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 September 30, 2010
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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). 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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

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 October 29, 2010 there were 113,383,660 shares of the registrant's common stock, par value $.10 per share, outstanding.

FOREST OIL CORPORATION
INDEX TO FORM 10-Q
September 30, 2010

Part I—FINANCIAL INFORMATION			1
	Item 1—Financial Statements		1
		Condensed Consolidated Balance Sheets as of September 30, 2010 and December 31, 2009	1
		Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2010 and 2009	2
		Condensed Consolidated Statement of Shareholders' Equity for the Nine Months Ended September 30, 2010	3
		Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2010 and 2009	4
		Notes to Condensed Consolidated Financial Statements	5
	Item 2—Management's Discussion and Analysis of Financial Condition and Results of Operations		28
	Item 3—Quantitative and Qualitative Disclosures About Market Risk		41
	Item 4—Controls and Procedures		44
Part II—OTHER INFORMATION			46
	Item 1A.—Risk Factors		46
	Item 2—Unregistered Sales of Equity Securities and Use of Proceeds		46
	Item 6—Exhibits		47
Signatures			48

i

PART I—FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS

FOREST OIL CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In Thousands, Except Share Data)

				September 30, 2010			December 31, 2009
ASSETS
Current assets:
	Cash and cash equivalents			$	251,599			467,221
	Accounts receivable				102,709			126,354
	Derivative instruments				91,784			35,643
	Deferred income taxes				—			7,108
	Inventory				40,445			52,211
	Other current assets				50,858			41,455
		Total current assets			537,395			729,992
Property and equipment, at cost:
	Oil and gas properties, full cost method of accounting:
		Proved, net of accumulated depletion of $7,706,181 and $7,511,661			1,725,430			1,316,712
		Unproved			808,220			828,645
			Net oil and gas properties		2,533,650			2,145,357
	Other property and equipment, net of accumulated depreciation and amortization of $47,864 and $54,810				81,645			113,850
			Net property and equipment		2,615,295			2,259,207
Deferred income taxes					301,940			393,061
Goodwill					256,259			255,908
Derivative instruments					24,251			556
Other assets					40,290			45,966
				$	3,775,430			3,684,690
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable and accrued liabilities			$	271,644			284,302
	Accrued interest				34,705			25,755
	Derivative instruments				14,071			41,358
	Deferred income taxes				25,840			—
	Current portion of long-term debt				—			156,678
	Asset retirement obligations				1,690			4,853
	Other current liabilities				21,498			22,074
		Total current liabilities			369,448			535,020
Long-term debt					1,868,453			1,865,836
Asset retirement obligations					85,871			88,450
Derivative instruments					5,034			826
Deferred income taxes					54,329			46,884
Other liabilities					73,166			68,520
	Total liabilities				2,456,301			2,605,536
Shareholders' equity:
	Preferred stock, none issued and outstanding				—			—
	Common stock, 113,359,349 and 112,337,315 shares issued and outstanding				11,336			11,234
	Capital surplus				2,675,128			2,652,689
	Accumulated deficit				(1,441,099	)		(1,652,426	)
	Accumulated other comprehensive income				73,764			67,657
	Total shareholders' equity				1,319,129			1,079,154
				$	3,775,430			3,684,690

See accompanying Notes to Condensed Consolidated Financial Statements.

1

FOREST OIL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In Thousands, Except Per Share Amounts)

			Three Months Ended September 30,						Nine Months Ended September 30,
			2010			2009			2010			2009
Revenues:
	Oil and gas sales		$	210,181			177,184			639,864			553,473
	Interest and other			206			(42	)		483			602
Total revenues				210,387			177,142			640,347			554,075
Costs, expenses, and other:
	Lease operating expenses			30,177			34,938			87,701			114,205
	Production and property taxes			13,376			10,873			37,291			34,359
	Transportation and processing costs			6,210			5,352			17,089			15,918
	General and administrative			18,007			17,316			54,541			49,050
	Depreciation, depletion, and amortization			64,737			65,275			179,495			237,964
	Ceiling test write-down of oil and gas properties			—			—			—			1,575,843
	Interest expense			37,088			42,653			112,240			122,373
	Realized and unrealized gains on derivative instruments, net			(59,156	)		(5,665	)		(177,398	)		(112,212	)
	Other, net			(6,396	)		(2,060	)		159			5,097
		Total costs, expenses, and other		104,043			168,682			311,118			2,042,597
Earnings (loss) before income taxes				106,344			8,460			329,229			(1,488,522	)
Income tax:
	Current			(16,814	)		—			(12,089	)		1,505
	Deferred			54,247			(163,851	)		129,991			(521,706	)
		Total income tax		37,433			(163,851	)		117,902			(520,201	)
Net earnings (loss)			$	68,911			172,311			211,327			(968,321	)
Basic earnings (loss) per common share			$	.61			1.53			1.87			(9.46	)
Diluted earnings (loss) per common share			$	.60			1.53			1.86			(9.46	)

See accompanying Notes to Condensed Consolidated Financial Statements.

2

FOREST OIL CORPORATION

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(Unaudited)

(In Thousands)

		Common Stock												Accumulated Other Comprehensive Income
								Capital Surplus			Accumulated Deficit					Total Shareholders' Equity
		Shares			Amount
Balances at December 31, 2009			112,337		$	11,234			2,652,689			(1,652,426	)		67,657		1,079,154
	Exercise of stock options		223			22			4,293			—			—		4,315
	Employee stock purchase plan		52			5			1,125			—			—		1,130
	Restricted stock issued, net of cancellations		879			88			(88	)		—			—		—
	Amortization of stock-based compensation		—			—			21,042			—			—		21,042
	Other, net		(132	)		(13	)		(3,933	)		—			—		(3,946	)
Comprehensive earnings:
	Net earnings		—			—			—			211,327			—		211,327
	Unfunded postretirement benefits, net of tax		—			—			—			—			975		975
	Foreign currency translation		—			—			—			—			5,132		5,132
	Total comprehensive earnings																217,434
Balances at September 30, 2010			113,359		$	11,336			2,675,128			(1,441,099	)		73,764		1,319,129

See accompanying Notes to Condensed Consolidated Financial Statements.

3

FOREST OIL CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

			Nine Months Ended September 30,
			2010			2009
Operating activities:
	Net earnings (loss)		$	211,327			(968,321	)
	Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
		Depreciation, depletion, and amortization		179,495			237,964
		Ceiling test write-down of oil and gas properties		—			1,575,843
		Deferred income tax		129,991			(521,706	)
		Unrealized (gains) losses on derivative instruments, net		(102,839	)		132,216
		Unrealized foreign currency exchange gains, net		(5,290	)		(15,609	)
		Unrealized losses on other investments, net		—			2,327
		Stock-based compensation expense		14,389			12,948
		Accretion of asset retirement obligations		5,441			6,195
		Other, net		1,162			4,201
	Changes in operating assets and liabilities:
		Accounts receivable		24,345			66,143
		Other current assets		1,539			20,622
		Accounts payable and accrued liabilities		(66,123	)		(106,567	)
		Accrued interest and other current liabilities		4,870			27,317
Net cash provided by operating activities				398,307			473,573
Investing activities:
	Capital expenditures for property and equipment:
		Exploration, development, and leasehold acquisition costs		(612,453	)		(512,266	)
		Other fixed assets		(19,831	)		(30,185	)
	Proceeds from sales of assets			156,177			145,691
	Other, net			1,189			—
Net cash used by investing activities				(474,918	)		(396,760	)
Financing activities:
	Proceeds from bank borrowings			101,198			706,551
	Repayments of bank borrowings			(101,198	)		(1,556,174	)
	Redemption of 73/4% senior notes			(151,938	)		—
	Repurchases of 7% senior subordinated notes			(100	)		(970	)
	Issuance of 81/2% senior notes, net of issuance costs			—			559,767
	Proceeds from common stock offering, net of offering costs			—			256,217
	Proceeds from the exercise of options and from employee stock purchase plan			5,445			1,296
	Change in bank overdrafts			13,852			(36,303	)
	Other, net			(5,934	)		(3,665	)
Net cash used by financing activities				(138,675	)		(73,281	)
Effect of exchange rate changes on cash				(336	)		(584	)
Net (decrease) increase in cash and cash equivalents				(215,622	)		2,948
Cash and cash equivalents at beginning of period				467,221			2,205
Cash and cash equivalents at end of period			$	251,599			5,153
Cash paid during the period for:
	Interest		$	103,819			92,711
	Income taxes			67,641			3,783

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 September 30, 2010 and the results of its operations, its cash flows, and changes in shareholders' equity for the periods presented. 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, determining impairments of investments in unproved properties, valuing deferred tax assets and goodwill, 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 2010 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, 2009, previously filed with the Securities and Exchange Commission ("SEC").

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

Earnings (Loss) per Share

        Basic earnings (loss) per share is computed using the two-class method by dividing net earnings (loss) attributable to common stock by the weighted average number of common shares outstanding during each period. Under the treasury stock method, diluted earnings (loss) per share is computed by dividing net earnings (loss) adjusted for the effects of certain contracts that provide the issuer or holder with a choice between settlement methods by the weighted average number of common shares outstanding adjusted for the dilutive effect, if any, of potential common shares (e.g. stock options, unvested restricted stock grants, unvested phantom stock units that may be settled in shares, and unvested performance units). No potential common shares shall be included in the computation of any diluted per share amount when a net loss exists.

        The two-class method of computing earnings per share is required for those entities that have participating securities or multiple classes of common stock. The two-class method is an earnings allocation formula that determines earnings per share for each class of common stock and participating

5

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Holders of restricted stock issued under Forest's stock incentive plans have the right to receive non-forfeitable cash dividends, participating on an equal basis with common stock. Holders of phantom stock units issued to directors under Forest's stock incentive plans also have the right to receive non-forfeitable cash dividends, participating on an equal basis with common stock, while phantom stock units issued to employees do not participate in dividends. Stock options issued under Forest's stock incentive plans do not participate in dividends. Performance units issued under Forest's stock incentive plans do not participate in dividends in their current form. Holders of performance units participate in dividends paid during the performance units' vesting period only after the performance units vest with common shares being earned by the holders of the performance units. Performance units may vest with no common shares being earned, depending on Forest's shareholder return over the performance units' vesting period in relation to the shareholder returns of specified peers. See Note 3 for more information on the performance units. In summary, restricted stock issued to employees and directors and phantom stock units issued to directors are participating securities and earnings are allocated to both common stock and these participating securities under the two-class method. However, these participating securities do not have a contractual obligation to share in Forest's losses. Therefore, in periods of net loss, none of the loss is allocated to these participating securities.

        Unvested restricted stock grants were not included in the calculation of diluted earnings per share for the three months ended September 30, 2010 and 2009 and the nine months ended September 30, 2010 as their inclusion would have an antidilutive effect. Stock options, unvested restricted stock grants, and unvested phantom stock units that may be settled in shares were not included in the calculation of diluted loss per share for the nine months ended September 30, 2009 as their inclusion would have an antidilutive effect.

6

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

        The following sets forth the calculation of basic and diluted earnings (loss) per share for the periods presented.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
	(In Thousands, Except Per Share Amounts)
Net earnings (loss)	$	68,911			172,311			211,327			(968,321	)
Net earnings attributable to participating securities		(1,427	)		(3,384	)		(4,116	)		—
Net earnings (loss) attributable to common stock for basic earnings per share		67,484			168,927			207,211			(968,321	)
Adjustment for liability-classified stock-based compensation awards		74			(21	)		250			—
Net earnings (loss) for diluted earnings per share	$	67,558			168,906			207,461			(968,321	)
Weighted average common shares outstanding during the period for basic earnings per share		110,992			110,054			110,691			102,366
Dilutive effects of potential common shares		786			168			699			—
Weighted average common shares outstanding during the period, including the effects of dilutive potential common shares, for diluted earnings per share		111,778			110,222			111,390			102,366
Basic earnings (loss) per common share	$	.61			1.53			1.87			(9.46	)
Diluted earnings (loss) per common share	$	.60			1.53			1.86			(9.46	)

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 nine months ended September 30, 2010 and 2009 are foreign currency gains and losses related to the translation of the assets and liabilities of Forest's Canadian operations and changes in unfunded postretirement benefits.

7

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

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

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

		Three Months Ended September 30,				Nine Months Ended September 30,
		2010		2009		2010		2009
		(In Thousands)
Net earnings (loss)		$	68,911		172,311		211,327		(968,321	)
Other comprehensive income:
	Foreign currency translation gains		8,978		18,591		5,132		22,623
	Unfunded postretirement benefits, net of tax		290		316		975		984
Total comprehensive earnings (loss)		$	78,179		191,218		217,434		(944,714	)

(3) STOCK-BASED COMPENSATION

        The table below sets forth total stock-based compensation recorded during the three and nine months ended September 30, 2010 and 2009, and the remaining unamortized amounts and weighted average amortization period as of September 30, 2010.

		Stock Options			Restricted Stock(1)			Phantom Stock Units			Total(2)
		(In Thousands)
Three months ended September 30, 2010:
	Total stock-based compensation costs	$	166			6,786			1,230			8,182
	Less: stock-based compensation costs capitalized		(73	)		(2,546	)		(588	)		(3,207	)
	Stock-based compensation costs expensed	$	93			4,240			642			4,975
Nine months ended September 30, 2010:
	Total stock-based compensation costs	$	396			20,240			3,759			24,395
	Less: stock-based compensation costs capitalized		(169	)		(7,273	)		(1,720	)		(9,162	)
	Stock-based compensation costs expensed	$	227			12,967			2,039			15,233
Unamortized stock-based compensation costs		$	464			39,151			8,112	(3)		47,727
Weighted average amortization period remaining			.7 year			2.1 years			2.0 years			2.0 years
Three months ended September 30, 2009:
	Total stock-based compensation costs	$	196			6,938			972			8,106
	Less: stock-based compensation costs capitalized		(70	)		(2,664	)		(470	)		(3,204	)
	Stock-based compensation costs expensed	$	126			4,274			502			4,902
Nine months ended September 30, 2009:
	Total stock-based compensation costs	$	533			19,586			1,273			21,392
	Less: stock-based compensation costs capitalized		(222	)		(7,751	)		(623	)		(8,596	)
	Stock-based compensation costs expensed	$	311			11,835			650			12,796

⁽¹⁾

Includes performance units.

8

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(3) STOCK-BASED COMPENSATION (Continued)

⁽²⁾

The Company also maintains an employee stock purchase plan (which is not included in the table) under which $.1 million and $.4 million of compensation cost was recognized for the three and nine months ended September 30, 2010, respectively, and $.1 million and $.5 million of compensation cost was recognized for the three and nine months ended September 30, 2009, respectively.

⁽³⁾

Based on the closing price of the Company's common stock on September 30, 2010.

Stock Options

        The following table summarizes stock option activity in the Company's stock-based compensation plans for the nine months ended September 30, 2010.

	Number of Options			Weighted Average Exercise Price		Aggregate Intrinsic Value (In Thousands)(1)		Number of Options Exercisable
Outstanding at January 1, 2010		1,818,419		$	21.26	$	7,387		1,722,216
Granted		—
Exercised		(223,082	)		19.35		1,674
Cancelled		(27,752	)		35.30
Outstanding at September 30, 2010		1,567,585		$	21.29	$	15,672		1,523,122

⁽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 nine months ended September 30, 2010.

	Restricted Stock(1)							Phantom Stock Units(2)
	Number of Shares			Weighted Average Grant Date Fair Value		Vest Date Fair Value (In Thousands)		Number of Units			Weighted Average Grant Date Fair Value		Vest Date Fair Value (In Thousands)(3)
Unvested at January 1, 2010		2,028,683		$	39.44				475,063		$	27.91
Awarded		1,253,043			26.04				142,835			25.30
Vested		(566,810	)		39.75	$	17,072		(65,140	)		41.88	$	1,910
Forfeited		(110,020	)		36.15				(52,156	)		35.37
Unvested at September 30, 2010		2,604,896		$	33.07				500,602		$	24.57

⁽¹⁾

Includes performance units that were awarded to Forest's officers on May 21, 2010. There were 264,500 performance units awarded, with a grant date fair value of $31.63 each. Under the terms of the award agreements, each performance unit represents a contractual right to receive one share of Forest's common stock; provided that the actual number of shares that may be deliverable under an award will range from 0% to 200% of the number of performance units awarded, depending on Forest's relative total shareholder return in comparison to an identified peer group during the thirty-six month performance period ending on March 31, 2013.

9

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(3) STOCK-BASED COMPENSATION (Continued)

⁽²⁾

Of the unvested units of phantom stock at September 30, 2010, 260,985 units can be settled in cash, shares of common stock, or a combination of both, while the remaining 239,617 units can only be settled in cash. The phantom stock units have been accounted for as a liability within the Condensed Consolidated Financial Statements.

⁽³⁾

Of the 65,140 phantom stock units that vested during the nine months ended September 30, 2010, 63,750 units were settled in shares of common stock and 1,390 units were settled in cash.

(4) DEBT

        The components of debt are as follows:

	September 30, 2010									December 31, 2009
	Principal		Unamortized Premium (Discount)			Other(1)		Total		Principal			Unamortized Premium (Discount)			Other(1)			Total
	(In Thousands)
Credit Facilities	$	—		—			—		—		—			—			—			—
8% Senior Notes due 2011(2)		285,000		1,615			1,011		287,626		285,000			2,583			1,638			289,221
7% Senior Subordinated Notes due 2013(3)		12		—			—		12		112			(2	)		—			110
81/2% Senior Notes due 2014		600,000		(19,677	)		—		580,323		600,000			(24,029	)		—			575,971
73/4% Senior Notes due 2014(4)		—		—			—		—		150,000			(1,035	)		7,713			156,678
71/4% Senior Notes due 2019		1,000,000		492			—		1,000,492		1,000,000			534			—			1,000,534
Total long-term debt		1,885,012		(17,570	)		1,011		1,868,453		2,035,112			(21,949	)		9,351			2,022,514
Less: current portion of long-term debt(4)		—		—			—		—		(150,000	)		1,035			(7,713	)		(156,678	)
Long-term portion of long-term debt	$	1,885,012		(17,570	)		1,011		1,868,453		1,885,112			(20,914	)		1,638			1,865,836

⁽¹⁾

Represents the unamortized portion of gains realized upon termination of interest rate swaps in 2002 and 2003 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.

⁽²⁾

Due December 2011.

⁽³⁾

In May 2010, the Company repurchased $.1 million in principal amount of the 7% senior subordinated notes due 2013 at par.

⁽⁴⁾

In December 2009, the Company irrevocably called the 7³/4% senior notes due 2014 and redeemed these notes in January 2010 at 101.292% of par and a net gain of $4.6 million was recognized upon redemption. The net gain was recognized due to the write-off of unamortized deferred gains on the termination of interest rate swaps.

