Forest Oil Announces Fourth Quarter and Year-End 2013 Results

  Forest Oil Announces Fourth Quarter and Year-End 2013 Results

Fourth Quarter 2013 Average Net Sales Volumes of 165 MMcfe/d (62% Natural Gas,
38% Liquids)

Fourth Quarter 2013 Average Net Sales Volumes of 111 MMcfe/d (68% Natural Gas,
32% Liquids) Pro Forma for Divestitures

2013 Average Oil Net Sales Volumes Increase 55% Compared to 2012 Pro Forma for
Divestitures

2013 Average Liquids Net Sales Volumes Increase 41% Compared to 2012 Pro Forma
for Divestitures

2013 Estimated Proved Reserves of 625 Bcfe; Oil Reserves Increase 30% Compared
to 2012 Pro Forma for Divestitures

2013 Drill Bit Reserve Replacement of 197% with Drill Bit Finding and
Development Costs of $2.19 per Mcfe

Business Wire

DENVER -- February 25, 2014

Forest Oil Corporation (NYSE:FST) (Forest or the Company) today announced
financial and operational results for the fourth quarter and full-year 2013
and provided year-end estimated proved reserves. References to pro forma
results exclude asset sales completed during 2012 and 2013.

For the three months ended December 31, 2013, Forest reported net earnings of
$106 million, or $0.89 per diluted share, compared to net earnings of $2
million, or $0.02 per share in the third quarter of 2013. Net earnings for the
fourth quarter of 2013 included the following items:

  *Net gain on asset dispositions of $202 million ($129 million net of tax)
  *Unrealized losses on derivative instruments of $9 million ($6 million net
    of tax)
  *Rig stacking costs of $4 million ($2 million net of tax)
  *Decrease in the valuation allowance of deferred tax assets, net of
    non-deductible stock-based compensation costs, goodwill reduction, and
    other of $38 million ($38 million net of tax)
  *Ceiling test write-down of oil and natural gas properties of $58 million
    ($37 million net of tax)
  *Employee-related asset disposition costs of $6 million ($4 million net of
    tax)
  *Net loss on early debt extinguishment of $24 million ($15 million net of
    tax)

Without the effect of these items, Forest’s results for the fourth quarter
were as follows:

  *Adjusted net earnings of $3 million, or $0.02 per diluted share, compared
    to adjusted net earnings of $7 million or $0.06 per share, in the third
    quarter of 2013
  *Adjusted EBITDA of $65 million compared to adjusted EBITDA of $85 million
    in the third quarter of 2013
  *Adjusted discretionary cash flow of $37 million compared to adjusted
    discretionary cash flow of $54 million in the third quarter of 2013.

The decreases in net earnings, EBITDA, and discretionary cash flow, each on an
adjusted basis, were primarily the result of the Texas Panhandle asset
divestiture in the fourth quarter of 2013.

Average Net Sales Volumes, Average Realized Prices, and Revenues

Forest's average net sales volumes for the three months ended December 31,
2013, were 165 MMcfe/d. Excluding volumes associated with the Texas Panhandle
divestiture that closed on November 25, 2013, fourth quarter 2013 net sales
volumes averaged 111 MMcfe/d. This compares to third quarter 2013 average net
sales volumes of 114 MMcfe/d excluding asset sales.

During the fourth quarter, the company-wide differential for crude oil was
$6.69 per Bbl less than the NYMEX West Texas Intermediate (WTI) price,
compared to $2.88 per Bbl less than the WTI price in the third quarter of
2013. The decrease was primarily the result of a narrowing of the Light
Louisiana Sweet (LLS) premium relative to WTI that the Company received for
its oil production in the Eagle Ford and Ark-La-Tex areas.

The following table details the components of average net sales volumes,
average realized prices, and revenues for the three months ended December 31,
2013:

                               
                                 Three Months Ended December 31, 2013
                                 Gas       Oil         NGLs       Total
                                 (MMcf/d)   (MBbls/d)    (MBbls/d)   (MMcfe/d)
                                                                     
Average Net Sales Volumes          101.8      5.3           5.2         164.7
                                                                     
                                                                  
Average Realized Prices          Gas        Oil          NGLs        Total
                                 ($/Mcf)    ($/Bbl)      ($/Bbl)     ($/Mcfe)
                                                                     
