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DENVER, Apr 01, 2008
(BUSINESS WIRE) -- Forest Oil Corporation (NYSE:FST) (Forest or the Company)
announced today a new natural gas discovery in the Utica Shale located in Quebec, Canada.
In addition, the Company announced that is has agreed to purchase properties
located in its Ark-La-Tex core areas for $285 million. Utica Shale
Over the last two years,
Forest has accumulated approximately 269,000 net acres, under lease or
farmout, in the St. Lawrence Lowlands in Quebec, Canada.
Two vertical pilot wells were drilled in 2007, testing the Utica Shale, to a
total depth of approximately 4,800 feet. Production rates tested up to 1
MMcfe/d. Although the play is still in the early stages, Forest
believes the initial results are encouraging due to the following factors:
-- Shallow depth of the
shale
-- Rock properties are
comparable to other more established shale plays
-- High-quality natural
gas with minimal impurities
-- Infrastructure in
place with nearby access to major pipelines
-- Premium natural gas
pricing to NYMEX makes the economics compelling
Forest plans to drill three horizontal
wells in 2008 to refine its drilling and completion techniques. Based on
technical data and the vertical pilot well program, the preliminary net
resource potential on Forest's acreage is
estimated to be approximately 4 Tcfe. First production is expected in 2009
with the potential for a full scale drilling program in 2010 and beyond. Ark-La-Tex
Acquisition
Forest has entered into a
definitive agreement with a private entity to acquire producing assets
including approximately 69,000 gross acres (47,000 net acres) primarily in
its core Ark-La-Tex area. Forest attributes estimated proved reserves of 110
Bcfe (45% proved developed) to the properties which produced an average of
approximately 13 MMcfe/d in 2007. Forest has identified more than 500
additional vertical and horizontal drilling locations on the properties
included in the acquisition primarily in the Cotton Valley and Travis Peak
intervals. Forest will pay approximately $285 million cash for the assets,
subject to customary adjustments tied to an economic effective date of March
1, 2008, and intends to fund the acquisition using its credit facility and
cash on hand.
Craig Clark, Forest's
President and Chief Executive Officer, stated, "This negotiated
transaction adds significant acreage and drilling opportunities to our
sizeable presence in the Ark-La-Tex area. Forest had little activity in this
area two years ago, but it has been the fastest growing area within the
Company recently. The acquisition nearly doubles our East Texas / North
Louisiana leasehold to over 140,000 gross acres. Our near term work will
focus on the Cotton Valley and Travis Peak intervals, both vertically and
horizontally. Additionally, we may have opportunities in the Bossier /
Haynesville Shale and James Lime. This is an excellent bolt on acquisition
for our Eastern Business Unit."
Forest intends to update
2008 guidance when the acquisition is closed. The acquisition is scheduled to
close in the second quarter of 2008 and is subject to customary closing
conditions and adjustments. Analyst Conference
Forest will discuss these
items and other corporate matters today at its 2008 Analyst Conference in New
York. To access the live webcast, visit Forest's website at www.forestoil.com
today at 1:00 PM ET. The slides that accompany the conference presentation
will be posted to Forest's website today by 11:00 AM ET. The webcast will
include presentations from Forest's senior management and will last
approximately three hours. If you are unable to listen to the live webcast, a
replay will be available through Friday, April 18, 2008 and can be accessed
from www.forestoil.com. Reserve Information
The Securities and
Exchange Commission permits oil and gas companies, in their filings with the
SEC, to disclose only proved reserves that a company has demonstrated by
actual production or conclusive formation tests to be economically and
legally producible under existing economic and operating conditions. The
description regarding the Utica Shale project above includes a reference to
reserve potential. Forest uses the terms "probable" and
"possible" reserves, resource "potential" or
"upside" or other descriptions of volumes of reserves potentially
recoverable through additional drilling or recovery techniques that the SEC's
guidelines strictly prohibit Forest from including in filings with the SEC. These
estimates are by their nature more speculative than estimates of proved
reserves and accordingly are subject to substantially greater risk of being
actually realized by Forest. Investors are urged to consider closely the
disclosure in Forest's Annual Report on Form 10-K for fiscal year ended
December 31, 2007, copies of which are available for free from Forest by
writing Forest at 707 17th Street, Suite 3600, Denver, CO 80202, Attention:
Investor Relations, or by calling Investor Relations at 303-812-1400, or
visiting Forest's website at www.forestoil.com. Forward-Looking Statements
This news release
includes forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of
1934. All statements, other than statements of historical facts, that address
activities that Forest assumes, plans, expects, believes, projects, estimates
or anticipates (and other similar expressions) will, should or may occur in
the future are forward-looking statements. The forward-looking statements
provided in this press release are based on management's current belief,
based on currently available information, as to the outcome and timing of
future events. Forest cautions that its future natural gas and liquids
production, revenues and expenses and other forward-looking statements are
subject to all of the risks and uncertainties normally incident to the
exploration for and development and production and sale of oil and gas.
These risks include, but
are not limited to, price volatility, inflation or lack of availability of
goods and services, environmental risks, drilling and other operating risks,
regulatory changes, the uncertainty inherent in estimating future oil and gas
production or reserves, and other risks as described in reports that Forest
files with the Securities and Exchange Commission (SEC), including its 2007
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K. Also, the financial results of Forest's foreign
operations are subject to currency exchange rate risks. Any of these factors
could cause Forest's actual results and plans to differ materially from those
in the forward-looking statements.
Forest Oil Corporation is
engaged in the acquisition, exploration, development, and production of
natural gas and liquids in North America and selected international
locations. Forest's principal reserves and producing properties are located
in the United States in Arkansas, Colorado, Louisiana, New Mexico, Oklahoma,
Texas, Utah, and Wyoming, and in Canada. Forest's common stock trades on the
New York Stock Exchange under the symbol FST. For more information about
Forest, please visit its website at www.forestoil.com.
SOURCE: Forest Oil
Corporation
Forest Oil Corporation Patrick J. Redmond, 303-812-1441 Director - Investor Relations |