Bank Credit Facilities

        As of September 30, 2010, the Company had syndicated bank revolving credit agreements with total lender commitments of $1.8 billion. The 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. At September 30, 2010, there were no outstanding borrowings under the Credit Facilities.

10

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(4) DEBT (Continued)

        Forest's availability under the Credit Facilities is governed by a borrowing base (the "Global Borrowing Base"). As of September 30, 2010, the borrowing base under the Credit Facilities was $1.3 billion, which Forest has allocated $1.155 billion to the U.S. Credit Facility and $145 million to the Canadian Credit Facility. The determination of the Global Borrowing Base is made by the lenders in their sole discretion, on a semi-annual basis, taking into consideration the estimated value of Forest's oil and gas properties based on pricing models determined by the lenders at such time, in accordance with the lenders' customary practices for oil and gas loans. The available borrowing amount under the Credit Facilities could increase or decrease based on such redetermination. In October 2010, the lenders reaffirmed the borrowing base at $1.3 billion and the next redetermination is expected to occur in the second quarter of 2011. In addition to the semi-annual redeterminations, Forest and the lenders each have discretion at any time, but not more often than once during a calendar year, to have the Global Borrowing Base redetermined. The Global Borrowing Base is also subject to automatic adjustments if certain events occur.

(5) PROPERTY AND EQUIPMENT

Full Cost Method of Accounting

        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 September 30, 2010 and 2009, Forest capitalized $12.0 million and $11.4 million of general and administrative costs (including stock-based compensation), respectively. During the nine months ended September 30, 2010 and 2009, Forest capitalized $34.6 million and $33.5 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 September 30, 2010 and 2009, the Company capitalized $3.0 million and $2.5 million, respectively, of interest costs attributed to unproved properties. During the nine months ended September 30, 2010 and 2009, the Company capitalized $8.9 million and $9.3 million, respectively, of interest costs 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, geographic and geologic data obtained relating to the properties, and estimated discounted future net cash flows from the properties. Estimated discounted future net cash flows are based on discounted future net revenues associated with probable and possible reserves, risk adjusted as appropriate. 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

11

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(5) PROPERTY AND EQUIPMENT (Continued)

assessing impairment. The amount of impairment assessed is added to the costs to be amortized, or is reported as a period expense, as appropriate.

        The Company performs a ceiling test each quarter on a country-by-country basis. The full cost ceiling test is a limitation on capitalized costs prescribed by SEC Regulation S-X Rule 4-10. The ceiling test is not a fair value based measurement. Rather, it is a standardized mathematical calculation. 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 (as discussed below), 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, a ceiling test write-down would be recognized to the extent of the excess capitalized costs. The September 30, 2010 ceiling test, which did not result in a write-down, was based on the average of the first-day-of-the-month prices during the twelve-month period prior to September 30, 2010 pursuant to the SEC's "Modernization of Oil and Gas Reporting" rule, which was effective beginning with December 31, 2009 reporting. The March 31, 2009 ceiling test, which was based on the March 31, 2009 spot prices, resulted in non-cash write-downs of oil and gas property costs of $1.4 billion in the United States cost center and $199.0 million in the Canada cost center.

        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.

        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. The Company uses its quarter-end reserves estimates to calculate depletion for the current quarter.

(6) ASSET RETIREMENT OBLIGATIONS

        Forest records 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 obligation 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.

12

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(6) ASSET RETIREMENT OBLIGATIONS (Continued)

        The following table summarizes the activity for Forest's asset retirement obligations for the nine months ended September 30, 2010 and 2009.

	Nine Months Ended September 30,
	2010			2009
	(In Thousands)
Asset retirement obligations at beginning of period	$	93,303			96,991
Accretion expense		5,441			6,195
Liabilities incurred		2,083			4,676
Liabilities settled		(1,623	)		(2,474	)
Disposition of properties		(7,377	)		(5,283	)
Revisions of estimated liabilities		(4,461	)		(2,494	)
Impact of foreign currency exchange rate		195			1,541
Asset retirement obligations at end of period		87,561			99,152
Less: current asset retirement obligations		(1,690	)		(3,456	)
Long-term asset retirement obligations	$	85,871			95,696

(7) FAIR VALUE MEASUREMENTS

        The Company's assets and liabilities measured at fair value on a recurring basis at September 30, 2010 are set forth in the table below.

Description			Using Significant Other Observable Inputs (Level 2)(1)
			(In Thousands)
Assets:
	Derivative instruments(2)
		Commodity	$	89,555
		Interest rate		26,480
Total assets			$	116,035
Liabilities:
	Derivative instruments(2)
		Commodity	$	19,105
		Interest rate		—
Total liabilities			$	19,105

⁽¹⁾

The authoritative accounting guidance regarding fair value measurements for assets and liabilities measured at fair value establishes a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value. These tiers consist of: Level 1, defined 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

13

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(7) FAIR VALUE MEASUREMENTS (Continued)

requiring an entity to develop its own assumptions. The Company uses the income approach to value financial instruments under the Level 2 hierarchy.

⁽²⁾

The Company's derivative assets and liabilities include commodity and interest rate derivatives (see Note 8 for more information on these instruments). The Company utilizes present value techniques and option-pricing models for valuing its derivatives. Inputs to these valuation techniques include published forward prices, volatilities, and credit risk considerations, including the incorporation of published interest rates and credit spreads. All of the significant inputs are observable, either directly or indirectly; therefore, the Company's derivative instruments are included within the Level 2 fair value hierarchy.

        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 nine months ended September 30, 2009. The Company did not have assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) at any time during 2010.

		Nine Months Ended September 30, 2009
		Equity Securities			Debt Securities(1)
		(In Thousands)
Balance at beginning of period		$	—			1,670
Total losses (realized/unrealized):
	Included in earnings		(657	)		(1,670	)
	Included in other comprehensive income		—			—
Purchases, issuances, sales, and settlements:
	Purchases		—			—
	Issuances		—			—
	Sales		—			—
	Settlements		—			—
	Transfers in and/or out of Level 3(2)(3)		657			—
Balance at end of period		$	—			—
The amount of total 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		$	(657	)		(1,670	)

⁽¹⁾

The Company's debt securities are comprised of a zero coupon senior subordinated note due from Pacific Energy Resources, Ltd. ("PERL") in 2014 at a principal amount at stated maturity of $60.8 million (the "PERL Note") that was received as a portion of the total consideration for the sale of the Company's Alaska assets in 2007. In March 2009, PERL filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code. The Company used its own assumptions as to what market participants would assume regarding future cash flows and risk-adjusted discount rates in valuing the PERL Note, which is currently valued at zero and has been since March 31, 2009.

⁽²⁾

The Company's investment in PERL common stock, which the Company also received as a portion of the total consideration for the sale of the Company's Alaska assets in 2007, was transferred from Level 1 to Level 3 in the first quarter of 2009 when PERL's common stock was suspended from trading for failure to meet the continued stock exchange listing requirements. The Company used its own assumptions as to what market participants would

14

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(7) FAIR VALUE MEASUREMENTS (Continued)

assume regarding future cash flows and risk-adjusted discount rates in valuing the PERL common stock, which is currently valued at zero and has been since March 31, 2009.

⁽³⁾

The Company's policy is to recognize transfers in and/or out of fair value hierarchy levels as of the beginning of the reporting period in which the event or change in circumstances caused the transfer.

        The table below sets forth 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 nine months ended September 30, 2009, which are reported in the Condensed Consolidated Statements of Operations under "Other, net." The Company did not record any gains or losses (realized and unrealized) related to assets or liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during 2010 or the three months ended September 30, 2009.

	Nine Months Ended September 30, 2009
	Equity Securities		Debt Securities
	(In Thousands)
Total losses included in earnings for the period	$	657		1,670
Change in unrealized losses relating to assets still held at end of period	$	657		1,670

        The fair values and carrying amounts of the Company's financial instruments are summarized below for the periods presented.

		September 30, 2010				December 31, 2009
		Carrying Amount		Fair Value(1)		Carrying Amount		Fair Value(1)
		(In Thousands)
Assets:
	Cash and cash equivalents	$	251,599		251,599		467,221		467,221
	Derivative instruments		116,035		116,035		36,199		36,199
Liabilities:
	Derivative instruments		19,105		19,105		42,184		42,184
	8% senior notes due 2011		287,626		300,818		289,221		296,400
	7% senior subordinated notes due 2013		12		12		110		112
	81/2% senior notes due 2014		580,323		657,000		575,971		630,000
	73/4% senior notes due 2014		—		—		156,678		151,938
	71/4% senior notes due 2019		1,000,492		1,030,000		1,000,534		992,500

⁽¹⁾

The Company used various assumptions and methods in estimating the fair values of its financial instruments. The carrying amount of cash and cash equivalents approximated fair value due to the short original maturities (three months or less) and high liquidity of the cash equivalents. The fair values of the senior notes and senior subordinated notes were estimated based on quoted market prices. The methods used to determine the fair values of the derivative instruments are discussed above. See also Note 8 to the Condensed Consolidated Financial Statements for more information on the derivative instruments.

15

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(8) DERIVATIVE INSTRUMENTS

Commodity Derivatives

        Forest periodically enters into derivative instruments such as swap, basis swap, and collar agreements as an attempt to moderate the effects of wide fluctuations in commodity prices on the Company's cash flow and to manage the exposure to commodity price risk. Forest's commodity derivative instruments generally serve as effective economic hedges of commodity price exposure; however, the Company has elected not to designate its derivatives as hedging instruments. As such, the Company recognizes all changes in fair value of its derivative instruments as unrealized gains or losses on derivative instruments in the Condensed Consolidated Statement of Operations.

        The table below sets forth Forest's outstanding commodity swaps and costless collars as of September 30, 2010.

Commodity Swaps and Collars
		Natural Gas (NYMEX HH)				Oil (NYMEX WTI)					NGLs (OPIS Refined Products)
Remaining Swap Term		Bbtu Per Day		Weighted Average Hedged Price per MMBtu		Barrels Per Day		Weighted Average Hedged Price per Bbl			Barrels Per Day		Weighted Average Hedged Price per Bbl
Swaps:
	October 2010 - December 2010		210	$	6.20		3,000	$	76.06			—	$	—
	Calendar 2011		90		5.86		—		—			3,000		36.75
Collars:
	October 2010 - December 2010		—		—		2,000		60.00/98.50	(1)		—		—
	Calendar 2011		—		—		3,000		75.00/91.87	(1)(2)		—		—

⁽¹⁾

Represents weighted average hedged floor and ceiling price per Bbl.

⁽²⁾

Subsequent to September 30, 2010, in connection with receiving a premium hedged price on a gas swap, Forest lowered the hedged ceiling price on one of its existing Calendar 2011 oil collars that covered 1,000 barrels per day from $95.00 to $90.00 per Bbl.

        In connection with several gas swaps entered into during the nine months ended September 30, 2010, Forest granted option instruments (several commodity swaptions and one call option) to the gas swap counterparties in exchange for Forest receiving premium hedged prices on the gas swaps. As of October 29, 2010, none of the options have been exercised by the counterparties. The table below sets forth the outstanding options as of September 30, 2010.

Commodity Options
			Natural Gas (NYMEX HH)				Oil (NYMEX WTI)
Instrument	Option Expiration	Underlying Swap Term	Underlying Swap Bbtu Per Day		Underlying Swap Weighted Average Hedged Price per MMBtu		Underlying Swap Barrels Per Day		Underlying Swap Hedged Price per Bbl
Gas Swaptions	December 2010	Calendar 2011		50	$	5.80		—	$	—
Oil Swaption	December 2011	Calendar 2012		—		—		1,000		90.00
Oil Call Option	Monthly in 2011	Monthly in 2011		—		—		1,000		90.00

        Subsequent to September 30, 2010, through October 29, 2010, Forest entered into two additional gas swaps covering 25 Bbtu per day for Calendar 2011 for a weighted average hedged price of $5.03

16

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(8) DERIVATIVE INSTRUMENTS (Continued)

per MMBtu. In connection with these swaps, the counterparties were granted the following oil swaptions.

Commodity Options
		Oil (NYMEX WTI)
Option Expiration	Underlying Swap Term	Underlying Swap Barrels Per Day		Underlying Swap Hedged Price per Bbl
December 2010	Calendar 2011		1,000	$	85.00
December 2011	Calendar 2012		1,000		90.00

Forest also uses basis swaps in connection with natural gas swaps in order to fix the price differential between the NYMEX Henry Hub price and the index price at which a portion of its natural gas production is sold. The table below sets forth Forest's outstanding basis swaps as of September 30, 2010.

Basis Swaps
Remaining Swap Term	Index	Bbtu Per Day		Weighted Average Hedged Price Differential per MMBtu
October 2010 - December 2010	Centerpoint		30	$	(.95	)
October 2010 - December 2010	Houston Ship Channel		50		(.29	)
October 2010 - December 2010	Mid Continent		60		(1.04	)
October 2010 - December 2010	NGPL TXOK		40		(.44	)

Interest Rate Derivatives

        Forest periodically enters into interest rate derivative agreements in an attempt to manage the mix of fixed and floating interest rates within its debt portfolio. The Company has elected not to designate its derivatives as hedging instruments. As such, the Company recognizes all changes in fair value of its derivative instruments as unrealized gains or losses on derivative instruments in the Condensed Consolidated Statement of Operations. The table below sets forth Forest's outstanding fixed-to-floating interest rate swaps as of September 30, 2010.

Interest Rate Swaps
Remaining Swap Term	Notional Amount (In Thousands)		Weighted Average Floating Rate	Weighted Average Fixed Rate
October 2010 - February 2014	$	500,000	1 month LIBOR + 5.89%		8.50	%

Fair Value and Gains and Losses

        The table below summarizes the location and fair value amounts of Forest's derivative instruments reported in the Condensed Consolidated Balance Sheets as of the dates indicated. These derivative instruments are not designated as hedging instruments for accounting purposes. For financial reporting purposes, Forest does not offset asset and liability fair value amounts recognized for derivative

17

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(8) DERIVATIVE INSTRUMENTS (Continued)

instruments with the same counterparty under its master netting arrangements. See Note 7 to the Condensed Consolidated Financial Statements for more information on the fair values of Forest's derivative instruments.

			September 30, 2010		December 31, 2009
			(In Thousands)
Assets:
	Commodity derivatives:
		Current assets: derivative instruments	$	80,870		35,454
		Derivative instruments		8,685		—
	Interest rate derivatives:
		Current assets: derivative instruments		10,914		189
		Derivative instruments		15,566		556
Total assets				116,035		36,199
Liabilities:
	Commodity derivatives:
		Current liabilities: derivative instruments		14,071		40,843
		Derivative instruments		5,034		—
	Interest rate derivatives:
		Current liabilities: derivative instruments		—		515
		Derivative instruments		—		826
Total liabilities				19,105		42,184
Net derivative fair value			$	96,930		(5,985	)

        The table below summarizes the amount of derivative instrument gains and losses reported in the Condensed Consolidated Statements of Operations as "Realized and unrealized gains on derivative instruments, net," for the periods indicated. These derivative instruments are not designated as hedging instruments for accounting purposes.

		Three Months Ended September 30,						Nine Months Ended September 30,
		2010			2009			2010			2009
		(In Thousands)
Commodity derivatives:
	Realized gains	$	(27,153	)		(81,395	)		(64,816	)		(237,503	)
	Unrealized (gains) losses		(21,222	)		87,857			(75,839	)		135,472
Interest rate derivatives:
	Realized gains		(2,912	)		(3,508	)		(9,743	)		(6,925	)
	Unrealized gains		(7,869	)		(8,619	)		(27,000	)		(3,256	)
Realized and unrealized gains on derivative instruments, net		$	(59,156	)		(5,665	)		(177,398	)		(112,212	)

        Due to the volatility of natural gas and liquids prices, the estimated fair values of Forest's commodity derivative instruments are subject to large fluctuations from period to period. Forest has

18

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(8) DERIVATIVE INSTRUMENTS (Continued)

experienced the effects of these commodity price fluctuations in both the current period and prior periods and expects that volatility in commodity prices will continue.

Credit Risk

        Forest executes with each of its derivative counterparties an International Swap and Derivatives Association, Inc. ("ISDA") Master Agreement, which is a standard industry form contract containing general terms and conditions applicable to many types of derivative transactions. Additionally, Forest executes, with each of its derivative counterparties, a Schedule, which modifies the terms and conditions of the ISDA Master Agreement according to the parties' requirements and the specific types of derivatives to be traded. All but one of the counterparties is a lender, or an affiliate of a lender, under the Credit Facilities, which provide that any security granted by Forest under the Credit Facilities shall also extend to and be available to those lenders that are counterparties to derivative transactions with Forest. None of these counterparties require collateral beyond that already pledged under the Credit Facilities. The remaining counterparty, a purchaser of Forest's natural gas production, generally is a net debtor to Forest and as a result of these purchases does not require collateral under the ISDA Master Agreement and Schedule it has executed with Forest. Forest is currently evaluating the impact, if any, that the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act will have on the existing derivative transactions under the Company's currently outstanding ISDA Master Agreements and Schedules, as well as Forest's ability to enter into such transactions and agreements in the future.

        The ISDA Master Agreements and Schedules contain cross-default provisions whereby a default under the Credit Facilities will also cause a default under the derivative agreements. Such events of default include non-payment, breach of warranty, non-performance of 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 Facility. In addition, 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. None of these events of default are specifically credit-related, but some could arise if there were a general deterioration of Forest's credit. The ISDA Master Agreements and Schedules contain a further credit-related termination event that would occur if Forest were to merge with another entity and the creditworthiness of the resulting entity was materially weaker than that of Forest.

        The vast majority of Forest's derivative counterparties are all financial institutions that are engaged in similar activities and have similar economic characteristics that, in general, could cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. Forest does not require the posting of collateral for its benefit under its derivative agreements. However, Forest's ISDA Master Agreements contain netting provisions whereby if on any date amounts would otherwise be payable by each party to the other, then on such date the party that owes the larger amount will pay the excess of that amount over the smaller amount owed by the other party, thus satisfying each party's obligations. These provisions apply to all derivative transactions with the particular counterparty. If all counterparties failed, Forest would be exposed to a risk of loss equal to this net amount owed to Forest, the fair value of which was $98.1 million at September 30, 2010. If Forest suffered an event of default, each counterparty could demand immediate payment, subject to

19

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(8) DERIVATIVE INSTRUMENTS (Continued)

notification periods, of the net obligations due to it under the derivative agreements. At September 30, 2010, Forest owed a net derivative liability to two counterparties, the fair value of which was $1.2 million.

