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Filed Pursuant to Rule 424(b)(4)
Registration No: 333-171123

Prospectus

15,000,000 Shares

LOGO

Lone Pine Resources Inc.

Common Stock

This is an initial public offering of common stock of Lone Pine Resources Inc. Lone Pine Resources Inc. is selling 15,000,000 shares of common stock. Lone Pine Resources Inc. is currently a wholly-owned subsidiary of Forest Oil Corporation.

Prior to this offering, there has been no public market for our common stock. We have been approved to list our shares of common stock on the New York Stock Exchange under the symbol "LPR." The Toronto Stock Exchange has also conditionally approved the listing of our shares of common stock under the symbol "LPR." Listing will be subject to us fulfilling all the listing requirements of the New York Stock Exchange and the Toronto Stock Exchange.

   

    Per share     Total  
   

Initial public offering price(1)

  $ 13.00   $ 195,000,000  

Underwriting discounts and commissions

 
$

0.78
 
$

11,700,000
 

Proceeds to Lone Pine Resources Inc., before expenses

 
$

12.22
 
$

183,300,000
 
   

(1)   The public offering price for shares of our common stock offered in the United States and elsewhere outside of Canada is payable in U.S. dollars, and the public offering price for shares of our common stock offered in each of the provinces of Canada other than Quebec is payable in Canadian dollars, except as may otherwise be agreed by the underwriters.

Delivery of the shares of common stock is expected to be made on or about June 1, 2011. We have granted the underwriters an option for a period of 30 days to purchase, on the same terms and conditions as set forth above, up to an additional 2,250,000 shares of our common stock to cover over-allotments.

Investing in our common stock involves substantial risk. Please read "Risk factors" beginning on page 17.

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

J.P. Morgan   Credit Suisse   TD Securities


BMO Capital Markets


 


Scotia Capital


 


Wells Fargo Securities

CIBC        RBC Capital Markets

 

BNP PARIBAS

 

Howard Weil Incorporated

Johnson Rice & Company L.L.C.

 

Raymond James

 

Tudor, Pickering, Holt & Co.

May 25, 2011


Table of Contents

Map



Table of contents

Prospectus summary

  1

Risk factors

  17

Forward-looking statements

  47

Use of proceeds

  49

Dividend policy

  51

Capitalization

  52

Dilution

  53

Selected historical consolidated financial and other data

  55

Unaudited pro forma consolidated financial information

  59

Management's discussion and analysis of financial condition and results of operations

  67

Business

  92

Management

  125

Executive compensation

  135

Ownership of our common stock

  179

Our relationship with Forest

  182

Certain relationships and related party transactions

  195

Description of capital stock

  196

Shares eligible for future sale

  206

Certain U.S. federal tax consequences for non-U.S. holders

  209

Certain Canadian federal income tax consequences for holders

  213

Certain ERISA considerations

  216

Underwriting

  217

Legal matters

  224

Experts

  224

Where you can find additional information

  224

Glossary of oil and gas terms

  A-1

Index to financial statements

  F-1

Industry and market data

The market data and certain other statistical information used throughout this prospectus are based on independent industry publications, government publications, or other published independent sources. Some data is also based on our good faith estimates. Although we believe these third-party sources are reliable and that the information is accurate and complete, we have not independently verified the information.

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Exchange rate data

Unless the context otherwise requires, references to "dollars" or "$" in this prospectus are to U.S. dollars and references to "CDN$" are to Canadian dollars. The following table sets forth, for the periods indicated, the high, low, average, and period-end noon spot rates of exchange for the U.S. dollar, expressed in Canadian dollars per U.S. dollar, based on data published by the Bank of Canada.

   
 
  Three months
ended March 31,
  Year ended December 31,  
 
  2011
  2010
  2010
  2009
  2008
 
           
 
  CDN$
  CDN$
  CDN$
  CDN$
  CDN$
 
   

Highest rate during the period

    1.0022     1.0734     1.0778     1.3000     1.2969  

Lowest rate during the period

    0.9686     1.0113     0.9946     1.0292     0.9719  

Average noon spot rate during the period(1)

    0.9857     1.0401     1.0299     1.1420     1.0660  

Rate at the end of the period

    0.9718     1.0156     0.9946     1.0466     1.2246  
   

(1)   Determined by averaging the rates on each business day during the respective period.

On March 31, 2011 and May 9, 2011, the noon spot rate of exchange published by the Bank of Canada for conversion of U.S. dollars into Canadian dollars was $1.00 = CDN$0.9718 and $1.00 = CDN$0.9661, respectively.

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Prospectus summary

This summary highlights information contained elsewhere in this prospectus. Because it is a summary, it is not complete and does not contain all of the information that you should consider before deciding whether or not to invest in our common stock. You should carefully read the entire prospectus. In particular, you should read the sections entitled "Risk factors" beginning on page 17, "Forward-looking statements" beginning on page 47, and "Management's discussion and analysis of financial condition and results of operations" beginning on page 67, and the historical and pro forma consolidated financial statements and the notes thereto included elsewhere in this prospectus. Unless the context otherwise requires, information presented in this prospectus assumes that the underwriters' over-allotment option to purchase additional shares of our common stock is not exercised. Unless the context otherwise requires, references to "dollars" or "$" in this prospectus are to U.S. dollars and references to "CDN$" are to Canadian dollars.

Unless the context otherwise requires, references in this prospectus to "we," "us," "our," "our company," or "Lone Pine" when used in a historical context refer to our predecessor, Canadian Forest Oil Ltd. and its consolidated subsidiary, which is being contributed to Lone Pine in connection with this offering, and when used in the present tense or prospectively, those terms refer to Lone Pine Resources Inc. and its consolidated subsidiaries, which will include Canadian Forest Oil Ltd., as in effect upon the completion of this offering. Unless the context otherwise requires, references in this prospectus to "Forest" refer to Forest Oil Corporation and its consolidated subsidiaries, other than us. Unless the context otherwise requires, references in this prospectus to "CFOL" or "our predecessor" refer to Canadian Forest Oil Ltd. and its consolidated subsidiary.

Unless the context otherwise requires, all operating data in this prospectus presented on a per unit basis is calculated based on net production volumes. Certain oil and gas industry terms used in this prospectus are defined in the "Glossary of oil and gas terms" beginning on page A-1 of this prospectus.

Our company

We are an independent oil and gas exploration, development, and production company with operations in Canada within the provinces of Alberta, British Columbia, and Quebec and the Northwest Territories. We were incorporated under the laws of the State of Delaware on September 30, 2010, and we are currently a wholly-owned subsidiary of Forest Oil Corporation. Our predecessor, Canadian Forest Oil Ltd., was acquired by Forest in 1996. We have the following estimated proved reserves, production, acreage, and drilling locations:

approximately 376 Bcfe of estimated proved reserves as of December 31, 2010, of which approximately 71% was natural gas and approximately 55% was classified as proved developed;

average daily working interest and net sales volumes of 89 MMcfe/d and 84 MMcfe/d, respectively, for the first quarter of 2011;

annualized organic production growth of approximately 22% from the first quarter of 2009 to the first quarter of 2011, pro forma for divestitures;

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approximately 1.1 million gross (.8 million net) acres of land (approximately 80% of which is undeveloped) as of March 31, 2011; and

approximately 181 gross (139 net) proved undeveloped drilling locations as of December 31, 2010.

The following table presents summary data for each of our significant properties as of March 31, 2011, unless otherwise indicated.

   
 
  Estimated
proved
reserves
(Bcfe)(1)(2)
  Estimated
proved
developed
reserves
(Bcfe)(1)(2)
  Average
daily
sales volumes
(MMcfe/d)(2)(3)
  Acreage   Proved
undeveloped
drilling
locations(1)
 
 
  Net
  Net
  Working
interest

  Net
  Gross
  Net
  Gross
  Net
 
   

Narraway/Ojay(4)

    132     59     39     36     129,166     91,682     28     16  

Wild River

    84     65     23     23     25,760     12,853     26     13  

Other Deep Basin

    22     21     7     7     47,254     24,889     3     1  
       
 

Total Deep Basin

    237     145     69     66     202,180     129,424     57     30  

Evi

   
90
   
22
   
7
   
6
   
48,000
   
41,062
   
107
   
101
 

Other light oil

    7     7     2     2     5,600     4,450          
       
 

Total light oil

    97     29     9     8     53,600     45,512     107     101  

Utica Shale

   
   
   
   
   
432,310
   
273,780
   
   
 

Liard Basin

                    61,720     60,927          
       
 

Total shales

                    494,030     334,707          

Other

   
42
   
35
   
11
   
10
   
354,636
   
279,910
   
17
   
8
 
       

Total

    376     209     89     84     1,104,446     789,553     181     139  
   

(1)   As of December 31, 2010.

(2)   Reserves and sales volumes are presented on a gas-equivalent basis using a conversion of 6 Mcf "equivalent" per barrel of oil or NGL. This conversion is based on energy equivalence and not price equivalence. For 2010, the average of the first day of the month marker gas price was $4.38 per Mcf for NYMEX Henry Hub ($3.93 per MMBtu at AECO), and the average of the first day of the month oil price was $79.81 per barrel. If a price equivalent conversion based on these twelve-month average prices was used, the conversion factor would be approximately 18 Mcf per barrel of oil or NGL rather than 6 Mcf per barrel of oil or NGL.

(3)   Represents average daily working interest and net sales volumes for the three months ended March 31, 2011. "Working interest sales volumes" represents our working interest share of sales volumes before the impact of royalty burdens. "Net sales volumes" represents our working interest volumes less the amount of volumes attributable to royalty burdens.

(4)   On April 29, 2011, we completed the acquisition of certain natural gas properties located in the Narraway/Ojay fields. See "—Recent developments—Acquisition of natural gas properties in the Narraway/Ojay fields" on page 6. The amounts in the table do not include these properties.

Significant properties

We have a well-balanced portfolio of oil and gas properties, consisting of low-risk natural gas and premium-priced light oil resource plays, as well as significant undeveloped potential associated with two shale gas plays. Our primary area of focus is in the Western Canadian Sedimentary Basin, which includes our Narraway/Ojay and Wild River fields in the Deep Basin and our Evi area in the Peace River Arch. In addition, we own significant acreage in the Utica Shale in Quebec and the Liard Basin in the southwest portion of the Northwest Territories, which are shale gas prospects that we believe have significant development potential.

Starting in the fourth quarter of 2009 and through December 31, 2010, we have repositioned our asset base, divesting approximately $142 million in non-core or non-operated oil and gas

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properties, and spending approximately $48 million on new undeveloped leasehold acreage primarily in the Narraway/Ojay fields and the Evi area, which we believe have strong growth potential. From the first quarter of 2009 to the first quarter of 2011, we achieved annualized company-wide organic production growth, pro forma for divestitures, of approximately 22%, and we intend to build on that growth going forward. For more information about our significant properties, see "Business—Significant properties" on page 94.

Deep Basin area

We have approximately 129,000 net acres in the Deep Basin, including approximately 92,000 net acres in the Narraway/Ojay fields, located in Alberta and British Columbia, and approximately 13,000 net acres in the Wild River field, located in the southeast portion of the Deep Basin. Our development of these assets is primarily focused on our Narraway/Ojay and Wild River fields. Geologically, these fields have a minimum of ten different stacked producing intervals. Although many of these intervals have not been exploited horizontally, we believe that horizontal drilling and slick-water fracture stimulation, while more expensive than vertical wells, will result in better initial production rates and recoveries than vertical wells.

Evi area

We have approximately 41,000 net acres in and near the Evi field, located in the Peace River Arch. This position offers us a significant development opportunity for premium-priced light oil. Through December 31, 2010, we drilled, completed, and commenced production on 25 gross horizontal wells in the Evi field. Our historical costs to drill and complete these 25 horizontal wells have ranged from $2.0 million to $4.5 million per well. During the first quarter of 2011, we drilled an additional 17 wells that were in various stages of completion as of March 31, 2011. Our working interest in all 17 of these wells is 100%. For the seven of these new wells that appear to have completed flow-back of fracture stimulation fluids, the average maximum recorded initial production rate was approximately 300 Bbls per day on a working interest basis (approximately 285 Bbls per day on a net basis). We believe that we can ultimately enhance production rates and recoveries in the Evi area through further development drilling and secondary recovery techniques, such as waterflooding.

Utica Shale

We have approximately 274,000 net acres in Quebec that are prospective for the Utica Shale. Natural gas produced from the Utica Shale in Quebec is in close proximity to major markets in Canada and the northeastern United States, which generally provides for a $0.50 to $1.00 premium in product pricing compared to NYMEX Henry Hub. The Utica Shale is relatively shallow compared to other shale plays in North America, which provides for an economic advantage relative to the drilling costs associated with developing the resource.

Liard Basin

We have approximately 61,000 net acres in the Liard Basin, located in the Northwest Territories, that are prospective for the Muskwa Shale. This is a newly developing natural gas shale play adjacent to the producing Horn River Basin. We believe that our acreage in the Liard Basin is analogous to the Muskwa Shale in the Horn River Basin. Our acreage is located in close proximity to a pipeline in the Northwest Territories providing for the sale and distribution of any natural gas produced.

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Infrastructure

During 2010, we spent $48 million on the construction of key infrastructure and the purchase of related equipment in the Narraway/Ojay fields. In late November 2010, we completed construction of a natural gas pipeline connecting shut-in wells from our Ojay acreage in British Columbia to sales meters in western Alberta. Our gas gathering system and associated facilities at the Narraway/Ojay fields were expanded in order to alleviate capacity restrictions, improve timely takeaway of our gas, and enable us to proceed with our development plan. At the Evi area, we have installed infrastructure that allows us to transport by pipeline the majority of our oil production, which has minimized the cost of trucking and the downtime associated with weather-dependent access to some locations.

Our business strategy

Our business strategy is to increase stockholder value by efficiently increasing production, reserves, and cash flow by applying horizontal drilling and new completion technologies to our significant and diversified undeveloped acreage positions. We expect to execute this strategy while managing our debt levels relative to our estimated proved reserves, cash flow from operations, and EBITDA. We endeavor to execute this strategy as follows:

Exploit and develop resource plays by applying horizontal drilling and new completion technologies.  We intend to apply the latest exploitation technologies to our resource plays, including horizontal drilling and multi-stage hydraulic fracture stimulation techniques. We believe these technologies, while more expensive than vertical wells, will provide for efficient production and reserve growth from our significant undeveloped acreage positions. Each of our Deep Basin and Evi areas has a large number of remaining drilling locations where delineation drilling has established the existence of a consistent geologic trend, creating what we believe are repeatable development opportunities through horizontal and vertical drilling. For the remainder of 2011, we intend to run a three-rig drilling program in the Evi area, targeting premium-priced light oil and a one-rig drilling program in the Deep Basin, targeting the multi-stacked natural gas intervals in our Narraway/Ojay fields.

Enhance returns by focusing on operational control and cost efficiencies.  We plan to develop and execute large-scale, repeatable drilling programs in areas where we have high working interests, concentrated land positions, large drilling inventory, and operational control to reduce costs and achieve economies of scale, thereby attaining higher rates of return on invested capital. Our plan is to further shift our focus from vertical development programs to horizontal drilling in order to improve initial production rates and overall recoveries, thereby enhancing overall program economics.

Develop, expand, and rationalize our asset base through leasehold and property acquisitions, divestitures, and exploration.  We intend to pursue leasehold and property acquisitions to enhance existing business operations in our core areas and to gain entrance into new, complementary resource plays with a preference for liquids-rich hydrocarbon prospects. We also plan to pursue a measured exploration drilling program in these areas in order to expand the ultimate scope of commercial development of our asset base. As economic conditions permit, we intend to divest assets that do not fit our primary business strategy, including those without significant development opportunities.

Develop large shale positions.  We have significant undeveloped shale acreage positions in the Utica Shale in Quebec and the Liard Basin in the Northwest Territories, which are in the

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    early stages of evaluation and have the potential to contain large-scale gas accumulations. We have achieved early progress in the Utica Shale through the drilling of ten exploration wells and the application of horizontal drilling and multi-stage fracturing technologies, which have demonstrated the potential to improve extraction efficiencies and economics. As part of our long-term business strategy, we plan to further explore each of our shale positions by taking deliberate steps to transition them into large-scale development projects. Subsequent to the completion of this offering, we expect to evaluate our large acreage position in the Liard Basin, commencing in late 2011, with the re-entry of an existing wellbore.

Maintain financial flexibility.  We expect to maintain a strong liquidity position to successfully execute our growth strategy through the application of budget controls and prudent financial management. We intend to focus on managing our debt levels relative to our estimated proved reserves, cash flow from operations, and EBITDA. We also plan to support our prospective cash flow and EBITDA through the implementation of a measured commodity hedging program.

Our competitive strengths

We believe we have a number of competitive strengths that will help us to execute our business strategy:

Large, contiguous acreage positions, with multi-year, diversified drilling inventory.  Our leasing efforts, which have included early identification and leasehold acquisition of acreage in prospective areas, have enabled us to develop large, contiguous acreage positions. In total, we have accumulated approximately 1.1 million gross (.8 million net) acres in prospective areas, with approximately 80% of the acreage classified as undeveloped as of March 31, 2011. Our acreage positions allow us to be more competitive in our development efforts through the execution of large-scale drilling and multi-stage fracture stimulation programs and the establishment of centralized gas gathering systems and associated facilities. We have a commodity-diverse drilling portfolio with approximately 57 gross (30 net) proved undeveloped drilling locations as of December 31, 2010 in the Deep Basin targeting natural gas and natural gas liquids, or NGLs, and approximately 107 gross (101 net) proved undeveloped drilling locations as of December 31, 2010 in our Evi area targeting premium-priced light oil. In addition, we have significant long-term exploration potential across our acreage in the Utica Shale and the Liard Basin.

Multi-stacked intervals in the Deep Basin, which yield low-risk incremental development opportunities.  The Deep Basin has historically been a highly prospective area for the production of natural gas and NGLs. The Deep Basin fields produce from a minimum of ten different intervals, many of which have not been exploited horizontally. With the advancement of drilling and completion technology, many of these intervals now have the potential to be developed with favorable economic results. We believe our interests in over 250 productive wells in the Deep Basin, completed in multiple zones, and our understanding of the geology of the basin, give us a competitive advantage in the development of these unexploited intervals. Our primary focus in the Deep Basin will be in the Narraway/Ojay fields, with the Nikanassin interval being our anchor zone. We believe that the application of horizontal drilling and multi-stage fracturing technologies, while more expensive than

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    vertical wells, will allow us to develop this and other intervals at enhanced economic rates of return.

Management and technical team with demonstrated operational and technical skills and experience in horizontal drilling.  Our management and technical team has extensive expertise in the oil and gas industry. We believe that our team is one of our principal competitive strengths, as evidenced by our track record in establishing, developing, and expanding our core assets with profitable rates of return. Our team has successfully implemented horizontal drilling and multi-stage hydraulic fracturing technologies and plans to expand the application of these technologies across our resource plays. Since the completion of our first horizontal well in the Evi area in 2006 and through December 31, 2010, we have drilled, completed, and commenced production on a total of 25 gross horizontal wells, improved production rates and recoveries by increasing the number of fracturing stages, and reduced drilling costs through efficiency gains. Further, key members of the team have gained lasting knowledge and experience through our relationship with Forest. We expect to continue to pursue the application of horizontal drilling and multi-stage fracturing technologies on our resource bases.

Operating control over a majority of our properties, with limited near-term lease expiries.  We have high working interests in our properties and currently operate 80% of our production. Further, we expect to operate substantially all of our planned 2011 drilling program. As the designated operator, we believe we can maintain control over capital expenditures, operating costs, and the pace of exploration and development. We also have limited near-term lease expiries. At March 31, 2011, approximately 89% of our net acreage was held by leases whose terms extend beyond the next three years.

Focus on operational efficiencies and cost containment.  We have focused and will continue to focus on improving operational efficiencies and controlling costs. From 2008 to 2010, we reduced our lease operating expense per unit by approximately 25%, to $.91 per Mcfe.

Strong balance sheet.  Upon the completion of this offering, we anticipate repaying any intercompany amounts due to Forest in full and having an attractive debt level relative to our estimated proved reserves and capitalization. Further, we expect to have a credit facility with sufficient availability that can be utilized to independently fund a multi-year exploration and development strategy associated with our large, multi-year drilling resource bases.

Recent developments

Acquisition of natural gas properties in the Narraway/Ojay fields

On April 29, 2011, we completed the acquisition of certain natural gas properties located in the Narraway/Ojay fields for approximately CDN$75 million using funds advanced to us by Forest under our promissory note payable to Forest. The purchase price is subject to adjustment based on an adjustment date of April 1, 2011. We estimate that the proved reserves (unaudited) associated with these properties were approximately 64 Bcfe as of December 31, 2010, of which approximately 67% were classified as proved developed. The acquisition increased our working interests in certain properties already owned and operated by CFOL in the Narraway field from approximately 50% to 100% and provided us with additional capacity in gathering systems and a gas plant in the Narraway field. In addition, the acquisition increased our acreage position by

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approximately 85,100 gross (35,700 net) acres, of which we expect approximately 69,100 gross (29,200 net) acres to be retained through exploitation.

Environmental assessment of shale gas drilling in Quebec

On March 8, 2011, the Government of Quebec announced that it would move forward with a strategic environmental assessment of shale gas drilling in the province as recommended by the Bureau d'audiences publiques sur l'environnement, or BAPE, the province's environmental public hearings board, in a report delivered to the Quebec Minister of Sustainable Development, Environment and Parks. The strategic environmental assessment is expected to take 18 to 30 months to complete, during which time, we understand that hydraulic fracturing will only be permitted in Quebec for scientific data gathering purposes. During this period, we will be able to explore and gather scientific data on our undeveloped shale acreage positions. We are currently working with the Quebec Oil and Gas Association to initiate discussions with the province regarding regulatory changes and lease tenure extensions. See "Risk factors—Risks relating to our business—"New laws or regulatory requirements relating to hydraulic fracturing could make it more difficult or costly for us to perform fracturing of producing formations and could have an adverse effect on our ability to produce oil and gas from new wells" on page 29 and "Business—Environmental regulation" on page 120.

Our relationship with Forest

We are currently a wholly-owned subsidiary of Forest. Forest is an independent oil and gas company engaged in the acquisition, exploration, development, and production of oil, natural gas, and NGLs primarily in North America. Forest was incorporated in New York in 1924, as the successor to a company formed in 1916, and has been a publicly held company since 1969. Forest's total estimated proved reserves as of December 31, 2010 were approximately 2,244 Bcfe. At December 31, 2010, approximately 81% of Forest's estimated proved oil and gas reserves were in the United States, approximately 17% were in Canada, and approximately 2% were in Italy.

