-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IaVOAzEKEegYEZC9sdF6NKyIX0a1a4BH+vi695lGyiIYyoiHjHDWhGANtQ2+WLWN RadpB9n61Yu5Q7HJveQikw== 0000912057-01-538316.txt : 20020410 0000912057-01-538316.hdr.sgml : 20020410 ACCESSION NUMBER: 0000912057-01-538316 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20011107 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20011108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FOREST OIL CORP CENTRAL INDEX KEY: 0000038079 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 250484900 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-13515 FILM NUMBER: 1778861 BUSINESS ADDRESS: STREET 1: 1600 BROADWAY STREET 2: 2200 COLORADO STATE BANK BLDG CITY: DENVER STATE: CO ZIP: 80202 BUSINESS PHONE: 3038121400 8-K 1 a2062914z8-k.txt FORM 8-K - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) November 7, 2001 FOREST OIL CORPORATION (Exact name of registrant as specified in charter) New York 1-13515 25-0484900 (State or other juris- (Commission (IRS Employer diction of incorporation) file number) Identification No.) 2200 Colorado State Bank Building, 1600 Broadway, Denver, CO 80202 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (303) 812-1400 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATON AND EXHIBITS. - --------------------------------------------------------------------------- (a) Financial Statements. Not applicable. (b) Pro Forma Financial Information. Not applicable. (c) Exhibits. Exhibit Description ------- ----------- (99.1) Forest Oil Corporation press release dated November 7, 2001, entitled "Forest Oil Announces Third Quarter and Nine Month 2001 Earnings" (99.2) Forest Oil Corporation press release dated November 7, 2001, entitled "Forest Oil Announces Operational Results for the First Ninc Months of 2001" ITEM 9. REGULATION FD DISCLOSURE. In accordance with General Instruction B.2 of Form 8-K, the following information, including Exhibits 99.1 and 99.2, shall not be deemed filed for purposes of Section 18 of the Securities and Exchange Act of 1934, nor shall such information and Exhibits be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such a filing. The registrant issued a press release dated November 7, 2001 announcing its earnings for the three and nine months ended September 30, 2001, and updating 2001 forecast information, which is attached hereto as Exhibit 99.1. The registrant issued a press release dated November 7, 2001 announcing its operational results for the nine months ended September 30, 2001, which is attached hereto as Exhibit 99.2. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. FOREST OIL CORPORATION (Registrant) Dated: November 8, 2001 By /s/ Joan C. Sonnen -------------------------------- Joan C. Sonnen Vice President - Controller and Chief Accounting Officer INDEX TO EXHIBITS FILED WITH THE CURRENT REPORT ON FORM 8-K EXHIBIT DESCRIPTION - ------- ----------- 99.1 Forest Oil Corporation press release dated November 7, 2001, entitled "Forest Oil Announces Third Quarter and Nine Month 2001 Earnings" 99.2 Forest Oil Corporation press release dated November 7, 2001, entitled "Forest Oil Announces Operational Results for the First Nine Months of 2001" EX-99.1 3 a2062914zex-99_1.txt EXHIBIT 99.1 Exhibit 99.1 NEWS FOR FURTHER INFORMATION FOREST OIL CORPORATION CONTACT: DONALD H. STEVENS 1600 BROADWAY, SUITE 2200 VICE PRESIDENT AND TREASURER DENVER, COLORADO 80202 (303) 812-1500 FOR IMMEDIATE RELEASE FOREST OIL ANNOUNCES THIRD QUARTER AND NINE MONTH 2001 EARNINGS DENVER, COLORADO - NOVEMBER 7, 2001 - Forest Oil Corporation (NYSE:FST) (Forest) reported today third quarter net earnings, adjusted for unusual and non-recurring items, of $15.7 million or $.33 per basic share for 2001 compared to net earnings of $36.6 million or $.76 per basic share in the corresponding 2000 period. Without adjustments for unusual or non-recurring items, Forest reported net earnings of $1.5 million or $.03 per basic share for the third quarter of 2001 compared to net earnings of $33.8 million or $.70 per share for the third quarter of 2000. The unusual and non-recurring items, which are stated net of the related income tax effects, consist of merger-related expenses of $2.3 million in 2001; non-cash foreign currency translation losses of $5.5 million in 2001 and $2.8 million in 2000; a non-cash unrealized loss on derivative instruments of $5.5 million in 2001; and an extraordinary loss on extinguishment of debt of $827,000 in 2001. For the first nine months of 2001, Forest reported net earnings, adjusted for unusual and non-recurring items, of $145.8 million or $3.04 per basic share compared to net earnings of $82.7 million or $1.73 per basic share in the corresponding 2000 period. Without adjustments for unusual or non-recurring items, earnings were $133.4 million or $2.78 per basic share for the first nine months of 2001 compared to $75.1 million or $1.56 per share for the corresponding 2000 period. The unusual and non-recurring items, net of related income tax effects, consist of merger-related expenses of $5.1 million in 2001; non-cash foreign currency translation losses of $7.8 million in 2001 and $7.6 million in 2000; a non-cash unrealized gain on derivative instruments of $2.9 million in 2001; and an extraordinary loss on extinguishment of debt of $2.4 million in 2001. Page 2 of 12 Total average daily oil and natural gas production for the third quarter of 2001 was approximately 470 MMCFE (million cubic feet equivalent of natural gas). Average daily production for the first nine months of 2001 was approximately 476 MMCFE. The decrease in production volumes during the periods reflects the effects of property sales, reduction in rig activity and a shifting of investment dollars to Alaska. Lease operating expense was negatively impacted by four unusual or non-recurring items totaling about $10 million in the third quarter. o Due to significant additional oil production in Alaska, the Company incurred one-time expense of approximately $4 million to refurbish and upgrade field level pipelines to handle the increased volumes. o Gathering and transportation costs were $2.5 million higher than those reported in the second quarter of 2001, due primarily to increased Alaskan oil production. o Expenses related to non-operated properties were approximately $1.5 million higher than anticipated due to prior period charges related to properties acquired in the merger. o One-time charges of $2.0 million were incurred for structural improvements to bring facilities on acquired properties in the Gulf of Mexico to acceptable specifications. Page 3 of 12 COMPARATIVE FINANCIAL AND PRODUCTION DATA The following table sets forth certain of Forest's financial and production statistics for the three and nine months ended September 30, 2001 and 2000:
Three Months Ended Nine Months Ended SEPTEMBER 30, SEPTEMBER 30, ------------------------------- -------------------------------- 2001 2000 CHANGE 2001 2000 CHANGE ---- ---- ------ ---- ------- ------ Daily natural gas production (MMCF): United States 264.5 283.2 (7)% 276.0 274.2 1% Canada 26.9 30.8 (13)% 29.2 32.6 (10)% Total 291.4 314.0 (7)% 305.2 306.8 (1)% Daily liquids production (MBBLS): United States 25.9 27.0 (4)% 24.8 27.3 (9)% Canada 3.7 4.2 (12)% 3.7 4.2 (12)% Total 29.6 31.2 (5)% 28.5 31.5 (10)% Net daily production (MMCFE) 469.1 501.3 (6)% 476.3 497.2 (4)% Production revenue (millions) (1) $ 145.7 162.9 (11)% $ 590.7 434.1 36% Average gas sales price ($/MCF) (1) $ 3.06 3.18 (4)% $ 4.77 2.89 65% Average gas sales price ($/MCF) (2) $ 3.52 3.18 11% $ 4.92 2.89 70% Average liquids sales price ($/BBL) (1) $ 23.34 24.74 (6)% $ 24.78 22.22 12% Average liquids sales price ($/BBL) (2) $ 23.23 24.74 (6)% $ 24.75 22.22 11% Cash flow before working capital changes, exclusive of merger expense (millions) $ 85.3 107.8 (21)% 406.4 271.1 50% EBITDA (millions) (3) $ 97.6 120.3 (19)% $ 445.5 311.7 43% Long-term debt (millions) $ 656 646 2% $ 656 646 2% Shareholders' equity (millions) $ 969 677 43% $ 969 677 43% Weighted average shares outstanding (millions) 47.2 46.1 2% 47.9 46.2 4%
- -------------------------------- (1) Includes realized effects of hedging. (2) Includes realized effects of all derivatives. (3) Earnings before interest, taxes, depreciation and depletion, merger and seismic licensing expense, translation of subordinated debt, extraordinary loss on extinguishment of debt and unrealized gain (loss) on derivative instruments. Page 4 of 12 2001 RESULTS The decrease in earnings for the third quarter of 2001 compared to the third quarter of 2000 was due primarily to lower production volumes and higher operating expenses. The increase in earnings for the first nine months of 2001 compared to the corresponding 2000 period was due primarily to higher product prices. Lease operating expense in the third quarter and nine months ended September 30, 2001 was $1.22 and $1.05 per MCFE, respectively, compared to $.77 and $.74 per MCFE in the corresponding periods in 2000. The increases in the per-unit rates for the 2001 periods were due primarily to increased service and transportation costs, higher ad valorem tax expense and increased workover activity. In addition, in the third quarter several large projects were undertaken and adjustments recorded which increased third quarter charges. General and administrative expense was $.18 and $.16 per MCFE in the third quarter and first nine months of 2001, respectively, compared to per-unit rates of $.17 and $.19 in the corresponding periods in 2000. The increase in the rate for the third quarter of 2001 was due