(9) INCOME TAXES

        A reconciliation of income tax computed by applying the United States statutory federal income tax rate is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
	(In Thousands)
Federal income tax at 35% of earnings (loss) before income taxes	$	37,220			2,961			115,230			(520,983	)
Change in valuation allowance for deferred tax assets		(980	)		(163,858	)		(1,158	)		(701	)
State income taxes, net of federal income tax benefits		1,038			(538	)		3,344			(15,195	)
Effect of differing tax rates in Canada		(942	)		(374	)		(2,096	)		11,501
Effect of federal, state, and foreign tax on permanent items		1,488			(848	)		3,525			1,295
Adjustments for statutory rate reductions and other		(391	)		(1,194	)		(943	)		3,882
Total income tax	$	37,433			(163,851	)		117,902			(520,201	)

        As of September 30, 2010, the Company had $17.6 million due from the United States Treasury Department, which is included in "Other current assets" in the Condensed Consolidated Balance Sheet, related to estimated tax payments made in excess of the Company's 2009 income tax liability.

(10) COSTS, EXPENSES, AND OTHER

        The table below sets forth the components of "Other, net" in the Condensed Consolidated Statements of Operations for the periods indicated.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
	(In Thousands)
Unrealized foreign currency exchange gains, net	$	(9,244	)		(9,723	)		(5,290	)		(15,609	)
Unrealized losses on other investments, net		—			—			—			2,327
Accretion of asset retirement obligations		1,693			2,014			5,441			6,195
Gain on debt extinguishment, net		—			—			(4,576	)		—
Other, net		1,155			5,649			4,584			12,184
	$	(6,396	)		(2,060	)		159			5,097

20

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(11) GEOGRAPHICAL SEGMENTS

        At September 30, 2010, Forest conducted operations in one industry segment, oil and gas exploration and production, 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 Exploration and Production
		Three Months Ended September 30, 2010									Nine Months Ended September 30, 2010
		United States		Canada		International			Total Company		United States		Canada		International			Total Company
		(In Thousands)
Oil and gas sales		$	174,991		35,190		—			210,181		529,012		110,852		—			639,864
Costs and expenses:
	Lease operating expenses		23,602		6,575		—			30,177		69,549		18,152		—			87,701
	Production and property taxes		12,751		625		—			13,376		35,419		1,872		—			37,291
	Transportation and processing costs		3,302		2,908		—			6,210		9,228		7,861		—			17,089
	Depletion		47,060		15,708		—			62,768		127,490		45,040		—			172,530
	Accretion of asset retirement obligations		1,416		251		26			1,693		4,592		774		75			5,441
Segment earnings (loss)		$	86,860		9,123		(26	)		95,957		282,734		37,153		(75	)		319,812
Capital expenditures(1)		$	146,517		18,237		1,230			165,984		477,282		178,118		3,335			658,735
Goodwill(2)		$	239,420		16,839		—			256,259		239,420		16,839		—			256,259
Long-lived assets(2)(3)		$	1,938,764		586,238		90,293			2,615,295		1,938,764		586,238		90,293			2,615,295
Total assets(2)		$	3,027,843		656,653		90,934			3,775,430		3,027,843		656,653		90,934			3,775,430

⁽¹⁾

Includes estimated discounted asset retirement obligations of $.4 million and $(2.4) million recorded during the three and nine months ended September 30, 2010, respectively.

⁽²⁾

As of September 30, 2010.

⁽³⁾

Consists of net property and equipment.

21

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(11) GEOGRAPHICAL SEGMENTS (Continued)

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

	Three Months Ended September 30, 2010			Nine Months Ended September 30, 2010
	(In Thousands)
Segment earnings	$	95,957			319,812
Interest and other income		206			483
General and administrative expense		(18,007	)		(54,541	)
Depreciation and amortization expense		(1,969	)		(6,965	)
Interest expense		(37,088	)		(112,240	)
Realized and unrealized gains on derivative instruments, net		59,156			177,398
Other, net		8,089			5,282
Earnings before income taxes	$	106,344			329,229

		Oil and Gas Exploration and Production
		Three Months Ended September 30, 2009									Nine Months Ended September 30, 2009
		United States		Canada		International			Total Company		United States			Canada			International			Total Company
		(In Thousands)
Oil and gas sales		$	151,239		25,945		—			177,184		471,787			81,686			—			553,473
Costs and expenses:
	Lease operating expenses		28,334		6,604		—			34,938		93,202			21,003			—			114,205
	Production and property taxes		9,969		904		—			10,873		31,887			2,472			—			34,359
	Transportation and processing costs		3,334		2,018		—			5,352		9,719			6,199			—			15,918
	Depletion		48,050		14,067		—			62,117		186,592			42,758			—			229,350
	Ceiling test write-down of oil and gas properties		—		—		—			—		1,376,822			199,021			—			1,575,843
	Accretion of asset retirement obligations		1,737		253		24			2,014		5,397			727			71			6,195
Segment earnings (loss)		$	59,815		2,099		(24	)		61,890		(1,231,832	)		(190,494	)		(71	)		(1,422,397	)
Capital expenditures(1)		$	69,207		13,775		3,366			86,348		379,765			46,567			5,603			431,935
Goodwill(2)		$	239,420		16,184		—			255,604		239,420			16,184			—			255,604
Long-lived assets(2)(3)		$	2,441,725		533,463		82,773			3,057,961		2,441,725			533,463			82,773			3,057,961
Total assets(2)		$	3,287,971		585,781		85,683			3,959,435		3,287,971			585,781			85,683			3,959,435

⁽¹⁾

Includes estimated discounted asset retirement obligations of $3.8 million and $2.2 million recorded during the three and nine months ended September 30, 2009, respectively.

⁽²⁾

As of September 30, 2009.

⁽³⁾

Consists of net property and equipment.

22

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(11) GEOGRAPHICAL SEGMENTS (Continued)

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

	Three Months Ended September 30, 2009			Nine Months Ended September 30, 2009
	(In Thousands)
Segment earnings (loss)	$	61,890			(1,422,397	)
Interest and other income		(42	)		602
General and administrative expense		(17,316	)		(49,050	)
Depreciation and amortization expense		(3,158	)		(8,614	)
Interest expense		(42,653	)		(122,373	)
Realized and unrealized gains on derivative instruments, net		5,665			112,212
Other, net		4,074			1,098
Earnings (loss) before income taxes	$	8,460			(1,488,522	)

(12) CONDENSED CONSOLIDATING FINANCIAL INFORMATION

        The Company's 8% senior notes due 2011, 8¹/2% senior notes due 2014, and 7¹/4% senior notes due 2019 have been fully and unconditionally guaranteed by Forest Oil Permian Corporation, 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 September 30, 2010 and December 31, 2009 and for the nine months ended September 30, 2010 and 2009 on an issuer (parent company), guarantor subsidiary, non-guarantor subsidiaries, eliminating entries, and consolidated basis. Elimination entries presented are necessary to combine the entities.

23

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(12) CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

CONDENSED CONSOLIDATING BALANCE SHEETS
(Unaudited)
(In Thousands)

			September 30, 2010													December 31, 2009
			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		$	242,115		—			9,484			—			251,599		456,978		379			9,864			—			467,221
	Accounts receivable			36,083		43,699			23,293			(366	)		102,709		79,857		24,406			22,671			(580	)		126,354
	Deferred income taxes			—		—			—			—			—		6,589		519			—			—			7,108
	Other current assets			161,235		771			21,081			—			183,087		115,663		797			12,849			—			129,309
		Total current assets		439,433		44,470			53,858			(366	)		537,395		659,087		26,101			45,384			(580	)		729,992
Property and equipment, at cost				7,331,703		1,176,716			1,860,921			—			10,369,340		7,093,082		1,074,610			1,657,986			—			9,825,678
	Less accumulated depreciation, depletion, and amortization			5,584,022		1,030,670			1,139,353			—			7,754,045		5,502,530		994,005			1,069,936			—			7,566,471
		Net property and equipment		1,747,681		146,046			721,568			—			2,615,295		1,590,552		80,605			588,050			—			2,259,207
Investment in subsidiaries				370,299		—			—			(370,299	)		—		308,424		—			—			(308,424	)		—
Note receivable from subsidiary				224,306		—			—			(224,306	)		—		135,529		—			—			(135,529	)		—
Goodwill				216,460		22,960			16,839			—			256,259		216,460		22,960			16,488			—			255,908
Due from (to) parent and subsidiaries				233,178		(51,171	)		(182,007	)		—			—		215,679		(60,884	)		(154,795	)		—			—
Deferred income taxes				333,264		—			—			(31,324	)		301,940		395,519		—			—			(2,458	)		393,061
Other assets				62,304		6			2,231			—			64,541		44,087		6			2,429			—			46,522
			$	3,626,925		162,311			612,489			(626,295	)		3,775,430		3,565,337		68,788			497,556			(446,991	)		3,684,690
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
	Accounts payable and accrued liabilities		$	227,999		3,050			40,961			(366	)		271,644		238,935		6,825			39,122			(580	)		284,302
	Current portion of long-term- debt			—		—			—			—			—		156,678		—			—			—			156,678
	Other current liabilities			88,818		425			8,561			—			97,804		86,633		64			7,343			—			94,040
		Total current liabilities		316,817		3,475			49,522			(366	)		369,448		482,246		6,889			46,465			(580	)		535,020
Long-term debt				1,868,453		—			—			—			1,868,453		1,865,836		—			—			—			1,865,836
Note payable to parent				—		—			224,306			(224,306	)		—		—		—			135,529			(135,529	)		—
Other liabilities				122,526		2,189			39,356			—			164,071		121,869		769			35,158			—			157,796
Deferred income taxes				—		51,678			33,975			(31,324	)		54,329		16,232		4,446			28,664			(2,458	)		46,884
		Total liabilities		2,307,796		57,342			347,159			(255,996	)		2,456,301		2,486,183		12,104			245,816			(138,567	)		2,605,536
Shareholders' equity				1,319,129		104,969			265,330			(370,299	)		1,319,129		1,079,154		56,684			251,740			(308,424	)		1,079,154
			$	3,626,925		162,311			612,489			(626,295	)		3,775,430		3,565,337		68,788			497,556			(446,991	)		3,684,690

24

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 September 30,
				2010															2009
				Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues
	Oil and gas sales			$	114,416			60,044			35,721			—			210,181			121,119			29,664			26,401			—			177,184
	Interest and other				1,197			10			3			(1,004	)		206			3,130			—			(117	)		(3,055	)		(42	)
	Equity earnings (losses) in subsidiaries				40,968			—			—			(40,968	)		—			35,072			—			—			(35,072	)		—
			Total revenues		156,581			60,054			35,724			(41,972	)		210,387			159,321			29,664			26,284			(38,127	)		177,142
Costs, expenses, and other:
	Lease operating expenses				21,271			2,222			6,684			—			30,177			23,488			4,654			6,796			—			34,938
	Other direct operating costs				12,037			4,405			3,144			—			19,586			12,423			1,395			2,407			—			16,225
	General and administrative				15,032			604			2,371			—			18,007			14,838			586			1,892			—			17,316
	Depreciation, depletion, and amortization				32,692			15,760			16,285			—			64,737			42,165			8,933			14,177			—			65,275
	Interest expense				34,449			230			3,413			(1,004	)		37,088			39,059			2,261			4,388			(3,055	)		42,653
	Realized and unrealized (gains) losses on derivative instruments, net				(47,022	)		(12,022	)		(112	)		—			(59,156	)		(7,754	)		2,076			13			—			(5,665	)
	Other, net				1,750			(580	)		(7,566	)		—			(6,396	)		4,556			181			(6,797	)		—			(2,060	)
		Total costs, expenses, and other			70,209			10,619			24,219			(1,004	)		104,043			128,775			20,086			22,876			(3,055	)		168,682
Earnings (loss) before income taxes					86,372			49,435			11,505			(40,968	)		106,344			30,546			9,578			3,408			(35,072	)		8,460
		Income tax			17,461			18,679			1,293			—			37,433			(141,765	)		(19,733	)		(2,353	)		—			(163,851	)
Net earnings (loss)				$	68,911			30,756			10,212			(40,968	)		68,911			172,311			29,311			5,761			(35,072	)		172,311

25

FOREST OIL CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)

(Unaudited)

(12) CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Continued)

				Nine Months Ended September 30,
				2010															2009
				Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues
	Oil and gas sales			$	373,620			153,539			112,705			—			639,864			376,896			93,341			83,236			—			553,473
	Interest and other				3,964			19			12			(3,512	)		483			9,948			91			(152	)		(9,285	)		602
	Equity earnings (losses) in subsidiaries				100,221			—			—			(100,221	)		—			(259,225	)		—			—			259,225			—
			Total revenues		477,805			153,558			112,717			(103,733	)		640,347			127,619			93,432			83,084			249,940			554,075
Costs, expenses, and other:
	Lease operating expenses				61,388			7,848			18,465			—			87,701			77,178			15,392			21,635			—			114,205
	Other direct operating costs				35,155			10,634			8,591			—			54,380			38,338			4,869			7,070			—			50,277
	General and administrative				45,092			1,767			7,682			—			54,541			41,311			1,913			5,826			—			49,050
	Depreciation, depletion, and amortization				96,182			36,665			46,648			—			179,495			159,928			37,404			40,632			—			237,964
	Ceiling test write-down of oil and gas properties				—			—			—			—			—			1,155,777			218,567			201,499			—			1,575,843
	Interest expense				107,083			1,308			7,361			(3,512	)		112,240			110,338			7,082			14,238			(9,285	)		122,373
	Realized and unrealized gains on derivative instruments, net				(145,083	)		(31,963	)		(352	)		—			(177,398	)		(94,946	)		(17,003	)		(263	)		—			(112,212	)
	Other, net				623			(548	)		84			—			159			10,498			322			(5,723	)		—			5,097
		Total costs, expenses, and other			200,440			25,711			88,479			(3,512	)		311,118			1,498,422			268,546			284,914			(9,285	)		2,042,597
Earnings (loss) before income taxes					277,365			127,847			24,238			(100,221	)		329,229			(1,370,803	)		(175,114	)		(201,830	)		259,225			(1,488,522	)
		Income tax			66,038			47,597			4,267			—			117,902			(402,482	)		(63,339	)		(54,380	)		—			(520,201	)
Net earnings (loss)				$	211,327			80,250			19,971			(100,221	)		211,327			(968,321	)		(111,775	)		(147,450	)		259,225			(968,321	)

26

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)

			Nine Months Ended September 30,
			2010												2009
			Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Consolidated			Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Consolidated
Operating activities:
	Net earnings (loss)		$	111,106			80,250			19,971			211,327			(709,096	)		(111,775	)		(147,450	)		(968,321	)
	Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
		Depreciation, depletion, and amortization		96,182			36,665			46,648			179,495			155,823			37,404			44,737			237,964
		Unrealized (gains) losses on derivative instruments, net		(85,415	)		(17,234	)		(190	)		(102,839	)		109,290			22,575			351			132,216
		Deferred income tax		78,127			47,597			4,267			129,991			(403,987	)		(63,339	)		(54,380	)		(521,706	)
		Ceiling test write-down of oil and gas properties		—			—			—			—			1,155,777			218,567			201,499			1,575,843
		Other, net		21,261			187			(5,746	)		15,702			25,760			250			(15,948	)		10,062
	Changes in operating assets and liabilities:
		Accounts receivable		43,774			(19,293	)		(136	)		24,345			50,143			6,306			9,694			66,143
		Other current assets		9,183			26			(7,670	)		1,539			21,688			(366	)		(700	)		20,622
		Accounts payable and accrued liabilities		(60,479	)		(2,384	)		(3,260	)		(66,123	)		(76,611	)		(6,952	)		(23,004	)		(106,567	)
		Accrued interest and other current liabilities		(4,765	)		(48	)		9,683			4,870			29,431			(402	)		(1,712	)		27,317
Net cash provided by operating activities				208,974			125,766			63,567			398,307			358,218			102,268			13,087			473,573
Investing activities:
	Capital expenditures for property and equipment			(333,616	)		(102,712	)		(195,956	)		(632,284	)		(385,045	)		(85,492	)		(71,914	)		(542,451	)
	Proceeds from sales of assets			126,596			1,489			28,092			156,177			81,636			57,588			6,467			145,691
	Other, net			—			—			1,189			1,189			—			—			—			—
Net cash used by investing activities				(207,020	)		(101,223	)		(166,675	)		(474,918	)		(303,409	)		(27,904	)		(65,447	)		(396,760	)
Financing activities:
	Issuance of 81/2% senior notes, net of issuance costs			—			—			—			—			559,767			—			—			559,767
	Proceeds from bank borrowings			—			—			101,198			101,198			605,000			—			101,551			706,551
	Repayments of bank borrowings			—			—			(101,198	)		(101,198	)		(1,477,000	)		—			(79,174	)		(1,556,174	)
	Proceeds from common stock offering, net of offering costs			—			—			—			—			256,217			—			—			256,217
	Redemption and repurchase of notes			(152,038	)		—			—			(152,038	)		(970	)		—			—			(970	)
	Net activity in investments from subsidiaries			(79,225	)		(23,925	)		103,150			—			35,879			(71,033	)		35,154			—
	Other, net			14,446			(997	)		(86	)		13,363			(34,273	)		(3,319	)		(1,080	)		(38,672	)
Net cash (used) provided by financing activities				(216,817	)		(24,922	)		103,064			(138,675	)		(55,380	)		(74,352	)		56,451			(73,281	)
Effect of exchange rate changes on cash				—			—			(336	)		(336	)		—			—			(584	)		(584	)
Net (decrease) increase in cash and cash equivalents				(214,863	)		(379	)		(380	)		(215,622	)		(571	)		12			3,507			2,948
Cash and cash equivalents at beginning of period				456,978			379			9,864			467,221			1,226			74			905			2,205
Cash and cash equivalents at end of period			$	242,115			—			9,484			251,599			655			86			4,412			5,153

27

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

OVERVIEW

        Forest Oil Corporation is an independent oil and gas company engaged in the acquisition, exploration, development, and production of natural gas and liquids primarily in North America. 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: the United States, Canada, and International. Our core operational areas are the Texas Panhandle area, the East Texas / North Louisiana area, and the Canadian Deep Basin area in Alberta and British Columbia. Our total estimated proved reserves as of December 31, 2009 were approximately 2,121 Bcfe. At December 31, 2009, approximately 83% of our estimated proved oil and natural gas reserves were in the United States, approximately 15% were in Canada, and approximately 2% were in Italy. Approximately 80% of our estimated proved reserves were natural gas as of December 31, 2009. 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 headings "Forward-Looking Statements" and "Risk Factors" below, and the information included or incorporated by reference in Forest's 2009 Annual Report on Form 10-K under the headings "Risk Factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies, Estimates, Judgments, and Assumptions."

Third Quarter and Year-to-Date 2010 Summary

        Forest's third quarter and year-to-date 2010 highlights and other significant items were as follows:

•

Oil and gas production decreased 4% to 457 MMcfe per day in the third quarter of 2010 as compared to 476 MMcfe per day in the third quarter of 2009. The decrease was due to the sale of approximately $1 billion of non-core oil and gas properties since the third quarter of 2009 representing 72 MMcfe of oil and gas production per day. The loss of the production associated with these property sales since the third quarter of last year was substantially offset by production increases from ongoing drilling operations in our core development areas. Oil and gas production also decreased 13% in the first nine months of 2010 as compared to the first nine months of 2009 primarily due to the asset sales discussed above, offset by production increases from ongoing drilling operations in our core areas.