Upon completion of this offering, Forest will own 82.3% of our outstanding shares of common stock (80.2% if the underwriters exercise their over-allotment option in full). Forest will have the ability to direct the election of all of the members of our board of directors and to determine the outcome of other matters submitted to a vote of our stockholders. As of the date of this prospectus, we have no material assets or activities as a separate corporate entity. In connection with this offering and pursuant to the separation and distribution agreement, Forest will contribute to us its approximate 86.6% direct ownership interest in CFOL and its 100% direct and indirect ownership interest in each of Wiser Oil Delaware, LLC and Wiser Delaware LLC, which collectively own the remaining ownership interest in CFOL, in exchange for 69,999,999 shares of our common stock and cash consideration of $29 million. We refer to Wiser Oil Delaware, LLC and Wiser Delaware LLC collectively as the Wiser Entities. CFOL owns all of Forest's operations in Canada and the business described in this prospectus.

Forest has advised us that, as soon as practicable following the completion of this offering and the expiration or waiver of the applicable lock-up period described under "Underwriting" beginning on page 217, it intends to distribute, or spin-off, all of the remaining shares of our common stock that it owns by means of a special dividend to its shareholders. Forest expects that the spin-off will occur approximately four months following the completion of this offering. This offering and the spin-off will be subject to the satisfaction or waiver of certain

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conditions. In particular, the separation and distribution agreement will provide that Forest will not effect this offering or the spin-off unless Forest has obtained a private letter ruling from the U.S. Internal Revenue Service, or IRS, and/or an opinion of its outside tax advisor, in either case reasonably acceptable to the Forest board of directors, to the effect that the contribution by Forest of its direct and indirect ownership interest in CFOL to us and the distribution by Forest of the shares of our common stock held by Forest after the offering should qualify for U.S. federal income tax purposes as a tax-free transaction under Sections 355 and 368(a)(1)(D) of the U.S. Internal Revenue Code of 1986, as amended, or the Code. Forest has obtained an opinion of its outside tax advisor that is acceptable to the Forest board of directors to the effect that the contribution by Forest of its direct and indirect ownership interest in CFOL to us and the distribution by Forest of the shares of our common stock held by Forest after the offering should qualify for U.S. federal income tax purposes as a tax-free transaction under Sections 355 and 368(a)(1)(D) of the Code, which opinion satisfies the related condition to this offering and the spin-off. Forest has requested, but has not yet received, a private letter ruling from the IRS. Forest may decide not to complete this offering or the spin-off if, at any time, Forest's board of directors determines, in its sole discretion, that this offering or the spin-off is not in the best interests of Forest or its shareholders. For a discussion of the conditions to this offering and the spin-off, see "Our relationship with Forest—Agreements between Forest and us—Separation and distribution agreement" on page 184.

We depend on Forest for a number of administrative functions. Immediately prior to the completion of this offering, we will enter into agreements with Forest related to the separation of our business operations from Forest. These agreements will be in effect as of the completion of this offering and will govern various interim and ongoing relationships between Forest and us, including the extent and manner of our dependence on Forest for administrative services following the completion of this offering. For more information regarding these agreements, see "Our relationship with Forest—Agreements between Forest and us" on page 183 and the historical and pro forma consolidated financial statements and the notes thereto included elsewhere in this prospectus. All of the agreements relating to our separation from Forest will be made in the context of a parent-subsidiary relationship and will be entered into in the overall context of our separation from Forest. The terms of these agreements may be more or less favorable to us than if they had been negotiated with unaffiliated third parties. See "Risk factors—Risks related to our relationship with Forest" on page 33.

As of March 31, 2011, we had approximately $284 million of intercompany debt payable to Forest and $44 million of intercompany advances and accrued interest due to Forest. As of May 9, 2011, we had approximately $354 million of intercompany debt payable to Forest, which includes additional borrowings used by us to complete the acquisition of certain gas properties in our Narraway/Ojay fields on April 29, 2011 for approximately CDN$75 million, pursuant to the promissory note, and $45 million of intercompany advances and accrued interest due to Forest. We estimate that the net proceeds from this offering of common stock, after deducting estimated underwriting discounts and commissions and estimated offering expenses, will be approximately $178.3 million ($205.8 million if the underwriters exercise their over-allotment option in full). Under the separation and distribution agreement, we have agreed to use a portion of the net proceeds from this offering to pay $29 million to Forest as partial consideration for the contribution of CFOL and the Wiser Entities to us. We intend to use the remaining net proceeds from this offering and borrowings under our bank credit

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facility to repay all of our outstanding indebtedness to Forest, including intercompany advances and accrued interest.

Risk factors

Investing in our common stock involves substantial risk. You should carefully consider all of the information in this prospectus, and, in particular, you should evaluate the risk factors and other cautionary statements set forth below and under "Risk factors" in deciding whether to invest in our common stock. The following risks are discussed in more detail in "Risk factors" beginning on page 17.

Oil, natural gas, and NGL prices and related differentials are volatile. Declines in commodity prices have adversely affected our business, financial condition, cash flows, results of operations, and ability to grow and in the future may adversely affect our business, financial condition, cash flows, results of operations, access to the capital markets, and ability to grow.

We require substantial capital expenditures to conduct our operations, engage in acquisition activities, and replace our production, and we may be unable to obtain needed financing on satisfactory terms necessary to execute our operating strategy.

Lower oil, natural gas, and NGL prices and other factors have resulted, and in the future may result, in ceiling test write-downs and other impairments of our asset carrying values.

Our proved reserves are estimates and depend on many assumptions. Any material inaccuracies in these assumptions could cause the quantity and value of our oil and gas reserves, and our revenue, profitability, and cash flow, to be materially different from our estimates.

As part of our ongoing operations, we plan to explore in new or emerging plays. As a result, our drilling in these areas is subject to greater risk and uncertainty.

Exploration and drilling activities involve substantial risks and may not result in commercially productive reserves.

Oil and gas exploration and development is subject to environmental regulation under a variety of federal, provincial, territorial, and in some instances municipal or aboriginal, laws and regulations. Changes in environmental regulation could have an adverse impact on our operations. The applicability of such laws and regulations may vary according to location.

Drilling locations that we decide to drill may not yield oil, natural gas, or NGLs in commercially viable quantities.

Our drilling locations are scheduled to be drilled over several years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. In addition, we may not be able to raise the significant amount of capital that would be necessary to drill a substantial portion of our potential drilling locations.

Our results as a separate, stand-alone company could be materially different from those portrayed in our historical financial results.

Our separation from Forest may adversely affect our business, and we may not achieve some or all of the expected benefits of the separation.

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As long as we are controlled by Forest, your ability to influence the outcome of matters requiring stockholder approval will be limited.

We may have potential business conflicts of interest with Forest regarding our past and ongoing relationships, and because of Forest's controlling ownership in us, the resolution of these conflicts may not be favorable to us.

Your investment in our common stock may be adversely affected if Forest does not spin-off its ownership of our common stock.

The separation agreements may limit our ability to obtain additional financing or make acquisitions and may require us to pay significant tax liabilities.

The separation agreements may limit our ability to make acquisitions, dispose of assets, acquire equity or debt securities of another person, incur indebtedness, or take any other actions that could reasonably result in Forest being in breach of or in default under its bank credit facility, the indentures governing its senior notes, or any other contract or agreement.

Prior to the spin-off, if Forest defaulted under its bank credit facility or the indentures governing its senior notes, such default would cause a cross-default under our bank credit facility and might result in a sale by Forest of its remaining interest in us and/or the exercise of contractual remedies by our lenders under our bank credit facility.

After the completion of this offering and prior to the spin-off, we will be a "controlled company" within the meaning of the NYSE rules, and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.

There currently exists no market for our common stock. An active trading market may not develop for our common stock, and the price of our common stock may be subject to factors beyond our control. If our share price fluctuates after this offering, you could lose all or a significant part of your investment.

Company information

Lone Pine was incorporated under the laws of the State of Delaware on September 30, 2010 and, until the completion of this offering, will be a wholly-owned subsidiary of Forest. Our principal executive offices are located at Suite 2500, 645-7 Avenue SW, Calgary, Alberta, Canada T2P 4G8, and our registered office in the State of Delaware is 2711 Centreville Road, Suite 480, Wilmington, Delaware 19808. Our telephone number is (403) 292-8000. Our website address will be www.lonepineresources.com. Information contained on our website is not incorporated by reference into this prospectus, and you should not consider information on our website as part of this prospectus.

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The offering

Common stock offered by us   15,000,000 shares

Underwriters' option to purchase additional common stock

 

2,250,000 shares

Common stock to be held by Forest immediately after this offering

 

70,000,000 shares

Common stock outstanding immediately after this offering

 

85,019,231 shares (87,269,231 shares if the underwriters exercise their over-allotment option in full)

Use of proceeds

 

The net proceeds from this offering of common stock, after deducting estimated underwriting discounts and commissions and estimated offering expenses, will be approximately $178.3 million ($205.8 million if the underwriters exercise their over-allotment option in full). Under the separation and distribution agreement, we have agreed to use a portion of the net proceeds from this offering to pay $29 million to Forest as partial consideration for the contribution of CFOL and the Wiser Entities to us. We intend to use the remaining net proceeds and borrowings under our bank credit facility to repay all of our outstanding indebtedness owed to Forest, including intercompany advances and accrued interest. As of May 9, 2011, we had approximately $354 million of intercompany debt payable to Forest, which includes additional borrowings used by us to complete the acquisition of certain gas properties in our Narraway/Ojay fields on April 29, 2011 for approximately CDN$75 million, pursuant to the promissory note, and $45 million of intercompany advances and accrued interest due to Forest. See "Use of proceeds" on page 49.

Exchange listing

 

It is a condition to the completion of this offering that our shares of common stock be listed on the Toronto Stock Exchange, or TSX, and the New York Stock Exchange, or NYSE. We have been approved to list our shares of common stock on the NYSE under the symbol "LPR." The TSX has also conditionally approved the listing of our shares of common stock under the symbol "LPR." Listing will be subject to us fulfilling all of the listing requirements of the NYSE and the TSX.

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Unless we specifically state otherwise, all information in this prospectus regarding our common stock:

gives effect to the transactions described under "Our relationship with Forest" beginning on page 182;

assumes no exercise by the underwriters of their over-allotment option to purchase additional shares of common stock; and

includes shares of common stock to be issued to our non-employee directors in connection with the completion of this offering, but excludes shares of common stock reserved for issuance under the Lone Pine Stock Incentive Plan.

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Summary historical and pro forma consolidated financial and other data

We derived the summary historical consolidated financial data of our predecessor, CFOL, as of December 31, 2010 and 2009 and for the years ended December 31, 2010, 2009, and 2008 from the audited historical consolidated financial statements of CFOL included elsewhere in this prospectus. We derived the summary historical consolidated financial data of CFOL as of December 31, 2008 from the audited historical consolidated financial statements of CFOL, which are not included in this prospectus. We derived the summary historical consolidated financial data of CFOL as of March 31, 2011 and for the three months ended March 31, 2011 and 2010 from the unaudited consolidated financial statements of CFOL included elsewhere in this prospectus. We derived the summary historical consolidated financial data of CFOL as of March 31, 2010 from the unaudited historical consolidated financial statements of CFOL, which are not included in this prospectus.

The historical consolidated financial statements of CFOL include a management fee payable to Forest, which was intended to reimburse Forest for certain corporate functions provided to CFOL by Forest. The historical consolidated financial statements of CFOL included in this prospectus may not necessarily reflect the financial position, results of operations, and cash flows of CFOL as if it had operated as a stand-alone public company during all periods presented. Following the completion of this offering, we expect to incur incremental general and administrative costs related to being a stand-alone public company. Accordingly, for this and other reasons, the historical results should not be relied upon as an indicator of our future performance.

The summary pro forma consolidated financial data presented as of March 31, 2011 and for the year ended December 31, 2010 and the three months ended March 31, 2011 is derived from our unaudited pro forma consolidated financial statements included elsewhere in this prospectus. The unaudited pro forma consolidated balance sheet as of March 31, 2011 assumes that the following items occurred on March 31, 2011, and the unaudited pro forma consolidated statements of operations for the year ended December 31, 2010 and for the three months ended March 31, 2011 assume that the following items occurred on January 1, 2010:

the contribution by Forest of its approximate 86.6% direct ownership interest in CFOL and its 100% direct and indirect ownership interest in each of the Wiser Entities, which collectively own the remaining interest in CFOL, to us, in exchange for 69,999,999 shares of our common stock and cash consideration of $29 million; and

the issuance by us to the public of 15,000,000 shares of common stock and the use of the net proceeds from this offering as described under "Use of proceeds" on page 49.

For a detailed discussion of the summary historical consolidated financial information contained in the following table, please read "Management's discussion and analysis of financial condition and results of operations" beginning on page 67. The following table should also be read in conjunction with "Use of proceeds" on page 49, the historical consolidated financial statements of CFOL and the accompanying notes thereto, and our unaudited pro forma consolidated financial statements contained elsewhere in this prospectus. Among other things, the historical consolidated and unaudited pro forma consolidated financial statements include

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more detailed information regarding the basis of presentation for the information in the following table.

   
 
  Lone Pine Resources Inc.
pro forma consolidated
  Canadian Forest Oil Ltd. historical consolidated  
 
  Three months
ended March 31,
   
   
   
 
 
  Three months
ended March 31,
2011

  Year ended
December 31,
2010

  Year ended December 31,  
(in thousands, except
volumes, prices, and per unit data)

 
  2011
  2010
  2010
  2009
  2008
 
   

Statement of operations data:

                                           

Revenues

  $ 36,273   $ 146,070   $ 36,273   $ 37,413   $ 146,070   $ 112,076   $ 251,111  

Costs, expenses, and other:

                                           
 

Lease operating expenses

    8,227     25,680     8,227     5,634     25,680     27,505     36,074  
 

Production and property taxes

    603     2,423     603     622     2,423     2,756     3,659  
 

Transportation and processing costs

    3,625     10,738     3,625     2,204     10,738     8,060     9,606  
 

General and administrative

    3,564     9,717     2,394     2,352     8,045     7,072     6,474  
 

Depreciation, depletion, and amortization

    19,019     63,645     19,019     13,267     63,645     56,464     86,331  
 

Ceiling test write-down of oil and gas properties

                        199,021      
 

Interest expense

    1,627     3,967     1,380     740     6,956     16,157     14,364  
 

Foreign currency exchange (gains) losses, net

        (1,395 )   (7,820 )   (6,650 )   (14,560 )   (18,062 )   20,440  
 

Other, net

    315     1,575     315     242     1,575     1,324     1,493  
       

Earnings (loss) before income taxes

    (707 )   29,720     8,530     19,002     41,568     (188,221 )   72,670  

Income tax:

                                           
 

Current

                            280  
 

Deferred

    796     6,593     1,985     3,989     7,830     (49,293 )   23,312  
       
     

Total income tax

    796     6,593     1,985     3,989     7,830     (49,293 )   23,592  
       

Net earnings (loss)

  $ (1,503 ) $ 23,127   $ 6,545   $ 15,013   $ 33,738   $ (138,928 ) $ 49,078  
       

Other financial data:

                                           
   

Adjusted EBITDA(1)

  $ 20,214   $ 96,973   $ 21,384   $ 26,624   $ 98,645   $ 66,368   $ 194,935  

Balance sheet data (at period end):

                                           
   

Oil and gas properties, net

  $ 659,705         $ 659,705   $ 553,607   $ 585,115   $ 453,148   $ 675,135  
   

Total assets

    796,201           796,201     643,660     713,670     515,636     726,895  
   

Long-term debt(2)

    174,999                           94,415  
   

Amounts due to Forest(3)

              322,020     190,302     286,480     156,726     106,063  
   

Total stockholders' equity

    468,087           321,066     281,801     306,606     257,554     368,123  

Cash flow information:

                                           
   

Net cash provided by (used in) operating activities

              $ 27,080   $ (4,916 ) $ 87,650   $ 50,339   $ 189,168  
   

Net cash (used in) provided by investing activities

                (57,791 )   (39,495 )   (218,155 )   28,483     (202,941 )
   

Net cash provided by (used in) financing activities

                32,457     35,491     121,551     (70,030 )   6,778  

Sales volumes and operating data:

                                           

Working interest sales volumes(4):

                                           
 

Natural gas (MMcf)

    6,801     23,961     6,801     5,596     23,961     25,431     28,501  
 

Oil and NGLs (MBbls)

    207     1,142     207     285     1,142     1,076     1,300  
 

Total natural gas equivalent (MMcfe)

    8,043     30,814     8,043     7,306     30,814     31,888     36,300  
 

Average daily sales volumes (MMcfe/d)(5)

    89     84     89     81     84     87     99  

Net sales volumes(6):

                                           
 

Natural gas (MMcf)

    6,486     22,436     6,486     4,979     22,436     23,248     23,313  
 

Oil and NGLs (MBbls)

    174     962     174     227     962     856     1,102  
 

Total natural gas equivalent (MMcfe)

    7,530     28,208     7,530     6,341     28,208     28,384     29,925  
 

Average daily sales volumes (MMcfe/d)(5)

    84     77     84     70     77     78     82  

Average sales price(7):

                                           
 

Natural gas (per Mcf)

  $ 3.49   $ 3.71   $ 3.49   $ 4.57   $ 3.71   $ 3.15   $ 6.98  
 

Oil and NGLs (per Bbl)

    78.26     65.30     78.26     64.64     65.30     45.68     79.61  

Cost and operating data per Mcfe(7):

                                           
   

Lease operating expenses

  $ 1.09   $ 0.91   $ 1.09   $ 0.89   $ 0.91   $ 0.97   $ 1.21  
   

Production and property taxes

    0.08     0.09     0.08     0.10     0.09     0.10     0.12  
   

Transportation and processing costs

    0.48     0.38     0.48     0.35     0.38     0.28     0.32  
   

General and administrative

    0.47     0.34     0.32     0.37     0.29     0.25     0.22  
   

Depreciation, depletion, and amortization

    2.53     2.26     2.53     2.09     2.26     1.99     2.88  
   

(1)   In addition to reporting net earnings as defined under U.S. generally accepted accounting principles, or GAAP, we also present Adjusted EBITDA, which is a non-GAAP performance measure. See "—Non-GAAP financial measureAdjusted EBITDA," below, for a reconciliation of Adjusted EBITDA to reported net earnings, which is the most directly comparable financial measure calculated and presented in accordance with GAAP.

(2)   Represents amounts due under our bank credit facility.

(3)   Includes our note payable to Forest, intercompany advances due to Forest, and accrued interest payable to Forest.

(4)   "Working interest sales volumes" represents our working interest share of sales volumes before the impact of royalty burdens.

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(5)   The comparability of the reported average daily working interest and net sales volumes reported for the year ended December 31, 2010 and for the three months ended March 31, 2011 to the prior comparative periods was impacted by divestitures of certain non-core oil and gas properties, primarily in December 2009 and April 2010, that, at the time the divestitures occurred, had a combined net production rate of 16 MMcfe/d.

(6)   "Net sales volumes" represents working interest volumes less the amount of volumes attributable to royalty burdens.

(7)   Calculated using net sales volumes.

Non-GAAP financial measure

Adjusted EBITDA

In addition to reporting net earnings as defined under GAAP, we also present, in the table above, earnings before interest, income taxes, depreciation, depletion, and amortization, and other non-cash operating items, or Adjusted EBITDA, which is a non-GAAP performance measure. Adjusted EBITDA consists of net earnings (loss) before interest expense, income taxes, depreciation, depletion, and amortization, as well as other non-cash operating items such as ceiling test write-downs of oil and gas properties, foreign currency exchange (gains) losses, and accretion of asset retirement obligations. Adjusted EBITDA does not represent, and should not be considered an alternative to, GAAP measurements, such as net earnings (loss) (its most comparable GAAP financial measure), and our calculations thereof may not be comparable to similarly-titled measures reported by other companies. By eliminating interest, income taxes, depreciation, depletion, amortization, and other non-cash items from earnings, we believe the result is a useful measure across time in evaluating our fundamental core operating performance. Our management also uses Adjusted EBITDA to manage our business, including the preparation of our annual operating budget and financial projections. We believe that Adjusted EBITDA is also useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. As indicated, Adjusted EBITDA does not include interest expense on borrowed money or depletion, depreciation, and amortization expense on capital assets or the payment of income taxes, which are necessary elements of our operations. Because Adjusted EBITDA does not account for these and other expenses, its utility as a measure of our operating performance has material limitations. Because of these limitations, our management does not view Adjusted EBITDA in isolation and also uses other measurements, such as net earnings and revenues, to measure operating performance. The following table provides a reconciliation of net earnings (loss), the most directly comparable GAAP measure, to Adjusted EBITDA for the periods presented.

   
 
  Lone Pine Resources Inc.
pro forma consolidated
  Canadian Forest Oil Ltd. historical consolidated  
 
  Three months
ended March 31,
   
   
   
 
 
   
  Year ended
December 31,
2010

  Year ended December 31,  
 
  Three months
ended March 31, 2011

 
(in thousands)
  2011
  2010
  2010
  2009
  2008
 
   

Net earnings (loss)

  $ (1,503 ) $ 23,127   $ 6,545   $ 15,013   $ 33,738   $ (138,928 ) $ 49,078  

Income tax expense (benefit)

    796     6,593     1,985     3,989     7,830     (49,293 )   23,592  

Foreign currency exchange (gains) losses, net

        (1,395 )   (7,820 )   (6,650 )   (14,560 )   (18,062 )   20,440  

Interest expense

    1,627     3,967     1,380     740     6,956     16,157     14,364  

Accretion of asset retirement obligations

    275     1,036     275     265     1,036     1,009     1,130  

Ceiling test write-down of oil and gas properties

                        199,021      

Depreciation, depletion, and amortization

    19,019     63,645     19,019     13,267     63,645     56,464     86,331  
       

Adjusted EBITDA

  $ 20,214   $ 96,973   $ 21,384   $ 26,624   $ 98,645   $ 66,368   $ 194,935  
   

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Summary reserve data

The following table presents summary data with respect to our estimated proved reserves as of the dates indicated. For additional information regarding our reserves, see "Business—Reserves" on page 107. The estimated proved reserves as of December 31, 2010 and 2009 presented in the table below were audited by DeGolyer and MacNaughton, our independent petroleum engineering firm, and were prepared consistent with the rules and regulations of the U.S. Securities and Exchange Commission, or the SEC, regarding oil and gas reserve reporting that are currently in effect. The estimated proved reserves as of December 31, 2008 were also audited by DeGolyer and MacNaughton, and were prepared consistent with the former rules and regulations of the SEC regarding oil and gas reserve reporting as in effect during such period.

