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Forest Oil Announces Second Quarter 2013 Results



  Forest Oil Announces Second Quarter 2013 Results

Second Quarter 2013 Average Net Sales Volumes of 211 MMcfe/d (41% Liquids)

Second Quarter 2013 Average Net Oil Sales Volumes of 6.6 MBbls/d Increased 14%
Compared to the First Quarter of 2013 Pro Forma for Divestitures

Second Quarter 2013 Eagle Ford Shale Average Gross Sales Volumes of 4.3
MBbls/d Increased 59% Compared to the First Quarter of 2013

Second Quarter 2013 Eagle Ford Shale Average Net Sales Volumes of 2.3 MBbls/d
Increased 21% Compared to the First Quarter of 2013

Completed Nine Eagle Ford Shale Wells with a 30-Day Average Gross Production
Rate of 529 Boe/d

Initiated Marketed Process to Divest Texas Panhandle Assets

Business Wire

DENVER -- August 6, 2013

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

Forest noted the following results for the three months ended June 30, 2013:

  * Average net sales volumes of 211 MMcfe/d; 41% liquids compared to 37%
    liquids in the first quarter of 2013, pro forma for divestitures
  * Average net oil sales volumes of 6.6 MBbls/d increased 14% compared to the
    first quarter of 2013, pro forma for divestitures
  * Adjusted net earnings of $7 million compared to $7 million in the
    corresponding 2012 period
  * Adjusted EBITDA of $88 million compared to $122 million in the
    corresponding 2012 period
  * Adjusted discretionary cash flow of $58 million compared to $89 million in
    the corresponding 2012 period

Patrick R. McDonald, President and CEO, stated, “We are pleased with the
results of the second quarter as we continue to execute on our stated goal of
better positioning Forest from both an operational and financial standpoint.
Our transition to a more commodity balanced production profile is evident as
second quarter average net oil sales volumes increased 14% over the previous
quarter. We expect to see continued growth in our oil volumes throughout the
second half of the year.

“Our Eagle Ford Shale asset took a significant step forward during the quarter
as we announced a development agreement with an industry partner that allows
us to build significant operational momentum. We recently ramped up our
drilling activity further by adding a fourth drilling rig to the field. We are
encouraged by recent well results as we implement ongoing technological
refinements and enhancements to our drilling and completion process in an
effort to optimize well results and costs. Gross production from the Eagle
Ford continues to show robust growth, increasing 59% over first quarter sales
volumes.

“As expected, capital expenditures were significantly lower on a sequential
basis as we realized the benefit of the drilling carry associated with the
Eagle Ford Shale development agreement.

“We also recently announced our intent to pursue the divestment of our Texas
Panhandle assets in a marketed process after receiving unsolicited proposals
from multiple third-parties. If successful, the sale of these assets would be
a transformational event for Forest and should allow us to reduce long-term
debt and accelerate the development and production growth of our remaining
assets.”

                         SECOND QUARTER 2013 RESULTS

For the three months ended June 30, 2013, Forest reported net earnings of $33
million, or $0.28 per diluted share. This compares to Forest's net loss of
$511 million, or $(4.44) per diluted share, in the corresponding 2012 period.
Net earnings for the second quarter of 2013 included the following items:

  * Unrealized gains on derivative instruments of $23 million ($15 million net
    of tax)
  * Rig stacking costs of $1 million ($1 million net of tax)
  * Decrease in the valuation allowance on deferred tax assets, net of
    non-deductible stock-based compensation costs of $12 million ($12 million
    net of tax)

