Sabine Oil & Gas and Forest Oil Announce Definitive Merger Agreement

  Sabine Oil & Gas and Forest Oil Announce Definitive Merger Agreement

   Complementary acreage positions create an industry leader in East Texas

Business Wire

HOUSTON & DENVER -- May 6, 2014

Sabine Oil & Gas LLC (“Sabine”) and Forest Oil Corporation (NYSE:FST)
(”Forest”), today announced the signing of a definitive merger agreement under
which Sabine and Forest will combine their businesses in an all-stock
transaction. Sabine and Forest’s highly complementary asset portfolios will
create one of the industry’s largest East Texas players, benefiting from
drilling program optimization and economies of scale. The combination is also
strengthened by a sizable collective Eagle Ford position, as well as Granite
Wash, Permian and Arkoma positions that provide optionality for development
and monetization.

Upon completion of the combination transaction, Sabine unit holders will own
approximately 73.5 percent of the new combined entity and Forest shareholders
will own approximately 26.5 percent. The combined entity, named Sabine Oil &
Gas Corporation, will be a newly formed parent company expected to list on the
New York Stock Exchange under the symbol “SABO”. The combined entity will be
headquartered in Houston, Texas, and be led by Sabine’s current executive
management team. The transaction is expected to be tax-free to Forest’s
shareholders.

David Sambrooks, Sabine’s President and CEO, commented, “We are excited about
this highly complementary combination, and the value creation it will bring to
Sabine and Forest equity holders. Since Sabine began in 2007, we have focused
on building a significant asset base in East Texas and with this combination
we have created a leading industry position in this highly economic,
multi-play basin. Sabine has had a successful track record of ~30% CAGR
production and cash flow growth since its inception and industry-leading well
results in all of our operating areas. We look forward to applying this
operational expertise over the new combined asset base.”

Patrick R. McDonald, President and CEO of Forest commented, “We believe that
this transaction creates a great opportunity for Forest shareholders to
participate in the upside potential gained from a larger and better
capitalized entity with a more robust suite of opportunities and a broader
portfolio upon which to execute its capital plan and strategy. Forest’s asset
portfolio is an excellent complement with Sabine’s asset portfolio and we have
confidence that Sabine’s management team is equipped to deliver exceptional
shareholder value through the enhanced opportunities that are embedded in
Forest’s assets.”

In addition to a top-tier 207,000 net acreage position in East Texas, the
combination of assets creates a 65,000 net acreage position in the Eagle Ford.
The complementary nature of Sabine’s and Forest’s assets present considerable
opportunities to generate savings through operating synergies, benefits of
scale, and optimized capital allocation.

The combined company will have estimated proved reserves of 1.5 trillion cubic
feet equivalent (71% gas) (as of December 31, 2013), and estimated daily
production of 345 million cubic feet equivalent (65% gas) for 2014, giving it
a leading position among its peers in production and cash flow growth.

The enhanced financial strength and flexibility of the combined company will
allow it to de-lever its balance sheet through optimized capital programs.
Further, the combined company’s size and scope, in addition to the expected
synergies, is expected to provide liquidity tofund its drilling program
through 2015 without accessing equity markets. The new entity expects to
quickly but prudently evaluate and execute on accretive asset divestments to
accelerate balance sheet de-levering.

TERMS OF THE TRANSACTION
Under the terms of the agreement, Sabine and Forest Oil will combine their
businesses under a newly formed holding company, Sabine Oil & Gas Corporation
(“Sabine Oil & Gas”). Forest Oil will merge with a subsidiary of Sabine Oil &
Gas and survive as a subsidiary of Sabine Oil & Gas. As part of the
transaction, each share of Forest Oil common stock will be converted into 0.1
of a share of Sabine Oil & Gas common stock, designed to replicate a 10:1
reverse stock split. Concurrent with the merger, Sabine’s parent entity will
contribute all of its equity interest in Sabine to Sabine Oil & Gas, in
exchange for which it will receive approximately 33 million shares of Sabine
Oil & Gas common stock. As a result of the transaction, former Sabine unit
holders and Forest Oil shareholders will own approximately 73.5% percent and
26.5% percent, respectively, of the outstanding Sabine Oil & Gas common stock
upon closing of the combination.

