-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Qe+JWvHVXIKRhLAPRB46DnrMokeAsFAfPSZ08bQhv5iEkY2wi7P0XtiJvoUpBYSw KszFSlcUHJ0qoA0Wsc1LFg== 0001047469-98-026667.txt : 19980710 0001047469-98-026667.hdr.sgml : 19980710 ACCESSION NUMBER: 0001047469-98-026667 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980625 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980709 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOREST OIL CORP CENTRAL INDEX KEY: 0000038079 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 250484900 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-13515 FILM NUMBER: 98662131 BUSINESS ADDRESS: STREET 1: 1600 BROADWAY STREET 2: STE 2200 CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3038121400 8-K 1 8K - ------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) June 25, 1998 FOREST OIL CORPORATION (Exact name of registrant as specified in charter) New York 0-13515 25-0484900 (State or other juris- (Commission (IRS Employer diction of incorporation) file number) Identification No.) 2200 Colorado State Bank Building, 1600 Broadway, Denver, CO 80202 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 812-1400 - ------------------------------------------------------------------------------- ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS On January 9, 1998 Forest entered into an agreement in principle with The Anschutz Corporation (Anschutz) to purchase certain oil and gas property interests in exchange for shares of Forest Common Stock. On April 6, 1998 a definitive purchase and sale agreement was executed. The properties include an interest in The Anschutz Ranch Field which is located in Utah and Wyoming, prospects and producing acreage in Canada, and interests in projects in various other countries (the Anschutz Properties). Forest's consideration consists of 5,950,000 shares of Common Stock. On June 25 and 29, 1998, in two separate closings, Forest acquired substantially all of the Anschutz Properties. As a result of this transaction, Anschutz increased its ownership from 30.7% to approximately 39.5% of the outstanding shares of Forest Common Stock. Filed herewith are financial statements of the Anschutz Ranch Field acquired by the Company and pro forma financial statements of the Company giving effect to the acquisitions described above. ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS (a) Audited Statement of Oil and Gas Revenue and Direct Lease Operating Expenses of the Anschutz Ranch Field for each of the years in the three year period ended December 31, 1997. (b) Condensed pro forma combined financial statements of Forest Oil Corporation at March 31, 1998 and for the three months then ended, and for the year ended December 31, 1997. (c) Exhibits (23) Consent of KPMG Peat Marwick LLP; (99.1) Amendment No. 2 to Rights Agreement by and between Forest Oil Corporation and ChaseMellon Shareholder Services L.L.C. dated June 25, 1998; (99.2) Amendment No. 2 to Registration Rights Agreement by and between Forest Oil Corporation and The Anschutz Corporation dated June 25, 1998; and (99.3) Second Amendment to Shareholders Agreement by and between Forest Oil Corporation and The Anschutz Corporation dated June 25, 1998. (99.4) Forest Oil Corporation press release announcing that its shareholders approved the proposed transaction between the Company and The Anschutz Corporation to acquire certain oil and gas properties from Anschutz in exchange for 5.95 million shares of its Common Stock. Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FOREST OIL CORPORATION (Registrant) Dated: July 8, 1998 By /s/ Daniel L. McNamara ------------------------- Daniel L. McNamara Secretary INDEPENDENT AUDITORS' REPORT THE BOARD OF DIRECTORS ANSCHUTZ RANCH EAST CORPORATION: We have audited the accompanying statement of oil and gas revenue and direct lease operating expenses of an oil and gas property (the Anschutz Ranch Field) of Anschutz Ranch East Corporation (AREC) acquired by Forest Oil Corporation for each of the years in the three-year period ended December 31, 1997. This financial statement is the responsibility of AREC's management. Our responsibility is to express an opinion on this financial statement based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of oil and gas revenue and direct lease operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement of oil and gas revenue and direct lease operating expenses. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. The accompanying statement of oil and gas revenue and direct lease operating expenses was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and excludes material expense, that would not be comparable to those resulting from the proposed future operations of the oil and gas properties as described in Note 1 to the Financial Statement, and thus is not intended to be a complete presentation of the revenue and expenses of the Anschutz Ranch Field. In our opinion, the statement of oil and gas revenue and direct lease operating expenses referred to above presents fairly, in all material respects, the oil and gas revenue and direct lease operating expenses of the Anschutz Ranch Field as described in Note 1 for each of the years in the three-year period ended December 31, 1997, in conformity with generally accepted accounting principles. KPMG PEAT MARWICK LLP Denver, Colorado March 12, 1998 ANSCHUTZ RANCH EAST CORPORATION ANSCHUTZ RANCH FIELD STATEMENT OF OIL AND GAS REVENUE AND DIRECT LEASE OPERATING EXPENSES