   
 
  As of December 31,  
 
  2010
  2009
  2008
 
   

Reserve data(1)(2):

                   

Estimated proved reserves(3):

                   
 

Natural gas (MMcf)

    266,886     221,201     237,515  
 

Oil (MBbl)

    17,284     15,364     7,359  
 

Natural gas liquids (MBbl)

    973     1,490     1,477  
 

Total (MMcfe)

    376,428     322,325     290,531  

Proved developed (MMcfe)

    208,856     206,952     227,300  

Proved undeveloped (MMcfe)

    167,572     115,373     63,231  

Proved developed reserves as a % of total proved reserves

    55%     64%     78%  

Standardized measure (in thousands)(4)

  $ 548,480   $ 498,690   $ 520,675  
   

(1)   Our estimated proved reserves and standardized measure were determined using index prices for oil and natural gas and were held constant throughout the projected life of the properties. The unweighted arithmetic average first-day-of-the-month index prices for the prior 12 months were $79.81 per Bbl for oil and $4.38 per MMBtu for natural gas for NYMEX Henry Hub ($3.93 per MMBtu at AECO) at December 31, 2010 and $61.08 per Bbl for oil and $3.87 per MMBtu for natural gas for NYMEX Henry Hub ($3.46 per MMBtu at AECO) at December 31, 2009. The NYMEX index prices were $44.60 per Bbl for oil and $5.71 per MMBtu for natural gas for Henry Hub ($5.44 per MMBtu at AECO) at December 31, 2008. The NYMEX and AECO prices were adjusted by lease for quality, transportation fees, geographical differentials, marketing bonuses or deductions, and other factors affecting the price we receive at the point of sale.

(2)   Estimated proved reserves are based on anticipated sales volumes and do not contain those volumes of gas that we expect to be consumed in operations, flared, or injected.

(3)   In 2010 and 2009, we sold certain non-core oil and gas properties that had estimated proved reserves of 13,795 MMcfe and 77,305 MMcfe, respectively. There were no divestitures of oil and gas properties that had estimated proved reserves in 2008.

(4)   Standardized measure is an estimate of the present value of the estimated future net revenues from proved oil and gas reserves at a date indicated after deducting estimated production and property taxes, future capital costs, operating expenses, and estimated future income taxes. The estimated future net revenues are discounted at an annual rate of 10%, in accordance with the SEC's requirements, to determine their "present value." The present value is shown to indicate the effect of time on the value of the revenue stream and should not be construed as being the fair market value of the properties. Estimates of future net revenues are made using liquids and natural gas prices and operating costs at the estimation date in accordance with the SEC's rules and regulations and are held constant for the life of the reserves.

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Risk factors

Investing in our common stock involves substantial risk. You should carefully consider the following risk factors and the other information in this prospectus before investing in our common stock. If any of the following risks actually occur, our business, financial condition, cash flows, and results of operations could suffer materially and adversely. In that case, the trading price of our common stock could decline, and you might lose all or part of your investment. The risks discussed below are not the only risks we face. We may experience additional risks and uncertainties not currently known to us; or, as a result of developments occurring in the future, conditions that we currently deem to be immaterial may also materially and adversely affect our business, financial condition, cash flows, and results of operations.

Risks relating to our business

Oil, natural gas, and NGL prices and related differentials are volatile. Declines in commodity prices have adversely affected our business, financial condition, cash flows, results of operations, and ability to grow and in the future may adversely affect our business, financial condition, cash flows, results of operations, access to the capital markets, and ability to grow.

Our financial condition, operating results, and future rate of growth depend upon the prices that we receive for our oil, natural gas, and NGLs. Prices also affect our cash flow available for capital expenditures and our ability to access funds under our bank credit facility and through the capital markets. The amount available for borrowing under our bank credit facility is subject to a borrowing base, which is determined by our lenders taking into account our estimated proved reserves, and is subject to periodic redeterminations based on pricing models determined by the lenders at such time. Declines in oil, natural gas, and NGL prices may adversely impact the value of our estimated proved reserves and, in turn, the market values used by our lenders to determine our borrowing base. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Bank credit facility" on page 81 for more details. Further, because we have elected to use the full cost accounting method, each quarter we must perform a "ceiling test" that is impacted by declining prices. Significant price declines could cause us to take one or more ceiling test write-downs, which would be reflected as non-cash charges against current earnings. See "—Lower oil, natural gas, and NGL prices and other factors have resulted, and in the future may result, in ceiling test write-downs and other impairments of our asset carrying values" on page 24.

Further, the differentials between (1) the prices that we realize for our oil, natural gas, and NGLs and (2) commonly-used benchmark prices for each product, are volatile and will change over time.

In addition, significant or extended price declines may also adversely affect the amount of oil, natural gas, and NGLs that we can produce economically. A reduction in production could result in a shortfall in our expected cash flows and require us to reduce our capital spending or borrow funds to cover any such shortfall. Any of these factors could negatively impact our ability to replace our production and our future rate of growth.

The markets for oil, natural gas, and NGLs have been volatile historically, and we expect them to remain volatile in the future. Oil and natural gas spot prices reached at or near historical highs in July 2008. Prices have declined since that time and may continue to fluctuate widely in the future. The prices we receive for our oil, natural gas, and NGLs depend upon factors beyond our control, including, among others:

domestic and global supplies, consumer demand for oil, natural gas, and NGLs, and market expectations regarding supply and demand;

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domestic and worldwide economic conditions;

the impact of the U.S. dollar and the Canadian dollar exchange rate on oil, natural gas, and NGL prices;

the proximity, capacity, cost, and availability of oil, natural gas, and NGL pipelines, processing, gathering, and other transportation facilities;

weather conditions;

political conditions, instability, and armed conflicts in oil-producing and gas-producing regions;

actions by the Organization of Petroleum Exporting Countries directed at maintaining prices and production levels;

the price and availability of imports of oil, natural gas, and NGLs;

the impact of energy conservation efforts and the price and availability of alternative fuels;

domestic and foreign governmental regulations and taxes; and

technological advances affecting energy consumption and supply.

These factors make it very difficult to predict future commodity price movements with any certainty. We sell the majority of our oil, natural gas, and NGL production at current spot prices rather than through fixed-price contracts. However, we intend in the future to enter into derivative instruments to reduce our exposure to fluctuations in oil, natural gas, and NGL prices. See "—Our use of hedging transactions could result in financial losses or reduce our income" on page 23. Further, oil prices and natural gas prices do not necessarily fluctuate in direct relation to each other. Approximately 71% of our estimated proved reserves at December 31, 2010 were natural gas, and, as a result, our financial results will be more sensitive to fluctuations in natural gas prices.

We require substantial capital expenditures to conduct our operations, engage in acquisition activities, and replace our production, and we may be unable to obtain needed financing on satisfactory terms necessary to execute our operating strategy.

We require substantial capital expenditures to conduct our exploration, development, and production operations, engage in acquisition activities, and replace our production. As part of our exploration and development operations, we have expanded, and expect to further expand, the application of horizontal drilling and multi-stage hydraulic fracture stimulation techniques. The utilization of these techniques requires substantially greater capital expenditures as compared to the drilling of a vertical well, sometimes more than three times the cost. The incremental capital expenditures are the result of greater measured depths and additional hydraulic fracture stages in horizontal wellbores. We have established a capital budget of approximately $250 million for our drilling programs in the Narraway/Ojay fields and the Evi area in 2011 and the acquisition described under "Prospectus summary—Recent developments—Acquisition of natural gas properties in the Narraway/Ojay fields" on page 6. Subsequent to the completion of this offering, we expect to increase our capital expenditure budget for 2011 to $291 million to continue our drilling programs in the Deep Basin area and the Evi area and to re-enter an existing wellbore in the Liard Basin in late 2011. Prior to completion of this offering, we plan to use cash flows from operations and borrowings from Forest to fund our capital expenditures in 2011. Subsequent to the completion of this offering, we plan to use cash flows from operations and borrowings under our bank credit facility to fund our capital expenditures in 2011. We also may engage in asset sale transactions to fund

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capital expenditures when market conditions permit us to complete transactions on terms we find acceptable.

As part of a divestiture program that was initiated by Forest in 2008 and continued throughout 2009, Forest's cash position increased significantly by the fourth quarter of 2009. In order to reduce its consolidated debt and interest expense, including amounts we had drawn on our bank credit facility, Forest advanced us $42 million in December 2009. We used this advance to pay down our bank credit facility. Since that time, we have continued to utilize our bank credit facility to fund short-term borrowing needs associated with our daily disbursements, which we repay utilizing cash flows from operations and borrowings from Forest. Since paying off our bank credit facility in December 2009, and through May 9, 2011, our borrowings from Forest have increased from $136 million to $354 million. In addition, intercompany advances, including accrued interest, have increased from $21 million to $45 million during the same period. As of May 9, 2011, we had approximately $354 million of intercompany debt payable to Forest, which includes additional borrowings used by us to complete the acquisition of certain gas properties in our Narraway/Ojay fields on April 29, 2011 for approximately CDN$75 million, pursuant to the promissory note, and $45 million of intercompany advances and accrued interest due to Forest. Under the separation and distribution agreement, we have agreed to use a portion of the net proceeds from this offering to pay $29 million to Forest as partial consideration for the contribution of CFOL and the Wiser Entities to us. We intend to use the remaining net proceeds from this offering and borrowings under our bank credit facility to repay all of our outstanding indebtedness to Forest, including intercompany advances and accrued interest. We do not expect to be able to borrow from, or receive intercompany advances from, Forest after the completion of this offering. On a pro forma basis, as of May 9, 2011, after giving effect to this offering, the application of the net proceeds therefrom, the related transactions, and the acquisition of certain natural gas properties located in the Narraway/Ojay fields described under "Prospectus summary—Recent Developments—Acquisition of natural gas properties in the Narraway/Ojay fields" on page 6, we estimate that we would have had $255.8 million in borrowings under our bank credit facility.

Following completion of this offering, we intend to rely on cash flows from operations and borrowings under our bank credit facility and, occasionally, property sales as our primary sources of liquidity. There can be no assurance that such sources will be sufficient to fund our exploration, development, and acquisition activities. For so long as Forest is required to consolidate our results of operations and financial position, we may not incur any additional indebtedness if the incurrence of indebtedness either (1) will cause Forest to be in breach of or default under any contract or agreement, (2) is reasonably likely, in Forest's reasonable opinion, to adversely impact Forest's credit rating, or (3) involves more than $5 million, except that the restriction against the incurrence of additional indebtedness contained in this clause (3) will not, however, affect our ability to borrow under our bank credit facility. Following the completion of this offering, and prior to the later of the spin-off and the expiration of the lock-up period under the underwriting agreement, we will be unable to issue any additional stock to fund our exploration, development, and acquisition activities. Following the spin-off and the expiration of the lock-up period under the underwriting agreement, our ability to access the private or public equity capital markets or complete asset sales to fund such activities will be subject to certain limitations related to the spin-off, as described below. If our revenues and cash flows decrease in the future as a result of a decline in commodity prices or a reduction in production levels, however, and we are unable to obtain additional equity or debt financing in the private or public capital markets or access alternative sources of funds, we may be required to reduce the level of our capital expenditures and may lack the capital necessary to replace our reserves or maintain our production levels.

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Our future revenues, cash flows, and spending levels are subject to a number of factors, including commodity prices, the level of production from existing wells, and our success in developing and producing new wells. Further, our ability to access funds under our bank credit facility is based on a borrowing base, which is subject to periodic redeterminations based on our estimated proved reserves and prices that will be determined by our lenders using the bank pricing prevailing at such time. If the prices for oil and natural gas decline, or if we have a downward revision in estimates of our proved reserves, the borrowing base may be reduced. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Bank credit facility" on page 81 for more details.

Our ability to access the private and public equity and debt markets and complete future asset monetization transactions is also dependent upon oil, natural gas, and NGL prices, in addition to a number of other factors, some of which are outside our control. These factors include, among others:

the value and performance of our equity securities;

domestic and global economic conditions; and

conditions in the domestic and global financial markets.

In addition, immediately prior to the completion of this offering, we will enter into separation agreements with Forest to preserve the tax-free status of a potential spin-off. As a result, we will be restricted in our ability to sell assets outside the ordinary course of business, to issue or sell our common stock or other securities (including securities convertible into our common stock but excluding certain compensation arrangements), or to enter into any other corporate transaction that would cause us to undergo either a 50% or greater change in the ownership of our voting stock or a 50% or greater change in the ownership (measured by value) of all classes of our stock (in either case, taking into account shares issued in this offering). See "—Risks related to our relationship with Forest—The separation agreements may limit our ability to obtain additional financing or make acquisitions and may require us to pay significant tax liabilities" on page 36 and "—The separation agreements may limit our ability to make acquisitions, dispose of assets, acquire equity or debt securities of another person, incur indebtedness, or take any other actions that could reasonably result in Forest being in breach of or in default under its bank credit facility, the indentures governing its senior notes, or any other contract or agreement" on page 38.

The credit crisis and related turmoil in the global financial markets have had an impact on our business and our financial condition, and we may face additional challenges if economic and financial market conditions worsen. The weakened economic conditions also may adversely affect the collectability of our trade receivables. For example, our accounts receivable are primarily from purchasers of our oil, natural gas, and NGL production and other exploration and production companies that own working interests in the properties that we operate. This industry concentration could adversely impact our overall credit risk because our customers and working interest owners may be similarly affected by changes in economic and financial market conditions, commodity prices, and other conditions. Further, a credit crisis and turmoil in the financial markets in the future could cause our commodity derivative instruments, if any, to be ineffective in the event a counterparty was unable to perform its obligations or sought bankruptcy protection.

Due to these factors, we cannot be certain that funding, if needed, will be available to the extent required, or on acceptable terms. If we are unable to access funding when needed on acceptable terms, we may not be able to fully implement our business plans, take advantage of business opportunities, respond to competitive pressures, or refinance our debt obligations as

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they come due, any of which could have a material adverse effect on our business, financial condition, cash flows, and results of operations.

Our future debt levels may limit our flexibility to obtain additional financing and pursue other business opportunities.

On a pro forma basis, as of May 9, 2011, after giving effect to this offering, the application of the net proceeds therefrom, the related transactions, and the acquisition of certain natural gas properties located in the Narraway/Ojay fields described under "Prospectus summary—Recent developments—Acquisition of natural gas properties in the Narraway/Ojay fields" on page 6, we estimate that we would have had $255.8 million in borrowings under our bank credit facility. Following this offering, we believe we will have the ability to incur additional debt, including under our bank credit facility. In the future, we may incur significant indebtedness in order to develop our properties. However, the amount of debt we will be able to incur will be primarily subject to the market value of our estimated proved reserves. Our future indebtedness could have important consequences to us, including:

our ability to obtain additional financing, if necessary, for working capital, capital expenditures, acquisitions, or other purposes may be impaired, or such financing may not be available on favorable terms;

covenants contained in our existing and future credit and debt arrangements will require us to meet financial tests that may affect our flexibility in planning for and reacting to changes in our business, including possible acquisition opportunities;

we may need a substantial portion of our cash flow to make principal and interest payments on our indebtedness, reducing the funds that would otherwise be available for operations and future business opportunities; and

our debt level will make us more vulnerable to competitive pressures or a downturn in our business or in the economy generally than our competitors with less debt.

Our ability to service our indebtedness will depend upon, among other things, our future financial and operating performance, which will be affected by prevailing economic conditions and commodity prices and financial, business, regulatory, and other factors, some of which are beyond our control. If our operating results are not sufficient to service our future indebtedness, we will be forced to take actions such as reducing or delaying business activities, acquisitions, investments, and/or capital expenditures, selling assets, restructuring or refinancing our indebtedness, or seeking additional equity capital or bankruptcy protection. We may not be able to effect any of these remedies on satisfactory terms or at all.

For so long as Forest is required to consolidate our results of operations and financial position, we may not incur any additional indebtedness if the incurrence of indebtedness either (1) will cause Forest to be in breach of or default under any contract or agreement, (2) is reasonably likely, in Forest's reasonable opinion, to adversely impact Forest's credit rating, or (3) involves more than $5 million, except that the restriction against the incurrence of additional indebtedness contained in this clause (3) will not, however, affect our ability to borrow under our bank credit facility. Following the completion of this offering, and prior to the later of the spin-off and the expiration of the lock-up period under the underwriting agreement, we will be unable to issue any additional stock to fund our exploration, development, and acquisition activities. Following the spin-off and the expiration of the lock-up period under the underwriting agreement, our ability to access the private or public equity capital markets or complete asset sales to fund such activities will be subject to certain limitations related to the spin-off. Immediately prior to the completion of this offering, we will enter into separation

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agreements with Forest to preserve the tax-free status of a potential spin-off. As a result, we will be restricted in our ability to sell assets outside the ordinary course of business, to issue or sell our common stock or other securities (including securities convertible into our common stock but excluding certain compensation arrangements), or to enter into any other corporate transaction that would cause us to undergo either a 50% or greater change in the ownership of our voting stock or a 50% or greater change in the ownership (measured by value) of all classes of our stock (in either case, taking into account shares issued in this offering). See "—Risks related to our relationship with Forest—The separation agreements may limit our ability to obtain additional financing or make acquisitions and may require us to pay significant tax liabilities" on page 36 and "—The separation agreements may limit our ability to make acquisitions, dispose of assets, acquire equity or debt securities of another person, incur indebtedness, or take any other actions that could reasonably result in Forest being in breach of or in default under its bank credit facility, the indentures governing its senior notes, or any other contract or agreement" on page 38.

Our new bank credit facility will have substantial restrictions and a financial covenant that may restrict our business and financing activities and could have a material adverse effect on our business, financial condition, cash flows, and results of operations.

In connection with this offering, we have entered into a new stand-alone bank credit facility, the operative provisions of which will become effective upon the closing of this offering. Our new bank credit facility includes covenants that place limitations on certain types of activities, including restrictions or requirements with respect to additional debt, liens, asset sales, hedging activities, investments, dividends, mergers, and acquisitions. In addition, we will be required to comply with a financial covenant relating to our EBITDA ratio. For example, our new bank credit facility provides that CFOL will not permit its ratio of total debt outstanding to consolidated EBITDA (as adjusted for non-cash charges) to be greater than 4.00 to 1.00 for four consecutive quarters.

Our ability to comply with these restrictions and covenants in the future is uncertain and will be affected by the levels of cash flow from our operations and events or circumstances beyond our control. If market or other economic conditions deteriorate, our ability to comply with these covenants may be impaired. If CFOL were to fail to perform its obligations under any of the restrictions, covenants, or requirements in our new bank credit facility, it could cause an event of default, and our new bank credit facility could be terminated and amounts outstanding could be declared immediately due and payable. We might not have, or be able to obtain, sufficient funds to make these accelerated payments. In addition, our obligations under our new bank credit facility will be secured by substantially all of CFOL's assets, and if we are unable to repay any outstanding indebtedness under our new bank credit facility, the lenders could seek to foreclose on such assets, which could have a material adverse effect on our business, financial condition, cash flows, and results of operations.

Our new bank credit facility limits the amounts we can borrow to a borrowing base amount, determined by the lenders in their sole discretion taking into account the estimated value of CFOL's oil and gas properties. Outstanding borrowings in excess of the borrowing base will be required to be repaid. If we do not have sufficient funds on hand for repayment, we may be required to seek a waiver or amendment from our lenders, refinance our credit facility, or sell assets, debt, or common stock. We may not be able obtain such financing or complete such transactions on terms acceptable to us, or at all. Failure to make the required repayment could result in a default under our new bank credit facility, which could have a material adverse effect on our business, financial condition, cash flows, and results of operations.

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Our use of hedging transactions could result in financial losses or reduce our income.

To reduce our exposure to fluctuations in oil, natural gas, and NGL prices, we expect to enter into derivative instruments (or hedging agreements) for a portion of our oil, natural gas, and NGL production. We expect that our commodity hedging agreements will be limited in duration, usually for periods of two years or less; however, in conjunction with acquisitions, we may enter into or acquire hedges for longer periods. Our hedging transactions will expose us to certain risks and financial losses, including, among others, the risk that:

we may be limited in receiving the full benefit of increases in oil, natural gas, and NGL prices as a result of these transactions;

we may hedge too much or too little production, depending on how oil, natural gas, and NGL prices fluctuate in the future;

there is a change to the expected differential between the underlying price and the actual price received; and

a counterparty to a hedging arrangement may default on its obligations to us.

Our hedging transactions will impact our earnings in various ways. Due to the volatility of oil, natural gas, and NGL prices, we may be required to recognize mark-to-market gains and losses on derivative instruments, as the estimated fair value of our commodity derivative instruments is subject to significant fluctuations from period to period. The amount of any actual gains or losses recognized will likely differ from our period-to-period estimates and will be a function of the actual price of the commodities on the settlement date of the derivative instrument. We expect that commodity prices will continue to fluctuate in the future, and, as a result, our periodic financial results will be subject to fluctuations related to our derivative instruments.

The implementation of financial reform legislation and regulations could have an adverse effect on our ability to use derivative instruments to hedge risks associated with our business.

To reduce our exposure to fluctuations in oil, natural gas, and NGL prices, we expect in the future to enter into derivative instruments (or hedging agreements) for a portion of our oil, natural gas, and NGL production. Over-the-counter derivatives have been the subject of recent legislative and regulatory initiatives. In the United States, comprehensive financial reform legislation, known as the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Dodd-Frank Act, was recently adopted that, among other things, establishes federal oversight and regulation of the over-the-counter derivatives market and entities, including businesses like ours, that participate in that market. The Dodd-Frank Act requires the U.S. Commodities Futures Trading Commission, or the CFTC, and the SEC to promulgate rules and regulations implementing the new legislation within 360 days from the date of enactment. In its rulemaking under the Dodd-Frank Act, the CFTC has proposed regulations to set position limits for certain futures and option contracts in the major energy markets and for swaps that are their economic equivalents. Certain bona fide hedging transactions or positions would be exempt from these position limits. It is not possible at this time to predict when the CFTC will finalize these regulations. In Canada, securities regulatory authorities have recently published a consultation paper on over-the-counter derivatives regulation, which includes proposals that are similar, in certain respects, to matters provided for under the Dodd-Frank Act. New regulations may require us to comply with margin requirements and with certain clearing and trade-execution requirements in connection with our derivatives activities, although the application of those provisions to us is uncertain at this time, and may also require the counterparties to our derivative instruments to spin-off some of their derivatives activities to a separate entity, which may not be as creditworthy as such counterparty. Such legislative and regulatory initiatives could significantly increase the cost of derivatives contracts (including

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through requirements to post collateral, which could adversely affect our available liquidity), materially alter the terms of derivatives contracts, reduce the availability of derivatives to protect against risks we encounter, reduce our ability to monetize or restructure any derivatives contracts, and increase our exposure to less creditworthy counterparties. If we limit our use of derivatives as a result of any such legislative and regulatory initiatives, our results of operations may become more volatile and our cash flows may be less predictable, which could adversely affect our ability to plan for and fund capital expenditures. Finally, the Dodd-Frank Act was intended, in part, to reduce the volatility of oil, natural gas, and NGL prices, which some legislators attributed to speculative trading in derivatives and commodity instruments related to oil, natural gas, and NGLs. Our revenues could, therefore, be adversely affected if a consequence of any new legislation and regulations is to lower commodity prices. Any of these consequences could have a material adverse effect on our business, financial condition, cash flows, and results of operations.