Average realized prices not
including realized derivative    $ 3.07     $ 90.82      $  32.15    $  5.84
gains (losses)
Realized gains (losses) on        0.52      (0.65  )     -          0.30
NYMEX derivatives
Average realized prices
including realized derivative    $ 3.59     $ 90.16     $  32.15    $  6.14
gains (losses)
                                                                     
Revenues (in thousands)          Gas        Oil          NGLs        Total
                                                                     
Revenues not including
realized derivative gains        $ 28,745   $ 44,500     $  15,240   $  88,485
(losses)
Realized gains (losses) on        4,884     (320   )     -          4,564
NYMEX derivatives
Revenues including realized      $ 33,629   $ 44,180    $  15,240   $  93,049
derivative gains (losses)
                                                                        

The following table details the components of average net sales volumes for
the fourth quarter of 2013 and full-year 2013 excluding asset divestitures:

                                                         
                            Gas        Oil         NGLs        Total
                            (MMcf/d)   (MBbls/d)   (MBbls/d)   (MMcfe/d)
                                                               
Average Net Sales Volumes
    Fourth Quarter 2013     75.0       3.7         2.3         111.1
                                                               
    Full Year 2013          79.2       3.4         2.1         112.3
                                                               

Total Cash Costs

Forest's total cash costs for the fourth quarter of 2013, excluding
stock-based compensation and employee-related asset disposition costs,
decreased 17% to $53 million, compared to $64 million in the third quarter of
2013. Total cash costs per-unit for the fourth quarter of 2013 increased 5% to
$3.48 per Mcfe, compared to $3.31 per Mcfe in the third quarter of 2013,
primarily as a result of lower equivalent production volumes and having a
greater proportion of higher operating cost oil properties following the sale
of the Texas Panhandle assets.

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

                        
                          Three Months Ended
                          December 31,  Per Mcfe   September 30,  Per Mcfe
                          2013                       2013
                          (In thousands, except per-unit amounts)
Production expense        $  22,731      $ 1.50      $  26,702       $ 1.39
General and
administrative expense
(excluding
stock-based
compensation and             5,448         0.36         7,981          0.42
employee-related asset
disposition costs of
$6,485 and $1,784,
respectively)
Interest expense             24,790        1.64         29,519         1.54
Current income tax          (245    )    (0.02 )     (587    )     (0.03 )
benefit
Total cash costs          $  52,724     $ 3.48     $  63,615      $ 3.31  

________________________

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 and
employee-related asset disposition costs); interest expense; and current
income tax expense.

Total Capital Expenditures

Forest's exploration and development capital expenditures for the three months
and the year-ended December 31, 2013, are set forth in the table below (in
thousands):

                                         Three Months Ended   Year Ended
                                           December 31,           December 31,
                                           2013                   2013
                                                                  
Exploration and development                $      50,846          $   324,822
Land and leasehold acquisitions                  1,933              7,117
                                                  52,779              331,939
                                                                  
Add:
ARO, capitalized interest, and                   6,198              18,251
capitalized equity compensation
Total capital expenditures                 $      58,977          $   350,190
                                                                      

                          ESTIMATED PROVED RESERVES

Forest reported December 31, 2013 estimated proved reserves of 625 Bcfe, which
were 66% proved developed, compared to 1,363 Bcfe at December 31, 2012, which
were 69% proved developed. The decrease in estimated proved reserves was a
result of 800 Bcfe of asset divestitures in 2013 partially offset by
extensions and discoveries of 148 Bcfe. With continued focus on oil and
liquids-rich drilling, extensions and discoveries were comprised of 66% oil
and natural gas liquids and 34% natural gas. The pricing utilized for
estimated proved reserves at December 31, 2013 was based on a 12-month average
of the 2013 first-day-of-the-month Henry Hub price for natural gas and West
Texas Intermediate price for oil of $3.67 per MMbtu and $97.33 per barrel,
respectively. This compares to the pricing utilized for estimated proved
reserves at December 31, 2012 for natural gas and oil of $2.76 per MMbtu and
$94.79 per barrel, respectively. Forest's estimated proved reserves were
audited by DeGolyer and MacNaughton (D&M), an independent third party
engineering firm. D&M's audit covered properties representing over 87% of the
value of Forest's total estimated proved reserves at year-end 2013.