•

Oil and gas sales increased 19% in the third quarter of 2010 to $210 million from $177 million in the corresponding period in 2009 and 16% in the first nine months of 2010 to $640 million from $553 million in the corresponding period in 2009. The increase in each period was due to increases in the average realized oil and gas prices.

•

Lease operating expenses were 10% lower on a per-unit basis in the third quarter of 2010 as compared to the third quarter of 2009 and were 11% lower on a per-unit basis in the first nine months of 2010 as compared to the same period in 2009. The decrease in each period was attributable to cost reduction initiatives and the sale of non-core oil and gas properties in late 2009 that had higher per-unit operating costs as compared to the properties we retained.

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RESULTS OF OPERATIONS

        Forest reported net earnings of $69 million in the third quarter of 2010, or $.60 per diluted share, compared to net earnings of $172 million, or $1.53 per diluted share, in the third quarter 2009. The decrease in net earnings in the third quarter 2010 compared to the third quarter 2009 was primarily due to a $164 million reduction of a valuation allowance on a portion of our deferred tax assets during the third quarter 2009. Earnings before income taxes increased $98 million between the two quarterly periods due to increased commodity prices and an increase in net realized and unrealized gains on commodity derivative instruments. Forest reported net earnings of $211 million in the first nine months of 2010, or $1.86 per diluted share, compared to a net loss of $968 million, or $9.46 per diluted share, in the first nine months of 2009. The increase in net earnings in the first nine months of 2010 is primarily due to a $1.6 billion non-cash ceiling test write-down recorded in the first quarter 2009, which was caused by the significant decline in spot natural gas prices at March 31, 2009, as well as due to increased commodity prices and an increase in net realized and unrealized gains on commodity derivative instruments.

        Forest's earnings before interest expense; income taxes; depletion, depreciation, and amortization expense; and certain other items ("Adjusted EBITDA"), were $176 million and $193 million for the quarters ended September 30, 2010 and 2009, respectively, and were $528 million and $586 million for the first nine months of 2010 and 2009, respectively. The decrease in Adjusted EBITDA in the 2010 periods as compared to the 2009 periods is primarily driven by decreases in realized gains on derivative instruments somewhat offset by increases in revenues and lower production expense, each as discussed below. Adjusted EBITDA is not considered a performance measure under U.S. Generally Accepted Accounting Principles ("GAAP") and reference should be made to "Reconciliation of Non-GAAP Measures" at the end of this Item 2 for further explanation of this performance measure, as well as a reconciliation to the most directly comparable GAAP measure. Discussion of the components of the changes in our quarterly and year-to-date results follows.

Oil and Gas Production and Revenues

        Oil and gas production volumes, revenues, and average sales prices by product and location for the three and nine months ended September 30, 2010 and 2009 are set forth in the tables below.

		Three Months Ended September 30,
		2010								2009
		Gas		Oil		NGLs		Total		Gas		Oil		NGLs		Total
		(MMcf)		(MBbls)		(MBbls)		(MMcfe)		(MMcf)		(MBbls)		(MBbls)		(MMcfe)
Production volumes:
	United States		25,687		597		971		35,095		27,337		810		682		36,289
	Canada		5,493		217		29		6,969		6,246		149		54		7,464
Totals			31,180		814		1,000		42,064		33,583		959		736		43,753
Revenues (in thousands):
	United States	$	101,268		44,071		29,652		174,991		80,810		52,768		17,661		151,239
	Canada		19,396		14,156		1,638		35,190		15,912		8,531		1,502		25,945
Totals		$	120,664		58,227		31,290		210,181		96,722		61,299		19,163		177,184
Average sales price per unit:
	United States	$	3.94		73.82		30.54		4.99		2.96		65.15		25.90		4.17
	Canada		3.53		65.24		56.48		5.05		2.55		57.26		27.81		3.48
Totals		$	3.87		71.53		31.29		5.00		2.88		63.92		26.04		4.05

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		Nine Months Ended September 30,
		2010								2009
		Gas		Oil		NGLs		Total		Gas		Oil		NGLs		Total
		(MMcf)		(MBbls)		(MBbls)		(MMcfe)		(MMcf)		(MBbls)		(MBbls)		(MMcfe)
Production volumes:
	United States		75,791		1,734		2,503		101,213		89,533		2,626		2,274		118,933
	Canada		16,019		648		108		20,555		17,746		480		175		21,676
Totals			91,810		2,382		2,611		121,768		107,279		3,106		2,449		140,609
Revenues (in thousands):
	United States	$	317,114		128,746		83,152		529,012		283,748		136,825		51,214		471,787
	Canada		61,941		43,348		5,563		110,852		53,988		22,776		4,922		81,686
Totals		$	379,055		172,094		88,715		639,864		337,736		159,601		56,136		553,473
Average sales price per unit:
	United States	$	4.18		74.25		33.22		5.23		3.17		52.10		22.52		3.97
	Canada		3.87		66.90		51.51		5.39		3.04		47.45		28.13		3.77
Totals		$	4.13		72.25		33.98		5.25		3.15		51.38		22.92		3.94

        Net oil and gas production in the third quarter 2010 decreased 4% to 457 MMcfe per day from 476 MMcfe per day in the third quarter 2009. Net oil and gas production in the first nine months of 2010 decreased 13% to 446 MMcfe per day from 515 MMcfe per day in the first nine months of 2009. The decrease in oil and gas production for the comparable three and nine month periods was due to non-core oil and gas property divestitures that occurred primarily in late 2009. Oil and gas revenues were $210 million in the third quarter 2010, a 19% increase as compared to $177 million in the third quarter 2009. Oil and gas revenues were $640 million in the first nine months of 2010, a 16% increase as compared to $553 million in the first nine months of 2009. The increase in oil and gas revenues between the comparable three and nine month periods was primarily due to a 23% and 33% increase in average realized sales prices, respectively, partially offset by the decrease in production discussed above.

Oil and Gas Production Expense

        The table below sets forth the detail of oil and gas production expense for the three and nine months ended September 30, 2010 and 2009.

		Three Months Ended September 30,				Nine Months Ended September 30,
		2010		2009		2010		2009
		(In Thousands, Except Per Mcfe Data)
Production expense:
	Lease operating expenses	$	30,177		34,938		87,701		114,205
	Production and property taxes		13,376		10,873		37,291		34,359
	Transportation and processing costs		6,210		5,352		17,089		15,918
Production expense		$	49,763		51,163		142,081		164,482
Production expense per Mcfe:
	Lease operating expenses	$	.72		.80		.72		.81
	Production and property taxes		.32		.25		.31		.24
	Transportation and processing costs		.15		.12		.14		.11
Production expense per Mcfe		$	1.18		1.17		1.17		1.17

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        Lease operating expenses in the third quarter 2010 were $30 million, or $.72 per Mcfe, compared to $35 million, or $.80 per Mcfe, in the third quarter 2009. Lease operating expenses in the first nine months of 2010 were $88 million, or $.72 per Mcfe, compared to $114 million, or $.81 per Mcfe, in the first nine months of 2009. The $5 million and $27 million decrease in lease operating expense between the comparable three and nine month periods, respectively, was primarily due to the non-core oil and gas property divestitures that occurred during late 2009. Lease operating expenses on a per-Mcfe basis also decreased between the periods presented due to cost reduction initiatives and the sale of non-core oil and gas properties in late 2009 that had higher average per-unit operating costs as compared to the properties we retained.

        Production and property taxes, which primarily consist of severance taxes paid on the value of the oil and gas produced, generally fluctuate proportionately to our oil and gas revenues. As a percentage of oil and natural gas revenue, production and property taxes were 6.4% and 6.1% for the three months ended September 30, 2010 and 2009, respectively, and 5.8% and 6.2% for the nine months ended September 30, 2010 and 2009, respectively. Normal fluctuations occur in the percentage between periods based upon the timing of approval of incentive tax credits in Texas, changes in tax rates, and changes in the assessed values of property and equipment for purposes of ad valorem taxes.

        Transportation and processing costs in the third quarter 2010 were $6 million, or $.15 per Mcfe, compared to $5 million, or $.12 per Mcfe, in the third quarter 2009. Transportation and processing costs in the first nine months of 2010 were $17 million, or $.14 per Mcfe, compared to $16 million, or $.11 per Mcfe, in the first nine months of 2009. Transportation and processing costs increased between comparable periods primarily due to higher transportation costs in Canada.

General and Administrative Expense

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

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
	(In Thousands)
Stock-based compensation costs	$	8,312			8,241			24,801			21,876
Other general and administrative costs		21,686			20,512			64,316			60,661
General and administrative costs capitalized		(11,991	)		(11,437	)		(34,576	)		(33,487	)
General and administrative expense	$	18,007			17,316			54,541			49,050

        General and administrative expense in the third quarter 2010 was $18 million compared to $17 million in the third quarter 2009. General and administrative expense in the first nine months of 2010 was $55 million compared to $49 million in the first nine months of 2009. The increase in general and administrative expense between the nine month periods was primarily due to higher employee incentive compensation costs, including stock-based incentive compensation. The percentage of general and administrative costs capitalized under the full cost method of accounting was relatively consistent between each of the periods presented, ranging from 39% to 41%.

Depreciation, Depletion, and Amortization

        Depreciation, depletion, and amortization expense ("DD&A") in the third quarter 2010 was $65 million, or $1.54 per Mcfe, compared to $65 million, or $1.49 per Mcfe, in the third quarter 2009. For the nine months ended September 30, 2010, DD&A was $179 million, or $1.47 per Mcfe, compared to $238 million, or $1.69 per Mcfe, for the first nine months of 2009. The decrease of $.22

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per Mcfe between the nine-month periods was primarily due to a $1.6 billion non-cash ceiling test write-down recorded in the first quarter 2009.

Ceiling Test Write-Down of Oil and Gas Properties

        In the first quarter 2009, Forest recorded a $1.6 billion ceiling test write-down related to its United States and Canadian cost centers pursuant to the ceiling test limitation prescribed by the Securities and Exchange Commission ("SEC") for companies using the full cost method of accounting. The write-down was primarily a result of a significant decline in natural gas prices in the first quarter of 2009. The March 31, 2009 spot price for natural gas was $3.63 per MMBtu compared to $5.71 at December 31, 2008. We have not incurred a ceiling test write-down since March 31, 2009. Our ceiling test calculations have been calculated based on the twelve month average natural gas and oil prices since December 31, 2009.

Interest Expense

        The following table summarizes interest expense incurred during the periods indicated.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
	(In Thousands)
Interest costs	$	40,107			45,153			121,169			131,685
Interest costs capitalized		(3,019	)		(2,500	)		(8,929	)		(9,312	)
Interest expense	$	37,088			42,653			112,240			122,373

        Interest expense in the third quarter 2010 totaled $37 million compared to $43 million in the third quarter 2009. Interest expense was $112 million and $122 million for the nine months ended September 30, 2010 and 2009, respectively. Although our outstanding debt decreased to $1.9 billion as of September 30, 2010 from $2.5 billion as of September 30, 2009, interest expense did not decrease proportionately given the fact that the majority of the debt reduction was attributable to a reduction of borrowings under our bank credit facilities (which had a variable interest rate that averaged less than 2% in the first nine months of 2009).

        In order to effectively reduce the concentration of fixed-rate debt anticipated after the completion of our 2009 oil and gas property divestiture program and the related reduction in outstanding debt, Forest entered into fixed-to-floating interest rate swaps under which it has swapped, as of September 30, 2010, $500 million in notional amount at an 8.5% fixed rate for an equal notional amount at a weighted-average rate equal to the 1-month LIBOR plus approximately 5.9%. Forest recognized realized gains under its interest rate swaps of $3 million and $9 million during the three and nine months ended September 30, 2010, respectively, and $3 million during both the three and nine months ended September 30, 2009, respectively. These gains are recorded as realized gains on derivatives rather than as a reduction to interest expense since Forest has not elected to use hedge accounting. See Note 8 to the Condensed Consolidated Financial Statements for more information on our interest rate derivatives.

Realized and Unrealized Gains and Losses on Derivative Instruments

        The table below sets forth realized and unrealized gains and losses on derivatives recognized under "Costs, expenses, and other" in our Condensed Consolidated Statements of Operations for the periods

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indicated. See Note 7 and Note 8 to the Condensed Consolidated Financial Statements for more information on our derivative instruments.

		Three Months Ended September 30,						Nine Months Ended September 30,
		2010			2009			2010			2009
		(In Thousands)
Realized losses (gains) on derivatives, net:
	Oil	$	41			(299	)		1,306			(14,596	)
	Gas		(27,194	)		(81,096	)		(66,122	)		(222,907	)
	Interest		(2,912	)		(3,508	)		(9,743	)		(6,925	)
Subtotal realized gains on derivatives, net			(30,065	)		(84,903	)		(74,559	)		(244,428	)
Unrealized losses (gains) on derivatives, net:
	Oil		7,302			(4,119	)		430			27,566
	Gas		(30,453	)		91,976			(78,198	)		107,906
	NGLs		1,929			—			1,929			—
	Interest		(7,869	)		(8,619	)		(27,000	)		(3,256	)
Subtotal unrealized (gains) losses on derivatives, net			(29,091	)		79,238			(102,839	)		132,216
Realized and unrealized gains on derivatives, net		$	(59,156	)		(5,665	)		(177,398	)		(112,212	)

Other, Net

        The table below sets forth the components of "Other, net" in our Condensed Consolidated Statements of Operations for the periods indicated.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
	(In Thousands)
Unrealized foreign currency exchange gains, net	$	(9,244	)		(9,723	)		(5,290	)		(15,609	)
Unrealized losses on other investments, net		—			—			—			2,327
Accretion of asset retirement obligations		1,693			2,014			5,441			6,195
Gain on debt extinguishment, net		—			—			(4,576	)		—
Other, net		1,155			5,649			4,584			12,184
	$	(6,396	)		(2,060	)		159			5,097

Foreign Currency Exchange

        Unrealized foreign currency exchange gains and losses relate to outstanding intercompany indebtedness and advances, which are denominated in U.S. dollars, between Forest Oil Corporation and our wholly-owned Canadian subsidiary.

Unrealized Loss on Other Investments

        Unrealized losses on other investments relate to fair value adjustments to the shares of Pacific Energy Resources, Ltd. ("PERL") common stock and the zero coupon senior subordinated note from PERL due 2014, which were received as a portion of the total consideration for the sale of our Alaska assets in August 2007. See Note 7 to the Condensed Consolidated Financial Statements for more information on these investments.

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Accretion of Asset Retirement Obligations

        Accretion of asset retirement obligations is the expense recognized to increase the carrying amount of the liability associated with our asset retirement obligations as a result of the passage of time. See Note 6 to the Condensed Consolidated Financial Statements for more information on our asset retirement obligations.

Gain on Debt Extinguishment

        The net gain on debt extinguishment for the nine months ended September 30, 2010 includes the net gain related to the January 2010 redemption of all $150 million of our 7³/4% senior notes due 2014 at 101.292% of par. The net gain was recognized due to the write-off of unamortized deferred gains on the termination of interest rate swaps. This gain is offset by the loss on debt extinguishment related to the write-off of the unamortized discount associated with the $.1 million of 7% senior subordinated notes due 2013 that were repurchased during the second quarter of 2010 at par. See Note 4 to the Condensed Consolidated Financial Statements for more information on our debt.

Current and Deferred Income Tax

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
	(In Thousands, Except Percentages)
Current income tax	$	(16,814	)		—			(12,089	)		1,505
Deferred income tax		54,247			(163,851	)		129,991			(521,706	)
Total income tax	$	37,433			(163,851	)		117,902			(520,201	)
Effective tax rate		35	%		(1,937	)%		36	%		35	%

        Our combined U.S. and Canadian effective tax rate should generally approximate 35% to 36% of pre-tax income but will fluctuate based on the percentage of pre-tax income generated in the U.S. versus Canada. Our effective income tax rate was 35% and 36% for the three and nine months ended September 30, 2010, respectively, and (1,937)% and 35% for the three and nine months ended September 30, 2009, respectively. The significant variance in our effective tax rate for the three months ended September 30, 2009 was due to the valuation allowance placed on a portion of our deferred tax assets in the United States during that period. See Note 9 to the Condensed Consolidated Financial Statements for a reconciliation of our income taxes at the statutory U.S. federal rate to income taxes at our effective rate for each period presented. The current income tax credit of $16.8 million and $12.1 million for the three and nine months ended September 30, 2010 is due to a $17.0 million reduction in our 2009 federal income tax liability recorded in the third quarter of 2010.

LIQUIDITY AND CAPITAL RESOURCES

        Our exploration, development, and acquisition activities require us to make significant operating and capital expenditures. Historically, we have used cash flow from operations and our bank credit facilities as our primary sources of liquidity. To fund large and other exceptional transactions, such as acquisitions and debt refinancing transactions, we have looked to the private and public capital markets as another source of financing and, as market conditions have permitted, we have engaged in asset monetization transactions.

        Changes in the market prices for oil and natural gas directly impact our level of cash flow generated from operations. For the nine months ended September 30, 2010, natural gas accounted for approximately 75% of our total oil and gas production and, as a result, our operations and cash flow are more sensitive to fluctuations in the market price for natural gas than to fluctuations in the market

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price for oil. We employ a commodity hedging strategy as an attempt to moderate the effects of wide fluctuations in commodity prices on our cash flow. As of October 29, 2010, we had hedged, via commodity swaps and collar instruments, approximately 86 Bcfe of our total 2010 production and 55 Bcfe, excluding outstanding swaptions and call options, of our total 2011 production. We expect that this level of hedging will provide a measure of certainty of the cash flow that we will receive for a portion of our production in 2010 and 2011. For further information concerning our derivative contracts, see Item 3—"Quantitative and Qualitative Disclosures about Market Risk—Commodity Price Risk" below.

        The other primary source of liquidity is our combined U.S. and Canadian credit facilities, which had an aggregate borrowing base of $1.3 billion as of September 30, 2010. These facilities are used to fund daily operations and to fund acquisitions and refinance debt, as needed and if available. The credit facilities are secured by a portion of our assets and mature in June 2012. See—"Bank Credit Facilities" below for further details. We had no amounts drawn on our credit facilities as of September 30, 2010 and October 29, 2010.

        The public and private capital markets have historically served as our primary source of financing to fund large acquisitions and other exceptional transactions. In the past, we have issued debt and equity in both the public and private capital markets. For example, in February 2009, we issued $600 million principal amount of 8¹/2% senior notes due 2014 in a private offering for net proceeds of $560 million and in May 2009, we issued approximately 14 million shares of common stock for net proceeds of $256 million. Our ability to access the debt and equity capital markets on economic terms is affected by general economic conditions, the domestic and global financial markets, the credit ratings assigned to our debt by independent credit rating agencies, our operational and financial performance, the value and performance of our equity and debt securities, prevailing commodity prices, and other macroeconomic factors outside of our control.

