Forest Oil Announces Third Quarter 2012 Results

  Forest Oil Announces Third Quarter 2012 Results

   Third Quarter 2012 Average Net Sales Volumes of 339 MMcfe/d (34% Liquids
                compared to 27% Liquids in Third Quarter 2011)

 Third Quarter 2012 Average Net Oil Sales Volumes of 8.9 MBbls/d; Organically
          Increased 29% from Third Quarter 2011 and 7% Sequentially

Extended Hogshooter Fairway with Successful Well at Camp South with an Average
           24-Hour Maximum Production Rate of 1,600 Boe/d (71% Oil)

Completed Two Unrestricted Rate Eagle Ford Shale Wells with an Average 24-Hour
                     Maximum Production Rate of 638 Boe/d

Completed Four Restricted Rate Eagle Ford Shale Wells with an Average 24-Hour
                     Maximum Production Rate of 542 Boe/d

Continued Progress on Deleveraging Plan with Agreements to Sell Approximately
                            $277 Million of Assets

  Recent $500 Million Senior Notes Offering Increases Financial Flexibility

Business Wire

DENVER -- October 29, 2012

Forest Oil Corporation (NYSE:FST) (Forest or the Company) today announced
financial and operational results from continuing operations for the third
quarter of 2012.

Forest noted the following results for the three months ended September 30,
2012:

  *Average net sales volumes of 339 MMcfe/d organically increased 5% from the
    third quarter of 2011 and 1% from the second quarter of 2012
  *Average oil net sales volumes of 8.9 MBbls/d organically increased 29%
    from the third quarter of 2011 and 7% from the second quarter of 2012
  *Adjusted net earnings of $12 million compared to $29 million in the
    corresponding 2011 period
  *Adjusted EBITDA of $134 million compared to $142 million in the
    corresponding 2011 period
  *Adjusted discretionary cash flow of $97 million compared to $106 million
    in the corresponding 2011 period

Due primarily to a non-cash ceiling test write-down of $330 million and an $80
million impairment charge, Forest reported a net loss of $459 million, or
$(3.97) per share, for the three months ended September 30, 2012.

Patrick R. McDonald, President and CEO, stated, “During the third quarter
Forest made significant progress towards achieving the strategic objectives
that we have communicated to our shareholders. Our divestiture program is off
to a good start, with approximately $277 million in sales closed or pending.
We will continue to focus on other non-core divestitures to improve our
financial position and flexibility. We opportunistically took advantage of
favorable high-yield market conditions to complete a $500 million Senior Notes
offering, with proceeds used to redeem 50% of our outstanding Senior Notes due
2014. Importantly, our capital program is now closely aligned with our
expected cash flow. Forest entered the fourth quarter operating five drilling
rigs, all targeting oil or liquids-rich opportunities in our three core
development areas. These actions have resulted in measurable achievements
designed to better position Forest for the long-term.

“Operationally, we continue to execute on our development program by targeting
higher-margin oil opportunities within our core Panhandle and Eagle Ford
areas. During the third quarter, we opened up a new area of the Hogshooter
play with a successful completion in the Camp South Area and we completed our
first well targeting the Douglas oil horizon. These results continue to
demonstrate the resource potential that exists within the oil zones of the
Panhandle. In the Eagle Ford, we have introduced a drilling rig equipped with
a “rig-walking” system that will allow for multi-well pad drilling in the
central fairway. This should result in more efficient operations, while
driving well costs lower and increasing our overall returns. Our focus on oil
projects continues to generate positive results, as third quarter oil volumes
increased 7% sequentially and 29% as compared to the third quarter of 2011.

“Forest made significant strides on all fronts during the most recent quarter;
continued execution is critical in bringing forward the value of our assets.
Everyone at Forest is focused on building upon the operational and financial
momentum gained during the third quarter for the remainder of 2012 and into
2013.”

