Forest Oil Announces First Quarter 2013 Results

  Forest Oil Announces First Quarter 2013 Results

First Quarter 2013 Average Net Sales Volumes of 243 MMcfe/d; 34% Liquids
Compared to 32% Liquids in First Quarter 2012

First Quarter 2013 Average Net Sales Volumes of 214 MMcfe/d (37% Liquids) Pro
Forma for South Texas Divestiture

First Quarter 2013 Average Net Oil Sales Volumes of 5.8 MBbls/d Pro Forma for
Divestitures; Organically Increased 9% Compared to the First Quarter 2012

Executed on Strategic Goal of Accelerating Production Growth with Eagle Ford
Shale Development Agreement

Eagle Ford Shale Gross Production in April Reached a Record High of 4,700
Boe/d

Business Wire

DENVER -- May 6, 2013

Forest Oil Corporation (NYSE:FST) (Forest or the Company) today announced
financial and operational results for the first quarter of 2013.

Forest noted the following results for the three months ended March 31, 2013:

  *Average net sales volumes of 243 MMcfe/d; 34% liquids compared to 32%
    liquids in the first quarter of 2012
  *Average net oil sales volumes of 5.8 MBbls/d organically increased 9% from
    the first quarter of 2012 on a pro forma basis
  *Adjusted net earnings of $3 million compared to $13 million in the
    corresponding 2012 period
  *Adjusted EBITDA of $94 million compared to $126 million in the
    corresponding 2012 period
  *Adjusted discretionary cash flow of $56 million compared to $95 million in
    the corresponding 2012 period

Due primarily to unrealized losses on derivatives of $38 million, a loss on
debt extinguishment of $25 million and severance-related costs of $7 million,
Forest reported a net loss of $68 million, or $(0.59) per share, for the three
months ended March 31, 2013.

Patrick R. McDonald, President and CEO, stated, “We made progress during the
first quarter in achieving our strategic goal of accelerating the development
of our oil inventory by announcing an Eagle Ford Shale development agreement.
This is an important transaction for our shareholders and our company as we
believe it will accelerate development and production growth, bring forward
significant economic value and generate notably more lease level income
compared to our previous plan. Establishing a partnership with an industry
leading service and technology company should allow us to optimize all facets
of our drilling and completion operations, so that we can deliver the best
possible results from this important oil asset. We also believe we are
carrying momentum into this partnership, as our gross production from the
Eagle Ford Shale in April reached a record high of 4,700 Boe/d.

“We see significant opportunities and attractive rates of return within the
oil bearing zones of the Texas Panhandle Area in both Texas and Oklahoma. We
currently have an inventory of over 500 identified locations within the
Hogshooter, Tonkawa, Douglas and other proven oil horizons. The Texas
Panhandle will remain an area of emphasis for Forest as we expect to maintain
a two rig development program throughout 2013 to capture the significant value
in this core asset. Additionally, we remain encouraged by the consistent
drilling results within our East Texas oil and liquids-rich properties and
plan to continue our efforts to develop these assets this year.”

                          FIRST QUARTER 2013 RESULTS

For the three months ended March 31, 2013, Forest reported a net loss of $68
million, or $(0.59) per diluted share. This compares to Forest's net loss of
$33 million, or $(0.29) per diluted share, in the corresponding 2012 period.
Net loss for the first quarter of 2013 was affected by the following items:

  *Unrealized losses on derivative instruments of $38 million ($24 million
    net of tax)
  *Change in valuation allowance on deferred tax assets associated with net
    loss and adjusting items of $25 million ($25 million net of tax)
  *Loss on debt extinguishment of $25 million ($16 million net of tax)
  *Severance and stock-based compensation acceleration of $7 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 March 31, 2013 would
have been $3 million, or $0.03 per diluted share, compared to $13 million, or
$0.11 per diluted share, in the corresponding 2012 period. Forest's adjusted
EBITDA for the three months ended March 31, 2013 was $94 million compared to
$126 million in the corresponding 2012 period. Forest's adjusted discretionary
cash flow for the three months ended March 31, 2013 was $56 million compared
to $95 million in the corresponding 2012 period.