Three Months Ended March 31, Years Ended December 31, --------------- ------------------------ (unaudited) 1998 1997 1997 1996 1995 ------ ------ ------- ------- ------ (in thousands) Operating Revenue: Sales of natural gas $3,104 3,340 13,541 9,247 6,978 Sales of condensate 819 1,347 4,700 5,163 4,870 Sales of natural gas liquids 1,013 1,670 5,827 6,440 3,600 ------ ------ ------- ------- ------ Total Operating Revenue 4,936 6,357 24,068 20,850 15,448 Direct Lease Operating Expenses 863 983 4,035 3,390 7,056 ------ ------ ------- ------- ------ Net Operating Revenue $4,073 5,374 20,033 17,460 8,392 ------ ------ ------- ------- ------ ------ ------ ------- ------- ------
See accompanying notes to financial statements. ANSCHUTZ RANCH EAST CORPORATION ANSCHUTZ RANCH FIELD NOTES TO STATEMENT OF OIL AND GAS REVENUE AND DIRECT LEASE OPERATING EXPENSES FOR EACH OF THE YEARS IN THE THREE-YEAR PERIOD ENDED DECEMBER 31, 1997 (1) PURCHASE OF OIL AND GAS PROPERTIES AND BASIS OF PRESENTATION The accompanying financial statement presents the revenues and direct operating expenses of a certain oil and gas property and related equipment of Anschutz Ranch East Corporation (the Anschutz Property) for each of the years in the three-year period ended December 31, 1997. The property consists of a working interest in a oil and gas property located in Summit County, Utah and Uinta County, Wyoming. This property is subject to an agreement whereby it would be purchased by Forest Oil Corporation effective January 1, 1998. The accompanying statement of oil and gas revenue and direct lease operating expenses of the Anschutz Property was prepared to comply with certain rules and regulations of the Securities and Exchange Commission and does not include general and administrative expenses, interest expense, a provision for depreciation, depletion and amortization, or any provision for income taxes since historical expenses of this nature incurred by Anschutz Ranch East Corporation are not necessarily indicative of the costs to be incurred by Forest Oil Corporation. Revenue in the accompanying statement of oil and gas revenue and direct lease operating expense is recognized on the sales method. During 1997 and 1996, a portion of the Anschutz Property's revenue was sold under a gas purchase contract. This contract was terminated in 1997. Direct lease operating expenses are recognized on the accrual basis and consist of all costs incurred in producing, marketing and distributing products produced by the property as well as production taxes and monthly administrative overhead costs. (2) SUPPLEMENTAL FINANCIAL DATA - OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) The following unaudited information has been prepared in accordance with Statement of Financial Accounting Standards No. 69, DISCLOSURE ABOUT OIL AND GAS PRODUCING ACTIVITIES (SFAS No. 69). (A) ESTIMATED PROVED OIL AND GAS RESERVES Proved oil and gas reserves are the estimated quantities of crude oil, natural gas, and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions; i.e., prices and costs as of the date the estimate is made. Proved developed oil and gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. Proved undeveloped oil and gas reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. An estimate of proved developed future net recoverable oil and gas reserves of the Anschutz Property and changes therein follows. Such estimates are inherently imprecise and may be subject to substantial revisions. Proved undeveloped reserves attributable to the Anschutz Property are not significant.
Oil and Condensate Natural Gas (000's of Bbls) (Mmcf) --------------- ----------- Balance at December 31, 1994 9,166 54,903 Production (868) (6,238) Effect of changes in prices and other 57 366 ------ ------ Balance at December 31, 1995 8,355 49,031 Production (875) (7,064) Effect of changes in prices and other 383 1,945 ------ ------ Balance at December 31, 1996 7,863 43,912 Production (823) (7,161) Effect of changes in prices and other (148) (466) ------ ------ Balance at December 31, 1997 6,892 36,285 ------ ------ ------ ------
(2) SUPPLEMENTAL FINANCIAL DATA - OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (CONTINUED) (B) STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS The standardized measure of discounted future net cash flows has been calculated in accordance with the provisions of SFAS No. 69. Future oil and gas sales and production and development costs have been estimated using prices and costs in effect at the end of the years indicated. Future income tax expense has not been considered as the properties are not a tax paying entity. Future general and administrative and interest expenses have also not been considered. Changes in the demand for oil and natural gas, inflation, and other factors make such estimates inherently imprecise and subject to substantial revision. This table should not be construed to be an estimate of the current market value of the proved reserves. The standardized measure of discounted future net cash flows as of December 31, 1997, 1996, and 1995 is as follows:
