Forest Oil Announces 2014 Capital Budget and Guidance

  Forest Oil Announces 2014 Capital Budget and Guidance

Drilling and Completion Budget of $260 Million to $270 Million; Total Capital
Budget of $290 Million to $310 Million

Average Equivalent Net Sales Volumes Guidance of 120 MMcfe/d to 130 MMcfe/d
(42% Liquids); Represents 11% Growth Pro Forma for Divestitures

Oil Volumes Expected to Grow 90% - 100% Pro Forma for Divestitures

Eagle Ford Net Sales Volumes Projected to More than Double to 6,250 Boe/d

Business Wire

DENVER -- December 2, 2013

Forest Oil Corporation (NYSE:FST) (Forest or the Company) announced today that
its Board of Directors has approved a 2014 capital budget and that it is
providing 2014 average net sales volumes and cost guidance.

Patrick R. McDonald, President and CEO, commented, “Following the completion
of the Texas Panhandle asset sale, we are focused on the development and
expansion of our Eagle Ford operations along with attention to our asset
positions in Ark-La-Tex and the Permian Basin. Our 2014 capital plan is
designed to deliver growth in oil volumes and accompanying growth in EBITDA as
we initiate development drilling activities in the central area of our Eagle
Ford position, with emphasis on pad drilling and increasing economies of scale
and capital efficiency. Based on our planned activity, 2014 production is
expected to increase by 11% with oil production volumes expected to increase
by nearly 100%. Since the acceleration of the Eagle Ford drilling program in
the second quarter of 2013, we have secured approximately 70% of the overall
position of 55,000 gross acres, the balance of which we expect to hold by the
second quarter of 2014. Our 2013 results have been instrumental in providing
important data to prepare for the development phase of the program and,
specifically, to design a development plan to maximize the recovery of the oil
in place. We believe that our 2014 investment plan will position Forest to
achieve continued growth in oil production volumes and will create a strong
foundation for an increase in shareholder value over the next several years.”

                                2014 GUIDANCE

The following guidance is subject to all the cautionary statements and
limitations described immediately below and under the caption “Forward-Looking
Statements.” Estimates for Forest’s future sales volumes are based on
assumptions of capital expenditure levels and the assumption that market
demand, prices for liquids and gas, and the cost of required services and
materials will continue at levels that allow for economic production of these
products. The production, transportation, and marketing of liquids and gas are
complex processes that are subject to disruption due to transportation and
processing availability, mechanical failure, human error, and meteorological
events (including, but not limited to severe weather, hurricanes, and
earthquakes). Further, actual capital expenditures are subject to a number of
factors, including economic conditions, well performance, and commodity
prices, and Forest has the flexibility to reduce or increase the budget as
appropriate. Therefore, Forest can give no assurance that its future results
will be as estimated.

The comparative production and average net sales volume information contained
throughout this press release relates only to Forest on a pro forma basis,
exclusive of 2013 asset divestitures.

Forest’s 2014 guidance is detailed in the table below:

                                                 Budget Low   Budget High
Drilling and Completion Capital Budget ($           $   260        $    270
million)
         Non-Drilling Capital Budget:
         Leasehold, Seismic, and Other ($               10              15
         million)
         Capitalized Overhead ($ million)              20             25
Total Capital Budget ($ million)                    $   290        $    310
                                                                   
Average Net Sales Volumes (MMcfe/d)                     120             130
         % Natural Gas                                  58.0%           58.0%
         % Oil                                          32.0%           32.0%
         % Natural Gas Liquids                          10.0%           10.0%
                                                                   
Production Expense ($ per Mcfe)                     $   1.85       $    1.95
Depreciation, Depletion and Amortization ($ per     $   2.50       $    2.70
Mcfe)
General and Administrative Expense ($ million)      $   28         $    30
Stock-Based Compensation ($ million)                $   9          $    11
Income Tax Rate (%)                                     0%              0%
                                                                   

Forest’s Board has approved a drilling and completion budget for 2014 in the
range of $260 million to $270 million (excluding capitalized interest,
capitalized stock-based compensation, and asset retirement obligations
incurred). The budget targets oil and other liquids-rich drilling
opportunities and will be allocated approximately 77% to the Eagle Ford and
23% to the Ark-La-Tex. Current plans entail operating three drilling rigs in
the Eagle Ford to drill 80 gross (40 net) wells as the program transitions to
full-scale development drilling. Forest plans to operate one drilling rig in
the Ark-La-Tex and will participate in 10 gross (7 net) liquids-rich Cotton
Valley wells.

