding Date occur, during a period beginning on the third business day following the date of release by the Company for publication of quarterly and annual summary statements of sales and earnings and ending on the thirtieth day following such date, and (c) be made more than six months after the effective date of this Agreement.

        (c)   If the Employee fails to pay the required amount to the Company or fails to make an election pursuant to the foregoing sub-sections (a) or (b), the Company is authorized to withhold from any cash remuneration (or, if the Employee is not a Section 16 Person, stock remuneration, including withholding any Restricted Stock distributable to the Employee under this Agreement) then or thereafter payable to the Employee any tax required to be withheld by reason of compensation income or wages resulting under this Agreement or the disposition of Restricted Stock acquired under this Agreement.

4.    Status of Stock.    The Employee agrees that the Restricted Stock issued under this Agreement will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws. The Employee also agrees that (i) certificates, if any, representing the Restricted Stock may bear such legend or legends as the Committee deems appropriate in order to reflect the Forfeiture Restrictions and to assure compliance with applicable securities laws, (ii) the Company may refuse to register the transfer of the Restricted Stock on the stock transfer records of the Company if such proposed transfer would constitute a violation of the Forfeiture Restrictions or, in the opinion of counsel satisfactory to the Company, of any applicable securities law, and (iii) the Company may give related instructions to its transfer agent, if any, to stop registration of the transfer of the Restricted Stock.

5.    Employment Relationship.    For purposes of this Agreement, the Employee shall be considered to be in the employment of the Company as long as the Employee remains an employee of either the Company, an Affiliate (as such term is defined in the Plan), or any successor corporation. Without limiting the scope of the preceding sentence, it is expressly provided that the Employee shall be considered to have terminated employment with the Company at the time of the termination of the "Affiliate" status under the Plan of the entity or other organization that employs the Employee. Nothing in the adoption of the Plan, nor the award of the Restricted Stock thereunder pursuant to this Agreement, shall confer upon the Employee the right to continued employment by the Company or affect in any way the right of the Company to terminate such employment at any time. Unless otherwise provided in a written employment agreement or by applicable law, the Employee's employment by the Company shall be on an at-will basis, and the employment relationship may be terminated at any time by either the Employee or the Company for any reason whatsoever, with or without cause. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee, and its determination shall be final.

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6.    Notices.    Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of the Employee, such notices or communications shall be effectively delivered if hand delivered to the Employee at his principal place of employment or if sent by registered or certified mail to the Employee at the last address the Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail to the Company at its principal executive offices.

7.    Parachute Payment.    In the event that the receipt of the Restricted Stock or the lapse of any Forfeiture Restrictions would constitute a parachute payment (within the meaning of section 280G of the Code) at a time when the Employee's Severance Agreement, if any, with the Company that is in effect as of the date hereof (or any successor agreement) is in effect, then the amount of such parachute payment shall be treated as a payment to the Employee for purposes of determining the amount of any gross-up payment to be made to the Employee under the terms of any such Severance Agreement (or any successor agreement) with respect to the excise tax imposed by Section 4999 of the Code.

8.    Entire Agreement; Amendment.    This Agreement replaces and merges all previous agreements and discussions relating to the same or similar subject matters between the Employee and the Company and constitutes the entire agreement between the Employee and the Company with respect to the subject matter of this Agreement. This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. Except as provided below, any modification of this Agreement shall be effective only if it is in writing and signed by both the Employee and an authorized officer of the Company.

9.    Binding Effect.    This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Employee.

10.    Controlling Law.This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Employee has executed this Agreement, all as of the date first above written.