Average Net Sales Volumes, Average Realized Prices, and Revenues

Forest's average net sales volumes for the three months ended March 31, 2013
were 243 MMcfe/d, a decrease of 28% and 21% from the corresponding 2012 period
and from the fourth quarter of 2012, respectively. First quarter 2013 average
net sales volumes were lower as a result of the South Louisiana property sale
that closed on November 16, 2012, the South Texas property sale that closed on
February 15, 2013, and a decline in natural gas volumes as the Company has
deferred capital investment on its natural gas properties to focus on
higher-margin oil opportunities. Net sales volumes were also negatively
impacted by downtime associated with severe winter weather that hindered
operations in both the Texas Panhandle and East Texas areas during the
quarter. The following table details the components of average net sales
volumes, average realized prices, and revenues for the three months ended
March 31, 2013:

                         Three Months Ended March 31, 2013
                            Gas        Oil         NGLs        Total
                            (MMcf/d)     (MBbls/d)     (MBbls/d)     (MMcfe/d)
                                                                     
Average Net Sales           159.2        6.2           7.8           243.0
Volumes
                                                                     
                                                                  
Average Realized Prices     Gas         Oil          NGLs         Total
                            ($/Mcf)      ($/Bbl)       ($/Bbl)       ($/Mcfe)
                                                                     
Average realized prices
not including realized      $ 2.98       $ 96.53       $ 30.69       $ 5.40
derivative gains
Realized gains on NYMEX     0.64         0.77          -             0.44
derivatives
Average realized prices
including realized          $ 3.62       $ 97.30       $ 30.69       $ 5.84
derivative gains
                                                                     
Revenues (in thousands)     Gas          Oil           NGLs          Total
                                                                     
Revenues not including
realized derivative         $ 42,658     $ 53,962      $ 21,422      $ 118,042
gains
Realized gains on NYMEX     9,221        428           -             9,649
derivatives
Revenues including
realized derivative         $ 51,879     $ 54,390      $ 21,422      $ 127,691
gains
                                                                     

Forest’s average net sales volumes for the first quarter of 2013 excluding
production associated with divested properties in South Texas were 214 MMcfe/d
(63% natural gas, 16% oil, 21% NGLs). Pro forma oil volumes of 5.8 MBbls/d
organically increased 9% as compared to the first quarter of 2012.

Total Cash Costs

Forest's total cash costs for the first quarter of 2013 decreased 10% to $79
million, compared to $88 million in the corresponding 2012 period. Total cash
costs per-unit for the first quarter of 2013 increased 26% to $3.61 per Mcfe,
compared to $2.86 per Mcfe in the corresponding 2012 period.

Total cash costs per-unit for the first quarter of 2013 increased primarily
due to increased general and administrative expense (excluding stock-based
compensation) and interest expense, which in turn was spread over decreased
sales volumes due to asset sales. General and administrative expense
(excluding stock-based compensation) for the first quarter of 2013 includes
one-time severance-related expense associated with the South Texas properties
disposition of $6 million.

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

                            Three Months Ended March 31
                               2013       Per Mcfe  2012         Per Mcfe
                               (In thousands, except per-unit amounts)
Production expense             $ 26,700    $  1.22    $ 42,732       $ 1.39
General and administrative
expense (excluding
stock-based compensation         15,754       0.72      11,934         0.39
of $4,260 and $3,450,
respectively)
Interest expense                 36,128       1.65      33,392         1.09
Current income tax expense      337         0.02     (218   )      (0.01 )
      Total cash costs         $ 78,919    $  3.61    $ 87,840      $ 2.86  
                                                                     

_________________________

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 March 31, 2013 increased 2% to $2.22 per Mcfe compared to $2.18 per Mcfe
in the corresponding 2012 period.

Total Capital Expenditures

Forest's exploration and development capital expenditures for the three months
ended March 31, 2013 were $125 million, compared to $181 million in the
corresponding 2012 period.

Forest’s land and leasehold acquisition costs for the three months ended March
31, 2013 were $3 million, compared to $45 million in the corresponding 2012
period.