        We also have engaged in asset dispositions as a means of generating additional cash to fund expenditures and enhance our financial flexibility. For example, during 2009, we sold certain non-strategic assets for approximately $1.1 billion, a portion of which proceeds were used to pay off the outstanding balances under our credit facilities in 2009 and redeem our 7³/4% senior notes due 2014 in January 2010. During the first nine months of 2010 we have sold additional non-strategic assets for total proceeds of $156 million.

        We believe that our current cash and cash equivalents, cash flows provided by operating activities, and $1.3 billion of funds available under our credit facilities will be sufficient to fund our normal recurring operating needs, anticipated capital expenditures, and our contractual obligations, including the redemption of our $285 million principal amount of senior notes that are due in December 2011. However, if our revenue and cash flow decrease in the future as a result of a deterioration in domestic and global economic conditions or a significant decline in commodity prices, we may elect to reduce our planned capital expenditures. We believe that this financial flexibility to adjust our spending levels will provide us with sufficient liquidity to meet our financial obligations should economic conditions deteriorate.

Bank Credit Facilities

        Our bank credit facilities consist of a $1.65 billion U.S. credit facility (the "U.S. Facility") with a syndicate of banks led by JPMorgan Chase Bank, N.A., and a $150 million Canadian credit facility (the "Canadian Facility," and together with the U.S. Facility, the "Credit Facilities") with a syndicate of banks led by JPMorgan Chase Bank, N.A., Toronto Branch. The Credit Facilities will mature in June 2012.

        Our availability under the Credit Facilities is governed by a borrowing base (the "Global Borrowing Base"), which was $1.3 billion as of September 30, 2010. We currently have allocated

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$1.155 billion to the borrowing base under the U.S. Facility and $145 million to the borrowing base under the Canadian Facility. The determination of the Global Borrowing Base is made by the lenders in their sole discretion, on a semi-annual basis, taking into consideration the estimated value of our oil and gas properties based on pricing models determined by the lenders at such time, in accordance with the lenders' customary practices for oil and gas loans. The available borrowing amount under the Credit Facilities could increase or decrease based on such redetermination. In October 2010, the lenders reaffirmed the borrowing base at $1.3 billion and the next redetermination is expected to occur in the second quarter of 2011. In addition to the semi-annual redeterminations, Forest and the lenders each have discretion at any time, but not more often than once during a calendar year, to have the Global Borrowing Base redetermined. The Global Borrowing Base is also subject to automatic adjustments if certain events occur.

        As of September 30, 2010 and October 29, 2010, there were no outstanding borrowings under our Credit Facilities. We had used the Credit Facilities for approximately $2 million in letters of credit at September 30, 2010.

        From time to time, we engage in other transactions with a number of the lenders under the Credit Facilities. Such lenders or their affiliates may serve as underwriters or initial purchasers of our debt and equity securities, act as agent or directly purchase our production, or serve as counterparties to our commodity and interest rate derivative agreements. As of October 29, 2010, our primary derivative counterparties are lenders and their affiliates, with six such lenders accounting for approximately 78 Bcfe, or 91% of our 2010 hedged production and approximately 40 Bcfe, or 73% of our 2011 hedged production, excluding outstanding swaptions and call options. Our obligations under our existing derivative agreements with our lenders are secured by the security documents executed by the parties under our Credit Facilities. See Part 3—"Quantitative and Qualitative Disclosures about Market Risk—Commodity Price Risk," below for additional details concerning our derivative arrangements.

Historical Cash Flow

        Net cash provided by operating activities, net cash used by investing activities, and net cash used by financing activities for the nine months ended September 30, 2010 and 2009 were as follows:

	Nine Months Ended September 30,
	2010			2009
	(In Thousands)
Net cash provided by operating activities	$	398,307			473,573
Net cash used by investing activities		(474,918	)		(396,760	)
Net cash used by financing activities		(138,675	)		(73,281	)

        Net cash provided by operating activities is primarily affected by production volumes, commodity prices, the effects of settlements of our derivative contracts, and changes in working capital. The decrease in net cash provided by operating activities in the nine months ended September 30, 2010 compared to the same period of 2009 was primarily due to lower realized gains on our derivative contracts and an increased investment in net operating assets (i.e., working capital) offset somewhat by higher average realized prices for oil and gas. Adjusted discretionary cash flow, which is a non-GAAP liquidity measure that management uses to evaluate cash flow from operations before changes in working capital, was $417 million and $466 million for the nine months ended September 30, 2010 and 2009, respectively. The decrease in adjusted discretionary cash flow between the nine-month periods was primarily driven by a decrease in realized gains on oil and gas derivative instruments of $173 million offset by an increase in oil and gas revenues of $86 million and a decrease in production and interest expenses of $22 million and $10 million, respectively. Reference should be made to "Reconciliation of Non-GAAP Measures" at the end of this Item 2 for further explanation of this

36

non-GAAP liquidity measure, as well as a reconciliation to the most directly comparable GAAP measure.

        Net cash used by investing activities is primarily comprised of expenditures for the exploration and development of oil and gas properties and leasehold acquisition costs net of proceeds from the dispositions of oil and gas properties and other capital assets. The increase in net cash used by investing activities in the nine months ended September 30, 2010 compared to the same period of 2009 was primarily due to increased exploration, development, and leasehold acquisition costs during the nine months ended September 30, 2010 as compared to the same period of 2009. The major components of cash used by investing activities for the nine months ended September 30, 2010 and 2009 were as follows:

	Nine Months Ended September 30,
	2010			2009
	(In Thousands)
Exploration, development, and leasehold acquisition costs(1)	$	(612,453	)		(512,266	)
Proceeds from sale of assets		156,177			145,691
Acquisition of other fixed assets		(19,831	)		(30,185	)
Other, net		1,189			—
Net cash (used) by investing activities	$	(474,918	)		(396,760	)

⁽¹⁾

Cash paid for exploration, development, and leasehold acquisition costs as reflected in the Condensed Consolidated Statements of Cash Flows differs from the reported capital expenditures in the "Capital Expenditures" table below due to the timing of when the capital expenditures are incurred and when the actual cash payment is made.

        Net cash used by financing activities in the nine months ended September 30, 2010 included the redemption of the 7³/4% senior notes for $152 million. Net cash used by financing activities in the nine months ended September 30, 2009 included net repayments of bank borrowings of $850 million, partially offset by net proceeds of $560 million for the issuance of the 8¹/2% senior notes and net proceeds of $256 million for the issuance of common stock.

Capital Expenditures

        Expenditures for property exploration, development, and leasehold acquisition costs were as follows:

			Nine Months Ended September 30,
			2010		2009
			(In Thousands)
Exploration, development, and leasehold acquisition costs:
	Direct costs:
		Exploration and development	$	510,625		376,030
		Leasehold acquisition costs		104,605		13,106
	Overhead capitalized			34,576		33,487
	Interest capitalized			8,929		9,312
Total capital expenditures(1)			$	658,735		431,935

⁽¹⁾

Total capital expenditures include cash expenditures, accrued expenditures, and non-cash capital expenditures including stock-based compensation capitalized under the full cost method of accounting. Total capital expenditures also include estimated discounted asset retirement obligations of $(2.4) million and $2.2 million for the nine months ended September 30, 2010 and 2009, respectively.

37

FORWARD-LOOKING STATEMENTS

        The information in this Quarterly Report on Form 10-Q includes "forward- looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements are statements other than statements of historical 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. Generally, the words "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," "may," "will," "could," "should," "future," "potential," "continue," variations of such words, and similar expressions identify 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.

        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 natural gas reserves;

•

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

•

our future financial condition and results of operations;

•

our future revenues, cash flows, and expenses;

•

our access to capital and our anticipated liquidity;

•

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

•

our outlook on oil and gas prices;

•

the amount, nature, and timing of future capital expenditures, including future development costs;

•

our ability to access the capital markets to fund capital and other expenditures;

•

our assessment of our counterparty risk and the ability of our counterparties to perform their future obligations; and

•

the impact of federal, state, and local political, legislative, regulatory, and environmental developments in the United States and certain foreign locations where we conduct business operations.

        We believe the expectations and forecasts reflected in our forward-looking statements are reasonable, but we can give no assurance that they will prove to be correct. We caution you that these forward-looking statements can be affected by inaccurate assumptions and 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. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading "Risk Factors" included or incorporated in Part I of our 2009 Annual Report on Form 10-K, as well as the risks described in Part II, Item 1A, "Risk Factors," in our Form 10-Q for the quarter ended June 30, 2010, and in this Form 10-Q.

        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.

38

        We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this report, and we undertake no obligation to update this information to reflect events or circumstances after the filing of this report with the SEC, except as required by law. 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 we may make or persons acting on our behalf may issue.

RECONCILIATION OF NON-GAAP MEASURES

Adjusted EBITDA

        In addition to reporting net earnings as defined under GAAP, Forest also presents adjusted earnings before interest, income taxes, depreciation, depletion, and amortization ("Adjusted EBITDA"), which is a non-GAAP performance measure. Adjusted EBITDA consists of net earnings (loss) before interest expense, income taxes, depreciation, depletion, and amortization, as well as other items such as ceiling test write-downs of oil and gas properties, unrealized losses (gains) on derivative instruments, unrealized and realized foreign currency exchange losses (gains), unrealized losses on other investments, accretion of asset retirement obligations, and other items presented in the table below. Adjusted EBITDA does not represent and should not be considered an alternative to GAAP measurements, such as net earnings (loss) (its most comparable GAAP financial measure), and Forest's calculations thereof may not be comparable to similarly titled measures reported by other companies. By eliminating interest, income taxes, depreciation, depletion, amortization, and other items, Forest believes the result is a useful measure across time in evaluating its fundamental core operating performance. Management also uses Adjusted EBITDA to manage its business, including in preparing its annual operating budget and financial projections. Forest believes that Adjusted EBITDA is also useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. As indicated, Adjusted EBITDA does not include interest expense on borrowed money or depletion and depreciation expense on capital assets or the payment of income taxes, which are necessary elements of Forest's operations. Because Adjusted EBITDA does not account for these and other expenses, its utility as a measure of Forest's operating performance has material limitations. Because of these limitations, Forest's management does not view Adjusted EBITDA in isolation and also uses other measurements, such as net earnings (loss) and revenues to measure operating performance. The following table provides a

39

reconciliation of net earnings (loss), the most directly comparable GAAP measure, to Adjusted EBITDA for the periods presented.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2010			2009			2010			2009
	(In Thousands)
Net earnings (loss)	$	68,911			172,311			211,327			(968,321	)
Income tax expense (benefit)		37,433			(163,851	)		117,902			(520,201	)
Unrealized (gains) losses on derivative instruments, net		(29,091	)		79,238			(102,839	)		132,216
Unrealized foreign currency exchange gains, net		(9,244	)		(9,723	)		(5,290	)		(15,609	)
Unrealized losses on other investments, net		—			—			—			2,327
Interest expense		37,088			42,653			112,240			122,373
Gain on debt extinguishment, net		—			—			(4,576	)		—
Accretion of asset retirement obligations		1,693			2,014			5,441			6,195
Ceiling test write-down of oil and gas properties		—			—			—			1,575,843
Depreciation, depletion, and amortization		64,737			65,275			179,495			237,964
Stock-based compensation		4,658			4,764			14,389			12,948
Adjusted EBITDA	$	176,185			192,681			528,089			585,735

Adjusted Discretionary Cash Flow

        In addition to reporting cash provided by operating activities as defined under GAAP, Forest also presents adjusted discretionary cash flow, which is a non-GAAP liquidity measure. Adjusted discretionary cash flow consists of cash provided by operating activities before changes in working capital items. Management uses adjusted discretionary cash flow as a measure of liquidity and believes it provides useful information to investors because it assesses cash flow from operations for each period before changes in working capital, which fluctuates due to the timing of collections of receivables and the settlements of liabilities. This measure does not represent the residual cash flow available for discretionary expenditures, since Forest has mandatory debt service requirements and other non-discretionary expenditures that are not deducted from the measure. The following table provides a reconciliation of cash provided by operating activities, the most directly comparable GAAP measure, to adjusted discretionary cash flow for the periods presented.

		Three Months Ended September 30,						Nine Months Ended September 30,
		2010			2009			2010			2009
		(In Thousands)
Net cash provided by operating activities		$	152,348			185,651			398,307			473,573
Changes in working capital:
	Accounts receivable		(18,445	)		(4,982	)		(24,345	)		(66,143	)
	Other current assets		12,818			(5,147	)		(1,539	)		(20,622	)
	Accounts payable and accrued liabilities		19,546			(7,909	)		66,123			106,567
	Accrued interest and other current liabilities		(8,486	)		(16,091	)		(4,870	)		(27,317	)
	2009 current income tax credit(1)		(16,984	)		—			(16,984	)		—
Adjusted discretionary cash flow		$	140,797			151,522			416,692			466,058

(1)

The current income tax credit of $17.0 million for the three and nine months ended September 30, 2010 is due to a $17.0 million reduction in our 2009 federal income tax liability recorded in the third quarter of 2010.

40

Item 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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. In order to reduce the impact of fluctuations in commodity prices, or to protect the economics of property acquisitions, we make use of a commodity hedging strategy. Under our hedging strategy, we enter into commodity swaps, collars, basis swaps, and other derivative instruments with counterparties who, in general, are participants in our credit facilities. These arrangements, which are typically 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 September 30, 2010, we had entered into the following swaps:

Commodity Swaps
	Natural Gas (NYMEX HH)						Oil (NYMEX WTI)							NGLs (OPIS Refined Products)
Remaining Swap Term	Bbtu per Day		Weighted Average Hedged Price per MMBtu		Fair Value (In Thousands)		Barrels per Day		Weighted Average Hedged Price per Bbl		Fair Value (In Thousands)			Barrels per Day		Weighted Average Hedged Price per Bbl		Fair Value (In Thousands)
Oct 2010 - Dec 2010		210	$	6.20	$	43,425		3,000	$	76.06	$	(1,414	)		—	$	—	$	—
Calendar 2011		90		5.86		46,044		—		—		—			3,000		36.75		(1,929	)

        Subsequent to September 30, 2010, through October 29, 2010, Forest entered into additional gas swaps. See "Commodity Swaptions" below for further information on these swaps.

Collars

        We also enter into 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

41

price only if the index price is above the ceiling price. As of September 30, 2010, we had entered into the following collars:

Oil Collars (NYMEX WTI)
Remaining Collar Term	Barrels Per Day		Weighted Average Hedged Floor and Ceiling Price per Bbl			Fair Value (In Thousands)
October 2010 - December 2010		2,000	$	60.00/98.50		$	(19	)
Calendar 2011		3,000		75.00/91.87	(1)		(1,117	)

⁽¹⁾

Subsequent to September 30, 2010, in connection with receiving a premium hedged price on a gas swap, we lowered the hedged ceiling price on one of our existing Calendar 2011 oil collars that covered 1,000 barrels per day from $95.00 to $90.00 per Bbl.

Commodity Swaptions

        In connection with several gas swaps entered into during the nine months ended September 30, 2010, we granted option instruments (several commodity swaptions and one call option) to the gas swap counterparties in exchange for us receiving premium hedged prices on the gas swaps. As of October 29, 2010, none of the options have been exercised by the counterparties. The table below sets forth the outstanding options as of September 30, 2010:

Commodity Options
			Natural Gas (NYMEX HH)							Oil (NYMEX WTI)
Instrument	Option Expiration	Underlying Swap Term	Underlying Swap Bbtu Per Day		Underlying Swap Weighted Average Hedged Price per MMBtu		Fair Value (In Thousands)			Underlying Swap Barrels Per Day		Underlying Swap Hedged Price per Bbl		Fair Value (In Thousands)
Gas Swaptions	December 2010	Calendar 2011		50	$	5.80	$	(248	)		—	$	—	$	—
Oil Swaption	December 2011	Calendar 2012		—		—		—			1,000		90.00		(3,182	)
Oil Call Option	Monthly in 2011	Monthly in 2011		—		—		—			1,000		90.00		(2,425	)

        Subsequent to September 30, 2010, through October 29, 2010, we entered into two additional gas swaps covering 25 Bbtu per day for Calendar 2011 for a weighted average hedged price of $5.03 per MMBtu. In connection with these swaps, the counterparties were granted the following oil swaptions:

Commodity Options
		Oil (NYMEX WTI)
Option Expiration	Underlying Swap Term	Underlying Swap Barrels Per Day		Underlying Swap Hedged Price per Bbl
December 2010	Calendar 2011		1,000	$	85.00
December 2011	Calendar 2012		1,000		90.00

42

Basis Swaps

        We also use basis swaps in connection with natural gas swaps in order to fix the price differential between the NYMEX Henry Hub price and the index price at which a portion of our natural gas production is sold. As of September 30, 2010, we had entered into the following basis swaps:

Basis Swaps
Remaining Swap Term	Index	Bbtu Per Day		Weighted Average Hedged Price Differential per MMBtu			Fair Value (In Thousands)
October 2010—December 2010	Centerpoint		30	$	(.95	)	$	(1,989	)
October 2010—December 2010	Houston Ship Channel		50		(.29	)		(1,299	)
October 2010—December 2010	Mid Continent		60		(1.04	)		(4,308	)
October 2010—December 2010	NGPL TXOK		40		(.44	)		(1,089	)

        The estimated fair value of all our commodity derivative instruments based on various inputs, including published forward prices, at September 30, 2010 was a net asset of approximately $70.5 million.

Interest Rate Risk

        We periodically enter into interest rate derivative agreements in an attempt to manage the mix of fixed and floating interest rates within our debt portfolio. As of September 30, 2010, we had entered into the following interest rate swaps:

Interest Rate Swaps
Remaining Swap Term	Notional Amount (In Thousands)		Weighted Average Floating Rate	Weighted Average Fixed Rate			Fair Value (In Thousands)
October 2010—February 2014	$	500,000	1 month LIBOR + 5.89%		8.50	%	$	26,480

        The estimated fair value of all our interest rate derivative instruments was a net asset of approximately $26.5 million as of September 30, 2010.

Derivative Fair Value Reconciliation

        The table below sets forth the changes that occurred in the fair values of our open derivative contracts during the nine months ended September 30, 2010, beginning with the fair value of our derivative contracts on December 31, 2009. It has been our experience that commodity prices are subject to large fluctuations, and we expect this volatility to continue. 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. Actual gains and losses recognized related to our commodity derivative instruments will likely differ from those estimated at September 30, 2010 and will depend

43

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, 2009	$	(5,389	)		(596	)		(5,985	)
Premiums received		—			(984	)		(984	)
Net increase in fair value		140,655			37,803			178,458
Net contract gains realized		(64,816	)		(9,743	)		(74,559	)
As of September 30, 2010	$	70,450			26,480			96,930

Interest Rates on Borrowings

        The following table presents principal amounts and related interest rates by year of maturity for Forest's debt obligations at September 30, 2010.