FOREST OIL CORPORATION
By:
	Cyrus D. Marter IV Senior Vice President, General Counsel and Secretary
EMPLOYEE
	[EMPLOYEE NAME] SS#:

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Exhibit 10.2

EX-10.3

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Exhibit 10.3

FOREST OIL CORPORATION
PHANTOM STOCK UNIT AGREEMENT

        This Phantom Stock Unit Agreement ("Agreement") is made as of the            day of            , 20    ("Date of Grant"), between Forest Oil Corporation, a New York corporation ("Forest"), and EMPLOYEE NAME ("Employee"). The defined term "Company" shall include Forest and its Affiliates, as defined in the Forest Oil Corporation 2001 [2007] Stock Incentive Plan (the "Plan").

        1.    Award.    In consideration of the services that the Employee has provided to the Company and the services to be provided by Employee to the Company in Canada in the future, Forest hereby makes a grant of Phantom Stock Units (as defined below) subject to the terms and conditions contained herein and in the Plan, which is available on the Forest intranet at the following site: http://corpweb1/. For paper copies of the Plan and prospectus please contact Stock Administration, 707 Seventeenth Street, Suite 3600, Denver, CO 80202, or call 303.812.1502.

        (a)    Units.    Pursuant to the Plan, units (the "Phantom Stock Units"), shall be issued as hereinafter provided in Employee's name subject to certain restrictions thereon. The Phantom Stock Units may be settled in shares of Forest common stock ("Shares") or the value of the Shares, paid in cash, or any combination thereof, as determined by the Committee (as defined in Section 2 below). The Phantom Stock Units constitute a "Phantom Stock Award" under the Plan.

        (b)    Grant of Phantom Stock Units.    The Phantom Stock Units shall be issued upon acceptance hereof by Employee and upon satisfaction of the conditions of this Agreement. The Employee acknowledges and agrees that this award of Phantom Stock Units shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof. In the event of any conflict between the terms of this Agreement and the Plan, the Plan shall control.

        2.    Phantom Stock Units.    The Employee hereby accepts the Phantom Stock Units when issued and agrees with respect thereto as follows:

        (a)    Forfeiture Restrictions.    The Phantom Stock Units granted hereunder may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of to the extent then subject to the Forfeiture Restrictions (as hereinafter defined), and in the event of termination of the Employee's employment with the Company for any reason other than death, Disability, or Involuntary Termination (as such terms are hereinafter defined), the Employee shall, for no consideration, forfeit to the Company all Phantom Stock Units to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Phantom Stock Units to the Company upon termination of employment are herein referred to as the "Forfeiture Restrictions." The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Phantom Stock Units. For purposes of this Agreement, the following capitalized words and terms shall have the meanings indicated below:

        (i)    "Board" shall mean the Board of Directors of Forest.

        (ii)   "Committee" shall mean the committee of the Board that is selected by the Board to administer the Plan as provided in the Plan.

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        (iii)  "Corporate Change" shall mean the occurrence of any one or more of the following events:

        (A)  Forest shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of Forest);

        (B)  Forest sells, leases or exchanges all or substantially all of its assets to any other person or entity (other than a wholly-owned subsidiary of Forest);

        (C)  Forest is to be dissolved and liquidated;

        (D)  any person or entity, including a "group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of more than 50% of the outstanding shares of Forest's voting stock (based upon voting power); or

        (E)  as a result of or in connection with a contested election of directors, the persons who were directors of Forest before such election shall cease to constitute a majority of the Board.

        Notwithstanding the foregoing, the term "Corporate Change" shall not include any reorganization, merger or consolidation involving solely Forest and one or more previously wholly-owned subsidiaries of Forest.

        (iv)  "Disability" shall mean that, as a result of the Employee's incapacity due to physical or mental illness, the Employee shall have been absent from the full-time performance of his duties for six consecutive months, and he shall not have returned to full-time performance of his duties within 30 days after written notice of termination is given to the Employee by the Company (provided, however, that such notice may not be given prior to 30 days before the expiration of such six-month period).

