Forest Oil Announces Third Quarter 2009 Results

Operated Horizontal Greater Buffalo Wallow Well Drilled and Completed with an Initial Production Rate of 30 MMcfe/d; Forest Adding Rigs to the Play

Two Operated Louisiana Horizontal Haynesville Wells Drilled and Completed with Initial Production Rates of 21 MMcfe/d and 15 MMcfe/d; Forest Adding Rigs to the Play

Third Quarter Average Net Sales Volumes of 476 MMcfe/d (Negatively Affected by 14 MMcfe/d Deferred and Divested Volumes); Organic Growth Anticipated in the Fourth Quarter of 2009

Closed Property Sales of Approximately $116 Million During the Third Quarter and Announced Non-operated Property Divestiture in Canada for Approximately $58 Million; Closed or Reached Agreement on Approximately $200 Million in Property Sales in 2009

DENVER--(BUSINESS WIRE)--Nov. 2, 2009-- Forest Oil Corporation (NYSE: FST) (Forest or the Company) today announced financial and operational results for the third quarter of 2009. For the three months ended September 30, 2009, the Company reported the following highlights:

Average net sales volumes decreased 9% to 476 MMcfe/d compared to the third quarter of 2008 (negatively affected by 14 MMcfe/d of deferred and divested volumes during the quarter)
Total cash costs per-unit decreased 3% to $2.42 per Mcfe compared to the third quarter of 2008
Adjusted net earnings per basic share decreased 62% to $0.48 compared to the third quarter of 2008
Adjusted EBITDA decreased 43% to $192.7 million compared to the third quarter of 2008
Adjusted discretionary cash flow decreased 50% to $151.5 million compared to the third quarter of 2008
Adjusted free cash flow increased 180% to $74.6 million compared to the third quarter of 2008
THIRD QUARTER 2009 RESULTS

For the three months ended September 30, 2009, Forest reported net earnings of $172.3 million or $1.53 per basic share. This compares to Forest’s net earnings of $429.0 million or $4.77 per basic share in the corresponding period in 2008. Net earnings for the three months ended September 30, 2009, were affected by the following items:

The non-cash effect of net unrealized losses on derivative instruments, totaling $79.2 million ($50.6 million net of tax)
The non-cash effect of unrealized foreign currency exchange gains, totaling $9.7 million ($8.1 million net of tax)
The non-cash gain on the change in valuation allowance for deferred tax assets totaling $163.9 million ($163.9 million net of tax)
Rig stacking charges totaling $4.0 million ($2.6 million net of tax)
Without the effects of these items, Forest’s adjusted net earnings for the three months ended September 30, 2009, were $53.5 million or $0.48 per basic share. This is a decrease of 53% compared to Forest’s adjusted net earnings of $113.2 million or $1.26 per basic share in the corresponding 2008 period.

Forest’s adjusted EBITDA decreased 43% for the three months ended September 30, 2009, to $192.7 million, compared to adjusted EBITDA of $336.7 million in the corresponding 2008 period. Forest’s adjusted discretionary cash flow decreased 50% for the three months ended September 30, 2009, to $151.5 million, compared to adjusted discretionary cash flow of $305.7 million in the corresponding 2008 period.

The decrease in net earnings, EBITDA, and discretionary cash flow, each as adjusted, was primarily due to significantly lower realized commodity prices for the three months ended September 30, 2009, compared to the corresponding 2008 period.

Net Sales Volumes, Average Realized Prices, and Revenues

For the three months ended


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