Increased drilling efficiencies and other operational synergies in the Eagle
Ford have resulted in a significant savings in the cost to drill and complete
wells. Specifically, drilling and completion costs for the wells drilled
during the third quarter averaged approximately $5.75 million, or a 10%
improvement over the wells drilled during the second quarter. Forest expects
to see continued improvement in well costs due the use of existing pad
locations as development drilling commences, centralized production facilities
are implemented, and continued optimization of completion techniques are
achieved.

Mr. McDonald further stated, “Our 2014 plan will allow us to expand further
the contribution from our Eagle Ford assets as we transition to development
drilling early in the year. We expect to have the remainder of our acreage
held by the second quarter, and will continue to refine the ongoing modeling
and testing of the optimal drilling density and well spacing for each area of
the field. We are presently seeking opportunities to add acreage to increase
the scale of our Eagle Ford resource development opportunity.”

Net sales volumes are forecasted to average 120 MMcfe/d to 130 MMcfe/d for
2014, which represents an increase of approximately 11% (at the mid-point of
guidance) compared to forecasted 2013 production volumes of approximately 113
MMcfe/d. The production growth is expected to be driven by a 90% to 100%
increase in oil volumes to approximately 6,800 barrels per day in 2014, which
is expected to be offset by a 9% decrease in natural gas production in the
Ark-La-Tex. The liquids component of our equivalent production is expected to
increase to approximately 42% of average equivalent net sales volumes compared
to pro forma liquids production of approximately 30% in 2013.

Mr. McDonald added, “Our 2014 Eagle Ford oil production volumes are projected
to increase by over 100% from 2013 levels, providing a production profile
which is increasingly weighted toward crude oil and which will create
corresponding growth in EBITDA. The growth in overall volumes will be offset
by normal declines in natural gas volumes.”

The following table below provides a summary of 2013 and 2014 average net
sales volumes by area:

             Average Net Sales Volumes (MMcfe/d)
                                                                     2014
Area           1Q13A   2Q13A   3Q13A   4Q13E      2013E    Guidance
                                                                     ^(1)
                                                                     
Ark-La-Tex     103       95        96        91 -         96 -       85 - 90
                                             95           98
                                                                     
Eagle Ford     11        14        18        19 -         15 -       35 - 40
                                             20           16
                                                                
Total          114       109       114       110 -        111 -      120 - 130
                                             115          114
                                                                     
                                             2014 Production         11%
                                             Growth ^(2)
                                             2014 Oil Volume         90% -
                                             Growth                  100%

^(1) Assumes that the Eagle Ford midstream gathering system becomes fully
operational by July 2014
^(2) Assumes the mid-point of guidance

Forest expects to show a significant reduction in cash costs post the Texas
Panhandle asset sale. General and administrative (G&A) expense is expected to
total $28 million to $32 million, not including stock-based compensation
expense, due to a more streamlined corporate structure. This results in an
approximate 30% reduction in G&A expense when compared to 2013, using the
mid-point of guidance. Interest expense is also expected to be significantly
lower as the majority of the net proceeds received from the Texas Panhandle
sale were used to reduce outstanding debt. Based on 2014 estimates, we expect
that interest expense will be approximately 50% lower than 2013. Our effective
income tax rate in 2014 is expected to be 0% due to the valuation allowance
placed against our net deferred tax assets. Similarly, no cash income taxes
are expected to be owed.

Upcoming Investor Conferences

Forest also today announced management’s participation in the upcoming
investor conferences:

Conference             City            Date            Presentation Time
                                                             
BAML Leveraged           Boca Raton,       December 4,       3:30 PM ET
Finance Conference       FL                2013
Wells Fargo Energy       New York, NY      December 11,      1:40 PM ET
Symposium                                  2013
Capital One              New Orleans,      December, 12,
Southcoast Energy        LA                2013              12:00 PM ET
Conference
Goldman Sachs Energy     Miami, FL         January 9,        TBD
Conference                                 2014
                                                             

                          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, 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 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 primarily in Arkansas,
Louisiana, Oklahoma and Texas. 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.

Contact:

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