primarily to lower production volumes. The decrease in the rate for the first nine months of 2001 was due primarily to higher credits for exploration and development activities due to increased capital spending, higher credits for production operations and operating synergies associated with the merger with Forcenergy Inc ("Forcenergy"). Merger and seismic licensing expense was $3.8 million and $8.3 million in the third quarter and first nine months of 2001, respectively. These costs include severance paid to terminated employees, office closure costs, employee relocation costs and other consulting costs related to the Forcenergy merger. Depreciation and depletion expense was $1.37 and $1.32 per MCFE for the third quarter and first nine months of 2001, respectively, compared to per-unit rates of $1.13 and $1.11 per MCFE in the corresponding periods in 2000. The increase in the per-unit rates was due primarily to capital spending, and higher future development costs. Interest expense was $12.3 million and $37.8 million in the third quarter and first nine months of 2001, respectively, compared to $14.4 million and $42.7 million in the corresponding periods in 2000. The decrease was due to lower overall debt balances as well as lower rates on variable rate debt. There was a realized gain on derivative instruments of $11.8 million in the third quarter and first nine months of 2001. There was an unrealized loss on derivative instruments of $8.9 million in the third quarter of 2001 and an unrealized gain of $4.7 million in the first nine months of 2001. These amounts were recorded as other income and expense under the provisions of SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", which Forest adopted on January 1, 2001. Current income tax expense was $485,000 and $2.7 million in the third quarter and first nine months of 2001, respectively, compared to $325,000 and $631,000 in the corresponding 2000 periods. The increase for the first nine months of 2001 is attributable primarily to increased pre-tax profitability. Deferred income tax expense was $4.0 million and $83.6 million in the third quarter and first nine months of 2001, respectively, compared to $15.9 million and $32.0 million in the corresponding 2000 periods. The decrease for the third quarter of 2001 is attributable primarily to decreased pre-tax profitability. The increase for the first nine months of 2001 is attributable primarily to increased pre- Page 5 of 12 tax profiatbility and to the recognition in the fourth quarter of 2000 of the future income tax benefit of previously unrecognized deferred tax assets. There was an extraordinary loss on extinguishment of debt in the third quarter and first nine months of 2001 of $827,000 and $2.4 million (net of tax), respectively, which resulted from the redemption of $26.6 million and $65.3 million, respectively, principal amount of the 8 3/4% Senior Subordinated Notes due 2007 at approximately 102% and 103%, respectively, of par value. CAPITAL STRUCTURE. In the third quarter and first nine months of 2001, Forest purchased 1,651,138 and 2,074,300 shares of common stock for approximately $43.2 million and $55.7 million, respectively. FORECAST FOR FOURTH QUARTER OF 2001 Forest also announced today certain changes to its 2001 financial forecast. A discussion of the fourth quarter forecast and underlying assumptions follows. SPECIFIC ASSUMPTIONS AND RISKS RELATED TO PRICE AND PRODUCTION ESTIMATES Prices for Forest's products are determined primarily by prevailing market conditions. Market conditions for these products are influenced by regional and worldwide economic growth, weather and other substantially variable factors. These factors are beyond Forest's control and are difficult to predict. In addition to volatility in general, Forest's oil and gas prices may vary considerably due to differences between regional markets, transportation availability and demand for different grades of products. Consequently, Forest's financial results and resources are highly influenced by this price volatility. Estimates for Forest's future production are based on the assumption that market demand and prices for oil and gas will continue at levels that allow for profitable production of these products. The production, transportation and marketing of oil and gas and NGLs are complex processes which are subject to disruption due to transportation and processing availability, mechanical failure, human error, meteorological events including, but not limited to, hurricanes, and numerous other factors. These estimates are based on certain other assumptions, such as well performance, which may vary significantly from those assumed. Therefore, we can give no assurance that our future production will be as estimated. Given these general limitations and those