                          THIRD QUARTER 2012 RESULTS

For the three months ended September 30, 2012, Forest reported a net loss of
$459 million, or $(3.97) per diluted share. This compares to Forest's net
earnings from continuing operations of $60 million, or $0.52 per diluted
share, in the corresponding 2011 period. The net loss in the third quarter of
2012 was affected by the following items:

  *The effect of a ceiling test write-down of $330 million ($210 million net
    of tax)
  *An impairment of $80 million primarily related to Forest’s South African
    properties ($51 million net of tax)
  *An increase in the valuation allowance on deferred tax assets (primarily
    driven by the ceiling test write-down and impairments) of $170 million
    ($170 million net of tax)
  *Unrealized losses on derivative instruments of $52 million ($33 million
    net of tax)
  *Legal proceeding costs of $6 million ($4 million net of tax)
  *Rig stacking costs of $3 million ($2 million net of tax)

Without the effect of these items, Forest's adjusted net earnings and earnings
per share on a diluted basis for the three months ended September 30, 2012
decreased to $12 million, or $0.10 per diluted share, compared to $29 million,
or $0.25 per diluted share, in the corresponding 2011 period. The decrease in
adjusted earnings was primarily due to higher depletion expense in the third
quarter of 2012 compared to the third quarter of 2011. Forest's adjusted
EBITDA for the three months ended September 30, 2012 decreased to $134 million
compared to $142 million in the corresponding 2011 period. Forest's adjusted
discretionary cash flow for the three months ended September 30, 2012
decreased to $97 million compared to $106 million in the corresponding 2011
period.

Average Net Sales Volumes, Average Realized Prices, and Revenues

Forest's average net sales volumes for the three months ended September 30,
2012 increased 5% and 1% from the corresponding 2011 period and from the
second quarter of 2012, respectively. The following table details the
components of average net sales volumes, average realized prices, and revenues
for the three months ended September 30, 2012:

                                
                                  Three Months Ended September 30, 2012
                                  Gas       Oil        NGLs       Total
                                  (MMcf/d)   (MBbls/d)   (MBbls/d)   (MMcfe/d)
                                                                     
Average Net Sales Volumes           224.9       8.9         10.1       339.1
                                                                     
                                  Gas        Oil         NGLs        Total
Average Realized Prices
                                  ($/Mcf)    ($/Bbl)     ($/Bbl)     ($/Mcfe)
                                                                     
Average realized prices not
including realized derivative     $ 2.48     $  94.34    $  29.48    $ 5.00
gains
Realized gains on NYMEX            1.10       2.56       1.59      0.84
derivatives
Average realized prices
including realized derivative     $ 3.57     $  96.90    $  31.07    $ 5.84
gains
                                                                     
Revenues (in thousands)           Gas        Oil         NGLs        Total
                                                                     
Revenues not including realized   $ 51,241   $  77,359   $  27,414   $ 156,014
derivative gains
Realized gains on NYMEX            22,664     2,097      1,481     26,242
derivatives
Revenues including realized       $ 73,905   $  79,456   $  28,895   $ 182,256
derivative gains
                                                                       

Total Cash Costs

Forest's total cash costs for the third quarter of 2012 decreased 38% to $52
million, compared to $84 million in the corresponding 2011 period. Total cash
costs per-unit for the third quarter of 2012 decreased 41% to $1.67 per Mcfe,
compared to $2.83 per Mcfe in the corresponding 2011 period.

Total cash costs per-unit for the third quarter of 2012, pro forma for the
current income tax credit associated with an income tax-carryback for cash
taxes paid in 2009, decreased 3% to $2.74 per Mcfe, compared to $2.83 per Mcfe
in the corresponding 2011 period.

The following table details the components of total cash costs for the
comparative periods:

                                Three Months Ended September 30,
                                 2012         Per Mcfe   2011      Per Mcfe
                                 (In thousands, except per-unit amounts)
                                                                      
Production expense               $ 39,848      $ 1.28      $ 34,603   $  1.16
General and administrative
expense (excluding stock-based     9,942         0.32        11,110      0.37
compensation of $3,474 and
$8,832, respectively)
Interest expense                   36,223        1.16        37,225      1.25
Current income tax expense        (33,830 )    (1.08 )    1,172      0.04
Total cash costs                 $ 52,183     $ 1.67     $ 84,110   $  2.83
Current income tax                33,327      1.07      -          -
credit/income tax-carryback
Pro forma total cash costs       $ 85,510     $ 2.74     $ 84,110   $  2.83
                                                                         

_________________________

Total cash costs is a non-GAAP measure that is used by management to assess
the Company’s cash operating performance. Forest defines total cash costs as
all cash operating costs, including production expense; general and
administrative expense (excluding stock-based compensation); interest expense;
and current income tax expense.