1997 1996 1995 --------- -------- ------- (in thousands) Future oil and gas sales $137,339 243,887 135,650 Future production and development costs (43,326) (56,999) (47,564) --------- -------- ------- Future net revenue 94,013 186,888 88,086 10% annual discount for estimated timing of cash flows (30,642) (65,114) (29,317) --------- -------- ------- Standardized measure of discounted future net cash flows $ 63,371 121,774 58,769 --------- -------- ------- --------- -------- -------
(C) CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS RELATING TO PROVED OIL AND GAS RESERVES An analysis of the changes in the total standardized measure of discounted future net cash flows during each of the last three years is as follows:
1997 1996 1995 --------- -------- ------- (in thousands) Beginning of year $121,774 58,769 70,108 Changes resulting from: Sales of oil and gas, net of production costs (20,033) (17,460) (8,392) Changes in prices and other (50,547) 74,588 (9,958) Accretion of discount 12,177 5,877 7,011 --------- -------- ------- End of year $ 63,371 121,774 58,769 --------- -------- ------- --------- -------- -------
FOREST OIL CORPORATION CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS On February 3, 1998, Forest Oil Corporation (Forest) purchased interests in 13 oil and gas properties located onshore Louisiana from a private company for total consideration of approximately $230,776,000 (the Louisiana Acquisition). The consideration consisted of 1,000,000 shares of Forest Common Stock and approximately $216,557,000 of cash. The cash portion of the consideration was funded from the Company's bank credit facility and from the issuance of $75,000,000 principal amount of 8 3/4% Senior Subordinated Debentures. On April 6, 1998 Forest entered into a definitive purchase and sale agreement with The Anschutz Corporation to acquire certain oil and gas property interests from Anschutz in exchange for 5,950,000 shares of Forest Common Stock (the Anschutz Transaction). The properties include an interest in the Anschutz Ranch Field which is located in Utah and Wyoming, prospects and producing acreage in Canada, and interests in projects in various other countries (the Anschutz Properties). On June 25 and 29, 1998, in two separate closings, Forest acquired all of the Anschutz Properties with the exception of an interest in a project in Thailand. The closing of this interest, which is not material to the Company or to the transaction, is expected to be completed in July 1998. The following unaudited condensed pro forma combined balance sheet assumes that the Anschutz Transaction occurred on March 31, 1998 and reflects the historical consolidated balance sheet of Forest giving pro forma effect to this transaction using the purchase method of accounting. The unaudited condensed pro forma combined balance sheet should be read in conjunction with the historical statements and related notes of Forest. The following unaudited condensed pro forma combined statement of operations for the three months ended March 31, 1998 and for the year ended December 31, 1997 assumes that the Louisiana Acquisition and the Anschutz Transaction occurred as of January 1, 1997. The pro forma results of operations are not necessarily indicative of the results of operations that would actually have been attained if the transactions had occurred as of this date. These statements should be read in conjunction with the historical financial statements and related notes of Forest, the Statement of Oil and Gas Revenue and Direct Operating and Production Expenses of the properties acquired in the Louisiana Acquisition included in the Form 8-K/A dated February 3, 1998, and the Statement of Oil and Gas Revenue and Direct Operating Expenses of the Anschutz Ranch Field included herein. FOREST OIL CORPORATION CONDENSED PRO FORMA COMBINED BALANCE SHEET (NOTE A) MARCH 31, 1998 (UNAUDITED) (IN THOUSANDS)
ASSETS Anschutz Pro forma Forest Transaction Combined Historical (Note C) Forest ---------- ----------- --------- Current assets: Cash and cash equivalents $ 5,770 50,951 (1) 25,721 (31,000)(2) Accounts receivable 50,243 3,290 (1) 53,533 Other current assets 5,539 - 5,539 --------- ------ ------- Total current assets 61,552 23,241 84,793 Net property and equipment, at cost 760,723 62,638 (1) 823,861 500 (3) Goodwill and other intangible assets, net 25,947 - 25,947 Other assets 13,606 - 13,606 --------- ------ ------- $ 861,828 86,379 948,207 --------- ------ ------- --------- ------ ------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Current portion of long-term debt $ - 5,300 (1) 5,300 Accounts payable 43,435 3,159 (1) 47,094 500 (3) Accrued interest 3,158 1,476 (1) 4,634 Other current liabilities 2,927 341 (1) 3,268 --------- ------ ------- Total current liabilities 49,520 10,776 60,296 Long-term debt 472,922 38,700 (1) 480,622 (31,000)(2) Other liabilities 16,973 338 (1) 17,311 Deferred income taxes 34,176 - 34,176 Minority interest 12,927 - 12,927 Shareholders' equity: Common stock 3,732 595 (1) 4,327 Capital surplus 503,058 66,970 (1) 570,028 Accumulated deficit (224,463) - (224,463) Other comprehensive loss (7,017) - (7,017) --------- ------ ------- Total shareholders' equity 275,310 67,565 342,875 --------- ------ ------- $ 861,828 86,379 948,207 --------- ------ ------- --------- ------ -------
See accompanying notes to condensed pro forma combined financial statements. FOREST OIL CORPORATION CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS (NOTE A) THREE MONTHS ENDED MARCH 31, 1998 (UNAUDITED) (IN THOUSANDS)