	2011			2013			2014			2019			Total
	(Dollar Amounts in Thousands)
Long-term debt:
Fixed rate debt	$	285,000			12			600,000			1,000,000			1,885,012
Coupon interest rate		8.00	%		7.00	%		8.50	%		7.25	%		7.76	%
Effective interest rate(1)		7.25	%		7.49	%		9.47	%		7.24	%		7.95	%

⁽¹⁾

The effective interest rates on the senior notes differ from the coupon interest rates due to the amortization of related discounts or premiums on the notes. The effective interest rate on the 8% senior notes due 2011 is further reduced from the coupon rate as a result of amortization of deferred gains related to interest rate swaps terminated in 2002.

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. 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.

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, Michael N. Kennedy, 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 September 30, 2010 (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

44

we file or submit under the Exchange Act (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 September 30, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

45

PART II—OTHER INFORMATION

Item 1A.    RISK FACTORS

        The following risk factor updates the Risk Factors included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2009 ("Annual Report"). Except as set forth below, and under Part II, Item 1A, "Risk Factors," in our Form 10-Q for the quarter ended June 30, 2010, there have been no material changes to the risks described in Part I, Item 1A, of the Annual Report.

We may face liabilities related to the pending bankruptcy of Pacific Energy Resources, Ltd.

        In August 2007, we closed on the sale of our oil and gas assets in Alaska (the "Alaska Assets") to Pacific Energy Resources, Ltd ("PERL"). In March 2009, PERL filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. PERL requested, and the bankruptcy court has approved, abandonment of PERL's interests in certain of the Alaska Assets. The remaining working interest owners in the Alaska Assets previously made the assertion that, in its role as assignor of the Alaska Assets, Forest should be held liable for any contractual obligations of PERL with respect to the Alaska Assets, including obligations related to operating costs and for costs associated with the final plugging and decommissioning of wells and production facilities. More recently, PERL has asserted during its bankruptcy case that the Alaska Assets were worth less than what PERL paid for them in August 2007, and that Forest may face liability under creditors' rights laws or other laws in connection with the transaction. Forest disagrees with both the working interest owners' assertion and PERL's assertion and, to the extent necessary, will vigorously oppose any efforts to hold Forest liable for PERL's unsatisfied obligations or for the sale of the Alaska Assets to PERL. We cannot predict, however, whether we would be successful in avoiding all such liabilities.

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

Unregistered Sales of Equity 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 third quarter 2010. 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 and phantom stock units that are settled in shares. Forest does not consider this a share buyback program.

Period	Total # of Shares Purchased		Average Price Paid Per Share		Total # of Shares 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
July 2010		4,716	$	28.57		—		—
August 2010		8,638		27.73		—		—
September 2010		3,500		29.29		—		—
Third Quarter Total		16,854	$	28.29		—		—

46

Item 6.   EXHIBITS

(a)

Exhibits.

3.1	Restated Certificate of Incorporation of Forest Oil Corporation dated October 14, 1993, incorporated herein by reference to Exhibit 3(i) to Form 10-Q for Forest Oil Corporation for the quarter ended September 30, 1993 (File No. 0-4597).
3.2	Certificate of Amendment of the Restated Certificate of Incorporation, dated as of July 20, 1995, incorporated herein by reference to Exhibit 3(i)(a) to Form 10-Q for Forest Oil Corporation for the quarter ended June 30, 1995 (File No. 0-4597).
3.3	Certificate of Amendment of the Certificate of Incorporation, dated as of July 26, 1995, incorporated herein by reference to Exhibit 3(i)(b) to Form 10-Q for Forest Oil Corporation for the quarter ended June 30, 1995 (File No. 0-4597).
3.4	Certificate of Amendment of the Certificate of Incorporation dated as of January 5, 1996, incorporated herein by reference to Exhibit 3(i)(c) to Forest Oil Corporation Registration Statement on Form S-2 (File No. 33-64949).
3.5	Certificate of Amendment of the Certificate of Incorporation dated as of December 7, 2000, incorporated herein by reference to Exhibit 3(i)(d) to Form 10-K for Forest Oil Corporation for the year ended December 31, 2000 (File No. 001-13515).
3.6	Bylaws of Forest Oil Corporation Restated as of February 14, 2001, as amended by Amendments No. 1, No. 2, No. 3, and No. 4, incorporated herein by reference to Exhibit 3.1 to Form 10-Q for Forest Oil Corporation for the quarter ended June 30, 2008 (File No. 001-13515).
10.1*	Form of 2010 Severance Agreement for Senior Vice President.
10.2*	Form of 2010 Severance Agreement for Vice President.
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 Principal Executive Officer of Forest Oil Corporation pursuant to 18 U.S.C. §1350.
32.2+	Certification of Principal Financial Officer of Forest Oil Corporation pursuant to 18 U.S.C. §1350.
101.INS++	XBRL Instance Document.
101.SCH++	XBRL Taxonomy Extension Schema Document.
101.CAL++	XBRL Taxonomy Calculation Linkbase Document.
101.LAB++	XBRL Label Linkbase Document.
101.PRE++	XBRL Presentation Linkbase Document.
101.DEF++	XBRL Taxonomy Extension Definition.

*

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.

⁺⁺

The documents formatted in XBRL (Extensible Business Reporting Language) and attached as Exhibit 101 to this report are deemed not filed as part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, are deemed not filed for purposes of section 18 of the Exchange Act, and otherwise are not subject to liability under these sections.

47

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)
November 3, 2010	By:	/s/ MICHAEL N. KENNEDY Michael N. Kennedy 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 Senior Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer)

48

Exhibit Index

3.1	Restated Certificate of Incorporation of Forest Oil Corporation dated October 14, 1993, incorporated herein by reference to Exhibit 3(i) to Form 10-Q for Forest Oil Corporation for the quarter ended September 30, 1993 (File No. 0-4597).
3.2	Certificate of Amendment of the Restated Certificate of Incorporation, dated as of July 20, 1995, incorporated herein by reference to Exhibit 3(i)(a) to Form 10-Q for Forest Oil Corporation for the quarter ended June 30, 1995 (File No. 0-4597).
3.3	Certificate of Amendment of the Certificate of Incorporation, dated as of July 26, 1995, incorporated herein by reference to Exhibit 3(i)(b) to Form 10-Q for Forest Oil Corporation for the quarter ended June 30, 1995 (File No. 0-4597).
3.4	Certificate of Amendment of the Certificate of Incorporation dated as of January 5, 1996, incorporated herein by reference to Exhibit 3(i)(c) to Forest Oil Corporation Registration Statement on Form S-2 (File No. 33-64949).
3.5	Certificate of Amendment of the Certificate of Incorporation dated as of December 7, 2000, incorporated herein by reference to Exhibit 3(i)(d) to Form 10-K for Forest Oil Corporation for the year ended December 31, 2000 (File No. 001-13515).
3.6	Bylaws of Forest Oil Corporation Restated as of February 14, 2001, as amended by Amendments No. 1, No. 2, No. 3, and No. 4, incorporated herein by reference to Exhibit 3.1 to Form 10-Q for Forest Oil Corporation for the quarter ended June 30, 2008 (File No. 001-13515).
10.1*	Form of 2010 Severance Agreement for Senior Vice President.
10.2*	Form of 2010 Severance Agreement for Vice President.
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 Principal Executive Officer of Forest Oil Corporation pursuant to 18 U.S.C. §1350.
32.2+	Certification of Principal Financial Officer of Forest Oil Corporation pursuant to 18 U.S.C. §1350.
101.INS++	XBRL Instance Document.
101.SCH++	XBRL Taxonomy Extension Schema Document.
101.CAL++	XBRL Taxonomy Calculation Linkbase Document.
101.LAB++	XBRL Label Linkbase Document.
101.PRE++	XBRL Presentation Linkbase Document.
101.DEF++	XBRL Taxonomy Extension Definition.

*

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.

⁺⁺

The documents formatted in XBRL (Extensible Business Reporting Language) and attached as Exhibit 101 to this report are deemed not filed as part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act, are deemed not filed for purposes of section 18 of the Exchange Act, and otherwise are not subject to liability under these sections.

49

EX-10.1

Exhibit 10.1

SEVERANCE AGREEMENT

SEVERANCE AGREEMENT (the “Agreement”) dated as of                   , 2010 between FOREST OIL CORPORATION, a New York corporation (the “Company”), with its principal offices located at 707 Seventeenth Street, Suite 3600, Denver, Colorado, and                                            (“Executive”),

W I T N E S S E T H:

WHEREAS, the Company desires to attract and retain certain key employee personnel and, accordingly, the Board of Directors of the Company (the “Board”) has approved the Company entering into a severance agreement with Executive in order to encourage his continued service to the Company;

WHEREAS, Executive is prepared to commit such services in return for specific arrangements with respect to severance compensation and other benefits;

WHEREAS, Executive will receive and/or has received proprietary and confidential trade secret information of the Company; and

WHEREAS, Executive will serve and/or has served as an executive, management personnel, or officer of the Company;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the Company and Executive agree as follows:

1.Definitions.

(a)“Annual Compensation” shall mean an amount equal to the greater of:

(i)Executive’s annual base salary at the annual rate in effect at the date of his Involuntary Termination;

(ii)Executive’s annual base salary at the annual rate in effect sixty days prior to the date of his Involuntary Termination; or

(iii)Executive’s annual base salary at the annual rate in effect immediately prior to a Change of Control.

Notwithstanding the foregoing, if Executive’s employment shall be subject to an Involuntary Termination within two years after such Change of Control, then the amount determined pursuant to the preceding sentence shall be increased by the amount of the Annual Bonus.  For purposes of the preceding sentence, the term ‘Annual Bonus’ shall mean the annual bonus most recently paid by the Company to Executive prior to the date of his Involuntary Termination; provided, however, that if Executive was employed by the Company for only a portion of the year

Confidential

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year with respect to which such bonus was paid, then the ‘Annual Bonus’ shall equal an amount determined by annualizing the bonus received by Executive based on the ratio of the number of days Executive was employed by the Company during such year to 365 days; provided, further, that if Executive has not received an annual bonus from the Company at any time prior to the date of his Involuntary Termination, then the ‘Annual Bonus’ shall equal the amount of Executive’s target annual bonus for the year in which such termination occurs.

(b)“Change in Duties” shall mean the occurrence of any one or more of the following:

(i)A significant change in the nature or scope of Executive’s authorities or duties from those applicable to him immediately prior to the date on which a Change of Control occurs;

(ii)A reduction in Executive’s base salary from that provided to him immediately prior to the date on which a Change of Control occurs;

(iii)A diminution in Executive’s eligibility to participate in bonus, stock option, incentive award and other compensation plans which provide opportunities to receive compensation which are the greater of (A) the opportunities provided by the Company (including its subsidiaries) for employees with comparable duties or (B) the opportunities under any such plans under which he was participating immediately prior to the date on which a Change of Control occurs;

(iv)A diminution in employee benefits (including but not limited to medical, dental, life insurance and long-term disability plans) and perquisites applicable to Executive from the greater of (A) the employee benefits and perquisites provided by the Company (including its subsidiaries) to employees with comparable duties or (B) the employee benefits and perquisites to which he was entitled immediately prior to the date on which a Change of Control occurs; or

(v)A change in the location of Executive’s principal place of employment by the Company (including its subsidiaries) by more than 50 miles from the location where he was principally employed immediately prior to the date on which a Change of Control occurs.

(c)“Change of Control” shall mean the occurrence of any one of the following events:

(i)Any one person, or more than one person Acting as a Group (as hereinafter defined), acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company; provided, however, that if any one person, or more than one person Acting as a Group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same

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person or group does not cause a Change of Control within the meaning of this Paragraph 1(c)(i); and provided, further, that an increase in the percentage of stock owned by any one person, or persons Acting as a Group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this Paragraph 1(c)(i); and provided, further, that this Paragraph 1(c)(i) applies to cause a Change of Control only when there is a transfer of stock of the Company (or issuance of stock of the Company) and stock in the Company remains outstanding after the transaction; and provided, further, that, if any person, or more than one person Acting as a Group, is considered to have met the control requirements of Paragraph 1(c)(ii) below, the acquisition of additional control by the same person or group will not cause a Change of Control within the meaning of this Paragraph 1(c)(i); or

(ii)A majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the members of the Board before the date of such appointment or election; provided, however, that, if any person, or more than one person Acting as a Group, is considered to have met the control requirements of this Paragraph 1(c)(ii), the acquisition of additional control by the same person or group will not cause a Change of Control within the meaning of this Paragraph 1(c)(ii); or

(iii)Any one person, or more than one person Acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) assets from the Company that have a total “gross fair market value” equal to or more than 60% of the total “gross fair market value” of all the assets of the Company immediately before such acquisition or acquisitions; provided, however, that there is no Change of Control under this Paragraph 1(c)(iii) where there is a transfer to an entity  that is controlled by the shareholders of the Company immediately after the transfer, as provided in the following proviso; and, provided, further, that a transfer of assets by the Company shall not be treated as change in the ownership of such assets if the assets are transferred to (1) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a person, or more than one person Acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in clause (3) of this proviso.  For purposes of this Paragraph 1(c)(iii), “gross fair market value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

For purposes of this Paragraph 1(c), (x) Section 318(a) of the Code applies to determine stock ownership, and (y) the term “Acting as a Group” means “acting as a group” within the meaning of Treasury Regulation section 1.409A-3(i)(5)(v)(B), (vi)(D), or (vii)(C), as applicable.  The definition of Change of Control under this Paragraph 1(c) is intended to comply with applicable definitions and requirements of Section 409A(a)(2)(A)(v) of the Code and Treasury Regulation section 1.409A-3(i)(5) that correspond to the change of control events described above, and shall be interpreted consistently therewith.

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(d)“Code” shall mean the Internal Revenue Code of 1986, as amended.

(e)“Compensation Committee” shall mean the Compensation Committee of the Board.

(f)“Disability” shall mean that, as a result of Executive’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 thirty days after written notice of termination is given to Executive by the Company (provided, however, that such notice may not be given prior to thirty days before the expiration of such six-month period).

(g)“Involuntary Termination” shall mean any termination of Executive’s employment with the Company which:

(i)does not result from a resignation by Executive (other than a resignation pursuant to clause (ii) of this subparagraph (g)); or

(ii)results from a resignation by Executive on or before the date which is sixty days after the date upon which Executive receives notice of a Change in Duties;

provided, however, the term “Involuntary Termination” shall not include a Termination for Cause or any termination as a result of death, Disability, or Retirement.  For all purposes of this Agreement, Executive shall be considered to have terminated employment with the Company when Executive incurs a “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code and applicable administrative guidance issued thereunder.

(h)“Retirement” shall mean Executive’s resignation on or after the date he reaches age sixty-five.

(i)“Severance Amount” shall mean an amount equal to 2.5 times Executive’s Annual Compensation.

(j)“Severance Period” shall mean a period commencing on the date of such Involuntary Termination and continuing for twenty-four months.

(k)“Termination for Cause” shall mean termination of Executive’s employment by the Company (or its subsidiaries) by reason of Executive’s (i) gross negligence in the performance of his duties, (ii) willful and continued failure to perform his duties, (iii) willful engagement in conduct which is materially injurious to the Company or its subsidiaries (monetarily or otherwise) or (iv) conviction of a misdemeanor involving moral turpitude or a felony.

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2.Services.  Executive agrees that he will render services to the Company (as well as any subsidiary thereof or successor thereto) during the period of his employment to the best of his ability and in a prudent and businesslike manner and that he will devote substantially the same time, efforts and dedication to his duties as heretofore devoted.

3.Termination Within Two Years After a Change of Control.  Subject to the provisions of Paragraph 6(i) hereof, if Executive’s employment by the Company or any subsidiary thereof or successor thereto shall be subject to an Involuntary Termination which occurs within two years after the date upon which a Change of Control occurs, then the Company will, as additional compensation for services rendered to the Company (including its subsidiaries), pay to Executive the following amounts (subject to any applicable payroll or other taxes required to be withheld and any employee benefit premiums) and take the following actions after the last day of Executive’s employment with the Company:

(a)Pay Executive a lump sum cash payment in an amount equal to the Severance Amount.  Subject to the provisions of Paragraph 6(i) hereof, such payment shall be made on one of the dates provided below (as evidenced by the initials of Executive and an authorized representative of the Company):

(i)On the date that is 60 days after the date of Executive’s Involuntary Termination (Initials:          (Executive)          (authorized representative of the Company)); or

(ii)On January 15 of the first calendar year following the calendar year in which Executive’s Involuntary Termination occurs (Initials:          (Executive)          (authorized representative of the Company)); or

(iii)On January 15 of the second calendar year following the calendar year in which Executive’s Involuntary Termination occurs (Initials:          (Executive)          (authorized representative of the Company)); or

(iv)On January 15 of the third calendar year following the calendar year in which Executive’s Involuntary Termination occurs (Initials:          (Executive)          (authorized representative of the Company)); or

(v)On January 15 of the fourth calendar year following the calendar year in which Executive’s Involuntary Termination occurs (Initials:          (Executive)          (authorized representative of the Company)); or

(vi)On January 15 of the fifth calendar year following the calendar year in which Executive’s Involuntary Termination occurs (Initials:          (Executive)          (authorized representative of the Company)).

If the payment described in the first sentence of this Paragraph 3(a) (other than a payment described in clause (i) above) will occur after the Interest Commencement Date (as defined

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below), then such payment shall, subject to Paragraph 4, accrue interest (compounded annually on January 15 of each year) from the Interest Commencement Date to the actual date of payment at the Interest Credit Rate (as defined below and subject to periodic adjustment as provided below) and such interest shall be paid in a lump sum on the actual date of payment of the Severance Amount.  Further, if the payment described in the first sentence of this Paragraph 3(a) will occur after the date that is six months after the date of Executive’s Involuntary Termination, then the Company shall, on or as soon as practicable after the date of Executive’s Involuntary Termination, contribute cash in an amount equal to the Severance Amount plus the interest described in the preceding sentence to an irrevocable grantor (“rabbi”) trust of which Executive is the sole beneficiary and the trustee of which is a nationally-recognized and solvent bank or trust company that is not affiliated with the Company (subject to the claims of the Company’s creditors, as required pursuant to applicable Internal Revenue Service guidance to prevent the imputation of income to Executive prior to distribution from the trust), pursuant to which such payment plus applicable interest shall be payable from the trust at the time provided herein, provided that (x) the Company shall remain liable to Executive for any deficiency in the payments from the trust and (y) in no event shall cash be transferred to the trust during any period in which such transfer would result in adverse tax consequences to Executive pursuant to Section 409A(b)(3) of the Code.  As used herein, (A) the term “Interest Commencement Date” shall mean the fifth day after the effective date of the release described in Paragraph 6(i) hereof and (B) the term “Interest Credit Rate” shall mean the sum of 3% plus the “prime rate” of interest as reported in The Wall Street Journal as of the date of determination of the Interest Credit Rate as provided in the following sentence.  The Interest Credit Rate shall initially be determined as of the Interest Commencement Date (or the first business day following such date if such date is not a business day) and shall be re-determined and adjusted as of each January 15 (or the first business day following such date if such date is not a business day) that occurs after the Interest Commencement Date and prior to the actual date of payment of the Severance Amount.