Depreciation and Depletion Expense

Forest's per-unit depreciation and depletion expense for the three months
ended September 30, 2012 increased 30% to $2.37 per Mcfe compared to $1.83 per
Mcfe in the corresponding 2011 period. The increase was primarily the result
of higher finding and development costs associated with Forest's oil- and
liquids-focused capital expenditure program.

Ceiling Test Write-Down, Property Impairments, and Deferred Tax Asset
Valuation Allowance

Forest recorded a non-cash ceiling test write-down of $330 million in the
third quarter of 2012 pursuant to the ceiling test limitation prescribed by
the Securities and Exchange Commission for companies using the full cost
method of accounting. The write-down was primarily a result of a $0.32 per Mcf
decrease in the natural gas price used and lower natural gas liquids price
used in the ceiling test calculation in the third quarter of 2012 compared to
the second quarter of 2012.

Forest recorded a $67 million impairment of its unproved properties in South
Africa during the third quarter of 2012 as it was determined that the Company
would likely not recover the carrying amount of its investment in the South
Africa properties. Forest also recorded an impairment of $13 million related
to the recently-announced sale of its East Texas natural gas gathering assets
which reduced the carrying amount of the assets to the final expected sales
price.

Primarily as a result of this quarter’s ceiling test write-down and property
impairments, Forest recorded a valuation allowance against its deferred tax
assets of $170 million.

Total Capital Expenditures

Forest's exploration and development capital expenditures for the three months
ended September 30, 2012 were $166 million, compared to $182 million in the
corresponding 2011 period. For the second half of 2012, Forest intends to
invest between $240 million and $260 million for capital expenditures.

Forest’s land and leasehold acquisition costs for the three months ended
September 30, 2012 were $7 million, compared to $76 million in the
corresponding 2011 period. The land and leasehold acquisitions in 2011 were a
result of Forest's decision to expand exposure to prospective oil- and
liquids-rich areas.

The following table summarizes total capital expenditures for the comparative
periods (in thousands):

                                             Three Months Ended September 30,
                                              2012              2011
                                                                 
Exploration and development                   $    165,885       $   181,822
Land and leasehold acquisitions                   6,977            75,804
                                                   172,862           257,626
                                                                 
Add:
ARO, capitalized interest, and capitalized        6,455            11,844
equity compensation
Total capital expenditures                    $    179,317       $   269,470
                                                                     

Asset Divestiture Update

Since embarking on its deleveraging plan in early July, Forest has completed,
or has under contract, transactions totaling approximately $277 million. This
includes the recently-announced agreement to sell South Louisiana properties
for $220 million; the sale of East Texas natural gas gathering assets for $34
million; approximately 5,600 net acres in the Eagle Ford Shale for
approximately $15 million; and other miscellaneous properties for
approximately $8 million. Forest will continue to focus on non-core asset
divestitures to improve the Company’s financial flexibility. The following
table details the third quarter of 2012 average daily production volumes for
the divested properties as well as the proved reserves associated with these
properties as of December 31, 2011.

                                  Estimated  3Q12        Proved Reserves at
                                   Proceeds    Production   December 31, 2011
Transaction                        ($MM)       (MMcfe/d)    (Bcfe)
                                                            
South Louisiana Properties         220         20           45
East Texas Natural Gas Gathering   34          -            -
Assets
Eagle Ford Shale Acreage           15          -            -
Miscellaneous Properties           8           2            7
                                                          
Total                              277         22           52
                                                            

                          OPERATIONAL PROJECT UPDATE

Panhandle Area

Forest holds approximately 178,000 gross acres (108,000 net) in the Panhandle
Area. The Company continues to focus drilling activities on the Missourian
Wash (Hogshooter), Cleveland, Tonkawa, and Douglas oil formations. Forest
entered the third quarter of 2012 operating five rigs in the Panhandle Area
and is currently running a two-rig drilling program.