Louisiana Combined Anschutz Acquisition Forest and Anschutz Transaction Pro Forma Forest Adjustments Louisiana Transaction Adjustments Combined Historical (Note B) Acquisition Historical (Note C) Forest ---------- ----------- ----------- ----------- ----------- --------- Revenue: Marketing and processing $ 35,003 - 35,003 - - 35,003 Oil and gas sales: Gas 27,607 2,435 (1) 30,042 3,104 - 33,146 Oil, condensate and natural gas liquids 12,886 1,199 (1) 14,085 1,832 - 15,917 -------- ----- ------ ----- ----- ------ Total oil and gas sales 40,493 3,634 44,127 4,936 - 49,063 -------- ----- ------ ----- ----- ------ Total revenue 75,496 3,634 79,130 4,936 - 84,066 Operating expenses: Marketing and processing 33,168 - 33,168 - - 33,168 Oil and gas production 8,842 378 9,220 863 - 10,083 General and administrative 4,255 - 4,255 - - 4,255 Depreciation and depletion 23,333 1,770 (2) 25,103 - 2,348 (1) 27,451 -------- ----- ------ ----- ----- ------ Total operating expenses 69,598 2,148 71,746 863 2,348 74,957 -------- ----- ------ ----- ----- ------ Earnings (loss) from operations 5,898 1,486 7,384 4,073 (2,348) 9,109 Other income and expense: Other expense, net 2 - 2 - - 2 Interest expense 8,506 1,432 (3) 9,938 - 963 (2) 10,901 Minority interest in loss of subsidiary (80) - (80) - - (80) Translation gain on subordinated debt (1,024) - (1,024) - - (1,024) -------- ----- ------ ----- ----- ------ Total other income and expense 7,404 1,432 8,836 - 963 9,799 -------- ----- ------ ----- ----- ------ Earnings (loss) before income taxes (1,506) 54 (1,452) 4,073 (3,311) (690) Income tax benefit (503) - (503) - - (503) -------- ----- ------ ----- ----- ------ Income (loss) from continuing operations $ (1,003) 54 (949) 4,073 (3,311) (187) -------- ----- ------ ----- ----- ------ -------- ----- ------ ----- ----- ------ Weighted average number of common shares outstanding 36,975 - 36,975 - 5,950 (3) 42,925 -------- ----- ------ ----- ----- ------ -------- ----- ------ ----- ----- ------ Loss from continuing operations attributable to common stock $ (1,003) - (949) - - (187) -------- ----- ------ ----- ----- ------ -------- ----- ------ ----- ----- ------ Basic loss per share from continuing operations $ (.03) - (.03) - - - -------- ----- ------ ----- ----- ------ -------- ----- ------ ----- ----- ------ Diluted loss per share from continuing operations $ (.03) - (.03) - - - -------- ----- ------ ----- ----- ------ -------- ----- ------ ----- ----- ------
See accompanying notes to condensed pro forma combined financial statements. FOREST OIL CORPORATION CONDENSED PRO FORMA COMBINED STATEMENT OF OPERATIONS (NOTE A) YEAR ENDED DECEMBER 31, 1997 (UNAUDITED) (IN THOUSANDS)
Louisiana Combined Anschutz Louisiana Acquisition Forest and Anschutz Transaction Pro Forma Forest Acquisition Adjustments Louisiana Transaction Adjustments Combined Historical Historical (Note B) Acquisition Historical (Note C) Forest ---------- ----------- ----------- ------------ ----------- ----------- --------- Revenue: Marketing and processing $ 184,399 - - 184,399 - - 184,399 Oil and gas sales: Gas 100,993 19,146 - 120,139 13,541 - 133,680 Oil, condensate and natural gas liquids 54,249 11,294 - 65,543 10,527 - 76,070 --------- ------ ------ -------- ------- ------- ------- Total oil and gas sales 155,242 30,440 - 185,682 24,068 - 209,750 --------- ------ ------ -------- ------- ------- ------- Total revenue 339,641 30,440 - 370,081 24,068 - 394,149 Operating expenses: Marketing and processing 175,847 - - 175,847 - - 175,847 Oil and gas production 36,284 5,262 - 41,546 4,035 - 45,581 General and administrative 16,864 - 750 (1) 17,614 - - 17,614 Depreciation and depletion 79,991 - 12,917 (2) 92,908 - 10,515 (1) 103,423 --------- ------ ------ -------- ------- ------- ------- Total operating expenses 308,986 5,262 13,667 327,915 4,035 10,515 342,465 --------- ------ ------ -------- ------- ------- ------- Earnings (loss) from operations 30,655 25,178 (13,667) 42,166 20,033 (10,515) 51,684 Other income and expense: Other income, net (1,289) - - (1,289) - - (1,289) Interest expense 21,403 - 16,896 (3) 38,299 - 3,740 (2) 42,039 Minority interest in earnings of subsidiary 108 - - 108 - - 108 Translation loss on subordinated debt 4,051 - - 4,051 - - 4,051 --------- ------ ------ -------- ------- ------- ------- Total other income and expense 24,273 - 16,896 41,169 - 3,740 44,909 Earnings (loss) before income taxes and extraordinary item 6,382 25,178 (30,563) 997 20,033 (14,255) 6,775 Income tax expense 3,293 - - 3,293 - - 3,293 --------- ------ ------ -------- ------- ------- ------- Income (loss) from continuing operations $ 3,089 25,178 (30,563) (2,296) 20,033 (14,255) 3,482 --------- ------ ------ -------- ------- ------- ------- --------- ------ ------ -------- ------- ------- ------- Weighted average number of common shares outstanding 33,669 - 1,000 (4) 34,669 - 5,950 (3) 40,619 --------- ------ ------ -------- ------- ------- ------- --------- ------ ------ -------- ------- ------- ------- Income (loss) from continuing operations attributable to common stock 2,900 - - (2,485) - - 3,293 --------- ------ ------ -------- ------- ------- ------- --------- ------ ------ -------- ------- ------- ------- Basic income (loss) per share from continuing operations $ .09 - - (.07) - - .08 --------- ------ ------ -------- ------- ------- ------- --------- ------ ------ -------- ------- ------- ------- Diluted income (loss) per share from continuing operations $ .08 - - (.07) - - .07 --------- ------ ------ -------- ------- ------- ------- --------- ------ ------ -------- ------- ------- -------