The following table reflects the 2013 activity related to the estimated proved
reserves and includes calculations of reserve replacement ratio and finding
and development costs utilizing net sales volumes and capital expenditures:

                                                            
                                                              Estimated Proved
                                                              Reserves (Bcfe)
                                                              
December 31, 2012                                                  1,363
                                                              
Extensions and discoveries                                        148     
Reserve additions                                                  148
                                                              
Net sales volumes                                                  (75     )
Sales of properties                                                (800    )
Price-related revisions                                            40
Five year PUD limitation revision ^(1)                             (41     )
Other revisions                                                   (10     )
Reserve subtractions                                               (886    )
                                                              
December 31, 2013                                                 625     
                                                              
Drill bit reserve replacement ratio excluding revisions            197     %
^(2)
                                                              
Drill bit finding and development costs excluding revisions   $    2.19
(per Mcfe) ^(3)
                                                              
Reserve : production ratio (years) ^ (4)                           8.3
                                                                           

^(1)  The five year estimated proved undeveloped reserve limitation revision
       is related primarily to natural gas assets located in the Ark-La-Tex.
       
       The drill bit reserve replacement ratio excluding revisions of 197% was
^(2)   calculated by dividing extensions and discoveries of 148 Bcfe by net
       sales volumes of 75 Bcfe.
       
       The drill bit finding and development costs, excluding revisions, of
       $2.19 per Mcfe was calculated by dividing the sum of exploration and
^(3)   development capital expenditures (excluding land and leasehold
       acquisitions, asset retirement obligations, capitalized interest, and
       capitalized equity compensation) of $325 million by extensions and
       discoveries of 148 Bcfe.
       
^(4)   The reserve to production ratio of 8.3 years was calculated by dividing
       proved reserves of 625 Bcfe by net sales volumes of 75 Bcfe.
       

                          OPERATIONAL PROJECT UPDATE

Eagle Ford

Forest’s drilling and completion activity during 2013 was primarily focused on
lease expirations in advance of transitioning to the development phase of the
Eagle Ford program. The Company plans to hold through production a total of
49,000 gross (24,500 net) acres within Gonzales County, Texas.

For 2013, Forest reported results on 44 gross (22 net) wells that had a 30-day
average gross production rate of 408 Boe/d (95% oil). This includes 17 gross
(8.5 net) wells that were completed since the Company’s last operational
update that had a 30-day average gross production rate of 304 Boe/d (94% oil),
including seven gross (3.5 net) wells that were drilled as part of two
separate well spacing and artificial lift pilot projects and three gross (1.5
net) wells that were drilled in areas where the completions were adversely
impacted by faulting.

As is characteristic of field delineation efforts, initial production rates
have varied as the Company focused on establishing and prioritizing its
acreage position, gathering significant geologic and geophysical data,
developing the optimal drilling, well completion, and fracture stimulation
techniques, conducting well spacing tests, and identifying the most
appropriate form of artificial lift. This data has provided a better
understanding of the geologic and reservoir characteristics and attributes of
the producing formation, which will be utilized during 2014 to determine well
locations, assist in reducing costs, and enhance performance.

Well spacing tests were conducted in two areas of the field in the fourth
quarter to determine optimal spacing for the parts of the field that have
distinct reservoir and production characteristics. Based on drilling and
completion results and initial production data from these two projects, Forest
believes that an average lateral spacing of 500-feet to 1,000-feet between
wells will be the development configuration for the majority of the acreage
position.

Forest encountered greater-than-anticipated faulting in a portion of its
southern acreage position that adversely impacted the flow rate of three
wells. The fault complexes were located in an area where two of the Company’s
seismic surveys overlap. Forest is in the process of merging and reprocessing
its existing 3D seismic surveys so that it can more accurately identify and
avoid fault complexes at the edge of the seismic surveys where the faulting
was encountered. It is expected that the reprocessed data will be available
and utilized to select drilling locations by the third quarter of 2014. Forest
plans to focus its first half of 2014 drilling program in areas where it has a
high degree of confidence in the geology, geophysical, and reservoir data and
believes the fault patterns are accurately imaged. The southern area is
considered to be the more productive part of the field and will be the primary
focus of the 2014 drilling program.

While the seismic is being reprocessed and optimal well design is being
evaluated, Forest has elected to reduce the pace of drilling in the Eagle
Ford. As such, the 2014 drilling plan will entail drilling 48 gross (24 net)
wells. Forest expects that the net capital allocated to the Eagle Ford for
drilling and completion activities in 2014 will total $95 million.