(b)Cause Executive and those of his dependents (including his spouse) who were covered under the Company’s medical and dental benefit plans on the day prior to Executive’s Involuntary Termination to continue to be covered under such plans (or to receive equivalent benefits) throughout the Severance Period, without any cost to Executive; provided, however, that (i)  such coverage shall terminate if and to the extent Executive becomes eligible to receive medical and dental coverage from a subsequent employer (and any such eligibility shall be promptly reported to the Company by Executive), (ii) if Executive (and/or his spouse) would have been entitled to retiree medical and/or dental coverage under the Company’s plans had he voluntarily retired on the date of such Involuntary Termination, then such coverages shall be continued as provided under such plans, and (iii) such coverage to Executive (or the receipt of equivalent benefits) shall be provided through an arrangement that satisfies the requirements of Sections 105 and 106 of the Code such that the benefits or reimbursements under such arrangement are not includible in Executive’s income.

(c)Cause any and all outstanding options to purchase common stock of the Company held by Executive to become immediately exercisable in full and cause Executive’s accrued benefits under any and all nonqualified deferred compensation plans sponsored by the Company to become immediately nonforfeitable.  If and to the extent that the preceding provisions of this

6

paragraph are inconsistent or conflict with the terms of any stock option agreement or non-qualified deferred compensation plan, then the preceding provisions of this paragraph shall govern and control.

(d)Cause any and all outstanding options to purchase common stock of the Company held by Executive to remain exercisable for twelve months after the last day of Executive’s employment with the Company (but in no event shall any such option be exercisable for (i) a longer period than the original term of such option (but in no event after the 10th anniversary of the original date of grant of such option) or (ii) a shorter period than that already provided for under the terms of such option).  If and to the extent that the preceding provisions of this paragraph are inconsistent or conflict with the terms of any stock option agreement, then the preceding provisions of this paragraph shall govern and control.

4.Interest on Late Payments.If any payment provided for in Paragraphs 3(a) or 5 hereof is not made when due (determined after giving effect to any delay in such payment required pursuant to Paragraph 6(i)(2) hereof), the Company shall pay to Executive interest on the amount payable from the date that such payment should have been made under such paragraph until such payment is made, which interest shall be calculated at 10% plus the prime rate of interest announced by JPMorgan Chase Bank (or any successor thereto) at its principal office in New York on a non-compounded basis, and shall change when and as any such change in such prime rate shall be announced by such bank.

5.Certain Additional Payments by the Company.

(a)Notwithstanding anything to the contrary in this Agreement, in the event that any payment, distribution or provision of a benefit by the Company to or for the benefit of Executive, whether paid or payable, distributed or distributable or provided or to be provided pursuant to the terms of this Agreement or otherwise (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall pay to Executive an additional payment (a “Gross-up Payment”) in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed on any Gross-up Payment, Executive retains an amount of the Gross-up Payment equal to the Excise Tax imposed upon the Payments.  The Gross-up Payment attributable to a particular Payment shall be made at the time such Payment is made; provided, however, that in no event shall the Gross-up Payment be made later than the end of Executive’s taxable year next following Executive’s taxable year in which Executive remits the related taxes.  The Company and Executive shall make an initial determination as to whether a Gross-up Payment is required and the amount of any such Gross-up Payment.  Executive shall notify the Company immediately in writing of any claim by the Internal Revenue Service which, if successful, would require the Company to make a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially determined by the Company and Executive) within five days of the receipt of such claim.  The Company shall notify Executive in writing at least five days prior to the due date of any response required with respect to such claim if it plans to contest the claim.  If the Company decides to

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contest such claim, Executive shall cooperate fully with the Company in such action; provided, however, the Company shall bear and pay directly or indirectly all costs and expenses (including additional interest and penalties) incurred in connection with such action and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of the Company’s action.  If, as a result of the Company’s action with respect to a claim, Executive receives a refund of any amount paid by the Company with respect to such claim, Executive shall promptly pay such refund to the Company.  If the Company fails to timely notify Executive whether it will contest such claim or the Company determines not to contest such claim, then the Company shall immediately pay to Executive the portion of such claim, if any, which it has not previously paid to Executive.

(b)On or before the date upon which a Change of Control occurs (the “Change of Control Date”), the Compensation Committee shall make a determination under the Company’s annual incentive plan as to whether bonuses under such plan for the year during which the Change of Control Date occurs are due based on partial year results through the Change of Control Date, and, if the Compensation Committee determines that such bonuses are due, then the Compensation Committee shall also determine the amount of such bonus that shall be paid to Executive.  On or before the Change of Control Date, the Company shall pay to Executive the amount of Executive’s bonus that has been determined by the Compensation Committee in accordance with the preceding sentence.

6.General.

(a)Term.  The effective date of this Agreement is                   , 20    .  Within thirty (30) days after December 17, 2012 and within thirty (30) days after each successive thirty (30)-month period of time thereafter that this Agreement is in effect, the Company shall have the right to review this Agreement, and in its sole discretion either continue and extend this Agreement, terminate this Agreement, and/or offer Executive a different agreement.   The Compensation Committee (excluding any member of the Compensation Committee who is covered by this Agreement or by a similar agreement with the Company) will vote on whether to so extend, terminate, and/or offer Executive a different agreement and will notify Executive of such action within said thirty-day time period mentioned above.  This Agreement shall remain in effect until so terminated and/or modified by the Company.  Failure of the Compensation Committee to take any action within said thirty days shall be considered as an extension of this Agreement for an additional thirty-month period of time.  Notwithstanding anything to the contrary contained in this “sunset provision”, it is agreed that if a Change of Control occurs while this Agreement is in effect, then this Agreement shall not be subject to termination or modification under this “sunset provision”, and shall remain in force for a period of thirty months after such Change of Control, and if within said thirty months the contingency factors occur which would entitle Executive to the benefits as provided herein, this Agreement shall remain in effect in accordance with its terms.  If, within such thirty months after a Change of Control, the contingency factors that would entitle Executive to said benefits do not occur, thereupon this thirty-month “sunset provision” shall again be applicable with the thirty-day time period for

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Compensation Committee action to thereafter commence at the expiration of said thirty months after such Change of Control and on each thirty-month anniversary date thereafter.

(b)Indemnification.If Executive shall obtain any money judgment or otherwise prevail with respect to any litigation brought by Executive or the Company to enforce or interpret any provision contained herein, the Company, to the fullest extent permitted by applicable law, hereby indemnifies Executive for his reasonable attorneys’ fees and disbursements incurred in such litigation and hereby agrees (i) to pay in full all such fees and disbursements and (ii) to pay prejudgment interest on any money judgment obtained by Executive from the earliest date that payment to him should have been made under this Agreement until such judgment shall have been paid in full, which interest shall be calculated at 10% plus the prime rate of interest announced by JPMorgan Chase Bank (or any successor thereto) at its principal office in New York on a non-compounded basis, and shall change when and as any such change in such prime rate shall be announced by such bank.  Any reimbursement of reasonable attorneys’ fees and disbursements required under this Paragraph 6(b) shall be made not later than the close of Executive’s taxable year following the taxable year in which Executive incurs the expense; provided, however, that, upon Executive’s termination of employment with the Company, in no event shall any additional reimbursement be made prior to the date that is six months after the date of Executive’s termination of employment to the extent such payment delay is required under Section 409A(a)(2)(B)(i) of the Code.  In no event shall any reimbursement be made to Executive for such fees and disbursements incurred after the later of (A) Executive’s death or (B) the date that is 10 years after the date of Executive’s termination of employment with the Company.

(c)Payment Obligations Absolute. The Company’s obligation to pay (or cause one of its subsidiaries to pay) Executive the amounts and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company (including its subsidiaries) may have against him or anyone else.  All amounts payable by the Company (including its subsidiaries hereunder) shall be paid without notice or demand.  Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and, except as provided in Paragraph 3(b) hereof, the obtaining of any such other employment shall in no event effect any reduction of the Company’s obligations to make (or cause to be made) the payments and arrangements required to be made under this Agreement.

(d)Successors.  This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company, by merger or otherwise.  This Agreement shall also be binding upon and inure to the benefit of Executive and his estate.  If Executive shall die prior to full payment of amounts due pursuant to this Agreement, such amounts shall be payable pursuant to the terms of this Agreement to his estate.

(e)Severability.  Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction by reason of applicable law shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or

9

affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(f)Non-Alienation.  Executive shall not have any right to pledge, hypothecate, anticipate or assign this Agreement or the rights hereunder, except by will or the laws of descent and distribution.

(g)Notices.  Any notices or other communications provided for in this Agreement shall be sufficient if in writing.  In the case of Executive, such notices or communications shall be effectively delivered if hand-delivered to Executive at his principal place of employment or if sent by registered or certified mail to Executive at the last address he 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.

(h)Controlling Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Colorado.

(i)Release and Delayed Payment Restriction.

(1)As a condition to the receipt of any benefit under Paragraph 3 hereof, Executive shall first execute a release, in the form established by the Company, releasing the Company, its shareholders, partners, officers, directors, employees and agents from any and all claims and from any and all causes of action of any kind or character, including but not limited to all claims or causes of action arising out of Executive’s employment with the Company or the termination of such employment.

(2)The release described in Paragraph 6(i)(1) hereof must be effective and irrevocable within 55 days after the date of the termination of Executive’s employment with the Company.  Notwithstanding any provision in this Agreement to the contrary, if the payment of any amount or benefit under this Agreement would be subject to additional taxes and interest under Section 409A of the Code because the timing of such payment is not delayed as provided in Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder, then any such payment or benefit that Executive would otherwise be entitled to during the first six months following the date of Executive’s termination of employment shall be accumulated and paid or provided, as applicable, on the date that is six months after the date of Executive’s termination of employment (or if such date does not fall on a business day of the Company, the next following business day of the Company), or such earlier date upon which such amount can be paid or provided under Section 409A of the Code without being subject to such additional taxes and interest.  If this Paragraph 6(i)(2) becomes applicable such that the payment of any amount is delayed, any payments that are so delayed shall accrue interest on a non-compounded basis, from the date such payment would have been made had this Paragraph 6(i)(2) not applied to the actual date of payment, at the prime rate of interest announced by JPMorgan Chase Bank (or any successor thereto) at its principal office in New York on the date of Executive’s termination of employment (or the first business day following such date if such termination does not occur on a business

10

day) and shall be paid in a lump sum on the actual date of payment of the delayed payment amount.  Executive hereby agrees to be bound by the Company’s determination of its “specified employees” (as such term is defined in Section 409A of the Code) in accordance with any of the methods permitted under the regulations issued under Section 409A of the Code.  Notwithstanding the preceding provisions of this Paragraph 6(i)(2), if Executive is entitled to a payment that would otherwise accrue interest at the Interest Credit Rate pursuant to Paragraph 3(a) but for the application of the preceding provisions of this Paragraph 6(i)(2), then (i) any interest that is to accrue with respect to such payment (whether pursuant to Paragraph 3(a) or this Paragraph 6(i)(2), but subject to Paragraph 4) shall be based on the Interest Credit Rate and (ii) for any period during which interest is provided with respect to such payment under both Paragraph 3(a) and this Paragraph 6(i)(2), interest shall accrue during such period under only one of such paragraphs.

(j)Full Settlement.  If Executive is entitled to and receives the benefits provided hereunder, performance of the obligations of the Company hereunder will constitute full settlement of all claims that Executive might otherwise assert against the Company on account of his termination of employment.

(k)Unfunded Obligation.  The obligation to pay amounts under this Agreement is an unfunded obligation of the Company (including its subsidiaries), and no such obligation shall create a trust or be deemed to be secured by any pledge or encumbrance on any property of the Company (including its subsidiaries).

(l)Not a Contract of Employment.  This Agreement shall not be deemed to constitute a contract of employment, nor shall any provision hereof affect (a) the right of the Company (or its subsidiaries) to discharge Executive at will or (b) the terms and conditions of any other agreement between the Company and Executive except as provided herein.

(m)Number and Gender.  Wherever appropriate herein, words used in the singular shall include the plural and the plural shall include the singular.  The masculine gender where appearing herein shall be deemed to include the feminine gender.

(n)Entire Agreement.  This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements between the parties with respect to such subject matter. Without limiting the scope of the preceding sentence, all understandings and agreements preceding the date of execution of this Agreement and relating to the subject matter hereof are hereby null and void and of no further force and effect, including, without limitation, all prior Severance Agreements, if any, by and between the Company and Executive. Any modification of this Agreement will be effective only if it is in writing and signed by the party to be charged.

[Signatures begin on the following page.]

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the effective date in Paragraph 6(a).

“EXECUTIVE”
[Insert Name]
“COMPANY”
FOREST OIL CORPORATION
By:
	H. Craig Clark
	President and Chief Executive Officer

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EX-10.2

Exhibit 10.2

SEVERANCE AGREEMENT

SEVERANCE AGREEMENT (the “Agreement”) dated as of                           , 2010 between FOREST OIL CORPORATION, a New York corporation (the “Company”), with its principal offices located at 707 Seventeenth Street, Suite 3600, Denver, Colorado, and                                            (“Executive”),

W I T N E S S E T H:

WHEREAS, the Company desires to attract and retain certain key employee personnel and, accordingly, the Board of Directors of the Company (the “Board”) has approved the Company entering into a severance agreement with Executive in order to encourage his continued service to the Company;

WHEREAS, Executive is prepared to commit such services in return for specific arrangements with respect to severance compensation and other benefits;

WHEREAS, Executive will receive and/or has received proprietary and confidential trade secret information of the Company; and

WHEREAS, Executive will serve and/or has served as an executive, management personnel, or officer of the Company;

NOW, THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the Company and Executive agree as follows:

1.Definitions.

(a)“Annual Compensation” shall mean an amount equal to the greater of:

(i)Executive’s annual base salary at the annual rate in effect at the date of his Involuntary Termination;

(ii)Executive’s annual base salary at the annual rate in effect sixty days prior to the date of his Involuntary Termination; or

(iii)Executive’s annual base salary at the annual rate in effect immediately prior to a Change of Control.

(b)“Change in Duties” shall mean the occurrence of any one or more of the following:

(i)A significant change in the nature or scope of Executive’s authorities or duties from those applicable to him immediately prior to the date on which a Change of Control occurs;

Confidential

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(ii)A reduction in Executive’s base salary from that provided to him immediately prior to the date on which a Change of Control occurs;

(iii)A diminution in Executive’s eligibility to participate in bonus, stock option, incentive award and other compensation plans which provide opportunities to receive compensation which are the greater of (A) the opportunities provided by the Company (including its subsidiaries) for employees with comparable duties or (B) the opportunities under any such plans under which he was participating immediately prior to the date on which a Change of Control occurs;

(iv)A diminution in employee benefits (including but not limited to medical, dental, life insurance and long-term disability plans) and perquisites applicable to Executive from the greater of (A) the employee benefits and perquisites provided by the Company (including its subsidiaries) to employees with comparable duties or (B) the employee benefits and perquisites to which he was entitled immediately prior to the date on which a Change of Control occurs; or

(v)A change in the location of Executive’s principal place of employment by the Company (including its subsidiaries) by more than 50 miles from the location where he was principally employed immediately prior to the date on which a Change of Control occurs.

(c)“Change of Control” shall mean the occurrence of any one of the following events:

(i)Any one person, or more than one person Acting as a Group (as hereinafter defined), acquires ownership of stock of the Company that, together with stock held by such person or group, constitutes more than 50% of the total fair market value or total voting power of the stock of the Company; provided, however, that if any one person, or more than one person Acting as a Group, is considered to own more than 50% of the total fair market value or total voting power of the stock of the Company, the acquisition of additional stock by the same person or group does not cause a Change of Control within the meaning of this Paragraph 1(c)(i); and provided, further, that an increase in the percentage of stock owned by any one person, or persons Acting as a Group, as a result of a transaction in which the Company acquires its stock in exchange for property will be treated as an acquisition of stock for purposes of this Paragraph 1(c)(i); and provided, further, that this Paragraph 1(c)(i) applies to cause a Change of Control only when there is a transfer of stock of the Company (or issuance of stock of the Company) and stock in the Company remains outstanding after the transaction; and provided, further, that, if any person, or more than one person Acting as a Group, is considered to have met the control requirements of Paragraph 1(c)(ii) below, the acquisition of additional control by the same person or group will not cause a Change of Control within the meaning of this Paragraph 1(c)(i); or

(ii)A majority of the members of the Board is replaced during any 12-month period by directors whose appointment or election is not endorsed by a majority of the

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members of the Board before the date of such appointment or election; provided, however, that, if any person, or more than one person Acting as a Group, is considered to have met the control requirements of this Paragraph 1(c)(ii), the acquisition of additional control by the same person or group will not cause a Change of Control within the meaning of this Paragraph 1(c)(ii); or

(iii)Any one person, or more than one person Acting as a Group, acquires (or has acquired during the 12-month period ending on the date of the most recent acquisition by such person or group) assets from the Company that have a total “gross fair market value” equal to or more than 60% of the total “gross fair market value” of all the assets of the Company immediately before such acquisition or acquisitions; provided, however, that there is no Change of Control under this Paragraph 1(c)(iii) where there is a transfer to an entity  that is controlled by the shareholders of the Company immediately after the transfer, as provided in the following proviso; and, provided, further, that a transfer of assets by the Company shall not be treated as change in the ownership of such assets if the assets are transferred to (1) a shareholder of the Company (immediately before the asset transfer) in exchange for or with respect to its stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a person, or more than one person Acting as a Group, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a person described in clause (3) of this proviso.  For purposes of this Paragraph 1(c)(iii), “gross fair market value” means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

For purposes of this Paragraph 1(c), (x) Section 318(a) of the Code applies to determine stock ownership, and (y) the term “Acting as a Group” means “acting as a group” within the meaning of Treasury Regulation section 1.409A-3(i)(5)(v)(B), (vi)(D), or (vii)(C), as applicable.  The definition of Change of Control under this Paragraph 1(c) is intended to comply with applicable definitions and requirements of Section 409A(a)(2)(A)(v) of the Code and Treasury Regulation section 1.409A-3(i)(5) that correspond to the change of control events described above, and shall be interpreted consistently therewith.

(d)“Code” shall mean the Internal Revenue Code of 1986, as amended.

(e)“Compensation Committee” shall mean the Compensation Committee of the Board.

(f)“Disability” shall mean that, as a result of Executive’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 thirty days after written notice of termination is given to Executive by the Company (provided, however, that such notice may not be given prior to thirty days before the expiration of such six-month period).