        (v)   "Involuntary Termination" shall mean any termination of the Employee's employment with the Company which does not result from a resignation by the Employee; provided, however, that the term "Involuntary Termination" shall not include a termination as a result of death, Disability, or a termination of the Employee's employment by the Company by reason of the Employee's unsatisfactory performance of his duties, to be determined by the Company in its sole discretion, or final conviction of a misdemeanor involving moral turpitude or a felony.

        (vi)  "Section 16 Person" shall mean an officer, director or affiliate of Forest or a former officer, director or affiliate of Forest who is subject to section 16 of the Securities Exchange Act of 1934, as amended.

        (vii) "Vesting Date" shall mean the date, if any, upon which the Forfeiture Restrictions Lapse pursuant to Section 2(b) below.

        (b)    Lapse of Forfeiture Restrictions.    The Forfeiture Restrictions shall lapse and cease to apply to Phantom Stock Units according to the following schedule provided that Employee has been continuously employed by the Company from the date of this Agreement through the lapse date:

Percentage of Units Vesting Vesting Date

2

        Notwithstanding the foregoing, the Forfeiture Restrictions shall lapse as to all of the Phantom Stock Units then subject to the Forfeiture Restrictions, and the Vesting Date for such Phantom Stock Units shall be: (i) the date of a Corporate Change provided that the Employee has been continuously employed by the Company from the date of this Agreement to the date of such Corporate Change or (ii) the date the Employee's employment with the Company is terminated by reason of death, Disability, or Involuntary Termination.

        Phantom Stock Units shall vest and the Forfeiture Restrictions shall lapse with respect to 100% of the Phantom Stock Units on the Vesting Date. As soon as reasonably practicable after the Vesting Date (but in no event later than March 15 of the calendar year following the calendar year in which the Vesting Date occurs), the Company will transfer Shares to the Employee and/or make payment of the value of the Shares in cash, or any combination thereof, as determined by the Committee, subject to (a) the Employee's satisfaction of applicable taxes and other required source deductions (as described in Section 2(d) below) and (b) the condition that if at any time the Board or the Committee shall determine in its discretion that the listing, registration, or qualification of the Shares is required under any federal, provincial or state law or under any securities exchange, or consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance of the Shares, then this grant of Phantom Stock Units will not vest or be settled through the issuance or delivery of Shares, as determined by the Committee, in whole or in part unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Any certificates shall include such legends as the Committee, in its sole discretion, may determine to be necessary or advisable in order to comply with applicable federal, provincial or state securities laws. Where Phantom Stock Units are settled through the delivery of Shares in whole or in part, the Company, in its sole discretion, may elect to deliver the certificate either in certificate form or in electronic, book-entry form to a brokerage account established for the Employee's benefit at a brokerage/financial institution selected by the Company. The Employee agrees to complete and sign any documents and take additional action that the Company may request to enable it to deliver the Shares on the Employee's behalf.

        If the employment of the Employee with the Company terminates prior to the lapse of the Forfeiture Restrictions, and there exists a dispute between the Employee and the Company or the Committee as to the satisfaction of the conditions to the lapse of the Forfeiture Restrictions or the terms and conditions of the grant, the Phantom Stock Units and all rights, property and interests associated therewith shall remain subject to the Forfeiture Restrictions until the resolution of such dispute.

        (c)    Settlement.    Settlement of vested Phantom Stock Units in Shares shall be made by delivery from the Company of one Share for each whole Phantom Stock Unit then being settled in Shares. Settlement of vested Phantom Stock Units in cash shall be made by payment from the Company of an aggregate amount equal to:

The product of:

*

the Fair Market Value of a Share as determined in accordance with Paragraph II of the Plan on the applicable settlement date specified by the Committee,

multiplied by:

*

the number of Phantom Stock Units (including fractional units) then being settled in cash.

        Any cash payment in settlement of Phantom Stock Units shall be payable in Canadian dollars.