Without the effect of these items, Forest's adjusted net earnings and earnings
per share for the three months ended June 30, 2013 would have been $7 million,
or $0.06 per diluted share, compared to $7 million, or $0.06 per diluted
share, in the corresponding 2012 period. Forest's adjusted EBITDA for the
three months ended June 30, 2013 was $88 million compared to $122 million in
the corresponding 2012 period. Forest's adjusted discretionary cash flow for
the three months ended June 30, 2013 was $58 million compared to $89 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 June 30, 2013
were 211 MMcfe/d, a decrease of 1% from the first quarter of 2013, pro forma
for asset divestitures. Second quarter 2013 average net sales volumes were
lower compared to the first quarter of 2013 due to a 6% decline in natural gas
volumes as the Company has been deferring capital investment on its natural
gas properties to focus on higher-margin oil opportunities. The decline in
natural gas volumes was partially offset by a 14% increase in average net oil
sales volumes. Forest continues to transition to a more commodity balanced
production profile as the second quarter liquids component of total equivalent
net sales volumes increased to 41% compared to 37% in the first quarter of
2013, pro forma for divestitures. The following table details the components
of average net sales volumes, average realized prices, and revenues for the
three months ended June 30, 2013:

                             
                              Three Months Ended June 30, 2013
                              Gas          Oil         NGLs        Total
                              (MMcf/d)     (MBbls/d)   (MBbls/d)   (MMcfe/d)
                                                                    
Average Net Sales Volumes       125.3         6.6         7.6        210.7
                                                                    
Average Realized Prices       Gas          Oil         NGLs        Total
                              ($/Mcf)      ($/Bbl)     ($/Bbl)     ($/Mcfe)
                                                                    
Average realized prices not
including realized            $ 3.61       $  93.70    $  27.82    $ 6.09
derivative (losses) gains
Realized (losses) gains on      (0.14  )      0.79        -          (0.06   )
NYMEX derivatives
Average realized prices
including realized            $ 3.47       $  94.49    $  27.82    $ 6.03     
derivative (losses) gains
                                                                    
Revenues (in thousands)       Gas          Oil         NGLs        Total
                                                                    
Revenues not including
realized derivative           $ 41,161     $  56,316   $  19,309   $ 116,786
(losses) gains
Realized (losses) gains on      (1,579 )      473         -          (1,106  )
NYMEX derivatives
Revenues including realized   $ 39,582     $  56,789   $  19,309   $ 115,680  
derivative (losses) gains
                                                                              

Total Cash Costs

Forest's total cash costs for the second quarter of 2013 decreased 16% to $66
million, compared to $79 million in the first quarter of 2013. Total cash
costs per-unit for the second quarter of 2013 decreased 4% to $3.46 per Mcfe,
compared to $3.61 per Mcfe in the first quarter of 2013.

Total cash costs for the second quarter of 2013 decreased primarily as a
result of decreased general and administrative expense attributable to asset
sales and decreased interest expense due to lower average debt balances.

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

                             Three Months Ended
                             June 30, 2013   Per Mcfe    March 31,    Per Mcfe
                                                         2013
                             (In thousands, except per-unit amounts)
Production expense           $  27,294       $ 1.42      $  26,700    $  1.22
General and administrative
expense (excluding
stock-based compensation        9,864          0.51         15,754       0.72
of $3,250 and $4,260,
respectively)
Interest expense                29,392         1.53         36,128       1.65
Current income tax              (212    )      (0.01 )      337          0.02
(benefit) expense
Total cash costs             $  66,338       $ 3.46      $  78,919    $  3.61

________________________
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 June 30, 2013 increased 3% to $2.28 per Mcfe compared to $2.22 per Mcfe
in the first quarter of 2013.

Total Capital Expenditures

Forest's exploration and development capital expenditures for the three months
ended June 30, 2013, were $69 million, compared to $125 million in the first
quarter of 2013. Total capital expenditures were $74 million, compared to $131
million in the first quarter of 2013. Despite increased drilling activity
during the second quarter, as a result of accelerating the Eagle Ford Shale
development program, exploration and development capital expenditures were 45%
lower on a sequential basis as the benefit of the drilling carry associated
with the Eagle Ford Shale development agreement was realized.

