CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Tables)

6 Months Ended

Jun. 30, 2011

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

CONDENSED CONSOLIDATING BALANCE SHEETS

CONDENSED CONSOLIDATING BALANCE SHEETS

(Unaudited)

(In Thousands)

	June 30, 2011												December 31, 2010
	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	$	473,306	$	—	$	5,843		$	—		$	479,149	$	216,580	$	3		$	1,562		$	—		$	218,145
Accounts receivable	30,280		37,488		32,730			(1,108		)	99,390		50,024		50,211			36,291			(796		)	135,730
Note receivable from subsidiary	—		—		—			—			—		250,183		—			—			(250,183		)	—
Other current assets	90,698		312		18,804			—			109,814		112,287		755			14,766			—			127,808
Total current assets	594,284		37,800		57,377			(1,108		)	688,353		629,074		50,969			52,619			(250,979		)	481,683
Property and equipment, at cost	7,658,235		1,255,113		2,234,824			—			11,148,172		7,403,398		1,198,138			1,978,127			—			10,579,663
Less accumulated depreciation, depletion, and amortization	5,693,109		1,074,589		1,272,804			—			8,040,502		5,618,604		1,049,647			1,195,734			—			7,863,985
Net property and equipment	1,965,126		180,524		962,020			—			3,107,670		1,784,794		148,491			782,393			—			2,715,678
Investment in subsidiaries	604,984		—		—			(604,984		)	—		436,772		—			—			(436,772		)	—
Goodwill	216,460		22,960		17,966			—			257,386		216,460		22,960			17,422			—			256,842
Due from (to) parent and subsidiaries	157,820		26,293		(184,113		)	—			—		187,404		(13,388		)	(174,016		)	—			—
Deferred income taxes	326,365		—		—			(66,957		)	259,408		330,309		—			—			(46,288		)	284,021
Other assets	58,515		6		6,375			—			64,896		44,936		6			2,222			—			47,164
	$	3,923,554	$	267,583	$	859,625		$	(673,049	)	$	4,377,713	$	3,629,749	$	209,038		$	680,640		$	(734,039	)	$	3,785,388
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	265,362	$	2,061	$	47,304		$	(1,108	)	$	313,619	$	204,295	$	2,189		$	46,512		$	(796	)	$	252,200
Current portion of long-term-debt	286,031		—		—			—			286,031		287,092		—			—			—			287,092
Note payable to parent	—		—		—			—			—		—		—			250,183			(250,183		)	—
Other current liabilities	84,041		64		10,694			—			94,799		80,328		36			9,718			—			90,082
Total current liabilities	635,434		2,125		57,998			(1,108		)	694,449		571,715		2,225			306,413			(250,979		)	629,374
Long-term debt	1,585,138		—		280,973			—			1,866,111		1,582,280		—			—			—			1,582,280
Other liabilities	123,271		2,145		42,995			—			168,411		122,390		2,119			38,878			—			163,387
Deferred income taxes	—		90,037		45,951			(66,957		)	69,031		577		67,365			35,906			(46,288		)	57,560
Total liabilities	2,343,843		94,307		427,917			(68,065		)	2,798,002		2,276,962		71,709			381,197			(297,267		)	2,432,601
Forest Oil Corporation shareholders’ equity	1,495,587		173,276		431,708			(604,984		)	1,495,587		1,352,787		137,329			299,443			(436,772		)	1,352,787
Noncontrolling interest	84,124		—		—			—			84,124		—		—			—			—			—
Total shareholders’ equity	1,579,711		173,276		431,708			(604,984		)	1,579,711		1,352,787		137,329			299,443			(436,772		)	1,352,787
	$	3,923,554	$	267,583	$	859,625		$	(673,049	)	$	4,377,713	$	3,629,749	$	209,038		$	680,640		$	(734,039	)	$	3,785,388

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

(Unaudited)

(In Thousands)