3

        (d)    Withholding of Taxes and Other Required Source Deductions.    To the extent that the receipt of the Phantom Stock Units or the settlement of Phantom Stock Units results in compensation, wages or other taxable employment income to the Employee for federal, state, provincial or local tax purposes, the Employee shall deliver to the Company at the time of such receipt or settlement, as the case may be, such amount in Canadian dollars or Shares as the Company may require to meet its obligation under applicable tax laws or regulations, in accordance with the sub-sections below.

        (i)    Non Section 16 Persons.

        (A)  Settlement in Shares—The Employee shall automatically surrender to the Company Shares (valued at their Fair Market Value on the date of surrender of such Shares) to satisfy any tax or other required source deductions required to be withheld by reason of compensation, wages or other taxable employment income resulting under this Agreement if the Phantom Stock Units are settled in Shares, unless the Employee elects to deliver to the Company at the time of the settlement of the Phantom Stock Units a check in the amount of the required taxes. An election pursuant to the preceding sentence shall be referred to herein as a "Withholding Election," and the Company retains the right to impose conditions on the withholding election right.

        (B)  Settlement in Cash—If the Phantom Stock Units are settled in cash, the Company shall automatically deduct from the amount of the cash payment the amount that is required to allow the Company to meet its obligation under applicable laws or regulations as provided in sub-section (iii) below.

        (ii)    Section 16 Persons.

        (A)  Notwithstanding the foregoing, if the Employee is a Section 16 Person and the Phantom Stock Units are settled in Shares, the Employee must provide the Company with an election form that must:

(1)

be in writing, signed, irrevocable and delivered at least six months prior to the withholding date and either (x) authorize the Company to withhold Shares sufficient to satisfy any tax or other required source deductions, or (y) confirm that the Employee will deliver to the Company a check in the amount of the required taxes at the time of settlement, except as provided below, and



(2)

comply with the Company's insider trading policies and special trading procedures for directors and officers as in effect from time to time.

        (B)  If the Phantom Stock Units are settled in cash, the Company shall automatically deduct from the amount of the cash the payment the amount that is required to allow the Company to meets its obligations under applicable laws or regulations as provided in sub-section (iii) below.

        (iii)    Payment of Taxes.    Taxes and other required source deductions arising in connection with the Vesting Date will be due and payable at the time of settlement of the Phantom Stock Units. If the Phantom Stock Units are settled in cash, the Company shall automatically deduct from the amount of the cash payment described in paragraph 2(c) the amount that is required to allow the Company to meet its obligations under applicable laws or regulations. In any event, if the Employee fails to deliver to the Company payment of the required amounts described above on or before 5:00 p.m. on December 29 of the calendar year in which the Vesting Date occurs, or fails to make a Withholding Election, the Company is authorized, in its sole discretion, to withhold from any cash value or, if the Employee is not a Section 16 Person, withhold any Shares distributable to the Employee under this Agreement, any tax or

4

other source deductions required to be withheld by reason of compensation income or wages resulting under this Agreement.

        (e)    Corporate Acts.    The existence of the Phantom Stock Units shall not affect in any way the right or power of the Board or the shareholders of Forest to make or authorize any adjustment, recapitalization, reorganization or other change in Forest's capital structure or its business, any merger or consolidation of Forest, any issue of debt or equity securities, the dissolution or liquidation of Forest or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding. Prior to the settlement date, the Committee shall have the right, in its sole discretion, to determine to make or determine not to make adjustments to any Phantom Stock Units in the event of a recapitalization, reorganization or other change in the Company's capital structure or business, or any merger or business consolidation as described in the Plan.

        3.    Rights as Stockholder.    The Phantom Stock Units represent an unsecured and unfunded right to receive a payment in Shares or cash, as applicable, which right is subject to the terms, conditions and restrictions set forth in this Agreement and the Plan. Accordingly, the Employee will have no rights as a stockholder with respect to any Shares covered by this Phantom Stock Unit Agreement until the Phantom Stock Units vest and the Shares, if any, are issued by the Company and are deposited in the Employee's account at a transfer agent or other custodian selected by the Committee, or are issued to the Employee with respect to those vested Shares.