discussed below, the assumptions underlying Forest's forecast for the fourth quarter of 2001 are set forth below. DAILY PRODUCTION. Taking into account our announced sale of properties to Unocal, as well as all other property sales for the year, we currently assume that our daily production will be between 455 and 465 MMCFE per day for the fourth quarter of 2001. OIL PRODUCTION. We currently assume that our oil production will be between 26,000 and 28,000 barrels per day. OIL PRICES. We have assumed that our realized oil price will average between $17.50 and $18.50 per barrel based upon NYMEX prices averaging between $20.00 and $22.00. Page 6 of 12 GAS PRODUCTION. We currently assume our natural gas production will be between 260 and 290 MMCF per day. GAS PRICES. We have assumed that our realized natural gas price will average between $2.10 and $2.35 per MCF based upon NYMEX prices averaging between $2.40 and $2.60 per MMBTU. NGL PRODUCTION. We currently assume that our NGL production will be between 2,000 and 3,000 barrels per day. NGL PRICES. We have assumed that our realized NGL prices will average between 60 and 70 percent of the assumed NYMEX oil prices. PRICE SENSITIVITY. We estimate that oil and gas revenue will change by approximately $1.5 million to $2.5 million for each $.10 per MMBTU change in NYMEX natural gas prices and by approximately $2 million to $4 million for each $1 per barrel change in NYMEX oil prices. HEDGING. Forest has swaps and collars in place covering the aggregate average daily volumes and weighted average prices shown below. We have assumed that we will realize $17 million to $21 million during the quarter from hedging activity based on the NYMEX assumptions above.
Fourth Quarter of Full Year 2001 2002 --------------------- ----------- NATURAL GAS SWAPS: Contract volumes (BBTU/d) 44.7 62.8 Weighted average price (per MMBTU) $ 3.14 3.15 NATURAL GAS COLLARS: Contract volumes (BBTU/d) 73.6 2.5 Weighted average ceiling price (per MMBTU) $ 6.45 8.05 Weighted average floor price (per MMBTU) $ 4.36 4.00 OIL SWAPS: Contract volumes (BBLS/d) 2,000 3,996 Weighted average price (per BBL) $ 26.71 24.85 OIL COLLARS: Contract volumes (BBLS/d) 10,500 - Weighted average ceiling price (per BBL) $ 29.91 - Weighted average floor price (per BBL) $ 25.56 - In connection with its issuance of $200 million 8% Senior Notes due 2008, Forest entered into an interest rate swap under which it will pay a variable rate based on six month LIBOR plus 195 basis points in exchange for a fixed rate of 8% on $100 million over the term of the senior note issue.
Page 7 of 12 PRODUCTION EXPENSE. Our production and operating expenses (which include production taxes) vary in response to several factors. Among the most significant of these factors are additions to or deletions from our property base, changes in production taxes, general changes in the prices of services and materials that are used in the operation of our properties and the amount of repair and workover activity required. We currently assume that our production expense on a per unit basis will average between $1.00 and $1.10 per MCFE. DEPRECIATION, DEPLETION AND AMORTIZATION (DD&A). We currently assume that the DD&A rate will be between $1.30 and $1.40 per MCFE. CAPITAL EXPENDITURES. We have assumed capital expenditures will be approximately $120 million. Some of the factors impacting the level of capital expenditures include absolute crude oil and natural gas prices, the volatility in these prices and the cost and availability of oil field services. PROPERTY SALES. We currently assume property sales of approximately $120 million, representing the proposed Unocal transaction. GENERAL AND ADMINISTRATIVE EXPENSE (G&A). We currently assume our G&A expense on a per unit basis will be between $.16 and $.18 per MCFE. INTEREST EXPENSE. We currently assume our interest expense will be between $10 million and $12 million, depending on the timing of cash flows and capital expenditures. INCOME TAXES. We currently assume our effective income tax rate will be 38 percent (inclusive of applicable federal and state taxes) and our current tax will be 1 to 3 percent of the total tax expense. SHARES OUTSTANDING. At October 31, 2001 we had approximately 47 million common shares outstanding. We currently assume that diluted shares will be between 49 million and 50 million shares. FINANCIAL FORECAST. In order to provide a financial forecast for the fourth quarter of 2001, we have assumed the mid-point of the range for each assumption. The selection of a mid-point is not meant to portray any further accuracy than any other number within the range, but is an arbitrary number within the range. Based upon this methodology, the following is a summary of certain financial data for 2000 and forecasted 2001.