The boards of directors of Sabine and Forest have each unanimously approved
the transaction and Forest is recommending approval of the transaction to its
shareholders. Consummation of the transaction is subject to approval by the
Forest shareholders, regulatory approvals and other customary closing
conditions. The transaction is expected to close in the third or fourth
quarter of 2014.

Upon completion of the transaction, David Sambrooks will serve as Chairman of
the Board of Directors of Sabine Oil & Gas as well as President and Chief
Executive Officer. Shane Bayless will serve as Executive Vice President and
Chief Financial Officer and Todd Levesque will serve as Executive Vice
President and Chief Operating Officer. The Board of Directors of the combined
entity will be comprised of the existing six Sabine board members, as well as
two of the current Forest board members. At closing, it is expected that at
least a majority of the directors will be independent under NYSE rules.

The completion of this transaction will trigger change-of-control provisions
in the indentures governing Forest’s existing senior notes.These
change-of-control provisions entitle holders of the notes to receive 101
percent of the principal amount of the notes plus accrued interest with
respect to each series of notes.Sabine expects that any of Forest’s notes
that are not tendered pursuant to the change of control offers will remain
outstanding following the transaction, subject to any opportunistic
refinancing of such notes Sabine Oil & Gas may pursue based on market
conditions.

Barclays Capital Inc. and Wells Fargo Securities, LLC acted as financial
advisors to Sabine. Tudor, Pickering, Holt & Co. is acting as an advisor to
Sabine on portfolio optimization. Vinson & Elkins LLP acted as legal advisor
to Sabine in the transaction, while Simpson Thacher & Bartlett LLP advised
Sabine on financing matters. Gibson, Dunn & Crutcher LLP acted as legal
advisor to First Reserve in the transaction. J.P. Morgan Securities LLC acted
as financial advisor to Forest, and Wachtell, Lipton, Rosen & Katz acted as
legal advisor to Forest.

CONFERENCE CALL
Sabine and Forest have scheduled a joint conference call for Tuesday, May 6,
2014, at 9:00 AM ET to discuss the transaction. You may access the call by
dialing toll free 866.318.8611 (for U.S./Canada) and 617.399.5130 (for
International) and request the Forest Oil teleconference (ID # 16740779). The
conference call will also be webcast live on the internet and can be accessed
by going to the “Investor Relations” sections of the Forest Oil website at
www.forestoil.com or Sabine Oil’s website at www.sabineoil.com. Transaction
overview slides that will be presented during the conference call will be made
available in the “Investor Relations” section of Forest’s website under
“Recent Presentations” and on Sabine’s website under “Events / Presentations.”

A replay of the conference call will be available through May 13, 2014. You
may access the replay by dialing toll free 888.286.8010 (for U.S./Canada) or
617.801.6888 (for International), conference ID # 47876321. An archive of the
conference call webcast will also be available at the “Investor Relations”
sections of Forest and Sabine’s websites.

Sabine Oil & Gas LLC is an independent energy company engaged in the
acquisition, production, exploration and development of onshore oil and
natural gas properties in the United States. Sabine’s current operations are
principally located in Cotton Valley Sand and Haynesville Shale in East Texas,
the Eagle Ford Shale in South Texas, and the Granite Wash in the Texas
Panhandle.

Forest Oil Corporation is engaged in the acquisition, production, exploration,
and development of natural gas and liquids in the United States. Forest’s
principal reserves and producing properties are located in East Texas, the
Eagle Ford in South Texas, Arkansas, Louisiana, and Oklahoma. Forest’s common
stock trades on the New York Stock Exchange under the symbol FST. For more
information about Forest Oil, please visit its website at
http://www.forestoil.com.