Lower oil, natural gas, and NGL prices and other factors have resulted, and in the future may result, in ceiling test write-downs and other impairments of our asset carrying values.

We use the full cost method of accounting to report our oil and gas operations. Under this method, we capitalize the cost to acquire, explore for, and develop oil and gas properties. Under full cost accounting rules, the net capitalized costs of proved oil and gas properties may not exceed a "ceiling limit," which is based upon the present value of estimated future net cash flows from proved reserves, discounted at 10%. If net capitalized costs of proved oil and gas properties exceed the ceiling limit, we must charge the amount of the excess to earnings. This is called a "ceiling test write-down." Under the accounting rules, we are required to perform a ceiling test each quarter. A ceiling test write-down would not impact cash flow from operating activities, but it would reduce our stockholders' equity. See "Management's discussion and analysis of financial condition and results of operations—Critical accounting policies, estimates, judgments, and assumptions—Full cost method of accounting" on page 87 for further details.

Investments in unproved properties, including capitalized interest costs, are also assessed periodically to ascertain whether impairment has occurred. Unproved properties whose costs are individually significant are assessed individually by considering the primary lease terms of the properties, the holding period of the properties, and geographic and geologic data obtained relating to the properties. The amount of impairment assessed, if any, is added to the costs to be amortized. If an impairment of unproved properties results in a reclassification to proved oil and gas properties, the amount by which the ceiling limit exceeds the capitalized costs of proved oil and gas properties would be reduced.

The risk that we will be required to write-down the carrying value of our oil and gas properties, our unproved properties, or goodwill increases when oil, natural gas, and NGL prices are low. In addition, write-downs may occur if we experience substantial downward adjustments to our estimated proved reserves or our unproved property values, or if estimated future development costs increase. For example, we recorded a non-cash ceiling test write-down of approximately $199 million in the first quarter of 2009. This write-down was reflected as a charge to net earnings. Additional ceiling test write-downs may be required if oil, natural gas, and NGL prices decline further, unproved property values decrease, estimated proved reserve volumes are revised downward, or costs incurred in exploration, development, or acquisition activities exceed the discounted future net cash flows from the additional reserves, if any.

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Our proved reserves are estimates and depend on many assumptions. Any material inaccuracies in these assumptions could cause the quantity and value of our oil and natural gas reserves, and our revenue, profitability, and cash flow, to be materially different from our estimates.

The proved oil and gas reserve information and the related future net revenues information contained in this prospectus represent only estimates, which are prepared by our internal staff of engineers and audited by DeGolyer and MacNaughton, an independent petroleum engineering firm. Estimating quantities of proved oil and gas reserves is a subjective, complex process and depends on a number of variable factors and assumptions. To prepare estimates of economically recoverable oil and gas reserves and future net cash flows, we:

analyze historical production from the area and compare it to production rates from other producing areas;

analyze available technical data, including geological, geophysical, production, and engineering data, and the extent, quality, and reliability of this data can vary; and

make various economic assumptions, including assumptions about oil, natural gas, and NGL prices, drilling, operating, and production costs, severance and excise taxes, capital expenditures, workover and remedial costs, and the availability of funds.

As a result, these estimates are inherently imprecise. Ultimately, actual production, revenues, taxes, expenses, and expenditures relating to our reserves will vary from our estimates. Any significant inaccuracies in our assumptions or changes in operating conditions could cause the estimated quantities and net present value of the reserves contained in this prospectus to be significantly different from the actual quantities and net present value of our reserves. In addition, we may adjust our estimates of proved reserves to reflect production history, actual results, prevailing commodity prices, and other factors, many of which are beyond our control.

Further, you should not assume that any present value of future net cash flows from our estimated proved reserves contained in this prospectus represents the market value of our estimated proved reserves. We base the estimated discounted future net cash flows from our estimated proved reserves at December 31, 2010 on first-day-of-the-month average oil and natural gas prices for the twelve-month period preceding the estimate and on costs as of the date of the estimate. Actual future prices and costs may be materially higher or lower. Actual future net revenues will be affected by factors such as the amount and timing of actual development expenditures, the rate and timing of production, and changes in governmental regulations and/or taxes. At December 31, 2010, approximately 45% of our estimated proved reserves (by volume) were undeveloped. Recovery of undeveloped reserves generally requires significant capital expenditures and successful drilling operations. Our reserve estimates include the assumption that we will make significant capital expenditures to develop these undeveloped reserves, and the actual costs, development schedule, and results associated with these properties may not be as estimated. In addition, the 10% discount factor that we use to calculate the net present value of future net revenues and cash flows may not necessarily be the most appropriate discount factor, based on our cost of capital in effect from time to time and the risks associated with our business and the oil and gas industry in general.

Our failure to replace our reserves could result in a material decline in our reserves and production, which could have a material adverse effect on our business, financial condition, cash flows, and results of operations.

In general, our proved reserves decline when oil and natural gas is produced, unless we are able to conduct successful exploitation, exploration, and development activities, or acquire additional properties containing proved reserves, or both. Our future performance, therefore, is

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dependent upon our ability to find, develop, and acquire additional oil and natural gas reserves that are economically recoverable. Exploring for, developing, or acquiring reserves is capital intensive and uncertain. We may not be able to economically find, develop, or acquire additional reserves, or may not be able to make the necessary capital investments if our cash flows from operations decline or external sources of capital become limited or unavailable. We cannot assure you that our future exploitation, exploration, development, and acquisition activities will result in additional proved reserves or that we will be able to drill productive wells at acceptable costs. See "—We require substantial capital expenditures to conduct our operations, engage in acquisition activities, and replace our production, and we may be unable to obtain needed financing on satisfactory terms necessary to execute our operating strategy" on page 18 for a discussion of the impact of financial market conditions on our access to financing.

As part of our ongoing operations, we plan to explore in new or emerging plays. As a result, our drilling in these areas is subject to greater risk and uncertainty.

We sometimes explore in new or emerging plays. These activities are more uncertain than drilling in areas that are developed and have established production. Because emerging plays and new formations have limited or no production history, we are less able to use past drilling results to help predict future results. The lack of historical information may result in our being unable to fully execute our expected drilling programs in these areas, or the return on investment in these areas may turn out to not be as attractive as anticipated. We cannot assure you that our future drilling activities in the Utica Shale in Quebec, the Liard Basin in the Northwest Territories, or other emerging plays will be successful or, if successful, will achieve the potential resource levels that we currently anticipate based on the drilling activities that have been completed or will achieve the anticipated economic returns based on our current cost models.

Exploration and drilling activities involve substantial risks and may not result in commercially productive reserves.

We do not always encounter commercially productive reservoirs through our drilling operations. The seismic data and other technologies that we use when drilling wells do not allow us to conclusively determine prior to drilling a well whether oil, natural gas, or NGLs are present or can be produced economically. As a result, we may drill new wells or participate in new wells that are dry wells or are productive but not commercially productive, and, as a result, we may not recover all or any portion of our investment in the wells we drill or in which we participate.

The costs and expenses of drilling, completing, and operating wells are often uncertain. The presence of unanticipated pressures or irregularities in formations, miscalculations, or accidents may cause our drilling costs to be significantly higher than expected or cause our drilling activities to be unsuccessful or result in the total loss of our investment. Also, our development and exploration operations may be shortened, delayed, or canceled or we may incur significant expenditures that are not provided for in our capital budget as a result of a variety of factors, many of which are beyond our control, including, among others:

unexpected drilling conditions;

geological irregularities or pressure in formations;

mechanical difficulties and equipment failures or accidents;

increases in the costs of, or shortages or delays in the availability of, drilling rigs and related equipment;

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shortages in labor;

adverse weather conditions;

compliance with environmental and other governmental requirements;

fires, explosions, blow-outs, or cratering; and

restricted access to land necessary for drilling or laying pipelines.

Drilling activities are subject to many risks, including well blow-outs, cratering, and explosions, pipe failures, fires, uncontrollable flows of oil, natural gas, brine, or well fluids, other environmental hazards, and risks outside of our control, including the factors described above, and other risks associated with conducting drilling activities. Among other things, these risks include the risk of natural gas leaks, oil spills, pipeline ruptures, and discharges of toxic gases, any of which could result in substantial losses, personal injuries or loss of life, severe damage to or destruction of property, natural resources, and equipment, extensive pollution or other environmental damage, clean-up responsibilities, regulatory investigations, administrative, civil, and criminal penalties, and injunctions resulting in the suspension of our operations. If any of these risks occur, we could sustain substantial losses.

Drilling locations that we decide to drill may not yield oil, natural gas, or NGLs in commercially viable quantities.

We describe drilling locations that are not proved undeveloped drilling locations and our plans to explore those drilling locations in this prospectus. These non-proved drilling locations are in various stages of evaluation, ranging from a location which is ready to drill to a location that will require substantial additional interpretation. There is no way to predict in advance of drilling and testing whether any particular location will yield oil, natural gas, or NGLs in sufficient quantities to recover drilling or completion costs or to be economically viable. The use of technologies and the study of producing fields in the same area will not enable us to know conclusively, prior to drilling, whether oil, natural gas, or NGLs will be present or, if present, whether oil, natural gas, or NGLs will be present in sufficient quantities to be economically viable. Even if sufficient amounts of oil, natural gas, or NGLs exist, we may damage the potentially productive hydrocarbon bearing formation or experience mechanical difficulties while drilling or completing the well, resulting in a reduction in production from the well or abandonment of the well. We cannot assure you that the analogies we draw from available data from other wells, more fully explored locations, or producing fields will be applicable to our other identified drilling locations. In summary, the cost of drilling, completing, and operating any well is often uncertain, and new wells may not be productive.

Our drilling locations are scheduled to be drilled over several years, making them susceptible to uncertainties that could materially alter the occurrence or timing of their drilling. In addition, we may not be able to raise the significant amount of capital that would be necessary to drill a substantial portion of our potential drilling locations.

Our management has identified and scheduled drilling locations as an estimate of our future multi-year drilling activities on our existing acreage. As of December 31, 2010, we had only 181 gross drilling locations with proved undeveloped reserves attributed to them. All of our drilling locations represent a significant part of our growth strategy. Our ability to drill and develop these locations is subject to a number of uncertainties, including the availability of capital, seasonal conditions, regulatory approvals, oil, natural gas, and NGL prices, costs, and drilling results. Because of these uncertainties, we do not know if the drilling locations we have identified will ever be drilled or if we will be able to produce oil, natural gas, or NGLs from these or any other potential drilling locations.

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Competition within our industry is intense and may have a material adverse effect on our business, financial condition, cash flows, and results of operations.

We operate in a highly competitive environment. We compete with major and independent oil and gas companies in acquiring desirable oil and gas properties and in obtaining the equipment and labor required to develop and operate such properties. We also compete with major and independent oil and gas companies in the marketing and sale of oil, natural gas, and NGLs. Many of these competitors are larger, including some of the fully integrated energy companies, and have financial, staff, and other resources substantially greater than ours. As a result, these companies may have greater access to capital and may be able to pay more for development prospects and producing properties, or evaluate and bid for a greater number of properties and prospects than our financial and staffing resources permit. Also, from time to time, we have to compete with financial investors in the property acquisition market, including private equity sponsors with more funds and access to additional liquidity. Factors that affect our ability to acquire properties include availability of desirable acquisition targets, staff, and resources to identify and evaluate properties, available funds, and internal standards for minimum projected return on investment. In addition, while costs for equipment, services, and labor in the industry, as well as the cost of properties available for acquisition, tend to fluctuate with oil, natural gas, and NGL prices, these costs often do not decrease proportionately to, or their decreases lag behind, decreases in commodity prices. This disconnect can negatively impact our cash flows and may put us at a competitive disadvantage with respect to companies that have greater financial and operational resources. In addition, oil and gas producers are increasingly facing competition from providers of non-fossil energy, and government policy may favor those competitors in the future. Many of these competitors have financial and other resources substantially greater than ours. We can give no assurance that we will be able to compete effectively in the future and that our business, financial condition, cash flows, and results of operations will not suffer as a result.

Our business, financial condition, cash flows, and results of operations may be adversely affected by foreign currency fluctuations and economic and political developments.

Currently, all of our oil and gas properties and operations are located in Canada. As a result, we are exposed to the risks associated with operating as a foreign company in Canada, including political and economic developments, royalty and tax increases, changes in laws or policies affecting our exploration and development activities, and currency exchange risks, as well as changes in the policies of Canada affecting trade, taxation, and investment.

The costs and expenses of our operations are denominated in Canadian dollars. As a result, our reported profitability of our operations is subject to the risk of fluctuation in the exchange rates between the U.S. dollar and Canadian dollar. In addition, our operations are impacted by the regulatory requirements in the provinces and territories in which our operations are located, and our project economics are influenced by the differing royalty regimes in each of these locations. Any adverse regulatory developments relating to the royalty regimes applicable to our operations or the laws or policies affecting our exploration and development activities could have a material adverse effect on our business, financial condition, cash flows, and results of operations. See "—Our oil and gas operations are subject to various environmental and other governmental laws and regulations that materially affect our operations" below and "—New laws or regulatory requirements relating to hydraulic fracturing could make it more difficult or costly for us to perform fracturing of producing formations and could have an adverse effect on our ability to produce oil and gas from new wells" below and "Business—Industry regulation" on page 113, "Business—Royalties" on page 114, "Business—Land tenure" on page 120, "Business—Environmental regulation" on page 120, and "Business—Climate change regulation" on page 121, for more detail on the Canadian regulatory framework.

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Our oil and gas operations are subject to various environmental and other governmental laws and regulations that materially affect our operations.

Our oil and gas operations are subject to various Canadian federal, provincial, territorial, and local laws and regulations. These laws and regulations may be changed in response to economic or political conditions, and regulate, among other things, land tenure and the production, handling, storage, transportation, and disposal of oil and gas, by-products from oil and gas, and other substances and materials produced or used in connection with oil and gas operations. Federal authorities do not regulate the price of oil and gas in export trade. However, Canadian law regulates the quantities of oil, natural gas, and NGLs that may be removed from the provinces and exported from Canada in certain circumstances, and regulatory requirements also exist related to licensing for drilling of wells, the method and ability to produce wells, surface usage, transportation of production from wells, and conservation matters. In addition, the provinces and territories in which we operate have legislation and regulations governing land tenure, royalties, production rates and taxes, environmental protection, and other matters under their respective jurisdiction. Compliance with these laws and regulations can affect the location or size of leases and facilities, prohibit or limit the extent to which exploration and development may be allowed, and require proper closure of wells and restoration of properties when production ceases. Failure to comply with these laws and regulations in effect from time to time may result in the assessment of administrative, civil, or criminal penalties, imposition of remedial obligations, and issuance of injunctions that could delay, limit, or prohibit certain of our operations. Further, a significant spill from one of our facilities could have a material adverse effect on our business, financial condition, cash flows, and results of operations. We cannot predict the ultimate cost of compliance with these requirements or their effect on our operations. We may not be able to recover some or any of these costs from insurance.

Our operations are, and will continue to be, affected to varying degrees by laws and regulations regarding environmental protection, which may be changed to impose higher standards and potentially more costly obligations on us. Future environmental laws or regulations or approvals or processes required thereunder, and the direct and indirect costs of complying with such laws, regulations, approvals, or processes, may adversely affect our business, financial condition, cash flows, and results of operations. We believe that it is reasonably likely that the trend in environmental legislation and regulation will continue toward stricter standards. See "Business—Environmental regulation" on page 120. Canadian federal, provincial, and territorial governments are continuing to assess and develop GHG emission reduction strategies. The direct and indirect costs of complying with any emission reduction requirements arising from the implementation of any such strategies or any related laws or regulations imposed either federally, provincially, or territorially may adversely affect our business, financial condition, cash flows, and results of operations. See "Business—Climate change regulation" on page 121.

New laws or regulatory requirements relating to hydraulic fracturing could make it more difficult or costly for us to perform fracturing of producing formations and could have an adverse effect on our ability to produce oil and gas from new wells.

Hydraulic fracturing is an important and common practice that is used to stimulate production of hydrocarbons. The process involves the injection of water, sand, and chemicals under pressure into the formation to fracture the surrounding rock and stimulate production. Some concern has been expressed over the potential environmental impact of hydraulic fracturing

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operations, including with respect to the effect on water resources. In the province of Quebec, for example, BAPE was requested to review environmental and health and safety issues concerning the development of the shale gas industry in Quebec, including hydraulic fracturing operations, in connection with the government's consideration of a new oil and gas regulatory regime for the province and in anticipation of new oil and gas legislation expected to be introduced by the Government of Quebec later in 2011 or 2012. The BAPE report, released on March 8, 2011, recommends that the province undertake a strategic environmental assessment, or SEA, of shale gas drilling and that development be controlled during the assessment process. In response to the report, the Quebec Minister of Sustainable Development, Environment and Parks announced that the work of the BAPE would guide future action by the provincial government and that he would move forward with a SEA through a committee of experts and representatives from government, municipalities and industry. The Minister indicated that hydraulic fracturing will only be authorized when required to advance scientific knowledge for the assessment, and that necessary transitional regulations would be adopted in the short term. A SEA could take 18 to 30 months to complete, during which time further shale gas activities in Quebec, including the use of hydraulic fracturing techniques, may be prohibited or otherwise significantly restricted. The particulars of any such prohibitions or other restrictions, including their duration, transitional provisions, and exceptions, if any, are not yet known. See "Business—Environmental regulation" on page 120. Regulatory initiatives relating to hydraulic fracturing have also commenced or been announced in the United States, where some states have adopted or are considering the adoption of regulations that could restrict hydraulic fracturing in certain circumstances and require disclosure of chemicals used in the fracturing process, and the U.S. Environmental Protection Agency and a committee of the U.S. House of Representatives have both initiated reviews of hydraulic fracturing practices. If new laws or regulatory requirements that prohibit or otherwise significantly restrict hydraulic fracturing are adopted in any jurisdiction in which we operate, whether as a consequence of environmental concerns or otherwise, it may become more difficult or costly for us to perform fracturing to stimulate production from tight formations. In addition, additional permitting, disclosure, or other regulatory obligations may make it more difficult for us to complete oil and natural gas wells and cause permitting delays and potential increases in costs. Restrictions on hydraulic fracturing could also reduce the amount of oil, natural gas, and NGLs that we are ultimately able to produce from our reserves.

Aboriginal peoples have claimed aboriginal title and rights in portions of Canada.

Aboriginal peoples have claimed aboriginal title and rights in portions of Canada. We are not aware that any claims have been made against us in respect of our properties and assets; however, if a claim arose and was successful, such claim may have a material adverse effect on our business, financial condition, cash flows, and results of operations. Our operations may be delayed or interrupted to the extent that they are deemed to encroach on the traditional rights of aboriginal people to hunt, trap, or otherwise have access to natural resources. For example, we encountered certain infrastructure constraints in our Ojay field in British Columbia, due in part to a several-month delay in permitting required for gathering pipelines recently installed in the field, while an aboriginal people considered the installation's potential impact on their traditional land use. We may face similar delays and interruptions in the future.

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The marketability of our production is dependent upon transportation and processing facilities over which we may have no control.

The marketability of our production depends in part upon the availability, proximity, and capacity of pipelines, natural gas gathering systems, and processing facilities. Any significant change in market factors affecting these infrastructure facilities, as well as delays in the construction of new infrastructure facilities, could harm our business. We deliver a portion of our oil, natural gas, and NGLs through gathering facilities that we do not own or operate. As a result, we are subject to the risk that these facilities may be temporarily unavailable due to mechanical reasons or market conditions, or may not be available to us in the future. For example, we experienced shut-in production due to infrastructure constraints in our Ojay field in British Columbia in 2010, due in part to a several-month delay in permitting required for gathering pipelines recently installed in the field, while an aboriginal people considered the installation's potential impact on their traditional land use. If we experience interruptions or loss of pipelines or access to gathering systems that impact a substantial amount of our production, it could have a material adverse effect on our business, financial condition, cash flows, and results of operations.

We may not be insured against all of the operating risks to which our business is exposed.

The exploration, development, and production of oil, natural gas, and NGLs involve operating risks. These risks include the risk of fire, explosions, blow-outs, pipe failure, damaged drilling and oil field equipment, abnormally pressured formations, weather-related issues, and environmental hazards. Environmental hazards include oil spills, gas leaks, pipeline ruptures, or discharges of toxic gases. If any of these industry-operating risks occur, we could have substantial losses. Substantial losses may be caused by injury or loss of life, severe damage to or destruction of property, natural resources, and equipment, pollution or other environmental damage, clean-up responsibilities, regulatory investigation and penalties, and suspension of operations. Consistent with industry practice, we maintain insurance against some, but not all, of the risks described above. Generally, pollution-related environmental risks are not fully insurable. We do not insure against business interruption. We cannot assure that our insurance will be fully adequate to cover other losses or liabilities. Also, we cannot predict the continued availability of insurance at premium levels that justify its purchase.

We will incur increased legal, accounting, and other costs as a result of being a public company.

Prior to this offering, as a subsidiary of a publicly-held company, we were not directly responsible for the corporate governance and financial reporting practices, policies, and disclosure required of a publicly-traded company. As a public company, we will incur significant legal, accounting, and other expenses that we did not directly incur in the past. In addition, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, the Dodd-Frank Act, and applicable Canadian securities laws, as well as new rules implemented by the SEC, Canadian securities regulators, and the NYSE, require or may require changes in corporate governance practices of public companies. We expect these new rules and regulations to increase our legal and financial compliance costs and to make some activities more time-consuming and costly. All of the foregoing may cause our costs to be higher than the historical costs associated with these areas reflected in our financial statements.

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Our results as a separate, stand-alone company could be materially different from those portrayed in our historical financial results.

The historical financial information included in this prospectus has been derived from the consolidated historical financial statements of CFOL. The historical costs and expenses reflected in CFOL's financial statements include a management fee intended to reimburse Forest for certain corporate functions provided by Forest on our behalf, including, among other things, executive oversight, insurance and risk management, treasury, information technology, legal, accounting, tax, marketing, corporate engineering, and human resources services. The management fee was based on what Forest considered to be reasonable reflections of the historical utilization levels of these services required in support of our business. In addition, a portion of the interest costs reflected in CFOL's consolidated financial statements was associated with a note payable to and advances from Forest, which provided for interest rates that may not have been comparable with the rates we would have negotiated with a third party. Other significant changes may occur in our cost structure, management, financing, and business operations as a result of operating as a separate, stand-alone public company. For additional information, see "Selected historical consolidated financial and other data" on page 55, "Management's discussion and analysis of financial condition and results of operations" beginning on page 67, and the consolidated historical financial statements and the notes thereto included elsewhere in this prospectus.