        4.    Employment Relationship.    A period of notice, if any, or payment in lieu thereof, upon termination of employment, wrongful or otherwise, shall not be considered as extending the period of employment for the purposes of this Agreement. Without limiting the scope of the preceding sentence, it is expressly provided that the Employee shall be considered to have terminated employment with the Company at the time of the termination of the "Affiliate" status under the Plan of the entity or other organization that employs the Employee. Nothing in the adoption of the Plan, nor the award of Phantom Stock Units thereunder pursuant to this Agreement, shall confer upon the Employee the right to continued employment by the Company or affect in any way the right of the Company to terminate such employment at any time. Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee, and its determination shall be final. The Employee waives any and all right to compensation or damages in consequence of termination of employment (whether lawfully or unlawfully) or otherwise whatsoever insofar as those rights arise or may arise from the Employee's ceasing to have rights under or be entitled to receive any Shares or cash payment under the Plan as a result of such termination of employment or pursuant to Section 2(a) of this Agreement.

        5.    Committee's Powers.    No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering, any of the powers, rights or authority vested in the Committee pursuant to the terms of the Plan, including, without limitation, the Committee's rights to make certain determinations and elections with respect to the Phantom Stock Units.

        6.    Resolution of Disputes.    As a condition of the granting of the Phantom Stock Units hereby, the Employee and the Employee's heirs, personal representatives and successors agree that any dispute or disagreement which may arise hereunder shall be determined by the Committee in its sole discretion and judgment, and that any such determination and any interpretation by the Committee of this Agreement shall be final and shall be binding and conclusive, for all purposes, upon the Company, Employee, Employee's heirs, personal representatives and successors or any person or entity claiming through any of them.

        7.    Binding Effect.    This Agreement shall be binding upon and enure to the benefit of any successor to the Company and all persons lawfully claiming under the Employee.

5

        8.    Entire Agreement; Amendment.    This Agreement replaces and merges all previous agreements and discussions relating to the same or similar subject matters between the Employee and the Company and constitutes the entire agreement between the Employee and the Company with respect to the subject matter of this Agreement. This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document. Any modification of this Agreement shall be effective only if it is in writing and signed by both the Employee and an authorized officer of the Company.

        9.    Notices.    Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of the Employee, such notices or communications shall be effectively delivered if hand delivered to the Employee at his principal place of employment or if sent by registered or certified mail to the Employee at the last address the Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail to Forest at its principal executive offices.

        10.    Controlling Law.    This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

IN WITNESS WHEREOF, Forest has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Employee has executed this Agreement, all as of the date first above written.

FOREST OIL CORPORATION
By:
	Cyrus D. Marter IV Senior Vice President, General Counsel and Secretary
EMPLOYEE
[Employee Name]

6

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Exhibit 10.3

EX-10.4

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Exhibit 10.4

Form of Non-Employee Director Phantom Stock Unit Agreement

PHANTOM STOCK UNIT AGREEMENT

THIS PHANTOM STOCK UNIT AGREEMENT (this "Agreement") is made as of the        day of                  , 2008, between Forest Oil Corporation, a New York corporation (the "Company"), and                        (the "Director").

1.    Award.    Pursuant to the Forest Oil Corporation 2007 Stock Incentive Plan (the "Plan"), as of the date of this Agreement, and in consideration of the services that the Director has provided to the Company and the services to be provided by the Director to the Company in the future, the Company hereby makes a grant of Phantom Stock Units (as defined below).

        (a)    Units.    Pursuant to the Plan,            units (the "Phantom Stock Units"), shall be issued as hereinafter provided in the Director's name subject to certain restrictions thereon. The Phantom Stock Units shall be settled in shares of the Company's common stock, par value $.10 per share (the "Shares"). The Phantom Stock Units constitute a "Phantom Stock Award" under the Plan.