Net sales volumes from the Eagle Ford averaged approximately 2,950 Boe/d in
the fourth quarter of 2013. Drilling and completion costs averaged
approximately $5.6 million per well in the fourth quarter and the average well
cost in 2013 was 15% lower than 2012. Forest expects to see further
improvement in well costs in 2014 through the continued optimization of
drilling and completion techniques, the use of existing pad locations, and as
the oil and gas gathering system and centralized production facility becomes
operational during the second half of 2014.

Ark-La-Tex

Forest holds approximately 234,000 gross (162,000 net) acres in the greater
Ark-La-Tex region, including East Texas, North Louisiana, and the Arkoma
Basin. The Ark-La-Tex is largely held by production and provides repeatable
and predictable drilling and recompletion opportunities in multiple natural
gas, oil, and natural gas liquids horizons. During 2013, drilling activity
focused on the liquids-rich Cotton Valley and other oil formations.

During the fourth quarter of 2013, one Cotton Valley well was completed with a
30-day average gross production rate of 8.4 MMcfe/d (35% liquids or 490
Bbls/d). Forest drilled a total of six wells in 2013 that had a 30-day average
gross production rate of 8.7 MMcfe/d (40% liquids). Net sales volumes for the
Ark-La-Tex averaged approximately 93 MMcfe/d in the fourth quarter of 2013.

A modified drilling and completion design was implemented in the latter part
of 2013, which reduced the average well cost to approximately $7.5 million.
This compares to an average well cost of $8.5 million for the other Cotton
Valley wells drilled in 2013.

Based on an improving price environment, lower drilling and completion costs,
and excellent well results, Forest has elected to increase activity in East
Texas and recently added a second operated rig to the program. A third
operated rig is expected to begin drilling during the second quarter of 2014.
Forest anticipates drilling 20-25 wells in East Texas in 2014.

As part of an expanded Ark-La-Tex drilling program, Forest plans to continue
development of a light sweet crude oil play in East Texas where it has
successfully completed three horizontal producers since initiating this
program in the second half of 2012. Forest currently holds approximately
19,000 gross (14,000 net) acres within this concentrated area. The Company is
currently engaged in the integration of 3D seismic data with geological and
well data and expects to commence additional drilling activity in this area
during the second half of 2014.

Management Comment

Patrick R. McDonald, President and CEO, stated, “Our goals last year included
accelerating development of our oil assets, improving our strategic direction
by narrowing our operational focus, and reducing debt levels. In 2013, these
objectives were achieved through the formation of a joint development
partnership for our Eagle Ford asset and the execution of asset sales that
generated proceeds of $1.3 billion. We were able to grow oil and liquids
volumes by 55% and 41%, respectively, when compared to 2012 pro forma for
divestitures. I am pleased that our team was able to accomplish these
objectives.

“Our drilling and completion activity in the Eagle Ford during 2013 was
primarily focused on lease expirations and delineation drilling in advance of
transitioning to the development phase of the program. Our Eagle Ford average
well costs continued to improve during 2013 as we capitalized on operational
synergies, technological advancements and more efficient well drilling and
completion designs. Our average well costs for 2013 were 15% lower than 2012
and we see the potential for further and significant reductions in 2014.

“As outlined in today’s update, we are electing to defer Eagle Ford drilling
activity as we complete the reprocessing and interpretation of 3D seismic data
and also evaluate the success of recent well completion designs. Importantly,
we maintain a balanced portfolio of projects that provides attractive
risk-adjusted rate-of-return opportunities. This will enable us to reallocate
capital to our liquids-rich opportunities in the Ark-La-Tex to maintain a
consistent level of drilling activity in 2014. This decision will result in
lower oil growth for 2014; however, we believe this is a prudent capital
allocation decision.”