If, after this offering, we are unable to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, or our internal controls over financial reporting are not effective, the reliability of our financial statements may be questioned, and our share price may suffer.

Section 404 of the Sarbanes-Oxley Act requires any company subject to the reporting requirements of the U.S. securities laws to perform a comprehensive evaluation of its and its subsidiaries' internal controls over financial reporting. Similar requirements apply to reporting issuers under Canadian securities laws. To comply with these requirements, we will be required to document and test our internal control procedures, our management will be required to assess and issue a report concerning our internal controls over financial reporting, and, under the Sarbanes-Oxley Act, our independent auditors will be required to issue an opinion on management's assessment and the effectiveness of our internal controls over financial reporting. Our compliance with Section 404 of the Sarbanes-Oxley Act will first be reported on in connection with the filing of our Annual Report on Form 10-K for the fiscal year ending December 31, 2012. The first certification by our chief executive officer and chief financial officer under Canadian securities laws as to their evaluation of our internal controls over financial reporting will occur in connection with the completion of our annual filings for the fiscal year ended December 31, 2011, subject to any available exemptions based on compliance with the SEC rules implementing Section 404. The rules governing the standards that must be met for management to assess our internal controls over financial reporting are complex and require significant documentation, testing, and possible remediation. During the course of its testing, our management may identify material weaknesses or significant deficiencies, which may not be remedied in time to meet the deadline imposed by the SEC rules implementing Section 404. If our management cannot favorably assess the effectiveness of our internal controls over financial reporting, or our auditors identify material weaknesses in our internal controls, investor confidence in our financial results may weaken, and our share price may suffer.

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Our separation from Forest may adversely affect our business, and we may not achieve some or all of the expected benefits of the separation.

We may not be able to achieve the full strategic and financial benefits expected to result from our separation from Forest, or such benefits may be delayed or not occur at all. These benefits include allowing us to adopt the capital structure and investment policy best suited to our financial profile and business needs, as well as resolving the current competition for capital among Forest's business units, including us. We may not achieve these anticipated benefits for a variety of reasons. There also can be no assurance that the separation will not adversely affect our business.

Risks related to our relationship with Forest

Following this offering, we will continue to depend on Forest to provide us with certain services for our business.

We have operated as a wholly-owned subsidiary of Forest. Certain administrative services required by us for the operation of our business are currently provided by Forest and its subsidiaries, including services related to executive oversight, insurance and risk management, treasury, information technology, legal, accounting, tax, marketing, corporate engineering, and human resources. Prior to the completion of this offering, we will enter into agreements with Forest related to the separation of our business operations from Forest, including a transition services agreement. Under the terms of the transition services agreement, which will be signed immediately prior to the completion of this offering, Forest will provide us with certain administrative services, including, among other things, executive oversight, insurance and risk management, treasury, information technology, legal, accounting, tax, marketing, corporate engineering, human resources, and investor relations. The services provided under the transition services agreement will terminate upon the later of (1) six months after the completion of this offering or (2) the spin-off; provided, however, that if the spin-off has not occurred by December 31, 2011, then the transition services agreement will terminate on such date. We believe it is necessary for Forest to provide these services for us under the transition services agreement to facilitate the efficient operation of our business as we transition to becoming a public company. We will, as a result, initially depend on Forest for transition services following this offering. See "Our relationship with Forest—Agreements between Forest and us—Transition services agreement" on page 188.

Once the transition period specified in the transition services agreement has expired, or if Forest does not or is unable to perform its obligations under the transition services agreement, we will be required to provide these services ourselves or to obtain substitute arrangements with third parties. We may be unable to provide these services because of financial or other constraints or be unable to implement substitute arrangements on a timely basis on terms that are favorable to us, or at all.

As long as we are controlled by Forest, your ability to influence the outcome of matters requiring stockholder approval will be limited.

After the completion of this offering, Forest will own 82.3% of the outstanding shares of our common stock (80.2% if the underwriters exercise their over-allotment option in full). As long as Forest has voting control of our company, Forest will have the ability to take many stockholder actions, including the election or removal of directors, irrespective of the vote of,

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and without prior notice to, any other stockholder. As a result, Forest will have the ability to influence or control all matters affecting us, including:

the composition of our board of directors and, through our board of directors, decision-making with respect to our business direction and policies, including the appointment and removal of our officers;

any determinations with respect to acquisitions of businesses, mergers, or other business combinations;

our acquisition or disposition of assets;

our capital structure;

changes to the agreements relating to our separation from Forest;

our payment or non-payment of dividends on our common stock; and

determinations with respect to our tax returns.

Forest's interests may not be the same as, or may conflict with, the interests of our other stockholders. As a result, actions that Forest takes with respect to us, as our controlling stockholder, may not be favorable to us or our other stockholders. In addition, this voting control may discourage transactions involving a change of control of our company, including transactions in which you, as a holder of our common stock, might otherwise receive a premium for your shares over the then-current market price. At any time following the completion of this offering and the expiration or waiver of the applicable lock-up period described under "Underwriting" beginning on page 217, Forest intends to spin-off all of the remaining shares of our common stock that it owns to its shareholders. In addition, after the expiration or waiver of the applicable lock-up period described under "Underwriting" beginning on page 217, Forest has the right to sell a controlling interest in us to a third party, without your approval and without providing for a purchase of your shares. There is no assurance that Forest will effect the spin-off, and if Forest elects not to effect the spin-off, it could remain our controlling stockholder for an extended or indefinite period of time. In addition, Forest may decide not to complete the spin-off if, at any time, Forest's board of directors determines, in its sole discretion, that the spin-off is not in the best interests of Forest or its shareholders. As a result, the spin-off may not occur by the contemplated time or at all. See "Shares eligible for future sale" on page 206.

We may have potential business conflicts of interest with Forest regarding our past and ongoing relationships, and because of Forest's controlling ownership in us, the resolution of these conflicts may not be favorable to us.

Conflicts of interest may arise between Forest and us in a number of areas relating to our past and ongoing relationships, including:

labor, tax, employee benefit, indemnification, and other matters arising under the separation agreements;

employee recruiting and retention;

sales or distributions by Forest of all or any portion of its ownership interest in us, which could be to one of our competitors; and

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business opportunities that may be attractive to both Forest and us.

We may not be able to resolve any potential conflicts, and, even if we do so, the resolution may be less favorable to us than if we were dealing with an unaffiliated party.

For two years after the completion of this offering, (1) Forest will agree not to acquire any oil and gas properties in Canada, unless such oil and gas properties in Canada constitute less than a majority of the assets included in a particular business opportunity, and (2) we will agree not to acquire any oil and gas properties in the United States, unless such oil and gas properties in the United States constitute less than a majority of the assets included in a particular business opportunity. However, during this two-year period, if Forest obtains our prior consent with respect to a defined area in Canada, it may engage in activities in that area, and, similarly, if we obtain Forest's prior consent with respect to a defined area in the United States, we may engage in activities in that area.

For two years after the completion of this offering, neither we nor Forest will be permitted to solicit each other's active employees for employment without the other's consent.

Pursuant to the terms of our certificate of incorporation, Forest is not required to offer corporate opportunities to us, and certain of our directors and officers are permitted to offer certain corporate opportunities to Forest before us.

Our certificate of incorporation provides that, until both (1) Forest and its subsidiaries no longer beneficially own 50% or more of the voting power of all then outstanding shares of our capital stock generally entitled to vote in the election of our directors and (2) no person who is a director or officer of Forest or of a subsidiary of Forest is also a director or officer of ours:

Forest is free to compete with us in any activity or line of business, except as provided in the separation and distribution agreement or other written agreement between us and Forest;

we do not have any interest or expectancy in any business opportunity, transaction, or other matter in which Forest engages or seeks to engage merely because we engage in the same or similar lines of business;

to the fullest extent permitted by law, Forest will have no duty to communicate its knowledge of, or offer, any potential business opportunity, transaction, or other matter to us, and Forest is free to pursue or acquire such business opportunity, transaction, or other matter for itself or direct the business opportunity, transaction, or other matter to its affiliates and Forest will not, to the fullest extent permitted by law, be deemed to have (1) breached or acted in a manner inconsistent with or opposed to its fiduciary or other duties to us regarding the business opportunity or (2) acted in bad faith or in a manner inconsistent with the best interests of our company or our stockholders; and

to the fullest extent permitted by law, if any director or officer of Forest who is also one of our officers or directors becomes aware of a potential business opportunity, transaction, or other matter (other than one expressly offered to that director or officer in writing solely in his or her capacity as our director or officer), that director or officer will have no duty to communicate or offer that business opportunity to us, and will be permitted to communicate or offer that business opportunity to Forest (or its affiliates) and that director or officer will not, to the fullest extent permitted by law, be deemed to have (1) breached or acted in a

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    manner inconsistent with or opposed to his or her fiduciary or other duties to us regarding the business opportunity or (2) acted in bad faith or in a manner inconsistent with the best interests of our company or our stockholders.

At the completion of this offering, our board of directors will include persons who are also directors and/or officers of Forest. In addition, after the completion of the spin-off, we expect that our board of directors will continue to include persons who are also directors and/or officers of Forest. As a result, Forest may gain the benefit of corporate opportunities that are presented to these directors.

Our separation agreements with Forest require us to assume the past, present, and future liabilities related to our business and may be less favorable to us than if they had been negotiated with unaffiliated third parties.

We negotiated our separation agreements with Forest as a wholly-owned subsidiary of Forest and will enter into these agreements immediately prior to the completion of this offering. If these agreements had been negotiated with unaffiliated third parties, they might have been more favorable to us. Pursuant to these agreements, we have agreed to indemnify Forest for, among other matters, all past, present, and future liabilities (other than tax liabilities, which will be governed by the tax sharing agreement as described herein; see "Our relationship with Forest—Agreements between Forest and us—Tax sharing agreement" on page 190) related to our business, and we have assumed these liabilities under the separation agreements. Such liabilities include unknown liabilities that could be significant. The allocation of liabilities between Forest and us may not reflect the allocation that would have been reached between two unaffiliated parties. See "Our relationship with Forest—Agreements between Forest and us" on page 183 for a description of these obligations and the allocation of liabilities between Forest and us.

Your investment in our common stock may be adversely affected if Forest does not spin-off the shares of our common stock owned by Forest.

Forest has advised us that, following the completion of this offering and the expiration or waiver of the applicable lock-up period described under "Underwriting" beginning on page 217, it intends to spin-off all of the remaining shares of our common stock that it owns to its shareholders as soon as practicable. Forest expects that the spin-off will occur approximately four months following the completion of this offering. This offering and the spin-off will be subject to the satisfaction or waiver of certain conditions. Forest may decide not to complete this offering or the spin-off if, at any time, Forest's board of directors determines, in its sole discretion, that this offering or the spin-off is not in the best interests of Forest or its shareholders. Unless and until such a spin-off occurs, we will face the risks discussed in this prospectus relating to Forest, including its control of us and potential conflicts of interest between Forest and us. In addition, if a spin-off does not occur, the liquidity of the market for our common stock may be constrained for as long as Forest continues to hold a significant position in our common stock. A lack of liquidity in the market for our common stock may adversely affect our share price.

The separation agreements may limit our ability to obtain additional financing or make acquisitions and may require us to pay significant tax liabilities.

We may engage, or desire to engage, in future financings or acquisitions. However, because the separation agreements are designed to preserve the tax-free status of the spin-off, we have

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agreed to certain restrictions in those agreements that may severely limit our ability to effect future financings or acquisitions. For the spin-off to be tax-free to Forest and its shareholders, among other things, Forest must own at least 80% of the voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors (and at least 80% of the shares of any class of non-voting stock) at the time of the spin-off. Therefore, prior to the spin-off, we will be unable to issue or sell our common stock or other securities (including securities convertible into our common stock but excluding certain compensation arrangements). We also will be restricted in our ability to sell assets during the pre-spin-off period. In addition, for a period of two years after the date of the spin-off, we will agree to be subject to certain restrictions under which we will be permitted to take certain actions only if Forest consents to the taking of such action or if we obtain, and provide to Forest, a private letter ruling from the IRS and/or an opinion from a law firm or accounting firm, in either case acceptable to Forest in its sole discretion, to the effect that such action would not jeopardize the tax-free status of the contribution and the spin-off. Thus, for that two-year period, these covenants will restrict our ability to sell assets outside the ordinary course of business, to issue or sell our common stock or other securities (including securities convertible into our common stock but excluding certain compensation arrangements), or to enter into any other corporate transaction that would cause us to undergo either a 50% or greater change in the ownership of our voting stock or a 50% or greater change in the ownership (measured by value) of all classes of our stock (in either case, taking into account shares issued in this offering). We are also required to indemnify Forest against certain tax-related liabilities incurred by Forest relating to a potential spin-off, to the extent caused by us. These liabilities include the substantial tax-related liability (calculated without regard to any net operating loss or other tax attribute of Forest) that would result if the spin-off failed to qualify as a tax-free transaction.

Finally, we are required to indemnify Forest against any additional Canadian tax-related liabilities incurred by Forest with respect to the contribution to us of its ownership interests in, and certain indebtedness of, CFOL and the transactions completed in conjunction with such contribution. As a result of these transactions, Forest has determined that it will be required to pay Canadian taxes in an amount consistent with an opinion of Forest's outside tax advisor. To the extent that the Canadian tax authorities disagree with Forest's determination of the amount of Canadian taxes due and attempt to assess and recover additional Canadian taxes from Forest, we will be required to indemnify, and if necessary reimburse, Forest with respect to such additional taxes, costs incurred in contesting such additional taxes, and any penalties and interest associated with such additional taxes. We believe that our maximum monetary exposure relating to this indemnity is approximately $48 million, plus interest. The triggering of this indemnity could have a material adverse impact on our liquidity and our ability to execute our business plan.

See "Our relationship with Forest—Agreements between Forest and us—Tax sharing agreement" on page 189 for a description of these restrictions and indemnities. See "Our relationship with Forest—Agreements between Forest and us" on page 183 for a description of the separation agreements.

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The separation agreements may limit our ability to make acquisitions, dispose of assets, acquire equity or debt securities of another person, incur indebtedness, or take any other actions that could reasonably result in Forest being in breach of or in default under its bank credit facility, the indentures governing its senior notes, or any other contract or agreement.

We have agreed with Forest that we will not (without Forest's prior written consent) take any of the following actions prior to the spin-off:

acquire any businesses or assets with an aggregate value of more than $20 million for all such acquisitions;

dispose of any assets with an aggregate value of more than $20 million for all such dispositions; and

acquire any equity or debt securities of any other person with an aggregate value of more than $5 million for all such acquisitions.

The separation agreements also provide that for so long as Forest owns 50% or more of the voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors, we will not (without the prior written consent of Forest) take any actions that could reasonably result in Forest being in breach of, or in default under, any contract or agreement. In addition, for so long as Forest is required to consolidate our results of operations and financial position, we may not incur any additional indebtedness if the incurrence of indebtedness (1) will cause Forest to be in breach of, or default under, any contract or agreement, (2) is reasonably likely, in Forest's reasonable opinion, to adversely impact Forest's credit rating, or (3) involves more than $5 million, except that the restriction against the incurrence of additional indebtedness contained in this clause (3) will not restrict our ability to borrow under our bank credit facility.

For example, under the terms of the separation agreements, prior to the spin-off, we may not incur indebtedness, issue capital stock or sell assets, or take any other action in a manner that would cause Forest to be in breach of or in default under the financial or other covenants contained in its bank credit facility or the indentures governing its senior notes. Upon the completion of this offering and until the completion of the spin-off, Forest will be a guarantor of our bank credit facility, and we will be an unrestricted subsidiary under Forest's bank credit facility. Prior to the spin-off, we will be a restricted subsidiary under the indentures governing Forest's senior notes, and we will be required to comply with the following restrictive covenants in Forest's indentures:

a limitation on indebtedness, which limits the ability of Forest and its restricted subsidiaries to incur any indebtedness, unless, after giving pro forma effect to the incurrence of indebtedness and the pro forma application of the net proceeds therefrom, the consolidated interest coverage ratio would have been at least 2.25 to 1.0 or such indebtedness is permitted indebtedness;

a limitation on restricted payments, which limits the ability of Forest and its restricted subsidiaries to pay dividends on their capital stock, to repurchase their capital stock, to prepay any subordinated indebtedness, and to make any investment other than a permitted investment;

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a limitation on restrictions on distributions from restricted subsidiaries, which prohibits Forest from allowing its restricted subsidiaries, subject to certain exceptions, to have restrictions on their ability to pay dividends or to make other distributions on their capital stock to Forest or Forest's other restricted subsidiaries, to pay any indebtedness owed to Forest or Forest's other restricted subsidiaries, to make loans or advances to Forest or Forest's other restricted subsidiaries, or to transfer any of their properties or assets to Forest or any of Forest's other restricted subsidiaries;

a limitation on asset sales, which limits the ability of Forest and its restricted subsidiaries to consummate asset sales and requires Forest to make a tender offer for its senior notes with certain net available proceeds received from asset sales;

a limitation on transactions with affiliates, which restricts Forest and its restricted subsidiaries, subject to certain exceptions, in their dealings with any affiliate, unless certain standards are met and certain procedures are followed;

a limitation on the issuance and sale of capital stock of restricted subsidiaries, which prohibits Forest from permitting (1) any restricted subsidiary to issue any capital stock other than to Forest or one of its wholly-owned subsidiaries or (2) any person other than Forest or one of its wholly owned subsidiaries to own any capital stock of any other restricted subsidiary, subject to certain exceptions; provided that any sale or issuance of capital stock of a restricted subsidiary will be deemed to be an asset sale and will be subject to compliance with the limitation on asset sales described above (this offering will be deemed to be an asset sale and will be made in compliance with the limitation on asset sales described above); and

a limitation on liens, which limits the ability of Forest and its restricted subsidiaries to place certain liens on their assets securing their indebtedness unless the senior notes or any subsidiary guarantees are secured equally and ratably with (or prior to) the other secured indebtedness for so long as such indebtedness is so secured.

Indebtedness incurred by us under our bank credit facility will be guaranteed by Forest and that guarantee will be indebtedness under Forest's bank credit facility and indentures and will need to be incurred by us in compliance with the covenants in Forest's indentures relating to limitations on indebtedness. During the period prior to the spin-off, if we default under our bank credit facility, the default would cause a cross-default under Forest's indentures and possibly under Forest's bank credit facility.

This offering and sales of capital stock or assets by us prior to the spin-off will each be treated as asset sales under the limitation on asset sales covenant in Forest's indentures. Forest's indentures provide that the net available cash from asset sales may be applied by us, Forest, or another restricted subsidiary, as Forest may elect, (1) to prepay, repay, or purchase pari passu indebtedness of Forest or a subsidiary guarantor under Forest's indentures or any indebtedness of a restricted subsidiary that is not a subsidiary guarantor (in each case excluding indebtedness owed to Forest or its affiliates) or (2) to reinvest in additional assets (including by means of an investment in additional assets by a restricted subsidiary with net available cash received by Forest or another restricted subsidiary).

See "Our relationship with Forest—Agreements between Forest and us" on page 183 for a description of the separation agreements.

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Prior to the spin-off, if Forest defaulted under its bank credit facility or the indentures governing its senior notes, such default would cause a cross-default under our bank credit facility and might result in a sale by Forest of its remaining interest in us and/or the exercise of contractual remedies by our lenders under our bank credit facility.

Prior to the spin-off, Forest will be a guarantor of our bank credit facility. If Forest defaults on any indebtedness aggregating CDN$15 million or more while it is a guarantor of our bank credit facility, such default would be an event of default under our bank credit facility, which event of default would (1) prohibit us from requesting additional borrowings under our bank credit facility, (2) prohibit us from converting existing borrowings under our bank credit facility to LIBOR, and (3) enable the majority lenders under our bank credit facility to either terminate their commitments or accelerate the outstanding loans under our bank credit facility, or both. In addition, prior to the spin-off, if Forest defaulted under its bank credit facility or the indentures governing its senior notes, Forest might be forced to sell its remaining interest in us to raise capital to satisfy its indebtedness.

We will not have complete control over our tax decisions and could be liable for income taxes owed by Forest.

For so long as Forest continues to own at least 80% of the total voting power and value of our common stock, we and our U.S. subsidiaries will be included in Forest's consolidated group for U.S. federal income tax purposes. In addition, we or one or more of our U.S. subsidiaries may be included in the combined, consolidated, or unitary tax returns of Forest or one or more of its subsidiaries for U.S. state or local income tax purposes. Under the tax sharing agreement, we generally will pay to, or receive from, Forest the amount of U.S. federal, state, and local income taxes that we would be required to pay to, or entitled to receive from, the relevant taxing authorities if we and our U.S. subsidiaries filed combined, consolidated, or unitary tax returns and were not included in the combined, consolidated, or unitary tax returns of Forest or its subsidiaries. In addition, by virtue of its controlling ownership and the tax sharing agreement, Forest will effectively control all of our U.S. tax decisions in connection with any combined, consolidated, or unitary income tax returns in which we (or any of our subsidiaries) are included. The tax sharing agreement provides that Forest will have sole authority to respond to and conduct all tax proceedings (including tax audits) relating to us, to file all income tax returns on our behalf, and to determine the amount of our liability to, or entitlement to payment from, Forest in connection with any combined, consolidated, or unitary income tax returns in which we (or any of our subsidiaries) are included. This arrangement may result in conflicts of interest between Forest and us. For example, under the tax sharing agreement, Forest will be able to choose to contest, compromise, or settle any adjustment or deficiency proposed by the relevant taxing authority in a manner that may be beneficial to Forest and detrimental to us. See "Our relationship with Forest—Agreements between Forest and us—Tax sharing agreement" on page 190.

Moreover, notwithstanding the tax sharing agreement, U.S. federal law provides that each member of a consolidated group is liable for the group's entire tax obligation. Thus, to the extent Forest or other members of the group fail to make any U.S. federal income tax payments required by law, we could be liable for the shortfall. Similar principles may apply for foreign, state, or local income tax purposes where we file combined, consolidated, or unitary returns with Forest or its subsidiaries for federal, foreign, state, or local income tax purposes.

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If, following the completion of the spin-off, there is a determination that the spin-off is taxable for U.S. federal income tax purposes because the facts, assumptions, representations, or undertakings underlying the IRS private letter ruling or tax opinion are incorrect or for any other reason, then Forest and its shareholders could incur significant income tax liabilities, and we could incur significant liabilities.