        (b)    Grant of Phantom Stock Units.    The Phantom Stock Units shall be issued upon acceptance hereof by the Director and upon satisfaction of the conditions of this Agreement. The Director acknowledges receipt of a copy of the Plan and agrees that this award of Phantom Stock Units shall be subject to all of the terms and provisions of the Plan, including future amendments thereof, if any, pursuant to the terms thereof. In the event of any conflict between the terms of this Agreement and the Plan, the Plan shall control.

2.    Definitions.    Capitalized terms used in this Agreement that are not defined below or in the body of this Agreement shall have the meanings given to them in the Plan. In addition to the terms defined in the body of this Agreement, the following capitalized words and terms shall have the meanings indicated below:

        (c)   "Corporate Change" shall mean the occurrence of any one or more of the following events:

          (i)  the Company shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company);

         (ii)  the Company sells, leases or exchanges all or substantially all of its assets to any other person or entity (other than a wholly-owned subsidiary of the Company);

        (iii)  the Company is to be dissolved and liquidated;

        (iv)  any person or entity, including a "group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of more than 50% of the outstanding shares of the Company's voting stock (based on voting power); or

         (v)  as a result of or in connection with a contested election of directors, the persons who were directors of the Company before such election shall cease to constitute a majority of the Board.

Notwithstanding the foregoing, the term "Corporate Change" shall not include any reorganization, merger or consolidation involving solely the Company and one or more previously wholly-owned subsidiaries of the Company.

1

        (d)   "Disability" shall mean that, in the determination of the Board in its discretion, the Director is permanently and totally unable to serve as a member of the Board as a result of any medically determinable physical or mental impairment as supported by a written medical opinion to the foregoing effect by a physician selected by the Board (unless the Board determines that such medical opinion is not necessary).

        (e)   "Forfeiture Restrictions" shall have the meaning specified in Section 3(a) hereof.

        (f)    "Vesting Date" shall mean the date, if any, upon which the Forfeiture Restrictions lapse pursuant to Section 3(b) below.

3.    Terms of Phantom Stock Unit Grant.    The Director hereby accepts the Phantom Stock Units when granted and agrees with respect thereto as follows:

        (g)Forfeiture Restrictions.    The Phantom Stock Units may not be sold, assigned, pledged, exchanged, hypothecated or otherwise transferred, encumbered or disposed of to the extent then subject to the Forfeiture Restrictions, and in the event of termination of the Director's membership on the Board prior to the Vesting Date for any reason other than death or Disability, the Director shall, for no consideration, forfeit to the Company all Phantom Stock Units to the extent then subject to the Forfeiture Restrictions. The prohibition against transfer and the obligation to forfeit and surrender Phantom Stock Units to the Company upon termination of membership on the Board as provided in the preceding sentence are herein referred to as the "Forfeiture Restrictions." The Forfeiture Restrictions shall be binding upon and enforceable against any transferee of Phantom Stock Units.

        (h)Lapse of Forfeiture Restrictions and Settlement of Phantom Stock Units.    Provided that the Director has continuously served as a member of the Board from the date of this Agreement through the vesting date described in this sentence, the Phantom Stock Units shall vest and the Forfeiture Restrictions shall lapse with respect to 100% of the Phantom Stock Units on the earlier of (i)                   , 20    , (ii) the date upon which a Corporate Change occurs, or (iii) the date upon which the Director's membership on the Board is terminated by reason of death or Disability. Settlement of vested Phantom Stock units shall be made by delivery from the Company of one Share for each whole Phantom Stock Unit.