	Three Months Ended June 30,
	2011															2010
	Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues
Oil, natural gas, and NGL sales	$	136,349		$	49,530		$	51,969		$	—		$	237,848		$	116,748		$	52,353		$	38,853		$	—		$	207,954
Interest and other	541			6			8			(269		)	286			1,083			—			3			(945		)	141
Equity earnings (losses) in subsidiaries	20,341			—			—			(20,341		)	—			18,186			—			—			(18,186		)	—
Total revenues	157,231			49,536			51,977			(20,610		)	238,134			136,017			52,353			38,856			(19,131		)	208,095
Costs, expenses, and other:
Lease operating expenses	19,733			3,640			9,090			—			32,463			19,486			2,937			5,999			—			28,422
Other direct operating costs	13,198			2,837			5,048			—			21,083			11,894			3,615			2,998			—			18,507
General and administrative	10,922			604			4,211			—			15,737			14,412			615			2,754			—			17,781
Depreciation, depletion, and amortization	38,989			12,850			21,483			—			73,322			32,607			13,096			16,743			—			62,446
Interest expense	36,516			(124		)	2,719			(269		)	38,842			35,331			221			2,502			(945		)	37,109
Realized and unrealized gains on derivative instruments, net	(39,968		)	(903		)	(5,176		)	—			(46,047		)	(21,014		)	(3,987		)	(30		)	—			(25,031		)
Other, net	7,793			20			4,239			—			12,052			1,577			84			12,888			—			14,549
Total costs, expenses, and other	87,183			18,924			41,614			(269		)	147,452			94,293			16,581			43,854			(945		)	153,783
Earnings (loss) before income taxes	70,048			30,612			10,363			(20,341		)	90,682			41,724			35,772			(4,998		)	(18,186		)	54,312
Income tax	31,138			13,699			6,871			—			51,708			8,470			13,132			(544		)	—			21,058
Net earnings (loss)	38,910			16,913			3,492			(20,341		)	38,974			33,254			22,640			(4,454		)	(18,186		)	33,254
Less: net earnings attributable to noncontrolling interest	—			—			64			—			64			—			—			—			—			—
Net earnings (loss) attributable to Forest Oil Corporation	$	38,910		$	16,913		$	3,428		$	(20,341	)	$	38,910		$	33,254		$	22,640		$	(4,454	)	$	(18,186	)	$	33,254

	Six Months Ended June 30,
	2011															2010
	Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated			Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Eliminations			Consolidated
Revenues
Oil, natural gas, and NGL sales	$	253,362		$	98,246		$	88,811		$	—		$	440,419		$	259,204		$	93,495		$	76,984		$	—		$	429,683
Interest and other	1,348			62			20			(580		)	850			2,767			9			9			(2,508		)	277
Equity earnings (losses) in subsidiaries	45,888			—			—			(45,888		)	—			59,253			—			—			(59,253		)	—
Total revenues	300,598			98,308			88,831			(46,468		)	441,269			321,224			93,504			76,993			(61,761		)	429,960
Costs, expenses, and other:
Lease operating expenses	40,269			6,628			17,423			—			64,320			40,117			5,626			11,781			—			57,524
Other direct operating costs	25,344			5,923			9,301			—			40,568			23,118			6,229			5,447			—			34,794
General and administrative	26,610			1,213			6,948			—			34,771			30,060			1,163			5,311			—			36,534
Depreciation, depletion, and amortization	75,063			24,942			40,880			—			140,885			63,490			20,905			30,363			—			114,758
Interest expense	73,016			(192		)	4,478			(580		)	76,722			72,634			1,078			3,948			(2,508		)	75,152
Realized and unrealized gains on derivative instruments, net	(4,172		)	(498		)	(5,131		)	—			(9,801		)	(98,061		)	(19,941		)	(240		)	—			(118,242		)
Other, net	10,249			(21		)	(2,059		)	—			8,169			(1,127		)	32			7.650			—			6,555
Total costs, expenses, and other	246,379			37,995			71,840			(580		)	355,634			130,231			15,092			64,260			(2,508		)	207,075
Earnings before income taxes	54,219			60,313			16,991			(45,888		)	85,635			190,993			78,412			12,733			(59,253		)	222,885
Income tax	18,639			22,672			8,680			—			49,991			48,577			28,918			2,974			—			80,469
Net earnings	35,580			37,641			8,311			(45,888		)	35,644			142,416			49,494			9,759			(59,253		)	142,416
Less: net earnings attributable to noncontrolling interest	—			—			64			—			64			—			—			—			—			—
Net earnings attributable to Forest Oil Corporation	$	35,580		$	37,641		$	8,247		$	(45,888	)	$	35,580		$	142,416		$	49,494		$	9,759		$	(59,253	)	$	142,416