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

                                                Three Months Ended
                                                June 30, 2013   March 31, 2013
                                                                 
Exploration and development                     $    69,276     $    124,906
Land and leasehold acquisitions                      1,461           2,605
                                                     70,737          127,511
                                                                 
Add:
ARO, capitalized interest, and capitalized           2,896           3,406
equity compensation
Total capital expenditures                      $    73,633     $    130,917
                                                                      

Total Debt

As of June 30, 2013, Forest had total debt of $1.63 billion, compared to $1.64
billion at March 31, 2013. The ratio of the Company’s total debt to trailing
twelve months EBITDA, as defined by Forest’s credit facility, was 4.37 times
at June 30, 2013, as compared to 4.34 times at March 31, 2013. The Company has
no debt maturity before 2016.

                          OPERATIONAL PROJECT UPDATE

Eagle Ford Shale

Gross sales volumes from the Eagle Ford Shale averaged approximately 4,300
Boe/d during the second quarter of 2013, compared to approximately 2,700 Boe/d
in the first quarter of 2013, or an increase of 59%. Net sales volumes
averaged approximately 2,300 Boe/d, compared to approximately 1,900 Boe/d in
the first quarter of 2013, or an increase of 21%.

During the second quarter, nine gross (4.5 net) wells were completed that had
a 30-day average production rate of 529 Boe/d (93% oil). This rate compares
favorably to the 30-day average production rate of 490 Boe/d (94% oil) for the
14 wells that were completed in 2012. Given the timing of completions during
the second quarter, an additional seven gross (3.5 net) wells, including six
wells completed using the Schlumberger HiWAY flow-channel fracturing
technique, are currently in various stages of post completion operations and
do not have sufficient production history to report 30-day average initial
production rates at this time.

Forest and its partner continue to be encouraged by recent well results and
have begun implementing various refinements to its drilling and completion
process. These enhancements involve ongoing micro-seismic and subsurface data
analysis, and reservoir studies that will be used to optimize well placement,
lateral length and fracture stimulation techniques and design. Modifications
are currently being implemented on a gradual basis and well performance data
is being monitored to determine the optimal completion technique that provides
the greatest balance between well performance, reserve recovery, and cost.

Forest exited the second quarter operating three drilling rigs and recently
added a fourth drilling rig to the field as it concentrates on drilling wells
to hold its acreage position. Drilling and completion costs for the most
recent wells averaged approximately $6 million per well, which is a 14%
improvement from wells completed during the 2012 program that averaged
approximately $7 million per well.

Texas Panhandle Area

Forest announced on July 15, 2013, after receiving unsolicited proposals from
third-parties interested in acquiring its oil and gas assets located in the
Texas Panhandle Area, that it was initiating a marketed process to pursue the
sale of the assets. Forest intends to use any proceeds from a potential sale
to reduce debt.

During the second quarter of 2013, net sales volumes in the Texas Panhandle
Area averaged approximately 102 MMcfe/d. Forest continues to operate a two-rig
drilling program and expects to maintain this level of activity for the
remainder of the year.

Highlighting drilling activity since the last earnings release, Forest
completed a commitment well targeting an Upper Granite Wash interval in
Wheeler County that had a 30-day average gross production rate of 2,440 Boe/d
(71% liquids). An offset to this location is currently being drilled.

The Company completed a Missourian Wash (Hogshooter) well that had an initial
30-day average gross production rate of 830 Boe/d (80% liquids). Two
additional Missourian Wash (Hogshooter) wells are currently in the process of
being completed.

Ark-La-Tex Area (formerly East Texas)

During the second quarter of 2013, net sales volumes in the Ark-La-Tex Area
averaged approximately 95 MMcfe/d. Forest continues to operate a one-rig
drilling program and expects to maintain this level of activity for the
remainder of the year targeting the liquids-rich 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 9.8 MMcfe/d (39%
liquids or 630 Bbls/d).