See accompanying notes to condensed pro forma combined financial statements. FOREST OIL CORPORATION NOTES TO CONDENSED PRO FORMA COMBINED FINANCIAL STATEMENTS MARCH 31, 1998 (UNAUDITED) A. BASIS OF PRESENTATION The accompanying unaudited condensed pro forma combined balance sheet assumes that the Anschutz Transaction occurred on March 31, 1998 and reflects the historical consolidated balance sheet of Forest at that date giving pro forma effect to the transaction using the purchase method of accounting. The unaudited condensed pro forma combined balance sheet should be read in conjunction with the historical statements and related notes of Forest. The accompanying unaudited condensed pro forma combined statements of operations for the three months ended March 31, 1998 and for the year ended December 31, 1997 assume that the Louisiana Acquisition and the Anschutz Transaction occurred as of January 1, 1997. The pro forma results of operations are not necessarily indicative of the results of operations that would actually have been attained if the transactions had occurred as of this date. These statements should be read in conjunction with the historical financial statements and related notes of Forest, the Statement of Revenue and Direct Operating Expenses of the properties acquired in the Louisiana Acquisition included in Form 8-K/A dated February 3, 1998 and the Statement of Revenue and Direct Operating Expenses of the Anschutz Properties included herein. B. ACQUISITION OF LOUISIANA PROPERTIES On February 3, 1998, Forest purchased interests in 13 oil and gas properties located onshore Louisiana from a private company for total consideration of approximately $230,776,000. The consideration consisted of 1,000,000 shares of Forest Common Stock and approximately $216,557,000 of cash. The cash portion of the consideration was funded by borrowings under the Company's bank credit facility and from the issuance of $75,000,000 principal amount of 8 3/4% Senior Subordinated Debentures. The effects of this transaction are included in the historical balance sheet at March 31, 1998. The historical information of Forest Oil Corporation in the accompanying condensed pro forma combined statement of operations for the three months ended March 31, 1998 includes the historical revenue and direct operating expenses of the Louisiana properties subsequent to their acquisition on February 3, 1998. In addition, the following pro forma adjustments have been made to the accompanying historical revenue and direct operating expenses of Forest Oil Corporation for the three months ended March 31, 1998: 1. To record oil and gas revenue of the Louisiana properties for the period from January 1, 1998 to February 2, 1998. 2. To adjust depletion expense to reflect the pro forma combined depletion rate giving effect to the acquisition of the properties. 3. To increase interest expense for interest associated with the debt incurred in connection with the Louisiana Acquisition. The accompanying condensed pro forma combined statement of operations for the year ended December 31, 1997 has been adjusted to include the historical revenue and direct operating expenses of the Louisiana properties. In addition, the following pro forma adjustments have been made to the accompanying historical revenue and direct operating expenses of the Louisiana properties for the year ended December 31, 1997: B. ACQUISITION OF LOUISIANA PROPERTIES (continued) 1. To adjust general and administrative expense to reflect increased costs associated with the Louisiana Acquisition. 2. To adjust depletion expense to reflect the pro forma combined depletion rate for the properties. 3. To increase interest expense for interest associated with the debt incurred in connection with the Louisiana Acquisition. 4. To adjust the weighted average shares outstanding to reflect the shares issued in connection with the Louisiana Acquisition. C. ACQUISITION OF ANSCHUTZ PROPERTIES On January 9, 1998 Forest entered into an agreement in principle with The Anschutz Corporation to purchase certain oil and gas property interests in exchange for shares of Forest Common Stock. On April 6, 1998 a definitive purchase and sale agreement was executed. The properties include an interest in The Anschutz Ranch Field which is located in Utah and Wyoming, prospects and producing acreage in Canada, and interests in projects in various other countries (the Anschutz Properties). Forest's consideration consists of 5,950,000 shares of Common Stock. On June 25 and 29, 1998, in two separate closings, Forest acquired all of the Anschutz Properties with the exception of an interest in a project in Thailand. The closing of this interest, which is not material to the Company or to the transaction, is expected to be completed in July 1998. The accompanying historical balance sheet of Forest at March 31, 1998 has been adjusted as follows to record the purchase price of the Anschutz assets acquired and liabilities assumed: 1. To record the assets acquired and liabilities assumed relating to the Anschutz Properties at March 31, 1998 and the issuance of Forest Common Stock in consideration therefor. The assets acquired and liabilities assumed (which consist primarily of the assets and liabilities of the Anschutz Ranch East Corporation which owns the Anschutz Ranch East Field) are as follows (in thousands): Cash $ 50,951 Accounts receivable 3,290 Oil and gas properties 62,638 Current portion of long-term debt (5,300) Accounts payable (3,159) Accrued interest (1,476) Other current liabilities (341) Long-term debt (38,700) Other liabilities (338) -------- Fair value of Forest Common Stock $ 67,565 -------- --------
