Forest Oil Corporation (NYSE:FST) (Forest or the Company) today announced that it has entered into a definitive agreement to sell all of its properties located in South Louisiana for approximately $220 million. The transaction is expected to close on November 16, 2012, with an effective date of August 1, 2012, and is subject to customary closing conditions and post-closing purchase price adjustments. The properties produced 20 MMcfe/d (65% liquids) during the third quarter of 2012 and had estimated proved reserves of 45 Bcfe (62% liquids) as of December 31, 2011. Forest intends to use the proceeds from this divestiture to repay outstanding borrowings under its bank credit facility.
Since embarking on its deleveraging plan in early July, Forest has completed or has under contract, transactions totaling approximately $277 million. This includes the previously announced East Texas natural gas gathering assets for $34 million, approximately 5,600 net acres in the Eagle Ford Shale for $15 million, and other miscellaneous properties for $8 million. Upon closing of the South Louisiana transaction, Forest intends to update 2012 guidance.
Proved Reserves atDecember 31, 2011
|South Louisiana Properties||220||20||45|
|East Texas Natural Gas Gathering Assets||34||-||-|
|Eagle Ford Shale Acreage||15||-||-|
Patrick R. McDonald, President and CEO, stated, “We are pleased to announce continued progress in our deleveraging plan with the sale of our non-core South Louisiana properties. Our team has made meaningful strides in improving the Company’s financial position, and we will continue to focus on other non-core divestitures to improve our balance sheet and increase our financial flexibility as we maintain focus on the development of our core oil properties.”