                            DERIVATIVE INSTRUMENTS

Forest proactively took advantage of the recent spike in crude oil prices to
add additional swaps for the second half of 2013 and to initiate crude oil
swaps for calendar 2014 at an attractive price level. For the second half of
2013, the Company added crude oil swaps totaling 2,000 Bbls/d at a weighted
average price of $99.70 per barrel. For calendar year 2014, crude oil swaps
totaling 3,000 Bbls/d were added at a weighted average price of $95.10 per
barrel.

As of August 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:

                                     Jul - Dec  
                                     2013        2014
Natural gas swaps:
Contract volumes (Bbtu/d)               133.4      80.0
Weighted average price (per MMBtu)   $  4.01     $ 4.34
                                                  
Oil swaps:
Contract volumes (MBbls/d)              6.0        3.0
Weighted average price (per Bbl)     $  96.92    $ 95.10
                                                    

In connection with entering into certain 2014 oil swaps with premium hedged
prices, Forest granted oil puts to the counterparties giving the
counterparties the option to put 2,000 Bbls/d to Forest at a weighted average
price of $70.00 per barrel on a monthly basis during 2014.

In connection with the execution of commodity 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 August 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)             2.0        6.0
Weighted average price (per Bbl)     $ 100.00   $ 100.79
                                                   

In June 2013, the Company voluntarily terminated interest rate swaps in
conjunction with the redemption of its 8 1/2% Senior Notes due 2014. As part
of this termination, the Company accelerated the recognition of $7 million in
realized hedge gains that would have otherwise been recognized ratably from
July 1, 2013 to February 15, 2014.

                         NON-GAAP FINANCIAL MEASURES

Adjusted Net Earnings

In addition to reporting net earnings (loss) as defined under generally
accepted accounting principles (GAAP), Forest also presents adjusted net
earnings, which is a non-GAAP performance measure. Adjusted net earnings
consist of net earnings (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 earnings (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 earnings (loss) and revenues to measure operating performance. The
following table provides a reconciliation of net earnings (loss), the most
directly comparable GAAP measure, to adjusted net earnings for the periods
presented (in thousands):

                                                    Three Months Ended
                                                    June 30,
                                                    2013          2012
                                                                   
Net earnings (loss)                                 $ 33,439      $ (511,173 )
Ceiling test write-down of oil and natural gas        -             222,612
properties
Change in valuation allowance on deferred tax
assets, net of non-deductible stock-based             (12,330 )     291,600
compensation costs
Severance and stock-based compensation                -             3,829
acceleration, net of tax
Rig stacking, net of tax                              803           -
Unrealized gains on derivative instruments, net       (14,584 )     (61      )
of tax
Adjusted net earnings                               $ 7,328       $ 6,807     
                                                                   
Earnings attributable to participating securities     (222    )     (166     )
Adjusted net earnings for diluted earnings per      $ 7,106       $ 6,641     
share
                                                                   
Weighted average number of diluted shares             116,033       115,109   
outstanding
                                                                   
Adjusted diluted earnings per diluted share         $ 0.06        $ 0.06      
                                                                              

Adjusted EBITDA

In addition to reporting net earnings (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 earnings (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 earnings (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 earnings
(loss) and revenues to measure operating performance. The following table
provides a reconciliation of net earnings (loss), the most directly comparable
GAAP measure, to adjusted EBITDA for the periods presented (in thousands):

                                                    Three Months Ended
                                                    June 30,
                                                    2013          2012
                                                                   
Net earnings (loss)                                 $ 33,439      $ (511,173 )
                                                                   
Income tax (benefit) expense                          (212    )     167,074
Interest expense                                      29,392        34,317
Ceiling test write-down of oil and natural gas        -             348,976
properties
Depreciation, depletion, and amortization             43,804        72,987
Unrealized gains on derivative instruments, net       (22,913 )     (111     )
Stock-based compensation                              2,832         6,240
Accretion of asset retirement obligations             549           1,597
Severance costs                                       -             1,851
Rig stacking                                          1,258         -         
Adjusted EBITDA                                     $ 88,149      $ 121,758   
                                                                              