The Common Stock issued was valued at $67,565,000 determined by reference to the quoted market price of Forest common shares during the period two days preceding and two days following the announcement of the agreement in principle, less a discount to reflect the size of the block of shares to be issued and the estimated brokerage fees on the ultimate disposition of the shares. In connection with the transaction, the Company will assume $44,000,000 of Senior Notes. The Senior Notes bear interest at 8.5% per annum, payable semiannually until the notes are repaid in 2003. A principal repayment of $1,000,000 is due on May 31, 1998 with the balance payable in 10 semiannual payments beginning November 30, 1998. The Senior Notes are secured by a first priority lien on the Anschutz Ranch Field. 2. To reflect the use of available cash received in the transaction to repay a portion of Forest's bank credit facility. 3. To record estimated costs associated with the Anschutz Transaction. C. ACQUISITION OF ANSCHUTZ PROPERTIES (continued) The accompanying condensed pro forma combined statement of operations for the three months ended March 31, 1998 and for the year ended December 31, 1997 have been adjusted to include the historical revenue and direct operating expenses of the Anschutz Ranch Field prior to the acquisition. There was no significant production from any of the other acquired properties. In addition, the following adjustments have been made to the accompanying condensed pro forma combined statement of operations for the three months ended March 31, 1998 and for the year ended December 31, 1997: 1. To adjust depletion expense to reflect the pro forma combined depletion rate giving effect to the acquisition of the Anschutz Properties. 2. To record interest expense associated with the debt to be assumed by Forest in connection with the acquisition of the Anschutz Properties. 3. To adjust the weighted average shares outstanding to reflect shares issued in connection with the Anschutz Acquisition. In addition to effects of the pro forma adjustments described above, the Company presently expects additional effects and events to occur as described below. The following statements are forward-looking and are based upon the Company's current belief as to the outcome and timing of such future events. There are risks and uncertainties that can affect the outcome and timing of such events, including many factors which are beyond the control of the Company. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove incorrect, the Company's actual results could differ materially from those expressed in the forward-looking statements. 1. The Company intends to repay in full the notes assumed in the Anschutz Acquisition as soon after closing as is reasonably practicable. Such repayment, which will be made using funds available under the Company's bank credit facility, is expected to result in reduced interest expense to the Company in the amount of approximately $450,000 annually. 2. General and administrative expense will increase as a result of adding the Anschutz Properties to the Company's existing property base. The Company estimates that additional engineering, marketing, accounting, legal and other administrative services will cost approximately $200,000 to $300,000 annually. EX-23 2 EXHIBIT 23 Exhibit 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS We consent to the incorporation by reference in (i) the Registration Statements (Nos. 2-74151, 2-76946, 33-2748 and 33-59504) on Form S-8 of Forest Oil Corporation - Retirement Savings Plan of Forest Oil Corporation, (ii) the Registration Statement (No. 33-48440) on Form S-8 of Forest Oil Corporation - 1992 Stock Option Plan of Forest Oil Corporation, and (iii) the Registration Statement (No. 333-56553) on Form S-3 of Forest Oil Corporation of Common Stock issuable to Bank of America National Trust and Savings Association and resales thereof, of our report dated March 12, 1998 relating to the statement of oil and gas revenue and direct lease operating expenses of an oil and gas property (the Anschutz Ranch Field) of Anschutz Ranch East Corporation acquired by Forest Oil Corporation for each of the years in the three-year period ended December 31, 1997, which report appears in the Form 8-K of Forest Oil Corporation dated July 8, 1998. KPMG PEAT MARWICK LLP Denver, Colorado July 8, 1998 EX-99.1 3 EXHIBIT 99.1 AMENDMENT NO. 2 TO RIGHTS AGREEMENT This AMENDMENT NO. 2 TO RIGHTS AGREEMENT (this "AMENDMENT") is entered into by Forest Oil Corporation, a New York corporation (the "COMPANY"), and ChaseMellon Shareholder Services L.L.C., a New York limited liability company, as rights agent (the "RIGHTS AGENT"), this 25th day of June 1998. The Company and the Rights Agent entered into a Rights Agreement dated as of October 14, 1993 and amended as of July 27, 1995 (the "RIGHTS AGREEMENT"). The Board of Directors of the Company (the "BOARD"), in approving that certain Purchase and Sale Agreement dated as of April 6, 1998 (the "PURCHASE AND SALE AGREEMENT"), between