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Forest Oil Announces Second Quarter 2011 Results

The decrease in net earnings, EBITDA, and discretionary cash flow, each as adjusted, was primarily due to lower average natural gas prices (including the effects of derivatives) and net sales volumes, partially offset by higher oil and natural gas liquids prices (including the effects of derivatives).

FOREST REMAINCO SECOND QUARTER 2011 EARNINGS

The information contained throughout the remainder of this press release, unless otherwise indicated, relates only to Forest on a pro forma basis and excludes the operations of Lone Pine (hereinafter referred to as Forest Remainco).

Forest Remainco reported the following highlights for the three months ended June 30, 2011:

  • Equivalent net sales volumes of 335 MMcfe/d, including liquids net sales volumes of 15,500 Bbls/d
  • Adjusted net earnings of $33 million, or $.29 per diluted share
  • Adjusted EBITDA and discretionary cash flow of $142 million and $107 million, respectively

For the three months ended June 30, 2011, Forest Remainco reported net earnings of $33 million, or $0.29 per diluted share. This compares to Forest Remainco’s net earnings of $36 million, or $0.32 per diluted share, in the corresponding 2010 period. Pro forma net earnings for the three months ended June 30, 2011, were affected by the following items:

  • The non-cash effect of net unrealized gains on derivative instruments totaling $36 million ($23 million net of tax)
  • A legal proceeding settlement of $7 million ($4 million net of tax)
  • The Canadian dividend tax totaling $29 million ($18 million net of tax) associated with the restructuring of Forest’s Canadian business immediately prior to the initial public offering of Lone Pine

Without the effects of these items, Forest Remainco’s adjusted net earnings for the three months ended June 30, 2011, were $33 million, or $0.29 per diluted share which represents a decrease of 21% and 22%, respectively, compared to Forest Remainco’s adjusted net earnings of $42 million, or $0.37 per diluted share, in the corresponding 2010 period. Forest Remainco’s adjusted EBITDA for the three months ended June 30, 2011, decreased 8% to $142 million, compared to $154 million in the corresponding 2010 period. Forest Remainco’s adjusted discretionary cash flow for the three months ended June 30, 2011, decreased 9% to $107 million, compared to $117 million in the corresponding 2010 period.

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