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, 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
                                               June 30,
                                               2013          2012
                                                              
Net cash provided by operating activities      $ 76,090      $ 82,865
                                                              
Changes in operating assets and liabilities:
Accounts receivable                              4,433         (12,722 )
Other current assets                             (840    )     (2,729  )
Accounts payable and accrued liabilities         (32,653 )     9,063
Accrued interest and other                       10,895        11,068
Severance costs^(1)                              -             1,851
                                                              
Adjusted discretionary cash flow               $ 57,925      $ 89,396   

       Severance costs are non-recurring cash-settled items. Including the
^(1)   effect of these items, adjusted discretionary cash flow would have been
       $88 million for the three months ended June 30, 2012.
        

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):

                         June 30, 2013               March 31, 2013
                         Principal     Book^(1)      Principal     Book^(1)
Credit facility          $ 130,000     $ 130,000     $ 140,000     $ 140,000
7% Senior subordinated     -             -             12            12
notes due 2013
7 1/4% Senior notes        1,000,000     1,000,337     1,000,000     1,000,351
due 2019
7 1/2% Senior notes        500,000       500,000       500,000       500,000
due 2020
Total debt                 1,630,000     1,630,337     1,640,012     1,640,363
                                                                    
Less: cash and cash        421           421           1,225         1,225
equivalents
                                                                    
Net debt                 $ 1,629,579   $ 1,629,916   $ 1,638,787   $ 1,639,138

       Book amounts include the principal amount of debt adjusted for
^(1)   unamortized premiums and discounts on the issuance of certain senior
       notes of $0.3 million and $0.4 million at June 30, 2013 and March 31,
       2013, respectively.
        

                             TELECONFERENCE CALL

A conference call is scheduled for Wednesday, August 7, 2013, at 7:00 AM MT to
discuss the release. You may access the call by dialing toll free 866.318.8618
(for U.S./Canada) and 617.399.5137 (for International) and request the Forest
Oil teleconference (ID # 75144258). 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 August 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 # 27967059. 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, intends, 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, timing and terms of any divestitures, and other
forward-looking statements relating to Forest are subject to all of the risks
and uncertainties normally incident to the exploration for and development and
production and sale of liquids and natural gas.

These risks relating to Forest include, but are not limited to, oil 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, the decision to sell or offer for
sale, or to determine not to sell any portion of its assets, the ability to
enter into agreements relating to such sales on desirable terms or at all, the
timing of any such agreements, the ability to consummate any such sales, the
ability to realize the anticipated benefits of any such sales, the ability to
determine the use of proceeds from any such sales, the ability to determine
whether to reduce outstanding indebtedness and the amount and timing of any
such reductions, 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 principal reserves and
producing properties are located in the United States in Arkansas, Louisiana,
Oklahoma, Texas, 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.

August 6, 2013

                                                               
FOREST OIL CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
                                                                 
                                               June 30,         December 31,
                                               2013             2012
ASSETS                                         (In thousands)
                                                                 
Current assets:
    Cash and cash equivalents                  $ 421            $ 1,056
    Accounts receivable                          72,470           67,516
    Derivative instruments                       17,211           40,190
    Other current assets                         16,024           16,318      
         Total current assets                    106,126          125,080
                                                                 
Net property and equipment                       1,498,422        1,754,238
                                                                 
Deferred income taxes                            6,547            14,681
Goodwill                                         239,420          239,420
Derivative instruments                           5,504            8,335
Other assets                                     57,726           60,108      
                                               $ 1,913,745      $ 2,201,862   
                                                                 
LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                 
Current liabilities:
    Accounts payable and accrued liabilities   $ 196,260        $ 164,786
    Accrued interest                             14,850           23,407
    Derivative instruments                       3,829            9,347
    Deferred income taxes                        6,547            14,681
    Other current liabilities                    14,038           14,104      
         Total current liabilities               235,524          226,325
                                                                 