2014 Guidance

Forest is updating its 2014 guidance that was initially provided on December
2, 2013, as follows:

  *The drilling and completion capital budget will be allocated approximately
    64% to the Ark-La-Tex and 36% to the Eagle Ford
  *Average net sales volumes are estimated to be comprised of approximately
    35% oil and natural gas liquids and 65% natural gas
  *Production expense, which includes lease operating expense, ad valorem
    taxes, production taxes, and product processing, gathering and
    transportation is expected to average $1.55 to $1.65 per Mcfe
  *Depreciation, depletion and amortization expense is expected to be $2.45
    to $2.65 per Mcfe

A summary of 2014 guidance, including the changes outlined in today’s press
release, is provided in the table below:

                                                              
                                                    Budget Low     Budget High
Drilling and Completion Capital Budget ($           $  260         $  270
million)
Non-Drilling Capital Budget:
Leasehold, Seismic, and Other ($ million)              10             15
Capitalized Overhead ($ million)                      20           25    
Total Capital Budget ($ million)                    $  290        $  310   
                                                                   
Average Net Sales Volumes (MMcfe/d)                    120            130
% Natural Gas                                          65.0  %        65.0  %
% Oil                                                  21.0  %        21.0  %
% Natural Gas Liquids                                  14.0  %        14.0  %
                                                                   
Production Expense ($ per Mcfe)                     $  1.55        $  1.65
Depreciation, Depletion and Amortization ($ per     $  2.45        $  2.65
Mcfe)
General and Administrative Expense ($ million)      $  28          $  30
Stock-Based Compensation ($ million)                $  9           $  11
Income Tax Rate                                        0     %        0     %
                                                                            

Incorporating the impact of a slower pace of development in the Eagle Ford and
lower-than-expected fourth quarter well results, first quarter of 2014 net
sales volumes are expected to average 105 – 110 MMcfe/d (67% natural gas and
33% liquids). Based on current projections of planned 2014 activity, the
Company expects fourth quarter of 2014 average net sales volumes to average
145 – 150 MMcfe/d (63% natural gas and 37% liquids).

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

            
               Average Net Sales Volumes (MMcfe/d)
Region         1Q13A   2Q13A   3Q13A   4Q13A   1Q14E   4Q14E   2014
                                                       ^(1)      ^(1)      Guidance
                                                                           
Ark-La-Tex     102       96        96        93        89        125       100 -
                                                                           109
                                                                           
Eagle Ford     12        13        18        18        18        22        20 - 21
                                                                     
Total          114       109       114       111       108       148       120 -
                                                                           130
                                                                           

^(1) Assumes the mid-point of guidance range

Forest’s guidance for 2014 remains subject to the cautionary statements and
limitations contained in Forest’s December 2, 2013, press release under the
caption “2014 Guidance” as well as those stated below under the caption
“Forward-Looking Statements.”

                            DERIVATIVE INSTRUMENTS

As of February 25, 2014, Forest had natural gas and oil derivatives in place
for 2014 and 2015 covering the aggregate average daily volumes and weighted
average prices shown below:

                                              
                                       2014        2015
Natural gas swaps:
Contract volumes (Bbtu/d)                70.0        20.0
Weighted average price (per MMBtu)     $ 4.38      $ 4.20
                                                   
Natural gas collars:
Contract volumes (Bbtu/d)                -           4.9
Ceiling price (per MMBtu)              $ -         $ 5.31
Floor price (per MMBtu)                $ -         $ 4.50
                                                   
Oil swaps:
Contract volumes (MBbls/d)               3.5         -
Weighted average price (per Bbl)       $ 95.34     $ -
                                                     

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

In connection with the execution of certain commodity swaps shown in the table
above, Forest sold 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 February 25, 2014:

                                              
                                     2015           2016
Natural gas swaptions:
Contract volumes (Bbtu/d)              -              10.0
Price (per MMBtu)                    $ -            $ 4.18
                                                    
Oil swaptions:
Contract volumes (MBbls/d)             6.0            -
Weighted average price (per Bbl)     $ 100.79       $ -
                                                      

                         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, the most
directly comparable GAAP measure, to adjusted net earnings for the periods
presented (in thousands):

                                                  
                     Three Months Ended               Year Ended
                     December 31,                      December 31,
                      2013         2012           2013         2012       
                                                                        
Net earnings         $ 106,219        $ (286,533 )     $ 73,924         $ (1,288,931 )
(loss)
                                                                        