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(g)“Involuntary Termination” shall mean any termination of Executive’s employment with the Company which:

(i)does not result from a resignation by Executive (other than a resignation pursuant to clause (ii) of this subparagraph (g)); or

(ii)results from a resignation by Executive on or before the date which is sixty days after the date upon which Executive receives notice of a Change in Duties;

provided, however, the term “Involuntary Termination” shall not include a Termination for Cause or any termination as a result of death, Disability, or Retirement.  For all purposes of this Agreement, Executive shall be considered to have terminated employment with the Company when Executive incurs a “separation from service” with the Company within the meaning of Section 409A(a)(2)(A)(i) of the Code and applicable administrative guidance issued thereunder.

(h)“Retirement” shall mean Executive’s resignation on or after the date he reaches age sixty-five.

(i)“Severance Amount” shall mean an amount equal to 2.5 times Executive’s Annual Compensation.

(j)“Severance Period” shall mean a period commencing on the date of such Involuntary Termination and continuing for twenty-four months.

(k)“Termination for Cause” shall mean termination of Executive’s employment by the Company (or its subsidiaries) by reason of Executive’s (i) gross negligence in the performance of his duties, (ii) willful and continued failure to perform his duties, (iii) willful engagement in conduct which is materially injurious to the Company or its subsidiaries (monetarily or otherwise) or (iv) conviction of a misdemeanor involving moral turpitude or a felony.

2.Services.  Executive agrees that he will render services to the Company (as well as any subsidiary thereof or successor thereto) during the period of his employment to the best of his ability and in a prudent and businesslike manner and that he will devote substantially the same time, efforts and dedication to his duties as heretofore devoted.

3.Termination Within Two Years After a Change of Control.  Subject to the provisions of Paragraph 6(i) hereof, if Executive’s employment by the Company or any subsidiary thereof or successor thereto shall be subject to an Involuntary Termination which occurs within two years after the date upon which a Change of Control occurs, then the Company will, as additional compensation for services rendered to the Company (including its subsidiaries), pay to Executive the following amounts (subject to any applicable payroll or other taxes required to be withheld and any employee benefit premiums) and take the following actions after the last day of Executive’s employment with the Company:

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(a)Pay Executive a lump sum cash payment in an amount equal to the Severance Amount.  Subject to the provisions of Paragraph 6(i) hereof, such payment shall be made on one of the dates provided below (as evidenced by the initials of Executive and an authorized representative of the Company):

(i)On the date that is 60 days after the date of Executive’s Involuntary Termination (Initials:          (Executive)          (authorized representative of the Company)); or

(ii)On January 15 of the first calendar year following the calendar year in which Executive’s Involuntary Termination occurs (Initials:          (Executive)          (authorized representative of the Company)); or

(iii)On January 15 of the second calendar year following the calendar year in which Executive’s Involuntary Termination occurs (Initials:          (Executive)          (authorized representative of the Company)); or

(iv)On January 15 of the third calendar year following the calendar year in which Executive’s Involuntary Termination occurs (Initials:          (Executive)          (authorized representative of the Company)); or

(v)On January 15 of the fourth calendar year following the calendar year in which Executive’s Involuntary Termination occurs (Initials:          (Executive)          (authorized representative of the Company)); or

(vi)On January 15 of the fifth calendar year following the calendar year in which Executive’s Involuntary Termination occurs (Initials:          (Executive)          (authorized representative of the Company)).

If the payment described in the first sentence of this Paragraph 3(a) (other than a payment described in clause (i) above) will occur after the Interest Commencement Date (as defined below), then such payment shall, subject to Paragraph 4, accrue interest (compounded annually on January 15 of each year) from the Interest Commencement Date to the actual date of payment at the Interest Credit Rate (as defined below and subject to periodic adjustment as provided below) and such interest shall be paid in a lump sum on the actual date of payment of the Severance Amount.  Further, if the payment described in the first sentence of this Paragraph 3(a) will occur after the date that is six months after the date of Executive’s Involuntary Termination, then the Company shall, on or as soon as practicable after the date of Executive’s Involuntary Termination, contribute cash in an amount equal to the Severance Amount plus the interest described in the preceding sentence to an irrevocable grantor (“rabbi”) trust of which Executive is the sole beneficiary and the trustee of which is a nationally-recognized and solvent bank or trust company that is not affiliated with the Company (subject to the claims of the Company’s creditors, as required pursuant to applicable Internal Revenue Service guidance to prevent the imputation of income to Executive prior to distribution from the trust), pursuant to which such payment plus applicable interest shall be payable from the trust at the time provided herein,

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provided that (x) the Company shall remain liable to Executive for any deficiency in the payments from the trust and (y) in no event shall cash be transferred to the trust during any period in which such transfer would result in adverse tax consequences to Executive pursuant to Section 409A(b)(3) of the Code.  As used herein, (A) the term “Interest Commencement Date” shall mean the fifth day after the effective date of the release described in Paragraph 6(i) hereof and (B) the term “Interest Credit Rate” shall mean the sum of 3% plus the “prime rate” of interest as reported in The Wall Street Journal as of the date of determination of the Interest Credit Rate as provided in the following sentence.  The Interest Credit Rate shall initially be determined as of the Interest Commencement Date (or the first business day following such date if such date is not a business day) and shall be re-determined and adjusted as of each January 15 (or the first business day following such date if such date is not a business day) that occurs after the Interest Commencement Date and prior to the actual date of payment of the Severance Amount.

(b)Cause Executive and those of his dependents (including his spouse) who were covered under the Company’s medical and dental benefit plans on the day prior to Executive’s Involuntary Termination to continue to be covered under such plans (or to receive equivalent benefits) throughout the Severance Period, without any cost to Executive; provided, however, that (i)  such coverage shall terminate if and to the extent Executive becomes eligible to receive medical and dental coverage from a subsequent employer (and any such eligibility shall be promptly reported to the Company by Executive), (ii) if Executive (and/or his spouse) would have been entitled to retiree medical and/or dental coverage under the Company’s plans had he voluntarily retired on the date of such Involuntary Termination, then such coverages shall be continued as provided under such plans, and (iii) such coverage to Executive (or the receipt of equivalent benefits) shall be provided through an arrangement that satisfies the requirements of Sections 105 and 106 of the Code such that the benefits or reimbursements under such arrangement are not includible in Executive’s income.

(c)Cause any and all outstanding options to purchase common stock of the Company held by Executive to become immediately exercisable in full and cause Executive’s accrued benefits under any and all nonqualified deferred compensation plans sponsored by the Company to become immediately nonforfeitable.  If and to the extent that the preceding provisions of this paragraph are inconsistent or conflict with the terms of any stock option agreement or non-qualified deferred compensation plan, then the preceding provisions of this paragraph shall govern and control.

4.Interest on Late Payments.If any payment provided for in Paragraphs 3(a) or 5 hereof is not made when due (determined after giving effect to any delay in such payment required pursuant to Paragraph 6(i)(2) hereof), the Company shall pay to Executive interest on the amount payable from the date that such payment should have been made under such paragraph until such payment is made, which interest shall be calculated at 10% plus the prime rate of interest announced by JPMorgan Chase Bank (or any successor thereto) at its principal office in New York on a non-compounded basis, and shall change when and as any such change in such prime rate shall be announced by such bank.

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5.Certain Additional Payments by the Company.  Notwithstanding anything to the contrary in this Agreement, in the event that any payment, distribution or provision of a benefit by the Company to or for the benefit of Executive, whether paid or payable, distributed or distributable or provided or to be provided pursuant to the terms of this Agreement or otherwise (a “Payment”), would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest or penalties, are hereinafter collectively referred to as the “Excise Tax”), the Company shall pay to Executive an additional payment (a “Gross-up Payment”) in an amount such that after payment by Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any Excise Tax imposed on any Gross-up Payment, Executive retains an amount of the Gross-up Payment equal to the Excise Tax imposed upon the Payments.  The Gross-up Payment attributable to a particular Payment shall be made at the time such Payment is made; provided, however, that in no event shall the Gross-up Payment be made later than the end of Executive’s taxable year next following Executive’s taxable year in which Executive remits the related taxes.  The Company and Executive shall make an initial determination as to whether a Gross-up Payment is required and the amount of any such Gross-up Payment.  Executive shall notify the Company immediately in writing of any claim by the Internal Revenue Service which, if successful, would require the Company to make a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially determined by the Company and Executive) within five days of the receipt of such claim.  The Company shall notify Executive in writing at least five days prior to the due date of any response required with respect to such claim if it plans to contest the claim.  If the Company decides to contest such claim, Executive shall cooperate fully with the Company in such action; provided, however, the Company shall bear and pay directly or indirectly all costs and expenses (including additional interest and penalties) incurred in connection with such action and shall indemnify and hold Executive harmless, on an after-tax basis, for any Excise Tax or income tax, including interest and penalties with respect thereto, imposed as a result of the Company’s action.  If, as a result of the Company’s action with respect to a claim, Executive receives a refund of any amount paid by the Company with respect to such claim, Executive shall promptly pay such refund to the Company.  If the Company fails to timely notify Executive whether it will contest such claim or the Company determines not to contest such claim, then the Company shall immediately pay to Executive the portion of such claim, if any, which it has not previously paid to Executive.

6.General.

(a)Term.  The effective date of this Agreement is                 , 2010.  Within thirty (30) days after December 17, 2012 and within thirty (30) days after each successive thirty (30)-month period of time thereafter that this Agreement is in effect, the Company shall have the right to review this Agreement, and in its sole discretion either continue and extend this Agreement, terminate this Agreement, and/or offer Executive a different agreement.   The Compensation Committee (excluding any member of the Compensation Committee who is covered by this Agreement or by a similar agreement with the Company) will vote on whether to so extend, terminate, and/or offer Executive a different agreement and will notify Executive of such action within said thirty-day time period mentioned above.  This Agreement shall remain in effect until so terminated and/or modified by the Company.  Failure of the Compensation

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Committee to take any action within said thirty days shall be considered as an extension of this Agreement for an additional thirty-month period of time.  Notwithstanding anything to the contrary contained in this “sunset provision”, it is agreed that if a Change of Control occurs while this Agreement is in effect, then this Agreement shall not be subject to termination or modification under this “sunset provision”, and shall remain in force for a period of thirty months after such Change of Control, and if within said thirty months the contingency factors occur which would entitle Executive to the benefits as provided herein, this Agreement shall remain in effect in accordance with its terms.  If, within such thirty months after a Change of Control, the contingency factors that would entitle Executive to said benefits do not occur, thereupon this thirty-month “sunset provision” shall again be applicable with the thirty-day time period for Compensation Committee action to thereafter commence at the expiration of said thirty months after such Change of Control and on each thirty-month anniversary date thereafter.

(b)Indemnification.If Executive shall obtain any money judgment or otherwise prevail with respect to any litigation brought by Executive or the Company to enforce or interpret any provision contained herein, the Company, to the fullest extent permitted by applicable law, hereby indemnifies Executive for his reasonable attorneys’ fees and disbursements incurred in such litigation and hereby agrees (i) to pay in full all such fees and disbursements and (ii) to pay prejudgment interest on any money judgment obtained by Executive from the earliest date that payment to him should have been made under this Agreement until such judgment shall have been paid in full, which interest shall be calculated at 10% plus the prime rate of interest announced by JPMorgan Chase Bank (or any successor thereto) at its principal office in New York on a non-compounded basis, and shall change when and as any such change in such prime rate shall be announced by such bank.  Any reimbursement of reasonable attorneys’ fees and disbursements required under this Paragraph 6(b) shall be made not later than the close of Executive’s taxable year following the taxable year in which Executive incurs the expense; provided, however, that, upon Executive’s termination of employment with the Company, in no event shall any additional reimbursement be made prior to the date that is six months after the date of Executive’s termination of employment to the extent such payment delay is required under Section 409A(a)(2)(B)(i) of the Code.  In no event shall any reimbursement be made to Executive for such fees and disbursements incurred after the later of (A) Executive’s death or (B) the date that is 10 years after the date of Executive’s termination of employment with the Company.

(c)Payment Obligations Absolute.The Company’s obligation to pay (or cause one of its subsidiaries to pay) Executive the amounts and to make the arrangements provided herein shall be absolute and unconditional and shall not be affected by any circumstances, including, without limitation, any set-off, counterclaim, recoupment, defense or other right which the Company (including its subsidiaries) may have against him or anyone else.  All amounts payable by the Company (including its subsidiaries hereunder) shall be paid without notice or demand.  Executive shall not be obligated to seek other employment in mitigation of the amounts payable or arrangements made under any provision of this Agreement, and, except as provided in Paragraph 3(b) hereof, the obtaining of any such other employment shall in no event effect any reduction of the Company’s obligations to make (or cause to be made) the payments and arrangements required to be made under this Agreement.

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(d)Successors.  This Agreement shall be binding upon and inure to the benefit of the Company and any successor of the Company, by merger or otherwise.  This Agreement shall also be binding upon and inure to the benefit of Executive and his estate.  If Executive shall die prior to full payment of amounts due pursuant to this Agreement, such amounts shall be payable pursuant to the terms of this Agreement to his estate.

(e)Severability.  Any provision in this Agreement which is prohibited or unenforceable in any jurisdiction by reason of applicable law shall, as to such jurisdiction, be ineffective only to the extent of such prohibition or unenforceability without invalidating or affecting the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

(f)Non-Alienation.  Executive shall not have any right to pledge, hypothecate, anticipate or assign this Agreement or the rights hereunder, except by will or the laws of descent and distribution.

(g)Notices.  Any notices or other communications provided for in this Agreement shall be sufficient if in writing.  In the case of Executive, such notices or communications shall be effectively delivered if hand-delivered to Executive at his principal place of employment or if sent by registered or certified mail to Executive at the last address he 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.

(h)Controlling Law.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Colorado.

(i)Release and Delayed Payment Restriction.

(1)As a condition to the receipt of any benefit under Paragraph 3 hereof, Executive shall first execute a release, in the form established by the Company, releasing the Company, its shareholders, partners, officers, directors, employees and agents from any and all claims and from any and all causes of action of any kind or character, including but not limited to all claims or causes of action arising out of Executive’s employment with the Company or the termination of such employment.

(2)The release described in Paragraph 6(i)(1) hereof must be effective and irrevocable within 55 days after the date of the termination of Executive’s employment with the Company.  Notwithstanding any provision in this Agreement to the contrary, if the payment of any amount or benefit under this Agreement would be subject to additional taxes and interest under Section 409A of the Code because the timing of such payment is not delayed as provided in Section 409A(a)(2)(B)(i) of the Code and the regulations thereunder, then any such payment or benefit that Executive would otherwise be entitled to during the first six months following the

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date of Executive’s termination of employment shall be accumulated and paid or provided, as applicable, on the date that is six months after the date of Executive’s termination of employment (or if such date does not fall on a business day of the Company, the next following business day of the Company), or such earlier date upon which such amount can be paid or provided under Section 409A of the Code without being subject to such additional taxes and interest.  If this Paragraph 6(i)(2) becomes applicable such that the payment of any amount is delayed, any payments that are so delayed shall accrue interest on a non-compounded basis, from the date such payment would have been made had this Paragraph 6(i)(2) not applied to the actual date of payment, at the prime rate of interest announced by JPMorgan Chase Bank (or any successor thereto) at its principal office in New York on the date of Executive’s termination of employment (or the first business day following such date if such termination does not occur on a business day) and shall be paid in a lump sum on the actual date of payment of the delayed payment amount.  Executive hereby agrees to be bound by the Company’s determination of its “specified employees” (as such term is defined in Section 409A of the Code) in accordance with any of the methods permitted under the regulations issued under Section 409A of the Code.  Notwithstanding the preceding provisions of this Paragraph 6(i)(2), if Executive is entitled to a payment that would otherwise accrue interest at the Interest Credit Rate pursuant to Paragraph 3(a) but for the application of the preceding provisions of this Paragraph 6(i)(2), then (i) any interest that is to accrue with respect to such payment (whether pursuant to Paragraph 3(a) or this Paragraph 6(i)(2), but subject to Paragraph 4) shall be based on the Interest Credit Rate and (ii) for any period during which interest is provided with respect to such payment under both Paragraph 3(a) and this Paragraph 6(i)(2), interest shall accrue during such period under only one of such paragraphs.

(j)Full Settlement.  If Executive is entitled to and receives the benefits provided hereunder, performance of the obligations of the Company hereunder will constitute full settlement of all claims that Executive might otherwise assert against the Company on account of his termination of employment.

(k)Unfunded Obligation.  The obligation to pay amounts under this Agreement is an unfunded obligation of the Company (including its subsidiaries), and no such obligation shall create a trust or be deemed to be secured by any pledge or encumbrance on any property of the Company (including its subsidiaries).

(l)Not a Contract of Employment.  This Agreement shall not be deemed to constitute a contract of employment, nor shall any provision hereof affect (a) the right of the Company (or its subsidiaries) to discharge Executive at will or (b) the terms and conditions of any other agreement between the Company and Executive except as provided herein.

(m)Number and Gender.  Wherever appropriate herein, words used in the singular shall include the plural and the plural shall include the singular.  The masculine gender where appearing herein shall be deemed to include the feminine gender.

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(n)Entire Agreement.  This Agreement constitutes the entire agreement of the parties with regard to the subject matter hereof, and contains all the covenants, promises, representations, warranties and agreements between the parties with respect to such subject matter. Without limiting the scope of the preceding sentence, all understandings and agreements preceding the date of execution of this Agreement and relating to the subject matter hereof are hereby null and void and of no further force and effect, including, without limitation, all prior Severance Agreements, if any, by and between the Company and Executive. Any modification of this Agreement will be effective only if it is in writing and signed by the party to be charged.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the effective date in Paragraph 6(a).

“EXECUTIVE”
[Insert Name]
“COMPANY”
FOREST OIL CORPORATION
By:
	H. Craig Clark
	President and Chief Executive Officer

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EX-31.1

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Exhibit 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

I, H. Craig Clark, certify that:

1.

I have reviewed this 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; and

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 functions):

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 H. Craig Clark
November 3, 2010	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
OF FOREST OIL CORPORATION AS REQUIRED BY
RULE 13a-14(a) OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

I, Michael N. Kennedy, certify that:

1.

I have reviewed this 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; and

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 functions):

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/ MICHAEL N. KENNEDY Michael N. Kennedy
November 3, 2010	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
PRINCIPAL 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 September 30, 2010 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, to such officer's knowledge:

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 as of the dates and for the periods expressed in the Report.

	/s/ H. CRAIG CLARK H. Craig Clark
November 3, 2010	President and Chief Executive Officer

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Exhibit 32.1

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

EX-32.2

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Exhibit 32.2

CERTIFICATION OF
PRINCIPAL 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 September 30, 2010 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, to such officer's knowledge:

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 as of the dates and for the periods expressed in the Report.

	/s/ MICHAEL N. KENNEDY Michael N. Kennedy
November 3, 2010	Executive Vice President and Chief Financial Officer

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Exhibit 32.2

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