Quarter ending December 31, 2000 2001E ------------ ----------- Cash flow per share, as adjusted* $ 2.33 $ 1.40 Earnings per basic share, as adjusted* $ 1.16 $ .10 EBITDA, as adjusted (millions)* $ 142 $ 75 Long-term debt at end of period (millions) $ 622 $ 600-625 Debt to total capitalization at end of period 42% 38-40% *As adjusted to exclude unusual or non-recurring items.
Page 8 of 12 TELECONFERENCE CALL The Company's management will hold a teleconference on Thursday, November 8, 2001 at 11:00 a.m. Eastern Standard Time. If you would like to participate, please call toll-free 888/781-5307 (for U.S./Canada) and 706/634-0611 (for International). A replay will be available from Thursday, November 8th through Friday, November 16th. You may access the replay by dialing toll free 800/642-1687 (for U.S./Canada) and 706/645-9291 (for International), reservation No. 1997854. Please note that the reservation number is not needed to access the teleconference. FORWARD-LOOKING STATEMENTS This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, that address activities that the Company plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. The forward-looking statements provided in this press release are based on management's examination of historical operating trends and its current belief as to the outcome and timing of future events. Forest cautions that its future natural gas and liquids production, revenues and expenses and other forward-looking statements are subject to all of the risks and uncertainties normally incident to the exploration for and development and production and sale of oil and gas. These risks include, but are not limited to, price volatility, inflation or lack of availability of goods and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating future oil and gas production or reserves, and other risks as described in Forest's 2000 Annual Report on Form 10-K as filed with the Securities and Exchange Commission. Also, the financial results of Forest's foreign operations are subject to currency exchange rate risks. Any of these factors could cause Forest's actual results and plans to differ materially from those in the forward-looking statements. * * * * * Forest Oil Corporation is engaged in the exploration, acquisition, development, production and marketing of natural gas and crude oil in North America and selected international locations. Forest's principal reserves and producing properties are located in the United States in the Gulf of Mexico, Louisiana, Texas, Alaska and in Canada in Alberta and the Northwest Territories. Forest's common stock trades on the New York Stock Exchange under the symbol FST. November 7, 2001 ### Page 9 of 12
FOREST OIL CORPORATION Condensed Consolidated Balance Sheets (Unaudited) September 30, December 31, 2001 2000 ------------- ------------ (In Thousands) ASSETS Current assets: Cash and cash equivalents $ 4,500 14,003 Accounts receivable 169,221 203,245 Derivative instruments 34,237 - Other current assets 34,523 21,580 ---------- ---------- Total current assets 242,481 238,828 Net property and equipment, at cost 1,572,249 1,359,756 Deferred income taxes 46,922 119,300 Goodwill and other intangible assets, net 17,089 19,412 Other assets 20,408 15,082 ---------- ---------- $ 1,899,149 1,752,378 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 203,066 192,200 Accrued interest 6,842 11,436 Current portion of deferred tax liability 10,534 - Other current liabilities 20,003 36,301 ---------- ---------- Total current liabilities 240,445 239,937 Long-term debt 655,748 622,234 Other liabilities 15,528 16,376 Deferred income taxes 18,106 14,865 Shareholders' equity: Common stock 4,882 4,840 Capital surplus 1,152,982 1,139,136 Accumulated deficit (136,153) (269,567) Accumulated other comprehensive gain (loss) 3,779 (12,177) Treasury stock, at cost (56,168) (3,266) ---------- ---------- Total shareholders' equity 969,322 858,966 ---------- ---------- $ 1,899,149 1,752,378 ========== ==========