Net gain on
asset                  (129,012 )       -                (129,012 )       -
dispositions,
net of tax
Ceiling test
write-down of
oil and natural        36,806           178,032          36,806           634,047
gas properties,
net of tax
Change in
valuation
allowance on
deferred tax
assets, net of
non-deductible         (38,151  )       104,442          (26,799  )       577,480
stock-based
compensation
costs, goodwill
reduction, and
other
Impairment of
properties, net        -                -                -                50,811
of tax
Employee-related
asset
disposition            3,893            -                8,156            3,835
costs, net of
tax
Rig stacking,          2,310            2,466            6,379            4,219
net of tax
Net loss on debt
extinguishment,        15,008           23,200           31,116           23,200
net of tax
Unrealized
losses (gains)
on derivative          5,650            (4,615   )       19,811           25,037
instruments, net
of tax
Legal proceeding
costs, net of         -              -              -              18,688     
tax
Adjusted net         $ 2,723         $ 16,992        $ 20,381        $ 48,386     
earnings
                                                                        
Earnings
attributable to       (67      )      (406     )      (579     )      (1,138     )
participating
securities
                                                                                     
Adjusted net
earnings for         $ 2,656         $ 16,586        $ 19,802        $ 47,248     
diluted earnings
per share
                                                                        
Weighted average
number of             116,559        115,477        116,125        114,960    
diluted shares
outstanding
                                                                        
Adjusted diluted
earnings per         $ 0.02          $ 0.14          $ 0.17          $ 0.41       
share
                                                                                     

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

                                                  
                     Three Months Ended                Year Ended
                     December 31,                      December 31,
                      2013         2012           2013         2012       
                                                                        
Net earnings         $ 106,219        $ (286,533 )     $ 73,924         $ (1,288,931 )
(loss)
                                                                        
Income tax
(benefit)              (245     )       (1,832   )       (707     )       173,437
expense
Interest expense       24,790           37,899           119,829          141,831
Ceiling test
write-down of          57,636           278,654          57,636           992,404
oil and natural
gas properties
Impairment of          -                -                -                79,529
properties
Depreciation,
depletion, and         35,237           66,656           171,557          280,458
amortization
Unrealized
losses (gains)         8,847            (7,246   )       30,923           39,126
on derivative
instruments, net
Gain on asset
dispositions,          (202,023 )       -                (202,023 )       -
net
Stock-based            1,599            2,847            8,875            15,074
compensation
Accretion of
asset retirement       643              1,749            2,982            6,663
obligations
Employee-related
asset                  5,357            -                11,178           1,851
disposition
costs
Legal proceeding       -                -                -                29,251
costs
Loss on debt           23,502           36,312           48,725           36,312
extinguishment
Rig stacking          3,617          3,860          9,989          6,604      
Adjusted EBITDA      $ 65,179        $ 132,366       $ 332,888       $ 513,609    
                                                                                     

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            Year Ended
                     December 31,                   December 31,
                      2013        2012         2013        2012    
                                                                    
Net cash
provided by          $ 17,774        $ 85,830       $ 201,759       $ 371,655
operating
activities
                                                                    
Changes in operating assets and liabilities:
Accounts               (29,614 )       (2,503  )      (31,816 )       (11,573 )
receivable
Other current          2,392           1,796          (3,504  )       (2,630  )
assets
Accounts payable
and accrued            13,934          23,346         (1,560  )       21,164
liabilities
Accrued interest       27,079          (15,799 )      28,996          (2,322  )
and other
Current income
tax
credit/income          -               -              -               (33,327 )
tax-carryback
^(1)
Employee-related
asset                  5,357           -              11,178          1,851
disposition
costs ^(1)
Legal proceeding       -               -              -               29,251
costs^(1)
                                                                 
Adjusted
discretionary        $ 36,922       $ 92,670      $ 205,053      $ 374,069 
cash flow

      The current income tax credit/income tax carryback, employee-related
      asset disposition costs, and legal proceeding costs are non-recurring
      cash-settled items. Including the effect of these items, adjusted
(1)  discretionary cash flow would have been $32 million and $93 million for
      the three months ended December 31, 2013 and 2012, respectively, and
      $194 million and $376 million for the years ended December 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):

                     December 31, 2013         December 31, 2012
                       Principal   Book^(1)      Principal     Book^(1)
Credit facility        $ -           $ -           $ 65,000        $ 65,000
7% Senior
subordinated notes       -             -             12              12
due 2013
8 1/2% Senior
notes due 2014           -             -             300,000         296,723
^(2)
7 1/4% Senior
notes due 2019           577,914       578,092       1,000,000       1,000,365
^(3)
7 1/2% Senior
notes due 2020          222,087      222,087      500,000        500,000
^(3)
Total debt               800,001       800,179       1,865,012       1,862,100
                                                                   
Less: cash and          66,192       66,192       1,056          1,056
cash equivalents
                                                                   
Net debt               $ 733,809     $ 733,987     $ 1,863,956     $ 1,861,044
                                                                     

       Book amounts include the principal amount of debt adjusted for
^(1)  unamortized premiums (discounts) on the issuance of certain senior
       notes of $0.2 million and $(2.9) million at December 31, 2013 and 2012,
       respectively.
       