Highlighting drilling activity since Forest’s last earnings release, the
productive boundary of the Hogshooter play was successfully extended with a
completion in the Camp South Area, which is located north of the Frye Ranch
Area. The initial well (100% WI) came online with an average 24-hour maximum
production rate of 1,128 Bbls/d of oil, 216 Bbls/d of NGLs, and 1.4 MMcf/d of
natural gas, for a total equivalent rate of 1,600 Boe/d (71% oil).

In addition, a Missourian Wash Hogshooter well (98% working interest) was
completed in the Frye Ranch Area with an average 24-hour maximum production
rate of 1,357 Bbls/d of oil, 442 Bbls/d of NGLs, and 1.4 MMcf/d of natural
gas, for a total equivalent rate of 2,030 Boe/d (67% oil). To date, Forest has
completed seven Hogshooter wells in the Frye Ranch Area that have had an
average 24-hour maximum production rate of 2,600 Boe/d (68% oil).

Forest completed its first well targeting the Douglas interval during the
third quarter in Hemphill County, Texas. This well (57% working interest) had
an average 24-hour maximum production rate of 715 Boe/d (62% oil). The Douglas
interval is one of the shallowest oil zones located in the Panhandle and a
development well is expected to cost approximately $4.5 million. Forest has 25
Douglas locations identified, with additional acreage being reviewed for
prospectivity.

Eagle Ford Shale

Forest holds approximately 100,000 gross acres (91,000 net) in the oil-bearing
section of the Eagle Ford Shale play.

Drilling in the Eagle Ford continues to be focused in the central fairway of
Forest’s acreage position, where the Company has experienced the most
consistent results and has the largest, most contiguous block of acreage.
Forest is currently operating a two-rig drilling program and expects to hold
approximately 40,000 net acres over the next several years.

Forest continues to make progress on reducing well costs and recently equipped
one of its drilling rigs with a “rig-walking” system that will allow for
multi-well pad drilling in the central fairway. It is expected that a
four-well pad location can be drilled in 65 days as compared to four
single-well site locations requiring 84 drill days. As a result of the
drilling efficiencies and other synergies, it is expected that the cost to
drill an Eagle Ford pad well can be reduced to between $5.5 million and $6.0
million depending on the lateral length, number of fracture stimulation
stages, and the amount of sand that is used. This results in per-well savings
of approximately 8-15% over a single-well approach and is expected to enhance
the economics of Forest’s Eagle Ford program.

Since Forest’s last earnings release, two Eagle Ford wells were completed
within the central fairway that had an average 24-hour maximum production rate
of 638 Boe/d (95% oil). In an effort to optimize reserve recovery and well
productivity, while lowering wells costs, Forest completed four wells as part
of a restricted-rate pilot program that began producing at an average 24-hour
maximum production rate of 542 boe/d (95% oil). Early results from the
restricted-rate initiative are being evaluated, and the Company will continue
to monitor the performance of the pilot wells before making a decision to
implement the program more broadly.

Average net sales volumes from the Eagle Ford in the third quarter of 2012
increased 50% to 1,800 Boe/d as compared to second quarter 2012 volumes of
1,200 Boe/d.

East Texas

Forest holds approximately 163,000 gross acres (123,000 net) in the East Texas
/ North Louisiana area.

Since Forest's last earnings release, one horizontal Cotton Valley well (100%
working interest) in East Texas was completed with an average 24-hour maximum
production rate of 13 MMcfe/d (39% liquids).

The Company plans to continue a one-rig drilling program targeting the
liquids-rich Cotton Valley formation in the fourth quarter.

            NATURAL GAS, NATURAL GAS LIQUIDS, AND OIL DERIVATIVES

As of October 29, 2012, Forest had natural gas, natural gas liquids, and oil
derivatives in place for the remainder of 2012 through 2014 covering the
aggregate average daily volumes and weighted average prices shown below. Since
the last earnings release, Forest added 4 MBbls/d of Calendar 2013 oil swaps
at $95.53 per barrel and 40 Bbtu/d of Calendar 2014 natural gas swaps at $4.50
per MMBtu.