IMPORTANT ADDITIONAL INFORMATION WILL BE FILED WITH THE SEC
In connection with the proposed transactions, New Forest Oil Inc. (which will
be renamed Sabine Oil & Gas Corporation as of the closing of the proposed
transaction) (“Holdco”) intends to file with the SEC a registration statement
on Form S-4 that will include the proxy statement of Forest Oil Corporation
that also constitutes a prospectus of Holdco. Each of Holdco and Forest Oil
Corporation also plan to file other relevant documents with the SEC regarding
the proposed transactions. INVESTORS ARE URGED TO READ THE PROXY
STATEMENT/PROSPECTUS AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IF AND
WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
You may obtain a free copy of the joint proxy statement/prospectus (if and
when it becomes available) and other relevant documents filed by Holdco and
Forest Oil Corporation with the SEC at the SEC’s website at www.sec.gov. You
may also obtain these documents by contacting Holdco or Forest Oil Corporation
at Forest Oil Corporation’s Investor Relations department at www.forestoil.com
or by email at IR@forestoil.com.

PARTICIPANTS IN THE SOLICITATION
Holdco, Forest Oil Corporation, Sabine Oil & Gas LLC and their respective
directors and executive officers and other members of management and employees
may be deemed to be participants in the solicitation of proxies in respect of
the proposed transactions. Information about Forest Oil Corporation’s
directors and executive officers is available in Forest Oil Corporation’s
proxy statement dated March 26, 2014, for its 2014 annual meeting of
share-holders. Information about Sabine Oil & Gas LLC’s directors and
executive officers was filed by Sabine Oil & Gas LLC with the SEC on May 6,
2014 pursuant to Rule 14a-12 promulgated under the Securities Exchange Act of
1934. Other information regarding the participants in the proxy solicitations
and a description of their direct and indirect interests, by security holdings
or otherwise, will be contained in the proxy statement/prospectus and other
relevant materials to be filed with the SEC regarding the proposed
transactions when they become available. Investors should read the proxy
statement/prospectus carefully when it becomes available before making any
voting or investment decisions. You may obtain free copies of these documents
from Holdco or Forest Oil Corporation using the sources indicated above.

This document shall not constitute an offer to sell or the solicitation of an
offer to buy any securities, nor shall there be any sale of securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such
jurisdiction. No offering of securities shall be made except by means of a
prospectus meeting the requirements of Section 10 of the U.S. Securities Act
of 1933, as amended.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements concerning the proposed
transactions, its financial and business impact, management’s beliefs and
objectives with respect thereto, and management’s current expectations for
future operating and financial performance, based on assumptions currently
believed to be valid. Forward-looking statements are all statements other than
statements of historical facts. The words “anticipates,” “may,” “can,”
“plans,” “believes,” “estimates,” “expects,” “projects,” “intends,” “likely,”
“will,” “should,” “to be,” and any similar expressions or other words of
similar meaning are intended to identify those assertions as forward-looking
statements. It is uncertain whether the events anticipated will transpire, or
if they do occur what impact they will have on the results of operations and
financial condition of Holdco, Forest Oil Corporation or Sabine Oil & Gas LLC.
These forward-looking statements involve significant risks and uncertainties
that could cause actual results to differ materially from those anticipated,
including but not limited to the ability of the parties to satisfy the
conditions precedent and consummate the proposed transactions, the timing of
consummation of the proposed transactions, the ability of the parties to
secure regulatory approvals in a timely manner or on the terms desired or
anticipated, the ability of Holdco to integrate the acquired operations, the
ability to implement the anticipated business plans following closing and
achieve anticipated benefits and savings, and the ability to realize
opportunities for growth. Other important economic, political, regulatory,
legal, technological, competitive and other uncertainties are identified in
the documents filed with the SEC by Holdco or Forest Oil Corporation from time
to time, including Forest Oil Corporation’s Annual Reports on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. For
additional information on the risks and uncertainties that could impact Sabine
Oil & Gas LLC’s business and operations, please see the Annual Report posted
to the investor relations section of its web site at www.sabineoil.com. The
forward-looking statements including in this document are made only as of the
date hereof. None of Holdco, Forest Oil Corporation nor Sabine Oil & Gas LLC
undertakes any obligation to update the forward-looking statements included in
this document to reflect subsequent events or circumstances.

Contact:

FOR INVESTORS
Forest Oil Corporation
Larry C. Busnardo, VP – Investor Relations
303-812-1441
or
Sabine Oil & Gas LLC
Shane M. Bayless, Executive Vice President and CFO
832-242-9600
or
FOR MEDIA
Brunswick Group
Lisa Singleton, 214-254-3790
 
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