This offering and the spin-off will be conditioned upon, among other things, Forest's receipt of a private letter ruling from the IRS, and/or an opinion of its outside tax advisor, in either case reasonably acceptable to the Forest board of directors, to the effect that the contribution by Forest of its direct and indirect ownership interest in CFOL to us and the distribution by Forest of the shares of our common stock held by Forest after the offering should qualify for U.S. federal income tax purposes as a tax-free transaction under Sections 355 and 368(a)(1)(D) of the Code. Forest has obtained an opinion of its outside tax advisor that is acceptable to the Forest board of directors to the effect that the contribution by Forest of its direct and indirect ownership interest in CFOL to us and the distribution by Forest of the shares of our common stock held by Forest after the offering should qualify for U.S. federal income tax purposes as a tax-free transaction under Sections 355 and 368(a)(1)(D) of the Code, which opinion satisfies the related condition to this offering and the spin-off. Forest has requested, but has not yet received, a private letter ruling from the IRS. The opinion relies, and the ruling will rely, on certain facts, assumptions, representations, and undertakings from Forest and us regarding the past and future conduct of the companies' respective businesses and other matters. If any of these facts, assumptions, representations, or undertakings are incorrect or not otherwise satisfied, Forest and its shareholders may not be able to rely on the ruling or the opinion of its tax advisor and could be subject to significant tax liabilities. Notwithstanding the private letter ruling or the opinion of Forest's tax advisor, the IRS could determine upon audit that the spin-off is taxable if it determines that any of these facts, assumptions, representations, or undertakings are not correct or have been violated or if it disagrees with the conclusions in the opinion that are not covered by the private letter ruling, or for other reasons, including as a result of certain significant changes in the stock ownership of Forest or us after the spin-off. If the spin-off is determined to be taxable for U.S. federal income tax purposes, Forest and its shareholders could incur significant income tax liabilities, and we could incur significant liabilities. For a description of the sharing of such liabilities between Forest and us, see "Our Relationship with Forest—Agreements between Forest and us—Separation and distribution agreement" on page 184 and "—Tax sharing agreement" on page 190.

Third parties may seek to hold us responsible for liabilities of Forest that we did not assume in our agreements.

Third parties may seek to hold us responsible for retained liabilities of Forest. Under the separation agreements, Forest has agreed to indemnify us for claims and losses relating to these retained liabilities. However, if those liabilities are significant and we are ultimately held liable for them, we cannot assure you that we will be able to recover the full amount of our losses from Forest.

Our prior and continuing relationship with Forest exposes us to risks attributable to businesses of Forest.

Forest is obligated to indemnify us for losses that a party may seek to impose upon us or our affiliates for liabilities relating to the business of Forest that are incurred through a breach of the separation agreements or any ancillary agreement by Forest or its affiliates other than us,

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if losses are attributable to Forest in connection with this offering or are not expressly assumed by us under the separation agreements. Immediately following this offering, any claims made against us that are properly attributable to Forest in accordance with these arrangements would require us to exercise our rights under the separation agreements to obtain payment from Forest. We are exposed to the risk that, in these circumstances, Forest cannot, or will not, make the required payment.

Our directors and executive officers who own shares of common stock of Forest, who hold options to acquire common stock of Forest or other Forest equity-based awards, or who hold positions with Forest may have actual or potential conflicts of interest.

Ownership of shares of common stock of Forest, options to acquire shares of common stock of Forest, and other equity-based securities of Forest by certain of our directors and officers after this offering, and the presence of directors or officers of Forest on our board of directors could create, or appear to create, potential conflicts of interest when those directors and officers are faced with decisions that could have different implications for Forest than they do for us. Certain of our directors will hold director and/or officer positions with Forest or beneficially own significant amounts of common stock of Forest.

H. Craig Clark, the President and Chief Executive Officer and a director of Forest, and Patrick R. McDonald, an independent director of Forest, also serve as directors of Lone Pine. Mr. Clark will serve on our compensation committee and our nominating and governance committee, and Mr. McDonald will serve on our audit and reserves committee. As a member of our compensation committee and our nominating and corporate governance committee, Mr. Clark may make recommendations to our board of directors regarding compensation for our directors and officers, which could also create, or appear to create, similar potential conflicts of interest. In addition, Michael N. Kennedy, the Executive Vice President and Chief Financial Officer of Forest, will also serve as our Vice President and Chief Financial Officer on an interim basis. See "Management" beginning on page 125 for a description of the extent of the relationship between our directors and officers and directors and officers of Forest.

After the completion of this offering and prior to the spin-off, we will be a "controlled company" within the meaning of the NYSE rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements that provide protection to stockholders of other companies.

After the completion of this offering and prior to the spin-off, Forest will own more than 50% of the voting power of all then outstanding shares of our capital stock entitled to vote generally in the election of directors, and we will be a "controlled company" under the NYSE corporate governance standards. As a controlled company, we intend to rely on certain exemptions from the NYSE standards that will enable us not to comply with certain NYSE corporate governance requirements, including the requirements that:

a majority of our board of directors consists of independent directors;

we have a nominating and governance committee that is composed entirely of independent directors, with a written charter addressing the committee's purpose and responsibilities;

we have a compensation committee that is composed entirely of independent directors, with a written charter addressing the committee's purpose and responsibilities; and

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we conduct an annual performance evaluation of the nominating and governance committee and compensation committee.

We intend to rely on some or all of these exemptions, and, as a result, prior to the spin-off, you will not have the same protection afforded to stockholders of companies that are subject to all of the NYSE corporate governance requirements.

Risks related to this offering

There currently exists no market for our common stock. An active trading market may not develop for our common stock, and the price of our common stock may be subject to factors beyond our control. If our share price fluctuates after this offering, you could lose all or a significant part of your investment.

Prior to this offering, no public market existed for our common stock. An active and liquid market for the common stock may not develop following the completion of this offering or, if developed, may not be maintained. If an active public market does not develop or is not maintained, you may have difficulty selling your shares. The initial public offering price of our common stock was determined by negotiations between us, Forest, and the underwriters for this offering and may not be indicative of the price at which the common stock will trade following the completion of this offering.

The market price of our common stock may also be influenced by many other factors, some of which are beyond our control, including, among other things:

actual or anticipated variations in quarterly and annual operating results;

changes in financial estimates and recommendations by research analysts following our common stock or the failure of research analysts to cover our common stock after this offering;

actual or anticipated changes in the Canadian and U.S. economies or the oil and gas industry;

terrorist acts or wars;

weather and acts of God;

changes in the stock price of other oil and gas companies;

announcements by us or our competitors of significant acquisitions, strategic partnerships, divestitures, joint ventures, or other strategic initiatives;

actual or anticipated sales or distributions of shares of our common stock by Forest, as well as by our officers and directors, whether in the market, in subsequent public offerings, or in the spin-off;

the trading volume of our common stock; and

changes in business, legal, or regulatory conditions, or other developments affecting the oil and gas industry.

As a result of this volatility, you may not be able to resell your shares at or above the initial public offering price. In addition, the stock market in general has experienced extreme price

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and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies like us. These broad market and industry factors may materially reduce the market price of the common stock, regardless of our operating performance.

Investors purchasing common stock in this offering will incur substantial and immediate dilution.

The initial public offering price of our common stock is substantially higher than the net tangible book value per share of our outstanding common stock. Purchasers of our common stock in this offering will incur immediate and substantial dilution of $7.73 per share in the net tangible book value of our common stock from an initial public offering price of $13.00 per share. This means that if we were to be liquidated immediately after this offering, there might be no assets available for distribution to you after satisfaction of all our obligations to creditors. For a further description of the effects of dilution in the net tangible book value of our common stock, see "Dilution" on page 53.

Our share price may decline because of the ability of Forest and others to sell our common stock.

Sales of substantial amounts of our common stock after this offering, or the possibility of those sales, could adversely affect the market price of our common stock and impede our ability to raise capital through the issuance of equity securities. See "Shares eligible for future sale" beginning on page 206 for a discussion of possible future sales of our common stock.

After this offering, Forest will own 82.3% of the outstanding shares of our common stock (80.2% if the underwriters exercise their over-allotment option in full). Forest has no contractual obligation to retain any of our common stock, except for a limited period, as described under "Underwriting" beginning on page 217, during which it will not sell any of our common stock without the underwriters' consent until 180 days after the date of this prospectus. Subject to applicable securities laws, after the expiration of this 180-day lock-up period, or before, with consent of the representatives of the underwriters to this offering, Forest may sell any or all of our common stock that it beneficially owns. Moreover, a shorter 120-day lock-up period applies to the spin-off by Forest of its remaining ownership interest in us to its shareholders, and its shareholders that are not affiliates of our company would not be subject to any resale restrictions. The registration rights agreement we will enter into with Forest grants Forest the right to require us to register the shares of our common stock it holds in specified circumstances. See "Our relationship with Forest—Agreements between Forest and us—Registration rights agreement" on page 189.

The shares of our common stock sold in this offering will be freely tradable without restriction in Canada, except for any shares held by a control person of our company, and in the United States, except for any shares acquired by an affiliate of our company, which can be sold under Rule 144 under the U.S. Securities Act of 1933, as amended, or the Securities Act, subject to various volume and other limitations. Subject to limited exceptions, we, our executive officers and directors, and Forest have agreed not to sell, dispose of, or hedge any shares of our common stock or any securities convertible into, or exchangeable for, our common stock for 180 days after the date of this prospectus without the prior written consent of the underwriters, who may waive this restriction at any time without public notice. After the expiration of the 180-day lock-up period, our executive officers, directors, and Forest could

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dispose of all or any part of their shares of our common stock through a public offering, sales under Rule 144, or another transaction.

In the future, subject to certain limitations related to the spin-off, we may also issue additional common stock for a number of reasons, including to finance our operations and business strategy, to adjust our ratio of debt to equity, or to provide incentives pursuant to certain executive compensation arrangements. Such future issuances of equity securities, or the expectation that they will occur, could cause the market price for our common stock to decline. The price of our common stock also could be affected by hedging or arbitrage trading activity that may exist or develop involving our common stock. Any sale by Forest or us of shares of our common stock in the public market, or the perception that sales could occur (for example, as a result of the spin-off), could adversely affect prevailing market prices for our common stock.

Your percentage ownership in us may be diluted by future issuances of common stock or securities or instruments that are convertible into our common stock, which could reduce your influence over matters on which stockholders vote.

Our board of directors has the authority, without action or vote of our stockholders, to issue all or any part of our authorized but unissued shares of common stock, including shares issuable upon the exercise of options, shares that may be issued to satisfy our obligations under our incentive plans, shares of our authorized but unissued preferred stock, and securities and instruments that are convertible into our common stock. Issuances of common stock or voting preferred stock would reduce your influence over matters on which our stockholders vote and, in the case of issuances of preferred stock, likely would result in your interest in us being subject to the prior rights of holders of that preferred stock.

We do not anticipate paying any dividends on our common stock in the foreseeable future. As a result, you will need to sell your shares of common stock to receive any income or realize a return on your investment.

We do not anticipate paying any dividends on our common stock in the foreseeable future. Any declaration and payment of future dividends to holders of our common stock may be limited by the provisions of the Delaware General Corporation Law, or DGCL, certain restrictive covenants in our bank credit facility, and, prior to the spin-off, certain restrictive covenants in the indentures governing Forest's senior notes. The future payment of dividends will be at the sole discretion of our board of directors and will depend on many factors, including our earnings, capital requirements, financial condition, and other considerations that our board of directors deems relevant. As a result, to receive any income or realize a return on your investment, you will need to sell your shares of common stock. You may not be able to sell your shares of common stock at or above the price you paid for them.

Our certificate of incorporation, bylaws, stockholder rights plan, and Delaware state law contain provisions that may have the effect of delaying or preventing a change in control of our company.

Our certificate of incorporation authorizes our board of directors to issue preferred stock and to determine the designations, powers, preferences, and relative, participating, optional, or other special rights, if any, and the qualifications, limitations, or restrictions of our preferred stock, including the number of shares, in any series, without any further vote or action by the stockholders. The rights of the holders of our common stock will be subject to the rights of the

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holders of any preferred stock that may be issued in the future. The issuance of preferred stock could delay, deter, or prevent a change in control and could adversely affect the voting power or economic value of your shares.

In addition, some provisions of our certificate of incorporation and bylaws could make it more difficult for a third party to acquire control of us following the spin-off, even if the change of control would be beneficial to our stockholders, including:

a classified board of directors, so that only approximately one-third of our directors are elected each year;

limitations on the removal of directors;

limitations on the ability of our stockholders to call special meetings;

limitations on the ability of our stockholders to act by written consent in certain circumstances;

a separate vote of 75% of the voting power of the outstanding shares of capital stock in order for stockholders to amend the bylaws in certain circumstances; and

advance notice provisions for stockholder proposals and nominations for elections to the board of directors to be acted upon at meetings of stockholders.

For a further description of these provisions of our certificate of incorporation, bylaws, and Delaware law, see "Description of capital stock—Certain anti-takeover provisions of our certificate of incorporation, our bylaws, and Delaware law" on page 201.

In addition, the rights agreement will impose a significant penalty on any person or group that acquires, or begins a tender or exchange offer that would result in such person acquiring, 20% or more of our outstanding common stock without approval from our board of directors. These provisions under the rights agreement will not apply to Forest until such time as Forest and its affiliates cease to beneficially own at least 20% or more of our common stock. See "Description of capital stock—The rights agreement" on page 197.

Although we believe these provisions protect our stockholders from coercive or otherwise unfair takeover tactics and thereby provide an opportunity to receive a higher bid by requiring potential acquirers to negotiate with our board of directors, these provisions apply even if the offer may be considered beneficial by some stockholders. Further, these provisions may discourage potential acquisition proposals and may delay, deter, or prevent a change of control of our company, including through unsolicited transactions that some or all of our stockholders might consider to be desirable. As a result, efforts by our stockholders to change our direction or our management may be unsuccessful.

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Forward-looking statements

This prospectus includes forward-looking statements. All statements, other than statements of historical facts or present facts, that address activities, events, outcomes, and other matters that we plan, expect, intend, assume, believe, budget, predict, forecast, project, estimate, or anticipate (and other similar expressions) will, should, or may occur in the future are forward-looking statements. Generally, the words "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words, and similar expressions identify forward-looking statements, and any statements regarding our future financial condition, results of operations, and business are also forward-looking statements. These forward-looking statements are based on our current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading "Risk factors" included elsewhere in this prospectus.

Forward-looking statements appear in a number of places in this prospectus, including "Prospectus summary," "Risk factors," "Management's discussion and analysis of financial conditions and results of operations," and "Business," and include statements with respect to, among other things:

estimates of our oil and natural gas reserves;

estimates of our future oil, natural gas, and NGL production, including estimates of any increases or decreases in our production;

estimates of future capital expenditures;

our future financial condition and results of operations;

our future revenues, cash flows, and expenses;

our access to capital and our anticipated liquidity;

our future business strategy and other plans and objectives for future operations;

our outlook on oil, natural gas, and NGL prices;

the amount, nature, and timing of future capital expenditures, including future development costs;

our ability to access the capital markets to fund capital and other expenditures;

our assessment of our counterparty risk and the ability of our counterparties to perform their future obligations;

the impact of federal, provincial, territorial, and local political, legislative, regulatory, and environmental developments in Canada, where we conduct business operations, and in the United States;

our estimates of additional costs and expenses we may incur as a separate stand-alone company; and

our separation from Forest and Forest's intention to spin-off its remaining ownership interest in us.

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We believe the expectations and forecasts reflected in our forward-looking statements are reasonable, but we can give no assurance that they will prove to be correct. We caution you that these forward-looking statements can be affected by inaccurate assumptions and are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond our control, incident to the exploration for and development, production, and sale of oil and gas. When considering forward-looking statements, you should keep in mind the assumptions, risk factors, and other cautionary statements described under the heading "Risk factors" included elsewhere in this prospectus. These assumptions and risks include, among other things:

the volatility of oil, natural gas, and NGL prices;

the availability of capital on economic terms to fund our significant capital expenditures and acquisitions;

our ability to obtain adequate financing to pursue other business opportunities;

our ability to replace and sustain production;

a lack of available drilling and production equipment, and related services and labor;

increases in costs of drilling, completion, and production equipment, and related services and labor;

unsuccessful exploration and development drilling activities;

regulatory and environmental risks associated with exploration, drilling, and production activities;

declines in the value of our oil and gas properties, resulting in a decrease in our borrowing base under our bank credit facility and ceiling test write-downs;

the adverse effects of changes in applicable tax, environmental, and other regulatory legislation;

a deterioration in the demand for our products;

the risks and uncertainties inherent in estimating proved oil and gas reserves and in projecting future rates of production and the timing of expenditures;

the risks of conducting exploratory drilling operations in new or emerging plays;

intense competition with companies with greater access to capital and staffing resources; and

the risks of conducting operations in Canada and the impact of fluctuations in currency exchange rates and political developments on the financial results of our operations.

Should one or more of the risks or uncertainties described above or elsewhere in this prospectus occur, or should underlying assumptions prove incorrect, our actual results and plans could differ materially from those expressed in any forward-looking statements.

We caution you not to place undue reliance on these forward-looking statements, which speak only as of the date of this prospectus, and we undertake no obligation to update this information to reflect events or circumstances after the date of this prospectus, except as required by law. All forward-looking statements, express or implied, included in this prospectus and attributable to us are expressly qualified in their entirety by these cautionary statements. These cautionary statements should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue.

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Use of proceeds

Our net proceeds from the sale of shares of common stock in this offering, after deducting estimated underwriting discounts and commissions and estimated offering expenses, will be approximately $178.3 million ($205.8 million if the underwriters exercise their over-allotment option in full).

The following table sets forth the anticipated sources and uses of funds we expect to receive from the sale of shares of common stock in this offering and related transactions as of May 9, 2011.

   
Sources of Funds
   
  Uses of Funds
   
 
   

Estimated net proceeds from the sale of 15,000,000 shares of common stock in this offering

  $ 178.3   Payment of cash consideration to Forest pursuant to the separation and distribution agreement(b)   $ 29.0  

Borrowings under our new bank credit facility(a)

    246.5   Repayment of intercompany debt due to Forest under the promissory note(b)     354.4  

        Repayment of intercompany advances and accrued interest due to Forest(b)(c)     41.4  
               
 

Total

  $ 424.8       Total   $ 424.8  
   

(a)   Our new bank credit facility will become effective immediately prior to the completion of this offering and will replace the existing CFOL bank credit facility. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Bank credit facility" on page 81. If the underwriters exercise their over-allotment option in full, we expect to borrow $219 million under our bank credit facility. As of May 9, 2011, we had approximately $9.3 million in borrowings outstanding under our existing bank credit facility. We intend to refinance borrowings under our existing bank credit facility with borrowings under our new bank credit facility. On a pro forma basis, as of May 9, 2011, after giving effect to this offering, the application of the net proceeds therefrom, the related transactions, and the acquisition of certain natural gas properties located in the Narraway/Ojay fields described under "Prospectus summary—Recent Developments—Acquisition of natural gas properties in the Narraway/Ojay fields" on page 6, we estimate that we would have had $255.8 million in borrowings under our bank credit facility.

(b)   Under the separation and distribution agreement, we have agreed to use a portion of the net proceeds from this offering to pay $29 million to Forest as partial consideration for the contribution of CFOL and the Wiser Entities to us. In addition, we have agreed to use the remaining net proceeds from this offering and borrowings under our bank credit facility to repay all of our outstanding indebtedness to Forest, including amounts due to Forest under the promissory note and intercompany advances and accrued interest. As of March 31, 2011, we had approximately $284 million of intercompany debt payable to Forest under the promissory note and $44 million of intercompany advances and accrued interest due to Forest. As of May 9, 2011, we had approximately $354 million of intercompany debt payable to Forest, which includes additional borrowings used by us to complete the acquisition of certain gas properties in our Narraway/Ojay fields on April 29, 2011 for approximately CDN$75 million, under the promissory note, and $45 million of intercompany advances and accrued interest due to Forest.

(c)    Excludes $3.9 million of third-party costs related to this offering, which third-party costs are included in estimated offering expenses.

We have up to $500 million of availability under the promissory note payable to Forest, under which $284 million was outstanding as of March 31, 2011. As of May 9, 2011, we had approximately $354 million of intercompany debt payable to Forest, which includes additional borrowings used by us to complete the acquisition of certain gas properties in our Narraway/Ojay fields on April 29, 2011 for approximately CDN$75 million, under the promissory note. The promissory note is due on demand or, failing such demand, in November 2014. The interest rate charged on borrowings under the promissory note is three-month LIBOR plus a multiple of Forest's credit default swap rate, with such interest rate being reset on the first day

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of the quarter for that quarter. Interest accrues and compounds at the end of each calendar month, with the interest accruing for any calendar year to be deferred and paid on or before the last business day of the second calendar year following the year in which the interest accrued; provided, however, that if the principal amount becomes due and payable, all accrued interest shall also be due and payable. During 2010, we used borrowings under our promissory note to Forest to fund leasehold acquisitions in our Narraway/Ojay fields and for other general working capital purposes. During 2011, we used borrowings under our promissory note to Forest to fund the acquisition of certain gas properties in our Narraway/Ojay fields and for other general working capital purposes.

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Dividend policy

We do not anticipate paying any dividends on our common stock in the foreseeable future. We currently intend to retain our future earnings for use in the operation and expansion of our business. As a result, to receive any income or realize a return on your investment, you will need to sell your shares of common stock. You may not be able to sell your shares of common stock at or above the price you paid for them. Our present or future ability to pay dividends is governed by:

the provisions of the DGCL;

our bank credit facility; and

prior to the spin-off, the indentures governing Forest's senior notes.

The future payment of cash dividends, if any, on our common stock is within the discretion of our board of directors and will depend on our earnings, capital requirements, financial condition, and other relevant factors. Additionally, our bank credit facility restricts our ability to pay dividends. There is no assurance that we will pay any cash dividends.

For information regarding restrictions on our payment of dividends, see "Our relationship with Forest—Forest as our controlling stockholder," "Risk factors—Risks related to our relationship with Forest—As long as we are controlled by Forest, your ability to influence the outcome of matters requiring stockholder approval will be limited." on page 33, and "Risk factors—Risks relating to this offering—We do not anticipate paying any dividends on our common stock in the forseeable future. As a result, you will need to sell your shares of common stock to receive any income or realize a return on your investment." on page 45.

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Capitalization

The following table sets forth our cash and capitalization as of March 31, 2011 on an historical basis and on a pro forma basis.