the Company and The Anschutz Corporation (the "PURCHASER"), also approved certain amendments to the Rights Agreement; and NOW, THEREFORE, the parties agree as follows (terms used but not otherwise defined herein shall have the same meanings as in the Purchase and Sale Agreement): 1. Notwithstanding any other provision of the Rights Agreement, (a) the execution or the delivery of one or more of the Transaction Documents or the conclusion of one or more of the Transactions (including, without limitation (i) the acquisition by the Purchaser or any of its Affiliates of the Forest Shares and (ii) the "beneficial ownership" (as defined in the Rights Agreement) by any of the Purchaser and its Affiliates of the foregoing) will not cause or permit the Rights to become exercisable, the Rights to be separated from the stock certificates to which they are attached or any provision of the Rights Agreement to apply to the Purchaser or any other person by reason of or in connection with the Transaction Documents or the Transactions, including, without limitation, the designation of the Purchaser or any other person as an Acquiring Person (as defined in the Rights Agreement) the occurrence of a Distribution Date (as defined in the Rights Agreement) and the occurrence of a Shares Acquisition Date (as defined in the Rights Agreement), and (b) for purposes of this Rights Agreement, none of the Purchaser and its Affiliates shall at any time be deemed to be the Beneficial Owner (as defined in the Rights Agreement) of the shares of Common Stock and other securities referred to in the preceding clause (a), provided, however, that this amendment shall not effect any amendment of the Rights Agreement with respect to the acquisition or beneficial ownership of Voting Securities (as defined in the Rights Agreement) that are not referred to in the preceding clause (a) that may be acquired or owned beneficially by any of the Purchaser and its Affiliates from time to time (other that Voting Securities acquired pursuant to or in connection with, or beneficially owned as a result of, the payment of a dividend on or split-up, merger, reclassification, recapitalization, reorganization, combination, subdivision, conversion, exchange of shares or the like with respect to such Voting Securities). 2. Except as otherwise amended herein, all provisions of the Rights Agreement shall remain in full force and effect and shall be binding upon the parties hereto. 3. This Amendment may be executed in any number of counterparts, each of such shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective officers, each of whom is duly authorized, as of the date first written above. FOREST OIL CORPORATION By: /s/Daniel L. McNamara ------------------------------------ Name: Daniel L. McNamara --------------------------------- Title: Secretary -------------------------------- CHASEMELLON SHAREHOLDER SERVICES L.L.C. By: /s/James E. Hagan ------------------------------------ Name: James E. Hagan ---------------------------------- Title: Vice President -------------------------------- -2- EX-99.2 4 EXHIBIT 99.2 AMENDMENT NO. 2 TO REGISTRATION RIGHTS AGREEMENT This AMENDMENT NO. 2 TO REGISTRATION RIGHTS AGREEMENT this ("AMENDMENT") is entered into by FOREST OIL CORPORATION, a New York corporation (the "COMPANY"), and THE ANSCHUTZ CORPORATION, a Kansas corporation (the "SHAREHOLDER"), this 25th day of June, 1998. The Company and the Shareholder entered into a Registration Rights Agreement dated as of May 19, 1995, and amended as of November 5, 1996 (the "REGISTRATION RIGHTS AGREEMENT"). Terms not otherwise defined herein have the meanings stated in the Registration Rights Agreement or, if not defined therein, in the Purchase Agreement (as defined therein). The Board of Directors of Forest, in approving the Purchase and Sale Agreement dated as of April 6, 1998, between Forest and Anschutz, also approved certain amendments to the Registration Rights Agreement. NOW, THEREFORE, the parties agree as follows: 1. The definition of "Registrable Shares" in the last sentence of Recital D is hereby amended to read in its entirety as follows: The Shareholder Shares and, when acquired by the Shareholder, the Tranche B Warrant Shares, and the Forest Shares (acquired by the Shareholder pursuant to a Purchase and Sale Agreement dated as of April 6, 1998 between the Shareholder and the Company) are collectively referred to as the "REGISTRABLE SHARES." 2. Except as otherwise provided herein, all provisions of the Registration Rights Agreement shall remain in full force and effect and shall be binding upon the parties hereto. 