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

                                               Three Months Ended March 31,
                                                  2013            2012
                                                                    
Exploration and development                       $  124,906        $  181,387
Land and leasehold acquisitions - Cash               2,605             8,424
Land and leasehold acquisitions - Stock             -                36,431
                                                     127,511           226,242
                                                                    
Add:
ARO, capitalized interest, and capitalized          3,406            6,174
equity compensation
Total capital expenditures                        $  130,917        $  232,416
                                                                    

Second Quarter 2013 Guidance

Incorporating the projected impact of the recently announced Eagle Ford Shale
development agreement, equivalent net sales volumes for the second quarter of
2013 are expected to be at approximately the same level as they were in the
first quarter of 2013 on a pro forma basis. In addition, Forest’s drilling
activity is expected to increase during 2013 as the Eagle Ford Shale
development program is expanded; however, net capital expenditures are
forecasted to be significantly lower than the first quarter as the benefit of
the drilling carry associated with the Eagle Ford Shale development agreement
is realized into 2014. As such, second quarter net capital expenditures are
expected to be between $70 million and $80 million and Forest anticipates
maintaining this level of spending per quarter for the second half of 2013.

Except as indicated above as it relates to the second quarter of 2013, Forest
reaffirms its full year 2013 guidance as detailed in the Company’s press
release dated February 20, 2013.

The Company’s production and capital budget guidance remains subject to the
cautionary statements and limitations contained in Forest’s February 20, 2013
press release under the caption “2013 Guidance” as well as those stated below
under the caption “Forward-Looking Statements.”

                          OPERATIONAL PROJECT UPDATE

Eagle Ford Shale

Forest recently announced an Eagle Ford Shale development agreement with an
industry partner that should meaningfully increase the play’s growth profile,
accelerate approximately $250 million of PV10 value and generate $75 million
more in lease level income in 2014 as compared to the previous development
plan. Forest maintains a large inventory of future drilling opportunities in
the Eagle Ford Shale with 688 gross locations (344 net) identified based on
80-acre spacing and over 100 million barrels of unrisked resource potential on
a net basis. In addition, net sales volumes from the Eagle Ford Shale are
expected to increase to over 6,500 boe/d in 2014 from an average of 1,600
boe/d in 2012.

Net sales volumes from the Eagle Ford Shale averaged 1,900 Boe/d in the first
quarter of 2013, which compares to fourth quarter of 2012 volumes of 2,300
Boe/d. The anticipated decline in first quarter sales volumes was a result of
initiating multi-well pad drilling during the fourth quarter of 2012. Due to
the timeline and sequence of drilling and completion operations associated
with the pad drilling, the six gross (three net) wells drilled during the
first quarter were brought online at various times during April. As such, the
wells do not have sufficient production history to report a 30-day average
initial production rate at this time. However, the six wells did have an
average 24-hour maximum production rate of 634 Boe/d. In addition, Forest’s
total average gross sales volumes from the Eagle Ford Shale during April
reached a record high of 4,700 Boe/d (2,640 Boe/d net).

Forest is currently moving a third drilling rig into the Eagle Ford Shale and
is expected to increase to four drilling rigs by the end of the third quarter
of 2013.

Texas Panhandle Area

Forest has an inventory of over 500 identified locations within the
Hogshooter, Tonkawa, Douglas, and other proven oil intervals. The current
focus of the Hogshooter drilling program is in Wheeler County, Texas, where
Forest has identified over 100 potential development opportunities.
Highlighting drilling activity since the last earnings release, two Missourian
Wash (Hogshooter) wells were completed that had a 30-day average gross
production rate of 1,800 Boe/d (80% oil).

Forest continues to operate two drilling rigs in the Texas Panhandle Area
targeting oil horizons and expects to maintain this level of activity during
2013.

East Texas

Forest remains active in East Texas targeting higher-margin oil and
liquids-rich development opportunities within the Cotton Valley and other
prospective zones. Since the last earnings release, one horizontal Cotton
Valley well was completed with a 30-day average gross production rate of 6
MMcfe/d (40% liquids or 400 Bbls/d).

The Company plans to continue a one-rig program targeting the liquids-rich
Cotton Valley and other prospective zones in 2013.