As soon as reasonably practicable after the Vesting Date (but in no event later than December 15 of the calendar year in which the Vesting Date occurs), the Company will transfer Shares to the Director in settlement of the Director's vested Phantom Stock Units, subject to (a) the Director's satisfaction of applicable taxes and other required source deductions (as described in Section 4) and (b) the condition that if at any time the Board or the Committee shall determine in its discretion that the listing, registration, or qualification of the Shares is required under any federal, provincial or state law or under any securities exchange, or consent or approval of any governmental regulatory body is necessary or desirable as a condition of, or in connection with, the issuance of the Shares, then this grant of Phantom Stock Units will not vest in whole or in part unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Upon the lapse of the Forfeiture Restrictions without forfeiture, the Company shall cause the applicable number of Shares to be issued in the name of the Director in exchange for and as settlement of the vested Phantom Stock Units. The Company, in its sole discretion, may elect to deliver the Shares either in certificate form or in electronic, book-entry form to a brokerage account established for the Director's benefit at a brokerage/financial institution selected by the Company. Certificates, if any, shall include such legends as the Committee, in its sole discretion, may determine to be necessary or advisable in order to comply with applicable federal, provincial or state securities laws. The Director agrees to complete and sign any documents, including stock powers, and to take any additional action that the Company may request to enable it to deliver the Shares on the

2

Director's behalf. Further, the Director agrees that any Shares issued under this Agreement will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal, provincial or state securities laws.

        (i)Corporate Acts.    The existence of the Phantom Stock Units shall not affect in any way the right or power of the Board or the shareholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of debt or equity securities, the dissolution or liquidation of the Company or any sale, lease, exchange or other disposition of all or any part of its assets or business or any other corporate act or proceeding. Prior to the settlement date, the Committee shall have the right, in its sole discretion, to determine to make or determine not to make adjustments to any Phantom Stock Units in the event of a recapitalization, reorganization or other change in the Company's capital structure or business, or any merger or business consolidation as described in the Plan.

4.    Withholding of Tax.    To the extent that the receipt of the Phantom Stock Units or the settlement of Phantom Stock Units results in compensation income, wages or other taxable income to the Director for federal, state, provincial or local tax purposes, the Director shall deliver to the Company at the time of such receipt or settlement, as the case may be, such amount of money as the Company may require to meet its minimum obligation under applicable tax laws or regulations, and if the Director fails to do so, the Company is authorized to withhold from any cash or stock remuneration (including withholding any Shares distributable to the Director under this Agreement) then or thereafter payable to the Director any tax or other source deductions required to be withheld by reason of such resulting compensation income or wages. The Director acknowledges and agrees that the Company is making no representation or warranty as to the tax consequences to the Director as a result of the grant, settlement or forfeiture of Phantom Stock Units.

5.    Membership on the Board.    Nothing in the adoption of the Plan, nor the award of the Phantom Stock Units thereunder pursuant to this Agreement, shall confer upon the Director the right to continued membership on the Board or affect in any way the right of the Company to terminate such membership at any time. Any question as to whether and when there has been a termination of the Director's membership on the Board, and the cause of such termination, shall be determined by the Board or its delegate, and its determination shall be final.

6.    Rights as Holder of Phantom Stock Units.    The Phantom Stock Units represent an unsecured and unfunded right to receive a payment in Shares, which right is subject to the terms, conditions and restrictions set forth in this Agreement and the Plan. Accordingly, the Director will have no rights as a stockholder with respect to any Shares covered by this Phantom Stock Unit Agreement until the Phantom Stock Units vest and the Shares, if any, are issued by the Company and are deposited in the Director's account at a transfer agent or other custodian selected by the Committee. Notwithstanding the preceding provisions of this Section 6 to the contrary, if the Company pays dividends to holders of its common stock prior to the earlier of the forfeiture of the Phantom Stock Units or the transfer to the Director of Shares in settlement of vested Phantom Stock Units, then the Director shall be entitled to receive dividend equivalents payable in the same amount, time and form with respect to each Phantom Stock Unit as is applicable to a share of the Company's common stock; provided, however, that (a) dividends paid in shares of the Company's stock shall be subject to the Forfeiture Restrictions and shall be paid to the Director only if and when Shares are transferred to the Director in settlement of vested Phantom Stock Units and (b) dividends paid other than in shares of the Company's stock shall be paid no later than the end of the calendar year in which the dividend for such class of stock is paid to stockholders of such class.