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

(Unaudited)

(In Thousands)

	Six Months Ended June 30,
	2011												2010
	Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Consolidated			Parent Company			Guarantor Subsidiary			Combined Non-Guarantor Subsidiaries			Consolidated
Operating activities:
Net earnings (loss)	$	(10,308	)	$	37,641		$	8,311		$	35,644		$	83,163		$	49,494		$	9,759		$	142,416
Adjustments to reconcile net earnings (loss) to net cash provided (used) by operating activities:
Depreciation, depletion, and amortization	75,063			24,942			40,880			140,885			63,490			20,905			30,363			114,758
Unrealized losses (gains) on derivative instruments, net	16,693			(2,677		)	(5,136		)	8,880			(61,804		)	(11,802		)	(142		)	(73,748		)
Deferred income tax	(10,405		)	22,672			8,281			20,548			43,852			28,918			2,974			75,744
Unrealized foreign currency exchange losses, net	—			—			28,540			28,540			—			—			3,954			3,954
Realized foreign currency exchange gains, net	—			—			(33,892		)	(33,892		)	—			—			—			—
Other, net	16,387			159			(356		)	16,190			12,760			114			(103		)	12,771
Changes in operating assets and liabilities:
Accounts receivable	19,744			12,723			4,762			37,229			33,049			(11,644		)	(15,505		)	5,900
Other current assets	10,030			443			2,726			13,199			21,011			23			(6,677		)	14,357
Accounts payable and accrued liabilities	(8,908		)	(186		)	(3,359		)	(12,453		)	(41,127		)	(3,334		)	(2,116		)	(46,577		)
Accrued interest and other current liabilities	(3,580		)	(241		)	(66		)	(3,887		)	(2,572		)	119			(1,163		)	(3,616		)
Net cash provided by operating activities	104,716			95,476			50,691			250,883			151,822			72,793			21,344			245,959
Investing activities:
Capital expenditures for property and equipment	(318,568		)	(56,925		)	(208,446		)	(583,939		)	(240,048		)	(60,479		)	(163,571		)	(464,098		)
Proceeds from sales of assets	120,634			—			468			121,102			79,976			1,608			25,614			107,198
Net cash used by investing activities	(197,934		)	(56,925		)	(207,978		)	(462,837		)	(160,072		)	(58,871		)	(137,957		)	(356,900		)
Financing activities:
Proceeds from bank borrowings	—			—			610,089			610,089			—			—			92,480			92,480
Repayments of bank borrowings	—			—			(329,116		)	(329,116		)	—			—			(92,480		)	(92,480		)
Proceeds from issuance of Lone Pine Resources Inc. common stock, net of issuance costs	—			—			178,502			178,502			—			—			—			—
Redemption and repurchase of notes	—			—			—			—			(152,038		)	—			—			(152,038		)
Net activity in investments from subsidiaries	348,217			(38,698		)	(309,519		)	—			(92,058		)	(13,586		)	105,644			—
Other, net	1,727			144			14,962			16,833			(4,469		)	(714		)	2,337			(2,846		)
Net cash provided (used) by financing activities	349,944			(38,554		)	164,918			476,308			(248,565		)	(14,300		)	107,981			(154,884		)
Effect of exchange rate changes on cash	—			—			(3,350		)	(3,350		)	—			—			(610		)	(610		)
Net increase (decrease) in cash and cash equivalents	256,726			(3		)	4,281			261,004			(256,815		)	(378		)	(9,242		)	(266,435		)
Cash and cash equivalents at beginning of period	216,580			3			1,562			218,145			456,978			379			9,864			467,221
Cash and cash equivalents at end of period	$	473,306		$	—		$	5,843		$	479,149		$	200,163		$	1		$	622		$	200,786