                                    Oct - Dec          
                                     2012        2013      2014
Natural gas swaps:
Contract volumes (Bbtu/d)               155.0      160.0     40.0
Weighted average price (per MMBtu)   $  4.63     $ 3.98    $ 4.50
                                                           
Natural gas liquids swaps:
Contract volumes (MBbls/d)              2.0        -         -
Weighted average price (per Bbl)     $  45.22    $ -       $ -
                                                           
Oil swaps:
Contract volumes (MBbls/d)              4.5        4.0       -
Weighted average price (per Bbl)     $  97.26    $ 95.53   $ -
                                                             

In connection with several swaps shown in the table above, Forest granted
swaption instruments to counterparties in exchange for Forest receiving
premium hedged prices on the swaps. The table below sets forth the outstanding
swaptions as of October 29, 2012:

                                    2013     2014      2015
Natural gas swaptions:
Contract volumes (Bbtu/d)              40.0      40.0       -
Weighted average price (per MMBtu)   $ 4.02    $ 4.50     $ -
                                                          
Oil swaptions:
Contract volumes (MBbls/d)             2.0       5.0        3.0
Weighted average price (per Bbl)     $ 95.00   $ 105.80   $ 100.00
                                                            

                         NON-GAAP FINANCIAL MEASURES

Adjusted Net Earnings

In addition to reporting net earnings (loss) from continuing operations as
defined under generally accepted accounting principles (GAAP), Forest also
presents adjusted net earnings from continuing operations (adjusted net
earnings), which is a non-GAAP performance measure. Adjusted net earnings
consists of net earnings (loss) from continuing operations after adjustment
for those items shown in the table below. Adjusted net earnings does not
represent, and should not be considered an alternative to, GAAP measurements
such as net earnings (loss) from continuing operations (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 the items shown below, Forest believes that the measure is useful
to investors because similar measures are frequently used by securities
analysts, investors, and other interested parties in their evaluation of
companies in the oil and gas industry. Forest's management does not view
adjusted net earnings in isolation and also uses other measurements, such as
net earnings (loss) from continuing operations and revenues to measure
operating performance. The following table provides a reconciliation of net
earnings (loss) from continuing operations, the most directly comparable GAAP
measure, to adjusted net earnings for the periods presented (in thousands):

                                                   Three Months Ended
                                                    September 30,
                                                    2012          2011
                                                                   
Net earnings (loss) from continuing operations      $ (458,552 )   $ 59,610
                                                                   
Ceiling test write-down of oil and natural gas        210,480        -
properties, net of tax
Change in valuation allowance on deferred tax         170,065        -
assets
Impairment of properties, net of tax                  50,731         -
Stock-based compensation expense attributable to      -              4,228
the spin-off, net of tax
Rig stacking, net of tax                              1,750          -
Unrealized losses (gains) on derivative               33,048         (34,831 )
instruments, net of tax
Legal proceeding costs, net of tax                   4,085        -       
Adjusted net earnings                               $ 11,607      $ 29,007  
                                                                   
Earnings attributable to participating securities    274          1,256   
Adjusted net earnings for diluted earnings per      $ 11,333      $ 27,751  
share
                                                                   
Weighted average number of diluted shares            115,417      112,162 
outstanding
                                                                   
Adjusted diluted earnings per diluted share         $ 0.10        $ 0.25    
                                                                             

Adjusted EBITDA

In addition to reporting net earnings (loss) from continuing operations as
defined under GAAP, Forest also presents adjusted net earnings before
interest, income taxes, depreciation, depletion, and amortization from
continuing operations (adjusted EBITDA), which is a non-GAAP performance
measure. Adjusted EBITDA consists of net earnings (loss) from continuing
operations after adjustment for those items shown in the table below. Adjusted
EBITDA does not represent, and should not be considered an alternative to,
GAAP measurements such as net earnings (loss) from continuing operations (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 the items shown below, Forest believes the measure is useful in
evaluating its fundamental core operating performance. Forest also believes
that adjusted EBITDA is useful to investors because similar measures are
frequently used by securities analysts, investors, and other interested
parties in their evaluation of companies in the oil and gas industry. Forest's
management uses adjusted EBITDA to manage its business, including in preparing
its annual operating budget and financial projections. Forest's management
does not view adjusted EBITDA in isolation and also uses other measurements,
such as net earnings (loss) from continuing operations and revenues to measure
operating performance. The following table provides a reconciliation of net
earnings (loss) from continuing operations, the most directly comparable GAAP
measure, to adjusted EBITDA for the periods presented (in thousands):

                                                   Three Months Ended
                                                    September 30,
                                                    2012          2011
                                                                   