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FOREST OIL CORPORATION Condensed Consolidated Statements of Operations (Unaudited) Three Months Ended Nine Months Ended ------------------ ----------------- September 30, September 30, 2001 2000 2001 2000 ------ ------ ------ ------ (In Thousands Except Per Share Amounts) Revenue: Marketing and processing $ 55,371 67,546 253,941 170,691 Oil and gas sales: Gas 82,167 91,869 397,775 242,744 Oil, condensate and natural gas liquids 63,575 71,070 192,944 191,342 -------- -------- -------- -------- Total oil and gas sales 145,742 162,939 590,719 434,086 -------- -------- -------- -------- Total revenue 201,113 230,485 844,660 604,777 Operating expenses: Marketing and processing 54,494 67,162 251,441 168,282 Oil and gas production 52,434 35,317 136,605 101,067 General and administrative 7,750 7,652 21,032 25,717 Merger and seismic licensing expense 3,763 - 8,261 - Depreciation and depletion 60,381 53,029 174,321 153,738 -------- -------- -------- -------- Total operating expenses 178,822 163,160 591,660 448,804 -------- -------- -------- -------- Earnings from operations 22,291 67,325 253,000 155,973 Other income and expense: Other (income) expense, net 685 46 1,868 (2,000) Interest expense 12,270 14,411 37,763 42,659 Translation loss on subordinated debt 5,465 2,824 7,766 7,638 Realized gain on derivative instruments, net (11,826) - (11,826) - Unrealized (gain) loss on derivative instruments, net 8,881 - (4,705) - -------- -------- -------- -------- Total other income and expense 15,475 17,281 30,866 48,297 -------- -------- -------- -------- Earnings before income taxes and extraordinary item 6,816 50,044 222,134 107,676 Income tax expense: Current 485 325 2,721 631 Deferred 3,964 15,925 83,582 31,977 -------- -------- -------- -------- 4,449 16,250 86,303 32,608 -------- -------- -------- -------- Net earnings before extraordinary item 2,367 33,794 135,831 75,068 Extraordinary loss on extinguishment of debt (827) - (2,417) - -------- -------- -------- -------- Net earnings $ 1,540 33,794 133,414 75,068 ======== ======== ======== ======== Earnings attributable to common stock $ 1,540 32,334 133,414 72,037 ======== ======== ======== ========
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FOREST OIL CORPORATION Condensed Consolidated Statements of Operations (Unaudited) (continued) Three Months Ended Nine Months Ended ------------------ ----------------- September 30, September 30, 2001 2000 2001 2000 ------ ------ ------ ------ (In Thousands Except Per Share Amounts) Weighted average number of common shares outstanding Basic 47,182 46,136 47,989 46,150 ====== ====== ====== ====== Diluted 48,476 48,008 49,722 47,335 ====== ====== ====== ====== Basic earnings per common share: Earnings attributable to common stock before extraordinary item $ .05 .70 2.83 1.56 Extraordinary loss on extinguishment of debt (.02) - (.05) - ------ ------ ------ ------ Earnings attributable to common stock $ .03 .70 2.78 1.56 ====== ====== ====== ====== Diluted earnings per common share: Earnings attributable to common stock before extraordinary item $ .05 .67 2.73 1.52 Extraordinary loss on extinguishment of debt (.02) - (.05) - ------ ------ ------ ------ Earnings attributable to common stock $ .03 .67 2.68 1.52 ====== ====== ====== ======
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FOREST OIL CORPORATION Condensed Consolidated Statements of Cash Flows (Unaudited) Nine Months Ended September 30, ------------------------------- 2001 2000 ------ ------ (In Thousands) Cash flows from operating activities: Net earnings before extraordinary item $ 135,831 75,068 Adjustments to reconcile earnings to net cash provided by operating activities: Depreciation and depletion 174,321 153,738 Amortization of deferred debt costs 1,309 1,114 Translation loss on subordinated debt 7,766 7,638 Unrealized gain on derivative instruments, net (4,705) - Deferred income tax expense 83,582 31,977 Stock and stock option compensation - 2,570 Other, net (54) (992) Decrease (increase) in accounts receivable 31,876 (30,351) Increase in other current assets (11,102) (30,764) Increase (decrease) in accounts payable 46,080 (10,826) Decrease in accrued interest and other current liabilities (55,617) (16,076) ----------- ----------- Net cash provided by operating activities before reorganization item 409,287 183,096 Decrease in accrued reorganization costs - (11,199) ----------- ----------- Net cash provided by operating activities after reorganization item 409,287 171,897 Cash flows from investing activities: Capital expenditures for property and equipment (431,392) (277,695) Proceeds from sales of assets 31,846 8,577 Increase in other assets, net (2,497) (3,514) ----------- ----------- Net cash used by investing activities (402,043) (272,632) Cash flows from financing activities: Proceeds from bank borrowings 687,986 246,907 Repayments of bank borrowings (788,238) (272,283) Issuance of 8% senior notes, net of issuance costs 199,500 - Proceeds from issuance of preferred stock - 38,800 Redemption of 8 3/4% senior subordinated notes (67,003) (4,630) Proceeds from the exercise of options and warrants 8,261 6,291 Purchase of treasury stock (55,720) (2,818) Decrease in other liabilities, net (1,202) (2,153) ----------- ----------- Net cash provided (used) by financing activities (16,416) 10,114 Effect of exchange rate changes on cash (331) 24 ----------- ----------- Net decrease in cash and cash equivalents (9,503) (90,597) Cash and cash equivalents at beginning of period 14,003 99,661 ----------- ----------- Cash and cash equivalents at end of period $ 4,500 9,064 ===========- ===========
EX-99.2 4 a2062914zex-99_2.txt EXHIBIT 99.2 Exhibit 99.2 NEWS FOR FURTHER INFORMATION FOREST OIL CORPORATION CONTACT: DONALD H. STEVENS 1600 BROADWAY, SUITE 2200 VICE PRESIDENT AND TREASURER DENVER, COLORADO 80202 (303) 812-1500 FOR IMMEDIATE RELEASE FOREST OIL ANNOUNCES OPERATIONAL RESULTS FOR THE FIRST NINE MONTHS OF 2001 DENVER, COLORADO - NOVEMBER 7, 2001 - - Forest Oil Corporation (NYSE:FST) (Forest) today announced operational results for the first nine months of 2001 and upcoming projects for its North American and International operations. CAPITAL ACTIVITIES - ------------------ Forest reported capital spending of approximately $431 million in the first nine months of 2001. Forest's 2001 drilling activities have added approximately 300 billion cubic feet equivalent (bcfe) of estimated proved reserves allocated at about 50 percent from Alaska and 50 percent elsewhere from the Company. Forest believes it will achieve a 150 - 200 percent reserve replacement through the drill bit for the entire year. PRODUCTION - ---------- During the first nine months of 2001, the Company produced approximately 130 bcfe or 476 million cubic feet of natural gas equivalent per day (mmcfe/d). Natural gas production averaged 305 mmcf/d, flat with the same period in 2000. Liquids production averaged about 28,500 barrels per day (bbls/d), down nine percent from the comparable period in 2000. Through the third quarter, the Company closed on property sales with estimated net daily production of 12 mmcfe/d. ALASKA - ------ ~ REDOUBT SHOAL (100% WORKING INTEREST) Redoubt #3 was drilled to a total depth of 16,940 feet and logged 436 feet of net oil pay in the Hemlock interval. This downdip test extended to the lowest-known oil pay by 300 feet and extended the aerial extent of the Redoubt Shoal accumulation. As a result, the recoverable reserve estimate is now in excess of 50 million barrels. Permits have been received to allow the immediate drilling of the #4 and #5 wells to test the field limits to the north. Permitting and engineering design for the facilities and pipeline are underway with first sales projected for December 2002. The Redoubt #3 also encountered 40 feet of net gas pay in a separate interval above the Hemlock, which was production tested at 8.5 mmcf/d at 3,500 psi FTP. This should provide greater flexibility for artificial lift and operating cost reduction. ~ MCARTHUR RIVER FIELD (46% WORKING INTEREST (AVERAGE)) The K-13 well, completed late last quarter, continues to produce at a rate of 7,000 bbls/d. This horizontal well is the most prolific oil producer in the history of the Cook Inlet. The K-14 follow-up well should be drilled in the fourth quarter of 2001. As a result of the high flow rate completions, pipeline and platform upgrades had to be performed in the third quarter resulting in incremental lease operating expense and periods of downtime. CANADA - ------ Forest continues to add to its position in the two primary exploration areas in the Canadian Foothills and Northwest Territories. Our recent acreage acquisitions, seismic program and joint venture arrangements should lead to an active program during the upcoming winter drilling season. Since the beginning of the year, we have added 39,000 gross acres to our Foothills play and 171,930 acres to our Northwest Territories position. THE FOOTHILLS Forest has now drilled 14 wells to date in the Cutpick, Narraway, Ojay and Waterton areas with a 100 percent success rate. Five wells are currently in progress with additional drilling to continue through the second quarter of 2002. The Ojay exploratory well is currently drilling to extend the Cutpick/Narraway trend to the northeast. Current gross production from the Foothills area is 15 mmcfe/d with an estimated 20 mmcfe/d shut-in awaiting plant construction. The pipeline and plant construction should be completed by the end of second quarter of 2002. 