                       NATURAL GAS AND OIL DERIVATIVES

As of May 6, 2013, Forest had natural gas and oil derivatives in place for the
remainder of 2013 and through 2014 covering the aggregate average daily
volumes and weighted average prices shown below:

                                    May - Dec  
                                       2013          2014
Natural gas swaps:
Contract volumes (Bbtu/d)                 160.0        80.0
Weighted average price (per MMBtu)     $  3.98       $ 4.34
                                                     
Oil swaps:
Contract volumes (MBbls/d)                4.0          -
Weighted average price (per Bbl)       $  95.53      $ -
                                                       

In connection with several swaps shown in the table above, Forest granted
swaption instruments to counterparties in exchange for Forest’s receiving
premium hedged prices on the swaps. The table below sets forth the outstanding
swaptions as of May 6, 2013:

                                    2014       2015
Natural gas swaptions:
Contract volumes (Bbtu/d)                40.0         -
Weighted average price (per MMBtu)     $ 4.50       $ -
                                                    
Oil swaptions:
Contract volumes (MBbls/d)               5.0          3.0
Weighted average price (per Bbl)       $ 101.80     $ 100.00
                                                    

                         NON-GAAP FINANCIAL MEASURES

Adjusted Net Earnings

In addition to reporting net loss as defined under generally accepted
accounting principles (GAAP), Forest also presents adjusted net earnings
(adjusted net earnings), which is a non-GAAP performance measure. Adjusted net
earnings consist of net loss 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 loss (its most
comparable GAAP financial measure), and Forest's calculations thereof may not
be comparable to similarly titled measures reported by other companies. By
eliminating 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 loss and revenues to measure operating performance. The following table
provides a reconciliation of net loss, the most directly comparable GAAP
measure, to adjusted net earnings for the periods presented (in thousands):

                                               
                                                   Three Months Ended
                                                   March 31,
                                                   2013          2012
                                                                   
Net loss                                           $ (67,948 )     $ (32,673 )
Ceiling test write-down of natural gas               -               34,817
properties
Change in valuation allowance on deferred tax
assets                                               24,585          -
associated with net loss and adjusting items
Loss on debt extinguishment, net of tax              16,107          -
Severance and stock-based compensation               4,263           -
acceleration, net of tax
Rig stacking, net of tax                             1,940           -
Unrealized losses (gains) on derivative              24,481          (3,383  )
instruments, net of tax
Legal proceeding costs, net of tax                  -             14,574  
Adjusted net earnings                              $ 3,428        $ 13,335  
                                                                   
Earnings attributable to participating              (97     )      (297    )
securities
Adjusted net earnings for diluted earnings per     $ 3,331        $ 13,038  
share
                                                                   
Weighted average number of diluted shares           115,655       114,079 
outstanding
                                                                   
Adjusted diluted earnings per diluted share        $ 0.03         $ 0.11    
                                                                   

Adjusted EBITDA

In addition to reporting net loss as defined under GAAP, Forest also presents
adjusted net earnings before interest, income taxes, depreciation, depletion,
and amortization (adjusted EBITDA), which is a non-GAAP performance measure.
Adjusted EBITDA consists of net loss 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 loss (its most
comparable GAAP financial measure), and Forest's calculations thereof may not
be comparable to similarly titled measures reported by other companies. By
eliminating 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 loss and revenues to measure operating performance. The following
table provides a reconciliation of net loss, the most directly comparable GAAP
measure, to adjusted EBITDA for the periods presented (in thousands):

                                               
                                                   Three Months Ended
                                                   March 31,
                                                   2013          2012
                                                                   
Net loss                                           $ (67,948 )     $ (32,673 )
                                                                   
Income tax expense                                   337             915
Interest expense                                     36,128          33,392
Ceiling test write-down of natural gas               -               34,817
properties
Loss on debt extinguishment                          25,223          -
Depreciation, depletion, and amortization            48,543          66,970
Unrealized losses (gains) on derivative              38,311          (5,312  )
instruments, net
Stock-based compensation                             3,647           3,017
Accretion of asset retirement obligations            1,244           1,598
Legal proceeding/severance costs                     5,821           22,847
Rig stacking                                        3,038         -       
               Adjusted EBITDA                     $ 94,344       $ 125,571 
                                                                   