Long-term debt                                   1,630,337        1,862,088
Asset retirement obligations                     23,247           56,155
Derivative instruments                           2,310            7,204
Other liabilities                                89,713           92,914      
         Total liabilities                       1,981,131        2,244,686
                                                                 
Shareholders' equity:
    Common stock                                 12,011           11,825
    Capital surplus                              2,550,933        2,541,859
    Accumulated deficit                          (2,610,503 )     (2,575,994 )
    Accumulated other comprehensive loss         (19,827    )     (20,514    )
         Total shareholders' equity              (67,386    )     (42,824    )
         (deficit)
                                                                 
                                               $ 1,913,745      $ 2,201,862   
                                                                              

FOREST OIL CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
                                     
                                      Three Months Ended
                                      June 30,
                                      2013                  2012
                                      (In thousands, except per share amounts)
                                                             
Revenues:
  Oil, gas, and NGL sales             $   116,786           $   135,694
  Interest and other                      28                    37          
        Total revenues                    116,814               135,731
                                                             
Costs, expenses, and other:
  Lease operating expenses                19,167                27,134
  Production and property taxes           5,029                 6,940
  Transportation and processing           3,098                 3,615
  costs
  General and administrative              13,114                16,421
  expense
  Depreciation, depletion, and            43,804                72,987
  amortization
  Ceiling test write-down of oil          -                     348,976
  and natural gas properties
  Interest expense                        29,392                34,317
  Realized and unrealized gains on        (31,610   )           (34,015    )
  derivative instruments, net
  Other, net                              1,593                 3,455       
        Total costs, expenses, and        83,587                479,830     
        other
  Earnings (loss) before income           33,227                (344,099   )
  taxes
  Income tax (benefit) expense            (212      )           167,074     
  Net earnings (loss)                 $   33,439            $   (511,173   )
                                                             
                                                             
Basic and diluted weighted average        116,033               115,107
shares outstanding
                                                             
Basic and diluted earnings (loss)     $   0.28              $   (4.44      )
per common share
                                                                            

FOREST OIL CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
                                                  
                                                   Three Months Ended
                                                   June 30,
                                                   2013           2012
                                                   (In thousands)
Operating activities:
Net earnings (loss)                                $ 33,439       $ (511,173 )
                                                                   
Adjustments to reconcile net earnings (loss) to
net cash provided by operating activities:
      Depreciation, depletion, and amortization      43,804         72,987
      Deferred income tax                            -              166,747
      Unrealized gains on derivative                 (22,913  )     (111     )
      instruments, net
      Ceiling test write-down of oil and natural     -              348,976
      gas properties
      Stock-based compensation                       2,832          6,240
      Other, net                                     763            3,879
                                                                   
      Changes in operating assets and
      liabilities:
              Accounts receivable                    (4,433   )     12,722
              Other current assets                   840            2,729
              Accounts payable and accrued           32,653         (9,063   )
              liabilities
              Accrued interest and other             (10,895  )     (11,068  )
                      Net cash provided by           76,090         82,865
                      operating activities
                                                                   
Investing activities:
Capital expenditures for property and equipment:
      Exploration, development, acquisition, and     (103,434 )     (208,659 )
      leasehold costs
      Other fixed assets                             (847     )     (2,398   )
Proceeds from sales of assets                        25,172         203       
                      Net cash used by investing     (79,109  )     (210,854 )
                      activities
                                                                   
Financing activities:
Proceeds from bank borrowings                        118,000        241,000
Repayments of bank borrowings                        (128,000 )     (108,000 )
Change in bank overdrafts                            12,933         (3,382   )
Other, net                                           (718     )     (1,826   )
                      Net cash provided by           2,215          127,792
                      financing activities
                                                                   
Net decrease in cash and cash equivalents            (804     )     (197     )
Cash and cash equivalents at beginning of period     1,225          877       
Cash and cash equivalents at end of period         $ 421          $ 680       
                                                                              

Contact:

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