3. This Amendment may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have executed and delivered this Amendment as of the date first written above. FOREST OIL CORPORATION By: /s/Daniel L. McNamara --------------------------------------------- Name: Daniel L. McNamara ------------------------------------------- Title: Secretary ------------------------------------------ THE ANSCHUTZ CORPORATION By: /s/Craig D. Slater --------------------------------------------- Name: Craig D. Slater ------------------------------------------- Title: Vice President ------------------------------------------ EX-99.3 5 EXHIBIT 99.3 SECOND AMENDMENT TO SHAREHOLDERS AGREEMENT This SECOND AMENDMENT TO SHAREHOLDERS AGREEMENT (this "AMENDMENT") is entered into by and between Forest Oil Corporation, a New York corporation ("FOREST"), and The Anschutz Corporation, a Kansas corporation ("ANSCHUTZ"), this 25th day of June 1998. Forest and Anschutz have entered into that certain Shareholders Agreement dated as of July 27, 1995, as amended by a First Amendment to Shareholders Agreement dated as of January 24, 1996 (the "SHAREHOLDERS AGREEMENT"). The Board of Directors of Forest (the "BOARD"), in approving the Purchase and Sale Agreement (the "PURCHASE AND SALE AGREEMENT"), dated as of April 6, 1998, between Forest and Anschutz, also approved certain amendments to the Shareholders Agreement. NOW, THEREFORE, for and in consideration of the premises and of the mutual agreements herein contained, and the mutual benefits to be derived therefrom the parties agree as follows (terms used but not otherwise defined shall have the same meaning as in the Shareholders Agreement): 1. Article I of the Shareholders Agreement is hereby amended by adding the following definitions: "Forest Shares" has the meaning given such term in the Purchase and Sale Agreement. "Shares" means the Purchaser Shares and the Forest Shares. "Transaction Documents" means the Transaction Documents (as defined in the Purchase Agreement) and the Transaction Documents (as defined in the Purchase and Sale Agreement). 2. The definition of "Section 16(b) Liability" in Article I, the definition of "Section 16(b) Matter" in Article I, Section 3.2, Section 3.2(f), Section 3.2(h), Section 3.2(i), Section 3.3(a)(1), Section 5.1, and Section 5.5 are hereby amended by replacing "Purchaser Shares" with "Shares." 3. Section 2.2(b) is hereby amended in its entirety to read as follows: (b) In all notices, registrations, applications, statements, pleadings, memoranda, briefs and other documents submitted to or filed with any Governmental Body (including, without limitation, in any Action referred to in Section 2.2(c)), none of the Company, Purchaser and their respective Affiliates shall assert any position or claim with respect to the acquisition (or deemed acquisition) or disposition (or deemed disposition) by Purchaser of "beneficial ownership" of, or a "pecuniary interest" or "indirect pecuniary interest" in (i) any of the Purchaser Shares that is inconsistent with the position or claim that Purchaser acquired (or shall have been deemed to acquire) "beneficial ownership" of, or a "pecuniary interest" or "indirect pecuniary interest" in, all of the Purchaser Shares on or before April 6, 1998 or (ii) any of the Forest Shares that is inconsistent with the position or claim that Purchaser acquired (or shall have been deemed to acquire) "beneficial ownership" of, or a "pecuniary interest" or "indirect pecuniary interest" in, all of the Forest Shares on April 6, 1998, except that Purchaser may assert any such inconsistent position or claim if Purchaser, based on advice of counsel, determines that there is a reasonable basis to conclude that as a result of the failure to assert such inconsistent position or claim, Purchaser, any person who controls Purchaser within the meaning of any applicable Regulation or any of their respective shareholders, directors, officers, employees, agents and Affiliates could be in violation of any applicable Regulation or could become subject to any sanction, fine, award or other penalty, whether civil or criminal. 4. Section 3.2(f) is further amended by replacing the reference to "Section 2.1" with "Section 3.1." Except as expressly amended hereby, the Shareholders Agreement is hereby ratified and confirmed, and as hereby amended, shall remain in full force and effect in accordance with its terms, conditions and provisions. EXECUTED in multiple counterparts, each having the force and effect of an original, effective as of the date first written above. FOREST OIL CORPORATION By: /s/Daniel L. McNamara ----------------------------------- Name: Daniel L. McNamara -------------------------------- Title: Secretary -------------------------------- THE ANSCHUTZ CORPORATION By: /s/Craig D. Slater ----------------------------------- Name: Craig D. Slater --------------------------------- Title: Vice President -------------------------------- -2- EX-99.4 6 EXHIBIT 99.4 [LETTERHEAD] FOR IMMEDIATE RELEASE FOREST OIL ANNOUNCES SHAREHOLDER APPROVAL OF ANSCHUTZ TRANSACTION DENVER, COLORADO - JUNE 25, 1998 - Forest Oil Corporation (NYSE:FST) announced that at today's annual meeting of shareholders its shareholders approved the proposed transaction between the company and The Anschutz Corporation to acquire certain oil and gas properties from Anschutz in exchange for 5.95 million shares of Forest Oil Corporation common stock. Approximately 97% of eligible shareholders voted in favor of the proposed transaction. The company also announced the election of two directors at the annual meeting of shareholders. Directors elected to serve terms expiring at the company's annual meeting in 2002 are Cortlandt S. Dietler and Craig D. Slater. Forest Oil Corporation is engaged in the acquisition, exploration, development, production and marketing of natural gas and crude oil in North America. Forest's principal reserves and producing properties are located in the United States in the Gulf of Mexico, Louisiana, Texas, Oklahoma and Wyoming and in Canada in Alberta and the Northwest Territories. Forest's common stock trades on the New York Stock Exchange under the symbol FST. June 25, 1998 -----END PRIVACY-ENHANCED MESSAGE-----