Net earnings (loss) from continuing operations      $ (458,552 )   $ 59,610
                                                                   
Income tax expense                                    7,280          34,556
Interest expense                                      36,223         37,225
Ceiling test write-down of oil and natural gas        329,957        -
properties
Impairment of properties                              79,529         -
Depreciation, depletion, and amortization             73,845         54,323
Unrealized losses (gains) on derivative               51,795         (54,548 )
instruments, net
Stock-based compensation                              2,970          9,732
Accretion of asset retirement obligations             1,719          1,539
Legal proceeding costs                                6,404          -
Rig stacking                                         2,744        -       
Adjusted EBITDA                                     $ 133,914     $ 142,437 
                                                                             

Adjusted Discretionary Cash Flow

In addition to reporting net cash provided by operating activities of
continuing operations as defined under GAAP, Forest also presents adjusted
discretionary cash flow of continuing operations (adjusted discretionary cash
flow), which is a non-GAAP liquidity measure. Adjusted discretionary cash flow
consists of net cash provided by operating activities of continuing operations
after adjustment for those items shown in the table below. This measure does
not represent, and should not be considered an alternative to, GAAP
measurements such as net cash provided by operating activities of continuing
operations (its most comparable GAAP financial measure), and Forest's
calculations thereof may not be comparable to similarly titled measures
reported by other companies. Forest's 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 before
changes in operating assets and liabilities, which fluctuate due to the timing
of collections of receivables and the settlements of liabilities, and other
items. Forest's management uses adjusted discretionary cash flow to manage its
business, including in preparing its annual operating budget and financial
projections. This measure does not represent the residual cash flow available
for discretionary expenditures. Forest’s management does not view adjusted
discretionary cash flow in isolation and also uses other measurements, such as
net cash provided by operating activities of continuing operations to measure
operating performance. The following table provides a reconciliation of net
cash provided by operating activities of continuing operations, the most
directly comparable GAAP measure, to adjusted discretionary cash flow for the
periods presented (in thousands):

                                                    Three Months Ended
                                                     September 30,
                                                     2012         2011
                                                                   
Net cash provided by operating activities of         $ 109,401     $ 111,765
continuing operations
                                                                   
Changes in operating assets and liabilities:
Accounts receivable                                    10,007        3,255
Other current assets                                   (2,121  )     2,179
Accounts payable and accrued liabilities               (22,783 )     (3,527  )
Accrued interest and other                             29,669        (7,617  )
Current income tax credit/income tax-carryback         (33,327 )     -
^(1)
Legal proceeding costs^(1)                             6,404         -
                                                                  
Adjusted discretionary cash flow                     $ 97,250     $ 106,055 

         The current income tax credit/income tax-carryback and legal
^(1)   proceeding costs are non-recurring cash-settled items. Including the
         effect of these items, adjusted discretionary cash flow for the three
         months ended September 30, 2012 would have been $124 million.
         

Net Debt

In addition to reporting total debt as defined under GAAP, Forest also
presents net debt, which is a non-GAAP debt measure. Net debt consists of the
principal amount of debt adjusted for cash and cash equivalents at the end of
the period. Forest's management uses net debt to assess Forest's indebtedness.
The following table sets forth the components of net debt (in thousands):

                        September 30, 2012         June 30, 2012
                         Principal    Book^(1)      Principal    Book^(1)
Credit facility          $ -           $ -           $ 348,000     $ 348,000
7% Senior subordinated     12            12            12            12
notes due 2013
8 1/2% Senior notes        600,000       591,980       600,000       590,513
due 2014 ^(2)
7 1/4% Senior notes        1,000,000     1,000,379     1,000,000     1,000,393
due 2019
7 1/2% Senior notes       500,000      500,000      -            -
due 2020 ^(2)
Total debt                 2,100,012     2,092,371     1,948,012     1,938,918
                                                                   
Less: cash and cash       39,169       39,169       680          680
equivalents
                                                                   
Net debt                 $ 2,060,843   $ 2,053,202   $ 1,947,332   $ 1,938,238

         Book amounts include the principal amount of debt adjusted for
^(1)   unamortized net discounts on the issuance of certain senior notes of
         $(8) million and $(9) million at September 30, 2012 and June 30,
         2012, respectively.

