Forest intends to initiate a one-rig drilling program to test the Wolfbone formation at the end of the first quarter in 2012. The drilling in both the Wolfbone and Wolfcamp Shale plays as contemplated herein, was included in Forest’s previously announced capital budget for 2012.Wolfcamp Shale (Midland Basin) Forest’s 57,500 gross acreage (51,500 net) position in Crockett County, Texas, is prospective for the Wolfcamp Shale oil play in addition to other conventional targets. Forest is continuing to conduct necessary data acquisition, including extensive coring of vertical pilot wells and employing micro-seismic technology to identify the most effective way to complete the horizontal wells. Forest’s leasehold position has over two years remaining in the primary term and can be maintained thereafter by drilling four wells per year to maintain all leasehold. Forest intends to focus its further testing work in the most brittle members of the 1,200 foot thick Wolfcamp Shale interval. Forest’s first horizontal well in the Wolfcamp Shale had an initial 24-hour production rate of 266 Boe/d (94% oil). Based on micro-seismic monitoring and production logging, it appears that only 10 of the 14 stages are contributing to this initial production rate. Subsequent to the drilling of this first horizontal well, multiple 3D seismic surveys have been obtained, which has and will be utilized in subsequent drilling and lateral placement. The second horizontal well is currently being completed with a lateral length of 4,000 feet and 15 fracture stimulation stages and a third well is currently being drilled. Permian Basin In total, Forest has approximately 126,000 gross acres (114,500 net) prospective for oil in the Permian Basin. Acreage and currently expected well characteristics for Forest’s position in the Permian Basin are as follows:
|Wolfbone (Vertical)||WolfcampShale (Horizontal)||Total|
|Gross Acreage Position (Acres)||68,500||57,500||126,000|
|Net Acreage Position (Acres)||63,000||51,500||114,500|
|Gross Prospective Drilling Locations||1,500||500||2,000|
|Drilling Costs (Gross $MM)||$4.0 - $5.0||$5.5 - $7.0|
|Estimated Ultimate Recovery (Gross MBoe)||200 - 300||300 - 400|
These risks relating to Forest include, but are not limited to, oil and natural gas price volatility, its access to cash flows and other sources of liquidity to fund its capital expenditures, its level of indebtedness, its ability to replace production, the impact of the current financial and economic environment on its business and financial condition, a lack of availability of, or increase in costs relating to, goods and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating future oil and gas production or reserves, 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. Also, the financial results of Forest's foreign operations are subject to currency exchange rate risks. 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 and selected international locations. Forest's principal reserves and producing properties are located in the United States in Arkansas, Louisiana, Oklahoma, Texas, Utah, and Wyoming. 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.