The pro forma financial information as of March 31, 2011 gives effect to (1) the completion of this offering at an initial public offering price of $13.00 per share of common stock, (2) borrowings under our bank credit facility of approximately $175 million, (3) the payment of $29 million to Forest pursuant to the separation and distribution agreement, and (4) the application of the net proceeds from this offering and borrowings under our bank credit facility to repay $284 million of indebtedness payable to Forest and $44 million of intercompany advances and accrued interest due to Forest.

This table is derived from the consolidated financial statements of CFOL and the notes thereto included elsewhere in this prospectus and should be read together with "Use of proceeds" on page 49, "Selected historical consolidated financial and other data" beginning on page 55, "Unaudited pro forma consolidated financial information" beginning on page 59, "Management's discussion and analysis of financial condition and results of operations" beginning on page 67, and "Description of capital stock" beginning on page 196.

   
 
  As of March 31, 2011  
(in thousands)
  Historical
  Pro forma
 
   

Cash

  $ 2,383   $ 2,383  
       

Debt:

             
 

Bank credit facility(1)

        174,999  
 

Promissory note payable to Forest(2)

    283,885      
 

Intercompany advances and accrued interest payable to Forest(3)

    43,507      
       

Total debt(1)

    327,392     174,999  
       

Stockholders' equity:

             
 

Common stock, $.01 par value per share, 1,000 shares authorized and 1 share issued and outstanding (historical); 300,000,000 shares authorized and 85,019,231 shares issued and outstanding (pro forma)

        850  
 

Capital surplus

    144,813     322,263  
 

Retained earnings

    72,058     43,058  
 

Accumulated other comprehensive income

    101,916     101,916  
       

Total stockholders' equity

    318,787     468,087  
       
 

Total capitalization

  $ 646,179   $ 643,086  
   

(1)   As of May 9, 2011, we had approximately $9.3 million in borrowings outstanding under our existing bank credit facility. On a pro forma basis, as of May 9, 2011, after giving effect to this offering, the application of the net proceeds therefrom, the related transactions, and the acquisition of certain natural gas properties located in the Narraway/Ojay fields described under "Prospectus summary—Recent developments—Acquisition of natural gas properties in the Narraway/Ojay fields" on page 6, we estimate that we would have had $255.8 million in borrowings under our bank credit facility.

(2)   As of May 9, 2011, we had approximately $354 million of intercompany debt payable to Forest, which includes additional borrowings used by us to complete the acquisition of certain gas properties in our Narraway/Ojay Fields on April 29, 2011 for approximately CDN$75 million, pursuant to the promissory note.

(3)   As of May 9, 2011, we had approximately $45 million of intercompany advances and accrued interest due to Forest.

After giving effect to the sale of common stock offered by us in this offering, there will be 85,019,231 shares of our common stock outstanding (87,269,231 shares if the underwriters exercise their over-allotment option in full) and no preferred shares outstanding. See "Description of capital stock" beginning on page 196.

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Dilution

Purchasers of the common stock in this offering will experience immediate and substantial dilution in the net tangible book value per share of the common stock for accounting purposes. On a pro forma basis as of March 31, 2011 before giving effect to this offering, our net tangible book value was approximately $267 million, or $3.82 per share. Pro forma net tangible book value per share is determined by dividing our pro forma tangible net worth (tangible assets less total liabilities) by the total number of outstanding shares of common stock that will be outstanding immediately prior to the closing of this offering, including giving effect to the issuance of restricted stock awards and phantom stock units upon completion of this offering. After giving effect to the sale of the shares in this offering and further assuming the receipt of the estimated net proceeds (after deducting estimated discounts and expenses of this offering), our adjusted pro forma net tangible book value as of March 31, 2011 would have been approximately $448 million, or $5.27 per share. This represents an immediate increase in the net tangible book value of $1.45 per share to our existing stockholders and an immediate dilution (i.e., the difference between the offering price and the adjusted pro forma net tangible book value after this offering) to new investors purchasing shares in this offering of $7.73 per share. The following table illustrates the per share dilution to new investors purchasing shares in this offering:

   

Initial public offering price per share

        $ 13.00  
             
 

Pro forma net tangible book value per share as of March 31, 2011 before giving effect to this offering

  $ 3.82        
 

Increase per share attributable to new investors in this offering

    1.45        
             

As adjusted pro forma net tangible book value per share after giving effect to this offering

          5.27  
             

Dilution in pro forma net tangible book value per share to new investors in this offering

        $ 7.73  
   

The following table summarizes, on an adjusted pro forma basis as of March 31, 2011, the total number of shares of common stock owned by our existing stockholder and to be owned by new investors, the total consideration paid, and the average price per share paid by our existing stockholder and to be paid by new investors in this offering at $13.00, calculated before deduction of estimated underwriting discounts and commissions:

   
 
   
   
  Total
Consideration
   
 
 
  Shares Acquired    
 
(dollar amounts in thousands
except per share amounts)

  Average Price
per Share

 
  Number
  Percent
  Amount
  Percent
 
   

Forest(1)

    70,000,000     82.3%   $ 144,813     42.6%   $ 2.07  

New Investors(2)

    15,019,231     17.7%     195,250     57.4%     13.00  
       

Total

    85,019,231     100.0%   $ 340,063     100.0%   $ 4.00  
   

(1)   The total consideration represents the total capital surplus of CFOL as of March 31, 2011.

(2)   The number of shares presented above for new investors includes 19,231 shares of restricted stock to be automatically issued to certain of our non-employee directors upon the completion of this offering based on the initial public offering price of $13.00 per common share. See "Executive Compensation—Director Compensation" on page 177.

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If the underwriters exercise their option to purchase additional shares of common stock in full, the following will occur:

the percentage of our total outstanding common stock held by Forest will decrease to approximately 80.2%; and

the number of shares of common stock held by new investors will increase to 17,250,000, or approximately 19.8% of our total outstanding common stock.

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Selected historical consolidated financial and other data

The following table sets forth the selected historical consolidated financial and other data of our predecessor, CFOL, as of and for each of the years in the five-year period ended December 31, 2010 and as of and for each of the three-month periods ended March 31, 2011 and 2010. We derived the selected historical consolidated financial data as of December 31, 2010 and 2009 and for the years ended December 31, 2010, 2009, and 2008 from the audited historical consolidated financial statements of CFOL included elsewhere in this prospectus. We derived the selected historical consolidated financial data of CFOL as of December 31, 2008 and for the year ended December 31, 2007 from the audited historical consolidated financial statements of CFOL, which are not included in this prospectus. We derived the selected historical consolidated financial data of CFOL as of March 31, 2011 and for the three months ended March 31, 2011 and 2010 from the unaudited historical consolidated financial statements of CFOL included elsewhere in this prospectus. We derived the selected historical consolidated financial data of CFOL as of December 31, 2007 and 2006 and March 31, 2010 and for the year ended December 31, 2006 from the unaudited historical consolidated financial statements of CFOL, which are not included in this prospectus.

The historical consolidated financial statements of CFOL include a management fee payable to Forest, which was intended to reimburse Forest for certain corporate functions provided to CFOL by Forest. The historical consolidated financial statements of CFOL included in this prospectus may not necessarily reflect the financial position, results of operations, and cash flows of CFOL as if it had operated as a stand-alone public company during all periods presented. Following the completion of this offering, we expect to incur incremental general and administrative costs related to being a stand-alone public company. Accordingly, for this and other reasons, the historical results should not be relied upon as an indicator of our future performance.

For a detailed discussion of the selected historical consolidated financial information contained in the following table, please read "Management's discussion and analysis of financial condition and results of operations" beginning on page 67. The following table should also be read in conjunction with the historical consolidated financial statements of CFOL and the accompanying notes thereto contained elsewhere in this prospectus.

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Table of Contents

   
 
  Canadian Forest Oil Ltd. historical consolidated  
 
  Three months
ended March 31,
   
   
   
   
   
 
 
  Year ended December 31,  
(in thousands, except volumes,
prices, and per unit data)

 
  2011
  2010
  2010
  2009
  2008
  2007
  2006
 
   

Statement of operations data:

                                           

Revenues

  $ 36,273   $ 37,413   $ 146,070   $ 112,076   $ 251,111   $ 191,423   $ 180,359  

Costs, expenses, and other:

                                           
 

Lease operating expenses

    8,227     5,634     25,680     27,505     36,074     31,490     28,227  
 

Production and property taxes

    603     622     2,423     2,756     3,659     3,442     2,981  
 

Transportation and processing costs

    3,625     2,204     10,738     8,060     9,606     10,471     9,935  
 

General and administrative

    2,394     2,352     8,045     7,072     6,474     7,809     5,452  
 

Depreciation, depletion, and amortization

    19,019     13,267     63,645     56,464     86,331     84,585     75,697  
 

Ceiling test write-down of oil and gas properties

                199,021              
 

Interest expense

    1,380     740     6,956     16,157     14,364     14,380     7,985  
 

Foreign currency exchange (gains) losses, net

   
(7,820

)
 
(6,650

)
 
(14,560

)
 
(18,062

)
 
20,440
   
(15,415

)
 
70
 
 

Other, net

   
315
   
242
   
1,575
   
1,324
   
1,493
   
958
   
1,041
 
       

Earnings (loss) before income taxes

    8,530     19,002     41,568     (188,221 )   72,670     53,703     48,971  

Income tax expense (benefit):

                                           
 

Current

                    280     (1,798 )   140  
 

Deferred

    1,985     3,989     7,830     (49,293 )   23,312     (2,098 )   3,643  
       
   

Total income tax

    1,985     3,989     7,830     (49,293 )   23,592     (3,896 )   3,783  

Earnings (loss) from continuing operations

    6,545     15,013     33,738     (138,928 )   49,078     57,599     45,188  

Earnings from discontinued operations, net of tax(1)

                            2,422  
       

Net earnings (loss)

  $ 6,545   $ 15,013   $ 33,738   $ (138,928 ) $ 49,078   $ 57,599   $ 47,610  
       

Other financial data:

                                           
 

Adjusted EBITDA(2)

  $ 21,384   $ 26,624   $ 98,645   $ 66,368   $ 194,935   $ 138,156   $ 137,376  

Balance sheet data (at period end):

                                           
 

Oil and gas properties, net

  $ 659,705   $ 553,607   $ 585,115   $ 453,148   $ 675,135   $ 711,295   $ 522,819  
 

Total assets

    796,201     643,660     713,670     515,636     726,895     791,714     595,341  
 

Long-term debt(3)

                    94,415     129,126     84,094  
 

Amounts due to Forest(4)

    322,020     190,302     286,480     156,726     106,063     84,454     69,728  
 

Total shareholders' equity

    321,066     281,801     306,606     257,554     368,123     403,022     291,936  

Cash flow information:

                                           
 

Net cash provided by (used in) operating activities

  $ 27,080   $ (4,916 ) $ 87,650   $ 50,339   $ 189,168   $ 124,168   $ 137,004  
 

Net cash (used in) provided by investing activities

    (57,791 )   (39,495 )   (218,155 )   28,483     (202,941 )   (164,322 )   (150,155 )
 

Net cash provided by (used in) financing activities

    32,457     35,491     121,551     (70,030 )   6,778     39,353     20,582  

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Table of Contents

   
 
  Canadian Forest Oil Ltd. historical consolidated  
 
  Three months
ended March 31,
   
   
   
   
   
 
 
  Year ended December 31,  
(in thousands, except volumes,
prices, and per unit data)

 
  2011
  2010
  2010
  2009
  2008
  2007
  2006
 
   

Sales volumes and operating data:

                                           

Working interest sales volumes(5):

                                           
 

Natural gas (MMcf)

    6,801     5,596     23,961     25,431     28,501     30,067     30,066  
 

Oil and NGLs (MBbls)

    207     285     1,142     1,076     1,300     1,259     1,384  
 

Total natural gas equivalent (MMcfe)

    8,043     7,306     30,814     31,888     36,300     37,622     38,367  
 

Average daily sales volumes (MMcfe/d)(6)

    89     81     84     87     99     103     105  

Net sales volumes(7):

                                           
 

Natural gas (MMcf)

    6,486     4,979     22,436     23,248     23,313     25,079     24,350  
 

Oil and NGLs (MBbls)

    174     227     962     856     1,102     1,060     1,139  
 

Total natural gas equivalent (MMcfe)

    7,530     6,341     28,208     28,384     29,925     31,439     31,184  
 

Average daily sales volumes (MMcfe/d)(6)

    84     70     77     78     82     86     85  

Average sales price(8):

                                           
 

Natural gas (per Mcf)

  $ 3.49   $ 4.57   $ 3.71   $ 3.15   $ 6.98   $ 5.29   $ 5.07  
 

Oil and NGLs (per Bbl)

    78.26     64.64     65.30     45.68     79.61     54.40     47.55  

Cost and operating data per Mcfe(8):

                                           
 

Lease operating expenses

  $ 1.09   $ 0.89   $ 0.91   $ 0.97   $ 1.21   $ 1.00   $ 0.91  
 

Production and property taxes

    0.08     0.10     0.09     0.10     0.12     0.11     0.10  
 

Transportation and processing costs

    0.48     0.35     0.38     0.28     0.32     0.33     0.32  
 

General and administrative

    0.32     0.37     0.29     0.25     0.22     0.25     0.17  
 

Depreciation, depletion, and amortization

    2.53     2.09     2.26     1.99     2.88     2.69     2.43  
   

(1)   Discontinued operations relate to the sale of the business assets of our marketing subsidiary.

(2)   In addition to reporting net earnings as defined under GAAP, we also present Adjusted EBITDA, which is a non-GAAP performance measure. See "—Non-GAAP financial measure—Adjusted EBITDA," below, for a reconciliation of Adjusted EBITDA to reported net earnings, which is the most directly comparable financial measure calculated and presented in accordance with GAAP.

(3)   Represents amounts due under our bank credit facility.

(4)   Includes our note payable to Forest, intercompany advances due to Forest, and accrued interest payable to Forest.

(5)   "Working interest sales volumes" represents our working interest share of sales volumes before the impact of royalty burdens.

(6)   The comparability of the reported average daily working interest and net sales volumes reported for the year ended December 31, 2010 and for the three months ended March 31, 2011 to the prior comparative periods was impacted by divestitures of certain non-core oil and gas properties, primarily in December 2009 and April 2010, that, at the time the divestitures occurred, had a combined net production rate of 16 MMcfe/d.

(7)   "Net sales volumes" represents working interest volumes less the amount of volumes attributable to royalty burdens.

(8)   Calculated using net sales volumes.

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Non-GAAP financial measure

Adjusted EBITDA

In addition to reporting net earnings as defined under GAAP, we also present, in the table above, earnings before interest, income taxes, depreciation, depletion, and amortization, and other non-cash operating items, or Adjusted EBITDA, which is a non-GAAP performance measure. Adjusted EBITDA consists of net earnings (loss) before interest expense, income taxes, depreciation, depletion, and amortization, as well as other non-cash operating items such as ceiling test write-downs of oil and gas properties, foreign currency exchange (gains) losses, and accretion of asset retirement obligations. Adjusted EBITDA does not represent, and should not be considered an alternative to, GAAP measurements, such as net earnings (loss) (its most comparable GAAP financial measure), and our calculations thereof may not be comparable to similarly-titled measures reported by other companies. By eliminating interest, income taxes, depreciation, depletion, amortization, and other non-cash items from earnings, we believe the result is a useful measure across time in evaluating our fundamental core operating performance. Our management also uses Adjusted EBITDA to manage our business, including the preparation of our annual operating budget and financial projections. We believe that Adjusted EBITDA is also useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. As indicated, Adjusted EBITDA does not include interest expense on borrowed money or depletion, depreciation, and amortization expense on capital assets or the payment of income taxes, which are necessary elements of our operations. Because Adjusted EBITDA does not account for these and other expenses, its utility as a measure of our operating performance has material limitations. Because of these limitations, our management does not view Adjusted EBITDA in isolation and also uses other measurements, such as net earnings and revenues, to measure operating performance. The following table provides a reconciliation of net earnings (loss), the most directly comparable GAAP measure, to Adjusted EBITDA for the periods presented.

   
 
  Canadian Forest Oil Ltd. historical consolidated  
 
  Three months
ended March 31,
  Year ended December 31,  
(in thousands)
  2011
  2010
  2010
  2009
  2008
  2007
  2006
 
   

Net earnings (loss)

  $ 6,545   $ 15,013   $ 33,738   $ (138,928 ) $ 49,078   $ 57,599   $ 47,610  

Income tax expense (benefit)

    1,985     3,989     7,830     (49,293 )   23,592     (3,896 )   5,010  

Foreign currency exchange (gains) losses, net

    (7,820 )   (6,650 )   (14,560 )   (18,062 )   20,440     (15,415 )   70  

Interest expense

    1,380     740     6,956     16,157     14,364     14,380     7,985  

Accretion of asset retirement obligations

    275     265     1,036     1,009     1,130     903     1,004  

Ceiling test write-down of oil and gas properties

                199,021              

Depreciation, depletion, and amortization

    19,019     13,267     63,645     56,464     86,331     84,585     75,697  
       

Adjusted EBITDA

  $ 21,384   $ 26,624   $ 98,645   $ 66,368   $ 194,935   $ 138,156   $ 137,376  
   

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Unaudited pro forma consolidated financial information

The following financial information sets forth our unaudited pro forma and historical consolidated statements of operations for the year ended December 31, 2010 and for the three months ended March 31, 2011, and the unaudited pro forma and historical consolidated balance sheets at March 31, 2011. We derived the historical consolidated statements of operations and balance sheets from the following sources:

the historical consolidated statement of operations of CFOL for the year ended December 31, 2010 was derived from the audited consolidated financial statements of CFOL for the year ended December 31, 2010, included elsewhere in this prospectus;

the historical consolidated statement of operations of CFOL for the three months ended March 31, 2011 and the historical consolidated balance sheet as of March 31, 2011 were derived from the unaudited consolidated financial statements of CFOL as of and for the three months ended March 31, 2011, included elsewhere in this prospectus;

the historical statement of operations of Lone Pine for the period from inception (September 30, 2010) to December 31, 2010 was derived from the audited financial statements of Lone Pine for the period from inception (September 30, 2010) to December 31, 2010, included elsewhere in this prospectus; and

the historical statement of operations of Lone Pine for the three months ended March 31, 2011 and the historical balance sheet as of March 31, 2011 were derived from the unaudited financial statements of Lone Pine as of and for the three months ended March 31, 2011, included elsewhere in this prospectus.

Our unaudited pro forma consolidated financial statements were prepared on a basis consistent with that used in preparing the audited consolidated financial statements of CFOL and audited financial statements of Lone Pine and includes all adjustments, consisting of normal and recurring items, that we consider necessary for a fair presentation of the financial position and results of operations for the unaudited periods.

The unaudited pro forma consolidated balance sheet as of March 31, 2011 assumes that the following items occurred on March 31, 2011, and the unaudited pro forma consolidated statements of operations for the year ended December 31, 2010 and for the three months ended March 31, 2011 assume that the following items occurred on January 1, 2010:

the contribution by Forest of its approximate 86.6% direct ownership interest in CFOL and its 100% direct and indirect ownership interest in each of the Wiser Entities, which collectively own the remaining interest in CFOL, to us, in exchange for 69,999,999 shares of our common stock and cash consideration of $29 million; and

the issuance by us to the public of 15,000,000 shares of common stock and the use of the net proceeds from this offering as described under "Use of proceeds" on page 49.

CFOL has been a wholly-owned subsidiary of Forest and certain of its subsidiaries since CFOL was acquired by Forest in 1996 and has held and operated all of Forest's interests in Canada since that time. We were incorporated on September 30, 2010 under the laws of the State of Delaware. Upon the completion of this offering, we will own and operate the business of our

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predecessor, CFOL. The contribution of the business of CFOL to us will be recorded at historical cost, as it is considered to be a reorganization of entities under common control.

The historical consolidated financial statements of CFOL include a management fee payable to Forest, which was intended to reimburse Forest for certain corporate functions provided to CFOL by Forest, including general corporate and shared services expenses. The historical consolidated financial statements of CFOL included in this prospectus may not necessarily reflect the financial position, results of operations, and cash flows of CFOL as if it had operated as a stand-alone public company during all periods presented. Upon the completion of this offering, we expect to incur incremental general and administrative costs related to becoming a stand-alone public company. Accordingly, the historical results should not be relied upon as an indicator of our future performance.

The unaudited pro forma consolidated financial data should be read in conjunction with "Use of proceeds" on page 49, "Selected historical consolidated financial and other data" beginning on page 55, "Management's discussion and analysis of financial condition and results of operations" beginning on page 67, and the historical consolidated financial statements of CFOL and historical financial statements of Lone Pine and accompanying notes to each included elsewhere in this prospectus. The unaudited pro forma consolidated financial statements are for informational purposes only and are not intended to represent what our results of operations would be after giving effect to this offering or to indicate our results of operations for any future period. Therefore, investors should not place undue reliance on the unaudited pro forma consolidated financial statements. The unaudited pro forma adjustments are based on available information and certain assumptions that we believe are reasonable and are described below in the accompanying notes.

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Table of Contents

   
 
  As of March 31, 2011  
(in thousands, except share amounts)
  Historical
Lone Pine
Resources Inc.

  Historical
Canadian
Forest
Oil Ltd.

  Pro forma for
contribution
of Canadian
Forest Oil Ltd.
to Lone Pine
Resources Inc.(1)

  Pro forma
combined

  Pro forma
adjustments
for this
offering(2)

  Pro forma
Lone Pine
Resources Inc.