Adjusted Discretionary Cash Flow

In addition to reporting net cash provided by operating activities as defined
under GAAP, Forest also presents adjusted discretionary cash flow (adjusted
discretionary cash flow), which is a non-GAAP liquidity measure. Adjusted
discretionary cash flow consists of net cash provided by operating activities
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 (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 to measure operating performance. The following table
provides a reconciliation of net cash provided by operating activities, the
most directly comparable GAAP measure, to adjusted discretionary cash flow for
the periods presented (in thousands):

                                             
                                                 Three Months Ended
                                                 March 31,
                                                 2013         2012
                                                                
Net cash provided by operating activities        $ 34,322       $ 93,559
                                                                
Changes in operating assets and liabilities:
Accounts receivable                                (265   )       (6,355  )
Other current assets                               1,109          424
Accounts payable and accrued liabilities           14,697         11,538
Accrued interest and other                         53             (27,260 )
Legal proceeding/severance costs^(1)               5,821          22,847
                                                               
        Adjusted discretionary cash flow         $ 55,737      $ 94,753  
                                                                          

       The legal proceeding/severance costs are non-recurring cash-settled
^(1)  items. Including the effect of these items, adjusted discretionary cash
       flow would have been $50 million and $72 million for the three months
       ended March 31, 2013 and 2012, respectively.
       

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):

                                             
                   March 31, 2013                  December 31, 2012
                   Principal     Book^(1)        Principal     Book^(1)
Credit             $ 140,000       $ 140,000       $ 65,000        $ 65,000
facility
7% Senior
subordinated         12              12              12              12
notes due 2013
8 1/2% Senior
notes due 2014       -               -               300,000         296,723
^(2)
7 1/4% Senior        1,000,000       1,000,351       1,000,000       1,000,365
notes due 2019
7 1/2% Senior       500,000        500,000        500,000        500,000
notes due 2020
     Total           1,640,012       1,640,363       1,865,012       1,862,100
     debt
                                                                   
Less: cash and
cash                1,225          1,225          1,056          1,056
equivalents
                                                                   
     Net debt      $ 1,638,787     $ 1,639,138     $ 1,863,956     $ 1,861,044
                                                                   

       Book amounts include the principal amount of debt adjusted for
^(1)  unamortized premiums and discounts on the issuance of certain senior
       notes of $0.4 million and $(2.9) million at March 31, 2013 and December
       31, 2012, respectively.
       
^(2)   Forest redeemed the 8 1/2% senior notes in March 2013, using proceeds
       from the sale of properties in South Texas.
       

                             TELECONFERENCE CALL

A conference call is scheduled for Tuesday, May 7, 2013, at 7:00 AM MT to
discuss the release. You may access the call by dialing toll free 877.474.9506
(for U.S./Canada) and 857.244.7559 (for International) and request the Forest
Oil teleconference (ID # 11913357). 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 May 21, 2013. You
may access the replay by dialing toll free 888.286.8010 (for U.S./Canada) and
617.801.6888 (for International), conference ID # 45789032. 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.

                                                         
FOREST OIL CORPORATION

Condensed Consolidated Balance Sheets

(Unaudited)
                                                                
                                             March 31,          December 31,
                                             2013               2012
         ASSETS                              (In thousands)
                                                                
Current assets:
    Cash and cash equivalents                $ 1,225            $ 1,056
    Accounts receivable                        81,879             67,516
    Derivative instruments                     10,094             40,190
    Other current assets                      16,864           16,318     
         Total current assets                  110,062            125,080
                                                                
Net property and equipment                     1,478,499          1,754,238
                                                                
Deferred income taxes                          4,150              14,681
Goodwill                                       239,420            239,420
Derivative instruments                         3,780              8,335
Other assets                                  59,073           60,108     
                                             $ 1,894,984       $ 2,201,862  
                                                                
         LIABILITIES AND SHAREHOLDERS'
         EQUITY
                                                                
Current liabilities:
    Accounts payable and accrued             $ 181,179          $ 164,786
    liabilities
    Accrued interest                           23,803             23,407
    Derivative instruments                     15,772             9,347
    Deferred income taxes                      4,150              14,681
    Current portion of long-term debt          12                 12
    Other current liabilities                 12,927           14,092     
         Total current liabilities             237,843            226,325
                                                                