7.    Committee's Powers.    No provision contained in this Agreement shall in any way terminate, modify or alter, or be construed or interpreted as terminating, modifying or altering, any of the powers,

3

rights or authority vested in the Committee pursuant to the terms of the Plan, including, without limitation, the Committee's rights to make certain determinations and elections with respect to the Phantom Stock Units.

8.    Resolution of Disputes.    As a condition of the granting of the Phantom Stock Units hereby, the Director and the Director's heirs, personal representatives and successors agree that any dispute or disagreement which may arise hereunder shall be determined by the Committee in its sole discretion and judgment, and that any such determination and any interpretation by the Committee of this Agreement shall be final and shall be binding and conclusive, for all purposes, upon the Company, Director, Director's heirs, personal representatives and successors or any person or entity claiming through any of them.

9.    Notices.    Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of the Director, such notices or communications shall be effectively delivered if hand delivered to the Director or if sent by registered or certified mail to the Director at the last address the Director has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered if sent by registered or certified mail to the Company at its principal executive offices.

10.    Entire Agreement; Amendment.    This Agreement replaces and merges all previous agreements and discussions relating to the same or similar subject matters between the Director and the Company and constitutes the entire agreement between the Director and the Company with respect to the subject matter of this Agreement. This Agreement may not be modified in any respect by any verbal statement, representation or agreement made by any employee, officer, or representative of the Company or by any written agreement unless signed by an officer of the Company who is expressly authorized by the Company to execute such document.

11.    Binding Effect; Survival.    This Agreement shall be binding upon and inure to the benefit of any successors to the Company and all persons lawfully claiming under the Director. The provisions of Section 3(b) shall survive the lapse of the Forfeiture Restrictions without forfeiture.

12.    Controlling Law.This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York.

IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and the Director has executed this Agreement, all as of the date first above written.

FOREST OIL CORPORATION

By:

Name:

Title:

DIRECTOR

4

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Exhibit 10.4

EX-31.1

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Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

I, H. Craig Clark, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Forest Oil Corporation;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;



5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):



a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and



b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	/s/ H. CRAIG CLARK
August 7, 2008	H. Craig Clark President and Chief Executive Officer

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Exhibit 31.1

EX-31.2

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Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

I, David H. Keyte, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Forest Oil Corporation;



2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;



3.

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;



4.

The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:



a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;



b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;



c)

Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and



d)

Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;



5.

The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):



a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and



b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

	/s/ DAVID H. KEYTE
August 7, 2008	David H. Keyte Executive Vice President and Chief Financial Officer

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Exhibit 31.2

EX-32.1

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Exhibit 32.1

CERTIFICATION OF
CHIEF EXECUTIVE OFFICER
OF FOREST OIL CORPORATION
PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. Section 1350 and in connection with the accompanying report on Form 10-Q for the quarter ended June 30, 2008 that is being filed concurrently with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned officer of Forest Oil Corporation (the "Company") hereby certifies that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ H. CRAIG CLARK
August 7, 2008	H. Craig Clark President and Chief Executive Officer

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Exhibit 32.1

EX-32.2

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Exhibit 32.2

CERTIFICATION OF
CHIEF FINANCIAL OFFICER
OF FOREST OIL CORPORATION
PURSUANT TO 18 U.S.C. SECTION 1350

Pursuant to 18 U.S.C. Section 1350 and in connection with the accompanying report on Form 10-Q for the quarter ended June 30, 2008 that is being filed concurrently with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned officer of Forest Oil Corporation (the "Company") hereby certifies that:

1.

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and



2.

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

	/s/ DAVID H. KEYTE
August 7, 2008	David H. Keyte Chief Financial Officer

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Exhibit 32.2