 
   

Pro forma balance sheet:

                                     

ASSETS

                                     

Current assets:

                                     
 

Cash

  $   $ 2,383   $   $ 2,383   $   $ 2,383  
 

Accounts receivable

        28,731         28,731         28,731  
 

Prepaid expenses and other current assets

    3,093     12,887         15,980     (3,093 )   12,887  
       
   

Total current assets

    3,093     44,001         47,094     (3,093 )   44,001  

Property and equipment, at cost:

                                     
 

Oil and gas properties, full cost method of accounting:

                                     
   

Proved, net of accumulated depletion of $1,173,385 for Historical CFOL

        554,295         554,295         554,295  
   

Unproved

        105,410         105,410         105,410  
       
 

Net oil and gas properties

        659,705         659,705         659,705  

Other property and equipment, net of accumulated depreciation and amortization of $8,697 for Historical CFOL

        63,948         63,948         63,948  
       
 

Net property and equipment

        723,653         723,653         723,653  
 

Inventory

        8,466         8,466         8,466  

Goodwill

        17,872         17,872         17,872  

Other assets

        2,209         2,209         2,209  
       

  $ 3,093   $ 796,201   $   $ 799,294   $ (3,093 ) $ 796,201  
       

LIABILITIES AND STOCKHOLDERS' EQUITY

                                     

Current liabilities:

                                     
 

Accounts payable and accrued liabilities

  $   $ 71,290   $   $ 71,290   $   $ 71,290  
 

Advances and accrued interest payable to Forest

    5,372     38,135     29,000     72,507     (72,507 )    
 

Note payable to Forest

        283,885         283,885     (283,885 )    
 

Other current liabilities

        2,779         2,779         2,779  
       
   

Total current liabilities

    5,372     396,089     29,000     430,461     (356,392 )   74,069  

Bank credit facility

                    174,999     174,999  

Asset retirement obligations

        13,899         13,899         13,899  

Deferred income taxes

        61,037         61,037         61,037  

Other liabilities

        4,110         4,110         4,110  
       

Total liabilities

    5,372     475,135     29,000     509,507     (181,393 )   328,114  

Commitments and contingencies:

                                     

Stockholders' equity:

                                     
 

Lone Pine common stock, $.01 par value per share, 1,000 shares authorized and 1 share issued and outstanding (historical); 300,000,000 shares authorized and 85,019,231 shares issued and outstanding (pro forma)

            700     700     150     850  
 

CFOL common stock; 2,106 no par shares issued and outstanding; unlimited             authorized

                         
 

Capital surplus

        144,813     (700 )   144,113     178,150     322,263  
 

Retained earnings (accumulated deficit)

    (2,279 )   74,337     (29,000 )   43,058         43,058  
 

Accumulated other comprehensive income

        101,916         101,916         101,916  
       
   

Total stockholders' equity

    (2,279 )   321,066     (29,000 )   289,787     178,300     468,087  
       

  $ 3,093   $ 796,201   $   $ 799,294   $ (3,093 ) $ 796,201  
   

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  Period from
inception
(September 30,
2010) to
December 31,
2010
  Year ended December 31, 2010  
(in thousands, except per share amounts)
  Historical
Lone Pine
Resources Inc.

  Historical
Canadian
Forest
Oil Ltd.

  Pro forma for
contribution
of Canadian
Forest Oil Ltd.
to Lone Pine
Resources Inc.(1)

  Pro forma
combined

  Pro forma
adjustments
for this
offering(2)(3)

  Pro forma
Lone Pine
Resources Inc.(4)

 
   

Pro forma statement of operations:

                                     

Revenues

 
$

 
$

146,070
 
$

 
$

146,070
 
$

 
$

146,070
 

Costs, expenses, and other:

                                     
 

Lease operating expenses

        25,680         25,680         25,680  
 

Production and property taxes

        2,423         2,423         2,423  
 

Transportation and processing costs

        10,738         10,738         10,738  
 

General and administrative

    1,222     8,045         9,267     450 (a)   9,717  
 

Depreciation, depletion, and amortization

        63,645         63,645         63,645  
 

Interest expense

        6,956         6,956     (2,989) (b)   3,967  
 

Foreign currency exchange (gains) losses, net

        (14,560 )       (14,560 )   13,165 (c)   (1,395 )
 

Other, net

        1,575         1,575         1,575  
       
   

Total costs, expenses, and other

    1,222     104,502         105,724     10,626     116,350  
       

Earnings (loss) before income taxes

    (1,222 )   41,568         40,346     (10,626 )   29,720  

Income tax expense (benefit):

                                     
 

Current

                         
 

Deferred

        7,830         7,830     (1,237 )   6,593  
       
   

Total income tax

        7,830         7,830     (1,237) (d)   6,593  
       

Net earnings (loss)

  $ (1,222 ) $ 33,738   $   $ 32,516   $ (9,389 ) $ 23,127  
       

Pro forma net earnings (loss) per share(4):

                                     
 

Basic

        $ .48         $ .46         $ .27  
 

Diluted

          .48           .46           .27  

Weighted average shares outstanding(4):

                                     
 

Basic

          70,000           70,000           85,000  
 

Diluted

          70,000           70,000           85,000  
   

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  Three months ended March 31, 2011  
(in thousands, except per share amounts)
  Historical
Lone Pine
Resources Inc.

  Historical
Canadian
Forest
Oil Ltd.

  Pro forma for
contribution
of Canadian
Forest Oil Ltd.
to Lone Pine
Resources Inc.(1)

  Pro forma
combined

  Pro forma
adjustments
for this
offering(2)(3)

  Pro forma
Lone Pine
Resources Inc.(4)

 
   

Pro forma statement of operations:

                                     

Revenues

 
$

 
$

36,273
 
$

 
$

36,273
 
$

 
$

36,273
 

Costs, expenses, and other:

                                     
 

Lease operating expenses

        8,227         8,227         8,227  
 

Production and property taxes

        603         603         603  
 

Transportation and processing costs

        3,625         3,625         3,625  
 

General and administrative

    1,057     2,394         3,451     113 (a)   3,564  
 

Depreciation, depletion, and amortization

        19,019         19,019         19,019  
 

Interest expense

        1,380         1,380     247 (b)   1,627  
 

Foreign currency exchange (gains) losses, net

        (7,820 )       (7,820 )   7,820 (c)    
 

Other, net

        315         315         315  
       
   

Total costs, expenses, and other

    1,057     27,743         28,800     8,180     36,980  
       

Earnings (loss) before income taxes

    (1,057 )   8,530         7,473     (8,180 )   (707 )

Income tax expense (benefit):

                                     
 

Current

                         
 

Deferred

        1,985         1,985     (1,189 )   796  
       
   

Total income tax

        1,985         1,985     (1,189) (d)   796  
       

Net earnings (loss)

  $ (1,057 ) $ 6,545   $   $ 5,488   $ (6,991 ) $ (1,503 )
       

Pro forma net earnings (loss) per share(4):

                                     
 

Basic

        $ .09         $ .08         $ (.02 )
 

Diluted

          .09           .08           (.02 )

Weighted average shares outstanding(4):

                                     
 

Basic

          70,000           70,000           85,035  
 

Diluted

          70,000           70,000           85,035  
   

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Notes to unaudited pro forma consolidated financial information
(in thousands, except share and per share amounts)

(1)
Represents the pro forma effect of the contribution by Forest of its approximate 86.6% direct ownership interest in CFOL and its 100% direct and indirect ownership interest in each of the Wiser Entities, which collectively own the remaining interest in CFOL, to us in exchange for 69,999,999 shares of Lone Pine common stock and cash consideration of $29 million.

(2)
Represents the pro forma effect of the offering of 15,000,000 shares of our common stock for net proceeds, after deducting underwriters' commissions and other direct expenses, of $178.3 million and the use of such proceeds to repay all amounts due under the note payable to Forest and all outstanding intercompany advances and accrued interest, including the $29 million cash consideration.

(a)
Represents the increase in equity compensation expense due to the automatic annual granting of restricted stock and phantom stock unit awards (the "annual share award") that vest one year from the date of grant to Lone Pine directors having a value equal to $450,000, all pursuant to Lone Pine's 2011 Stock Incentive Plan. For purposes of the pro forma statements of operations, the annual share award was assumed to take place at the beginning of each calendar year and was calculated by dividing $450,000 by the initial public offering price of $13.00 per share.

Under Lone Pine's 2011 Stock Incentive Plan, restricted stock and phantom stock unit awards are "participating securities." Accordingly, 19,231 restricted stock awards and 15,385 phantom stock unit awards which were assumed to be issued at the beginning of each pro forma period presented were not included in each respective period's calculation of basic or diluted shares outstanding, nor were they included in the calculation of pro forma diluted earnings per share for each respective period, as their inclusion would have an antidilutive effect.

(b)
Represents the reduction in interest expense associated with repayment of amounts due under the note payable to Forest and outstanding intercompany advances due to Forest as of January 1, 2010.

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      Pro forma interest expense primarily relates to interest expense on borrowings under our bank credit facility. See "Management's discussion and analysis of financial condition and results of operations—Liquidity and capital resources—Bank credit facility" beginning on page 81. The significant terms used in calculating the pro forma interest expense associated with our bank credit facility are as follows:

      Borrowings bearing interest at the Canadian Prime Rate plus 75 to 175 basis points, depending on borrowing base utilization. The Canadian Prime Rate used in the pro forma calculations ranged from 2.25% – 3.00%.

      A commitment fee of .5%, which accrues on the amount of unutilized commitment.

      Actual interest rates under our bank credit facility can vary from those used in calculating the pro forma interest expense adjustments. If the historical Canadian Prime Rate used in the pro forma interest expense calculations had been 1/8 percent higher, pro forma net earnings for the year ended December 31, 2010 would have been approximately $96,000 lower and pro forma net loss for the three months ended March 31, 2011 would have increased by approximately $32,000.

    (c)
    The repayment of amounts due under the note payable to Forest and outstanding intercompany advances and accrued interest due to Forest as of January 1, 2010 would result in a realized foreign currency gain of $1 million and would have eliminated subsequent unrealized and realized gains recognized during the periods presented.

    (d)
    A statutory income tax rate of 26.5% and 28% was applied to pro forma adjustments to the statement of operations for 2011 and 2010, respectively. Changes to realized and unrealized foreign currency exchange gains and losses are treated as capital gains and losses in Canada and are subject to 50% of the statutory rate. No U.S. income taxes or Canadian withholding taxes are reflected as we expect that all future cash flows generated will continue to be reinvested in Canada for exploration, development, or acquisition activities or utilized to satisfy other obligations in Canada. If we repatriate Canadian earnings, we may be subject to U.S. income taxes and Canadian withholding taxes.

(3)
As a public company, we will incur increased legal, accounting, and other costs as a result of being a public company that are in addition to our historical expenses. No pro forma adjustment has been made for these additional expenses, as an estimate of these expenses is not objectively determinable.

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(4)
Earnings per share for "Historical CFOL" was calculated assuming that the 70,000,000 shares of Lone Pine (as successor to CFOL) that will be owned by Forest after the contribution of Forest's approximate 86.6% direct ownership in CFOL and its 100% direct and indirect ownership interest in each of the Wiser Entities to Lone Pine, were also outstanding for "Historical CFOL." Historical earnings per share data using actual outstanding shares of 2,106 for CFOL was not considered meaningful or representative of a capital structure that would exist under public ownership. See "Earnings (loss) per share" in Note 1 to our consolidated financial statements included elsewhere in this prospectus.

Pro Forma Lone Pine Resources Inc. earnings (loss) per share was calculated using 85,000,000 shares of our common stock for 2010 and 85,034,616 for the three months ended March 31, 2011, which gives effect to the 2010 "annual share award" to directors of Lone Pine as discussed under Note 2(a) on page 64.

As discussed above, the unaudited pro forma balance sheet as of March 31, 2011 gives pro forma effect to the $29 million payment to Forest by Lone Pine under the separation and distribution agreement between Forest and Lone Pine. The payment is partial consideration for Forest's contribution of its direct and indirect ownership interests in CFOL to Lone Pine, and, for pro forma purposes, such payment is considered a dividend to Forest. No incremental shares of Lone Pine common stock would have been required to fund the $29 million dividend, because pro forma CFOL and Lone Pine combined net earnings of $33 million for the year ended December 31, 2010 exceeded the amount of the dividend.

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Management's discussion and analysis of
financial condition and results of operations

All expectations, forecasts, assumptions, and beliefs about our future financial results, condition, operations, strategic plans, and performance are forward-looking statements, as described in more detail in "Forward-looking statements" beginning on page 47. Our actual results may differ materially because of a number of risks and uncertainties. See "Risk factors" beginning on page 17.

You should read the following discussion and analysis of our financial condition and results of operations in conjunction with the unaudited interim consolidated financial statements of CFOL and the notes thereto for the three months ended March 31, 2011 and 2010, the audited consolidated financial statements of CFOL and notes thereto for the years ended December 31, 2010, 2009, and 2008, and the unaudited pro forma consolidated financial statements of Lone Pine as of and for the three months ended March 31, 2011 and for the year ended December 31, 2010 contained elsewhere in this prospectus.

Unless the context otherwise requires, all operating data presented in this prospectus on a per unit basis is calculated based on net sales volumes, all references to "dollars" or "$" in this prospectus are to U.S. dollars, and all references to "CDN$" are to Canadian dollars.

Overview

We are an independent oil and gas exploration, development, and production company with operations in Canada within the provinces of Alberta, British Columbia, and Quebec and the Northwest Territories. We were incorporated under the laws of the State of Delaware on September 30, 2010, and we are currently a wholly-owned subsidiary of Forest Oil Corporation. Our predecessor, Canadian Forest Oil Ltd., was acquired by Forest in 1996. As of December 31, 2010, we had approximately 376 Bcfe of estimated proved reserves, of which approximately 71% was natural gas and 29% was oil and natural gas liquids, or NGLs.

How we evaluate our operations

We use a variety of financial and operational measures to assess our performance. Among these measures are the following:

volumes of oil, natural gas, and NGLs produced and sold;

realized commodity prices;

production costs; and

earnings before interest, taxes, depreciation, depletion, and amortization, and other non-cash items, or Adjusted EBITDA.

Volumes of oil, natural gas, and natural gas liquids produced and sold

The volumes of oil, natural gas, and NGLs that we produce and sell are driven by several factors, including:

the amount of capital we invest in the exploration, development, and acquisition of oil and gas properties, including the drilling of new wells and the recompletion of existing wells;

the rate at which production volumes on our wells naturally decline;

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the royalty percentage, or burden, that is levied on our sales volumes by Canadian provinces; and

the amount of production volumes associated with oil and gas properties we may sell from time to time.

Average daily working interest and net sales volumes for the three months ended March 31, 2011 and 2010 and for the years ended December 31, 2010, 2009, and 2008 are set forth in the table below. See "Results of operations—three months ended March 31, 2011 and 2010 and years ended December 31, 2010, 2009, and 2008—Oil and gas volumes and revenues" on page 72 for an evaluation of the information presented.

   
 
  Three months
ended March 31,
  Year ended December 31,  
 
  2011
  2010
  2010
  2009
  2008
 
   

Working interest sales volumes—before royalty burden (MMcfe/d)

    89     81     84     87     99  

Less: royalty burden (MMcfe/d)

    (5 )   (11 )   (7 )   (9 )   (17 )
       

Net sales volumes (MMcfe/d)

    84     70     77     78     82  
       

Royalty burden (percentage of working interest sales volumes)

    6%     13%     8%     11%     18%  

Pro forma daily sales volumes giving effect to oil and gas property divestitures(1):

                               
 

Working interest sales volumes (MMcfe/d)

    89     75     83     69     79  
 

Net sales volumes (MMcfe/d)

    84     66     76     62     65  
   

(1)   We divested certain non-core oil and gas properties, primarily in December 2009 and April 2010, that, at the time the divestitures occurred, had a combined net production rate of 16 MMcfe/d. The pro forma working interest and net daily sales volumes for oil and gas property divestitures represent the net daily sales attributable to the oil and gas properties in which we had an ownership interest as of March 31, 2011.

Realized commodity prices

We market our oil, natural gas, and NGL production to a variety of purchasers based on regional pricing. The prices we receive for our oil, natural gas, and NGLs are determined by various factors but are primarily driven by global and regional supply and demand fundamentals. NYMEX WTI futures prices are widely-used benchmarks in the pricing of oil and NGLs, and NYMEX Henry Hub and AECO futures prices are each used as benchmarks in the pricing of natural gas. The prices realized for each of our products compared to the NYMEX benchmark prices, or differential, will depend on various factors, which are discussed by product below.

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The table below sets forth the prices we receive per unit of volume for each of our products compared to the benchmark prices for the periods indicated:

   
 
  Three months
ended March 31,
  Year ended December 31,  
 
  2011
  2010
  2010
  2009
  2008
 
   

Oil:

                               

Average NYMEX WTI price (per Bbl)

  $ 94.10     78.72   $ 79.53   $ 61.80   $ 99.65  

Average oil sales price (per Bbl)

    80.71     69.31     67.51     51.14     86.68  
       

Differential to NYMEX WTI

  $ 13.39   $ 9.41   $ 12.02   $ 10.66   $ 12.97  
       

Natural gas:

                               

Average NYMEX Henry Hub price (per MMBtu)

  $ 4.11   $ 5.30   $ 4.39   $ 3.98   $ 9.03  

Average natural gas sales price (per Mcf)

    3.49     4.57     3.71     3.15     6.98  
       

Differential to NYMEX Henry Hub

  $ .62   $ .73   $ .68   $ .83   $ 2.05  
       

Average AECO price (per MMBtu)

  $ 3.73   $ 5.06   $ 3.95   $ 3.50   $ 7.82  

Average natural gas sales price (per Mcf)

    3.49     4.57     3.71     3.15     6.98  
       

Differential to AECO

  $ .24   $ .49   $ .24   $ .35   $ .84  
       

NGL:

                               

Average NYMEX WTI price (per Bbl)

  $ 94.10   $ 78.72   $ 79.53   $ 61.80   $ 99.65  

Average NGL sales price (per Bbl)

    59.40     46.77     51.68     30.82     60.71  

Percentage of NYMEX WTI

    63%     59%     65%     50%     61%  
   

Oil differentials

The primary factors influencing our oil differential to NYMEX are (1) the quality of our oil and (2) the proximity of our oil production to major consuming and refining markets.

Among other things, there are two characteristics that determine the quality of our oil: (1) the oil's American Petroleum Institute, or API, gravity and (2) the oil's sulfur content by weight. In general, lighter oil (with higher API gravity) sells at a higher price than heavier oil, because lighter oil produces a larger number of lighter liquid products, such as gasoline, that have a higher resale value. Oil with low sulfur content, or "sweet" crude oil, is less expensive to refine and, as a result, normally sells at a higher price than high sulfur-content oil, or "sour" crude oil.

The proximity of our oil production to major consuming and refining markets also impacts our oil differentials. Oil that is produced close to major consuming and/or refining markets, such as Edmonton or Hardisty in Alberta, is in higher demand than oil that is produced farther from these markets and, consequently, realizes a higher price due to the implied costs that must be incurred by the buyer of the oil at or near the wellhead to transport the oil to the consuming and refining markets.

Natural gas differentials

The primary factors influencing natural gas differentials include the proximity of natural gas production to consuming markets or, in instances when natural gas is produced in remote areas away from consuming markets, the amount of "takeaway capacity" available to transport natural gas produced to areas with higher demand. Generally, natural gas produced in close proximity to areas that consume large quantities of natural gas will command higher prices, as

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will natural gas produced in areas with adequate takeaway capacity to those consuming markets. The majority of the natural gas that we produce can access adequate takeaway capacity to major consuming markets, and approximately 75% of our current total natural gas production is transported to those markets under firm transportation contracts. As of May 9, 2011, we have a delivery commitment of approximately 21 Bbtu/d of natural gas, which provides for a price equal to NYMEX Henry Hub less $1.49 to a buyer through October 31, 2014, unless the Henry Hub price exceeds $6.50 per MMBtu, at which point we share the amount of the excess equally with the buyer. Accordingly, when NYMEX Henry Hub trades above $6.50 MMBtu, our reported differentials will widen, as was the case in 2008.

NGL realizations

NGL realizations, which are generally evaluated as a percentage of NYMEX WTI, are primarily driven by the composition of liquids. NGLs are primarily composed of five marketable components, which, ordered from lightest to heaviest, are: (1) ethane, (2) propane, (3) isobutane, (4) normal butane, and (5) natural gasoline. The heavier liquid components normally realize higher prices than the lighter components.

Production costs

In evaluating our production operations, we frequently monitor and assess our production expenses on a per unit of production basis, or "per Mcfe." This measure allows us to better evaluate our operating efficiency as production levels change.

Production costs are the costs incurred in the operation of producing our oil, natural gas, and NGLs and are primarily comprised of lease operating expense (including workover costs), production and property taxes, and transportation and processing costs. In general, lease operating expense and workover costs represent the components of production costs over which we have management control, while production and property taxes are primarily driven by the assessed valuation of our property and equipment by the taxing authorities. Transportation and processing costs are comprised of downstream pipeline transportation costs (primarily incurred to deliver natural gas to consuming regions in order to achieve a higher sales price) and processing costs, which includes the cost of separating NGLs from the natural gas stream and compressing the residue natural gas to a pressure adequate to meet pipeline requirements.

Certain components of lease operating expense are also impacted by energy and field services costs. For example, we incur power costs in connection with various production-related activities, such as pumping to recover oil and gas, and we purchase other products, such as methanol, to prevent the freezing of gas lines. Although these costs are highly correlated with production volumes, they are also influenced by commodity prices. Certain items, however, such as direct labor and materials and supplies, generally remain fixed across broad sales volume ranges, but can fluctuate depending on activities performed during a specific period. For instance, repairs to our pumping equipment or surface facilities result in increased expenses in periods during which they are performed.

The table below sets forth our production costs per Mcfe for the three months ended March 31, 2011 and 2010 and for the years ended December 31, 2010, 2009, and 2008. See "—Results of operations—three months ended March 31, 2011 and 2010 and years ended

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December 31, 2010, 2009, and 2008—Oil and gas production expense" below for an evaluation of these production costs for each period presented.

   
 
  Three months
ended March 31,
  Year ended December 31,  
 
  2011
  2010
  2010
  2009
  2008
 
   

Production expense per Mcfe:

                               
 

Lease operating expenses

  $ 1.09   $ .89   $ .91   $ .97   $ 1.21  
 

Production and property taxes

    .08     .10     .09     .10     .12  
 

Transportation and processing costs

    .48     .35     .38     .28     .32  
       

Production expense per Mcfe

  $ 1.65   $ 1.33   $ 1.38   $ 1.35   $ 1.65  
   

Adjusted EBITDA

We also evaluate the results of our operations using a non-GAAP financial measure, Adjusted EBITDA. Adjusted EBITDA is calculated as net earnings (loss) plus:

income tax expense (benefit);

foreign currency exchange (gains) losses, net;

interest expense;

accretion of asset retirement obligations;

ceiling test write-downs of oil and gas properties; and

depreciation, depletion, and amortization.

By eliminating interest, income taxes, depreciation, depletion, amortization, and other non-cash operating items, we believe the result is a useful measure across time in evaluating our fundamental core operating performance. Our management also uses Adjusted EBITDA to manage our business, including in preparing our annual operating budget and financial projections. We believe that Adjusted EBITDA is also useful to investors because similar measures are frequently used by securities analysts, investors, and other interested parties in their evaluation of companies in similar industries. As indicated, Adjusted EBITDA does not include interest expense on borrowed money or depletion, depreciation, and amortization expense on capital assets or the payment of income taxes, which are all necessary elements of our operations. Because Adjusted EBITDA does not account for these and other expenses, its utility as a measure of our operating performance has material limitations. Because of these limitations, our management does not view Adjusted EBITDA in isolation and also uses other measurements, such as net earnings and net revenues, to measure operating performance. See "—Results of operations—three months ended March 31, 2011 and 2010 and years ended December 31, 2010, 2009, and 2008" below and "—Reconciliation of non-GAAP measure—Adjusted EBITDA" on page 90 for our Adjusted EBITDA and the reconciliation to net earni