         In September 2012, Forest issued $500 million in 7 1/2% senior notes
^(2)     due September 15, 2020. A portion of the proceeds were used in
         October 2012 to redeem 50% of our $600 million 8 1/2% senior notes
         due February 15, 2014.
         

                             TELECONFERENCE CALL

A conference call is scheduled for Tuesday, October 30, 2012, at 9:00 AM MT to
discuss the release. You may access the call by dialing toll-free 866.700.6067
(for U.S./Canada) and 617.213.8834 (for International) and request the Forest
Oil teleconference (ID # 24150095). The conference call will also be webcast
live on the Internet and can be accessed by going to the Forest Oil website at
www.forestoil.com in the “Investor Relations” section of the website. A Q&A
period will follow.

A replay of the conference call will be available through November 14, 2012.
You may access the replay by dialing toll free 888.286.8010 (for U.S./Canada)
and 617.801.6888 (for International), conference ID # 59332773. An archive of
the conference call webcast will also be available at www.forestoil.com in the
“Investor Relations” section of the website.

                          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 future natural
gas and liquids production, revenues, cash flows, liquidity, plans for future
operations, expenses, outlook for oil and natural gas prices, timing of
capital expenditures, and other forward-looking statements relating to Forest
are subject to all of the risks and uncertainties normally incident to their
exploration for and development and production and sale of liquids and natural
gas.

These risks relating to Forest include, but are not limited to, liquids and
natural gas price volatility, its level of indebtedness, its ability to
replace production, its ability to compete with larger producers,
environmental risks, drilling and other operating risks, regulatory changes,
credit risk of financial counterparties, risks of using third-party
transportation and processing facilities and other risks as described in
reports that Forest files with the SEC, including its Annual Report on Form
10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. 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 the United States
and selected international locations. Forest's estimated proved reserves and
producing properties are located in the United States in Arkansas, Louisiana,
Oklahoma, Texas, Utah, and Wyoming. 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.

October 29, 2012


FOREST OIL CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
                                                         
                                           September 30,    December 31,
                                           2012             2011
ASSETS                                     (In thousands)
                                                            
Current assets:
Cash and cash equivalents                  $ 39,169         $ 3,012
Accounts receivable                          77,210           79,089
Derivative instruments                       43,853           89,621
Other current assets                        16,278         38,950     
Total current assets                         176,510          210,672
                                                            
Net property and equipment                   2,260,562        2,651,116
                                                            
Deferred income taxes                        9,851            231,116
Goodwill                                     239,420          239,420
Derivative instruments                       5,273            10,422
Other assets                                90,762         38,405     
                                           $ 2,782,378     $ 3,381,151  
                                                            
LIABILITIES AND SHAREHOLDERS' EQUITY
                                                            
Current liabilities:
Accounts payable and accrued liabilities   $ 189,753        $ 247,880
Accrued interest                             29,663           23,259
Derivative instruments                       7,759            28,944
Deferred income taxes                        9,851            20,172
Current portion of long-term debt            296,002          -
Other current liabilities                   20,743         20,582     
Total current liabilities                    553,771          340,837
                                                            
Long-term debt                               1,796,369        1,693,044
Asset retirement obligations                 79,133           77,898
Derivative instruments                       16,640           -
Other liabilities                           93,688         76,259     
Total liabilities                            2,539,601        2,188,038
                                                            
Shareholders' equity:
Common stock                                 11,823           11,454
Capital surplus                              2,538,129        2,486,994
Accumulated deficit                          (2,289,461 )     (1,287,063 )
Accumulated other comprehensive loss        (17,714    )    (18,272    )
Total shareholders' equity                   242,777          1,193,113
                                                           
                                           $ 2,782,378     $ 3,381,151  
                                                                         

FOREST OIL CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
                                    
                                      Three Months Ended
                                      September 30,
                                      2012                  2011
                                      (In thousands, except per share amounts)
                                                             
Revenues:
Oil, gas, and NGL sales               $   156,014            $   174,012
Interest and other                       54                   109       
Total revenues                            156,068                174,121
                                                             