       In March 2013, Forest redeemed the $300 million 8 1/2% Senior notes due
^(2)   February 15, 2014 using the South Texas divestiture proceeds and
       borrowings on the credit facility.
       
       In November 2013, Forest redeemed $700 million in aggregate principal
^(3)   amount of the 7 1/4% Senior notes due June 15, 2019 and 7 1/2% Senior
       notes due September 15, 2020 using a portion of the Texas Panhandle
       divestiture proceeds.
       

                             TELECONFERENCE CALL

A conference call is scheduled for Wednesday, February 26, 2014, at 7:00 AM MT
to discuss the release. You may access the call by dialing toll free
800.295.4740 (for U.S./Canada) and 617.614.3925 (for International) and
request the Forest Oil teleconference (ID # 57263063). 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 March 5, 2014. You
may access the replay by dialing toll free 888.286.8010 (for U.S./Canada) and
617.801.6888 (for International), conference ID # 59682985. 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.
Forest's principal reserves and producing properties are located in the United
States 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.

February 25, 2014

                                                        
FOREST OIL CORPORATION
Condensed Consolidated Balance Sheets
(Unaudited)
                                                                
                                             December 31,       December 31,
                                              2013             2012       
ASSETS                                       (In thousands)
                                                                
Current assets:
  Cash and cash equivalents                  $ 66,192           $ 1,056
  Accounts receivable                          35,654             67,516
  Derivative instruments                       5,192              40,190
  Other current assets                        6,756            16,318     
          Total current assets                 113,794            125,080
                                                                
Net property and equipment                     818,569            1,754,238
                                                                
Deferred income taxes                          2,230              14,681
Goodwill                                       134,434            239,420
Derivative instruments                         400                8,335
Other assets                                  48,525           60,108     
                                             $ 1,117,952       $ 2,201,862  
                                                                
LIABILITIES AND SHAREHOLDERS' EQUITY
                                                                
Current liabilities:
  Accounts payable and accrued               $ 141,107          $ 164,786
  liabilities
  Accrued interest                             6,654              23,407
  Derivative instruments                       4,542              9,347
  Deferred income taxes                        2,230              14,681
  Other current liabilities                   12,201           14,104     
          Total current liabilities            166,734            226,325
                                                                
Long-term debt                                 800,179            1,862,088
Asset retirement obligations                   22,629             56,155
Derivative instruments                         -                  7,204
Other liabilities                             73,941           92,914     
          Total liabilities                    1,063,483          2,244,686
                                                                
Shareholders' equity:
  Common stock                                 11,940             11,825
  Capital surplus                              2,554,997          2,541,859
  Accumulated deficit                          (2,502,070 )       (2,575,994 )
  Accumulated other comprehensive loss        (10,398    )      (20,514    )
          Total shareholders' equity           54,469             (42,824    )
          (deficit)
                                                               
                                             $ 1,117,952       $ 2,201,862  
                                                                             

FOREST OIL CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
                                           
                   Three Months Ended            Year Ended
                   December 31,                  December 31,
                    2013        2012         2013        2012       
                   (In thousands, except per share amounts)
                                                                
Revenues:
  Oil, gas, and    $ 88,485       $ 154,914      $ 441,341      $ 605,523
  NGL sales
  Interest and      5            13           331          136        
  other
      Total          88,490         154,927        441,672        605,659
      revenues
                                                                