Long-term debt                                 1,640,351          1,862,088
Asset retirement obligations                   23,699             56,155
Derivative instruments                         4,440              7,204
Other liabilities                             93,402           92,914     
         Total liabilities                     1,999,735          2,244,686
                                                                
Shareholders' equity:
    Common stock                               11,933             11,825
    Capital surplus                            2,547,430          2,541,859
    Accumulated deficit                        (2,643,942 )       (2,575,994 )
    Accumulated other comprehensive loss      (20,172    )      (20,514    )
         Total shareholders' equity            (104,751   )       (42,824    )
         (deficit)
                                                               
                                             $ 1,894,984       $ 2,201,862  
                                                                

                                
FOREST OIL CORPORATION

Condensed Consolidated Statements of Operations

(Unaudited)
                                                        
                                      Three Months Ended
                                      March 31,
                                      2013                    2012
                                      (In thousands, except per share amounts)
                                                                
Revenues:
   Oil, gas, and NGL sales            $   118,042               $  158,901
   Interest and other                    132                    32       
        Total revenues                    118,174                  158,933
                                                                
Costs, expenses, and other:
   Lease operating expenses               21,204                   27,607
   Production and property taxes          2,216                    11,153
   Transportation and processing          3,280                    3,972
   costs
   General and administrative             20,014                   15,384
   expense
   Depreciation, depletion, and           48,543                   66,970
   amortization
   Ceiling test write-down of             -                        34,817
   natural gas properties
   Interest expense                       36,128                   33,392
   Realized and unrealized losses
   (gains) on derivative                  25,580                   (29,524  )
   instruments, net
   Other, net                            28,820                 26,920   
        Total costs, expenses,           185,785                190,691  
        and other
   Loss before income taxes               (67,611   )              (31,758  )
   Income tax                            337                    915      
   Net loss                              (67,948   )             (32,673  )
                                                                
                                                                
Basic and diluted weighted                115,655                  113,821
average shares outstanding
                                                                
Basic and diluted loss per common     $   (0.59     )           $  (0.29    )
share
                                                                

                                                           
FOREST OIL CORPORATION

Condensed Consolidated Statements of Cash Flows

(Unaudited)
                                                                  
                                                 Three Months Ended
                                                 March 31,
                                                 2013             2012
                                                 (In thousands)
Operating activities:
Net loss                                         $ (67,948  )     $ (32,673  )
                                                                  
Adjustments to reconcile net loss to net
cash provided by operating activities:
      Depreciation, depletion, and                 48,543           66,970
      amortization
      Deferred income tax                          -                1,133
      Unrealized losses (gains) on                 38,311           (5,312   )
      derivative instruments, net
      Ceiling test write-down of natural gas       -                34,817
      properties
      Stock-based compensation                     3,647            3,017
      Accretion of asset retirement                1,244            1,598
      obligations
      Loss on debt extinguishment                  25,223           -
      Other, net                                   896              2,356
                                                                  
      Changes in operating assets and
      liabilities:
            Accounts receivable                    265              6,355
            Other current assets                   (1,109   )       (424     )
            Accounts payable and accrued           (14,697  )       (11,538  )
            liabilities
            Accrued interest and other            (53      )      27,260   
                  Net cash provided by             34,322           93,559
                  operating activities
                                                                  
Investing activities:
Capital expenditures for property and
equipment:
      Exploration, development, acquisition,       (101,665 )       (187,122 )
      and leasehold costs
      Other fixed assets                           (268     )       (2,512   )
Proceeds from sales of assets                     313,805        899      
                  Net cash provided (used)         211,872          (188,735 )
                  by investing activities
                                                                  
Financing activities:
Proceeds from bank borrowings                      202,000          202,000
Repayments of bank borrowings                      (127,000 )       (92,000  )
Redemption of senior notes                         (321,315 )       -
Change in bank overdrafts                          590              (17,284  )
Other, net                                        (300     )      325      
                  Net cash (used) provided         (246,025 )       93,041
                  by financing activities
                                                                  
Net increase (decrease) in cash and cash           169              (2,135   )
equivalents
Cash and cash equivalents at beginning of         1,056          3,012    
period
Cash and cash equivalents at end of period       $ 1,225         $ 877      
                                                                  

Contact:

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