Costs, expenses, and other:
Lease operating expenses                  27,426                 23,480
Production and property taxes             8,842                  7,926
Transportation and processing costs       3,580                  3,197
General and administrative expense        13,416                 19,942
Depreciation, depletion, and              73,845                 54,323
amortization
Ceiling test write-down of oil and        329,957                -
natural gas properties
Impairment of properties                  79,529                 -
Interest expense                          36,223                 37,225
Realized and unrealized losses
(gains) on derivative instruments,        22,795                 (65,961   )
net
Other, net                               11,727               (177      )
Total costs, expenses, and other         607,340              79,955    
Earnings (loss) from continuing           (451,272   )           94,166
operations before income taxes
Income tax                               7,280                34,556    
Net earnings (loss) from continuing       (458,552   )           59,610
operations
Net earnings from discontinued           -                    28,108    
operations
Net earnings (loss)                       (458,552   )           87,718
Less: net earnings attributable to       -                    4,923     
noncontrolling interest
Net earnings (loss) attributable to
Forest Oil Corporation common         $   (458,552   )       $   82,795    
shareholders
                                                             
Weighted average number of common
shares outstanding:
Basic                                     115,417                111,810
Diluted                                   115,417                112,162
                                                             
Basic and diluted earnings (loss)
per common share attributable to
Forest Oil Corporation common
shareholders:
Earnings (loss) from continuing       $   (3.97      )       $   0.52
operations
Earnings from discontinued               -                    0.20      
operations
Basic and diluted earnings (loss)     $   (3.97      )       $   0.72      
per common share
                                                                           

FOREST OIL CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
                                                               
                                                   Three Months Ended
                                                   September 30,
                                                   2012           2011
                                                   (In thousands)
Operating activities:
Net earnings (loss)                                $ (458,552 )   $ 87,718
Less: net earnings from discontinued operations     -            28,108   
Net earnings (loss) from continuing operations       (458,552 )     59,610
                                                                  
Adjustments to reconcile net earnings (loss)
from continuing operations to net cash provided
by operating activities of continuing
operations:
Depreciation, depletion, and amortization            73,845         54,323
Deferred income tax                                  41,110         33,384
Unrealized losses (gains) on derivative              51,795         (54,548  )
instruments, net
Ceiling test write-down of oil and natural gas       329,957        -
properties
Impairment of properties                             79,529         -
Stock-based compensation                             2,970          9,732
Accretion of asset retirement obligations            1,719          1,539
Other, net                                           1,800          2,015
Changes in operating assets and liabilities:
Accounts receivable                                  (10,007  )     (3,255   )
Other current assets                                 2,121          (2,179   )
Accounts payable and accrued liabilities             22,783         3,527
Accrued interest and other                          (29,669  )    7,617    
Net cash provided by operating activities of         109,401        111,765
continuing operations
                                                                  
Investing activities:
Capital expenditures for property and equipment:
Exploration, development, acquisition, and           (203,101 )     (282,256 )
leasehold costs
Other fixed assets                                   (1,101   )     (811     )
Proceeds from sales of assets                       7,800        322      
Net cash used by investing activities of             (196,402 )     (282,745 )
continuing operations
                                                                  
Financing activities:
Proceeds from bank borrowings                        208,000        -
Repayments of bank borrowings                        (556,000 )     -
Issuance of senior notes, net of issuance costs      491,250        -
Change in bank overdrafts                            (17,050  )     (35,013  )
Other, net                                          (710     )    105      
Net cash provided (used) by financing activities     125,490        (34,908  )
of continuing operations
                                                                  
Cash flows of discontinued operations:
Operating cash flows                                 -              44,058
Investing cash flows                                 -              (50,196  )
Financing cash flows                                -            3,957    
Net cash used by discontinued operations             -              (2,181   )
Effect of exchange rate changes on cash             -            (126     )
Net increase (decrease) in cash and cash             38,489         (208,195 )
equivalents
Net decrease in cash and cash equivalents of        -            4,145    
discontinued operations
Net increase (decrease) in cash and cash             38,489         (204,050 )
equivalents of continuing operations
Cash and cash equivalents of continuing             680          474,139  
operations at beginning of period
Cash and cash equivalents of continuing            $ 39,169      $ 270,089  
operations at end of period

Contact:

Forest Oil Corporation
Larry C. Busnardo, 303-812-1441
Director – Investor Relations