Costs, expenses,
and other:
  Lease
  operating          17,059         25,860         76,675         108,027
  expenses
  Production and     2,945          7,314          14,857         34,249
  property taxes
  Transportation
  and processing     2,727          3,466          11,895         14,633
  costs
  General and
  administrative     11,933         14,041         54,826         59,262
  expense
  Depreciation,
  depletion, and     35,237         66,656         171,557        280,458
  amortization
  Ceiling test
  write-down of
  oil and            57,636         278,654        57,636         992,404
  natural gas
  properties
  Impairment of      -              -              -              79,529
  properties
  Interest           24,790         37,899         119,829        141,831
  expense
  Realized and
  unrealized
  losses (gains)     4,283          (31,902  )     3,786          (72,646    )
  on derivative
  instruments,
  net
  Other, net        (174,094 )    41,304       (142,606 )    83,406     
      Total
      costs,        (17,484  )    443,292      368,455      1,721,153  
      expenses,
      and other
  Earnings
  (loss) before      105,974        (288,365 )     73,217         (1,115,494 )
  income taxes
  Income tax
  (benefit)         (245     )    (1,832   )    (707     )    173,437    
  expense
  Net earnings     $ 106,219     $ (286,533 )   $ 73,924      $ (1,288,931 )
  (loss)
                                                                
Basic and
diluted weighted     116,559        115,477        116,125        114,958
average shares
outstanding
                                                                
Basic and
diluted earnings   $ 0.89        $ (2.48    )   $ 0.62        $ (11.21     )
(loss) per
common share
                                                                             

FOREST OIL CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
                                           
                   Three Months Ended            Year Ended
                   December 31,                  December 31,
                    2013        2012         2013          2012       
                   (In thousands)
Operating
activities:
Net earnings       $ 106,219      $ (286,533 )   $ 73,924         $ (1,288,931 )
(loss)
                                                                  
Adjustments to
reconcile net
earnings (loss)
to net cash
provided by
operating
activities:
  Depreciation,
  depletion, and     35,237         66,656         171,557          280,458
  amortization
  Deferred
  income tax         -              (15      )     -                208,975
  expense
  (benefit)
  Unrealized
  losses (gains)
  on derivative      8,847          (7,246   )     30,923           39,126
  instruments,
  net
  Ceiling test
  write-down of
  oil and            57,636         278,654        57,636           992,404
  natural gas
  properties
  Impairment of      -              -              -                79,529
  properties
  Stock-based        1,599          2,847          8,875            15,074
  compensation
  Gain on asset
  dispositions,      (202,023 )     -              (202,023   )     -
  net
  Loss on debt       23,502         36,312         48,725           36,312
  extinguishment
  Other, net         548            1,995          4,258            13,347
                                                                  
  Changes in
  operating
  assets and
  liabilities:
    Accounts         29,614         2,503          31,816           11,573
    receivable
    Other
    current          (2,392   )     (1,796   )     3,504            2,630
    assets
    Accounts
    payable and      (13,934  )     (23,346  )     1,560            (21,164    )
    accrued
    liabilities
    Accrued
    interest and
    other           (27,079  )    15,799       (28,996    )    2,322      
    current
    liabilities
      Net cash
      provided
      by             17,774         85,830         201,759          371,655
      operating
      activities
                                                                  
Investing
activities:
Capital
expenditures for
property and
equipment:
  Exploration,
  development,
  acquisition,       (73,048  )     (122,654 )     (363,971   )     (721,536   )
  and leasehold
  costs
  Other fixed        (251     )     (3,117   )     (1,517     )     (9,128     )
  assets
Proceeds from       976,679      253,980      1,347,116      262,882    
sales of assets
      Net cash
      provided
      (used) by      903,380        128,209        981,628          (467,782   )
      investing
      activities
                                                                  
Financing
activities:
Proceeds from        72,000         593,000        529,000          1,244,000
bank borrowings
Repayments of        (187,000 )     (528,000 )     (594,000   )     (1,284,000 )
bank borrowings
Issuance of
senior notes,        -              -              -                491,250
net of issuance
costs
Redemption of        (715,847 )     (330,709 )     (1,037,174 )     (330,709   )
senior notes
Change in bank       (25,541  )     13,499         (14,424    )     (24,217    )
overdrafts
Other, net          (695     )    58           (1,653     )    (2,153     )
      Net cash
      (used)
      provided       (857,083 )     (252,152 )     (1,118,251 )     94,171
      by
      financing
      activities
                                                                  
Net increase
(decrease) in        64,071         (38,113  )     65,136           (1,956     )
cash and cash
equivalents
Cash and cash
equivalents at      2,121        39,169       1,056          3,012      
beginning of
period
Cash and cash
equivalents at     $ 66,192      $ 1,056       $ 66,192        $ 1,056      
end of period
                                                                  

Contact:

Forest Oil Corporation
Larry C. Busnardo, 303-812-1441
VP – Investor Relations
 
Press spacebar to pause and continue. Press esc to stop.