2 NORTHWEST TERRITORIES ~ FT. LIARD AREA (33% - 65% WORKING INTEREST) Forest has concluded a farm out arrangement for a portion of its interest in three exploration licenses with Anadarko Canada Operations. The program will involve Anadarko shooting 3-D seismic at their expense during the 2001-02 winter season. Anadarko has committed to drill one deep test and has options on additional wells in order to earn acreage. ~ MATTSON (33.33% WORKING INTEREST) The N-01 discovery well produced at a net rate of 12 mmcf/d during May and June 2001 until being shut-in for a production license approval. The well was returned to production in the third quarter at 12 mmcfe/d. The a-96-J wildcat should spud December 2001. ~ CENTRAL MACKENZIE VALLEY AREA (50% - 100% WORKING INTEREST) During the third quarter, Forest was successful in acquiring an exploration license consisting of 171,930 acres, bringing our total position in this area to over 350,000 acres. GULF OF MEXICO - -------------- Forest completed six of seven wells during the third quarter. Forest operated all six discoveries. Through the nine months of 2001, Forest's Offshore Business Unit has completed 29 of 33 wells for an 88 percent success rate. On November 6, 2001, Forest announced the signing of a memorandum of understanding with Unocal for joint exploration activities in the Gulf of Mexico. Under the terms of the proposal, Unocal will pay $120 million for 50 percent of Forest's interest in certain properties in the South Marsh Island and Vermilion areas. Unocal will provide seismic evaluation in addition to drilling commitment wells on a promoted basis. The exploration activities will be primarily focused on drilling deep exploratory wells on Forest and Unocal acreage. ~ EAST BREAKS 164 (100% WORKING INTEREST) In October 2001, Forest tied its first operated deepwater project to sales. Current production for the well is 15.6 mmcfe/d. ~ EUGENE ISLAND 53 (100% WORKING INTEREST) The #12 sidetrack was directionally drilled to a depth of 13,592 feet and logged 55 feet net gas pay in the Miocene. The well came on line the first week of November at 12 mmcfe/d. ~ SOUTH MARSH ISLAND 76 (75% WORKING INTEREST) The B-14 was directionally drilled to a depth of 14,738 feet and logged 160 feet net gas pay in the Pliocene. Following completion, the well was placed to sales 10.4 mmcfe/d. 3 ~ SOUTH MARSH ISLAND 149 (100% WORKING INTEREST) The third successful well was drilled in the third quarter. The C-3 well was directionally drilled to 10,535 feet and logged 120 feet of total Pleistocene pay. All three wells are temporarily abandoned at the mud line and should be completed after installing a new platform in the fourth quarter 2001. Initial sales are expected in the first quarter of 2002. GULF COAST ONSHORE - ------------------ ~ BONUS FIELD, TEXAS (73% - 100% WORKING INTEREST) Forest completed two wells during the third quarter. The first well is on production and is currently producing 11 mmcfe/d. Two additional wells are being completed. Total gross production is expected to reach 40 mmcfe/d by year end. ~ S.E. TIGRE LAGOON, LOUISIANA (78% WORKING INTEREST) The Broussard Heirs #1 exploratory well was drilled to 14,153 feet and logged 90 feet of Miocene gas pay. Following pipeline construction, the well had initial sales in October at 8.6 mmcfe/d at 8,800 psi FTP. ~ MCALLEN FIELD, TEXAS (50% WORKING INTEREST) Forest's ongoing exploitation in this field has resulted in two successful Vicksburg completions. The McAllen #36 came on line in September at 3 mmcfe/d while the McAllen #38 was completed in October at a rate of 7 mmcfe/d. Additionally, the McAllen #38 found virgin pressure within the existing field limits, which may lead to other opportunities. Field gross production has risen from 5 mmcfe/d to 15 mmcfe/d. WESTERN REGION - -------------- ~ WILD ROSE, WYOMING (66% - 100% WORKING INTEREST) At the Wild Rose Prospect, Forest has drilled and cased five wells in the Washakie Basin. These wells are 11,000 feet deep to test the Lewis and Almond intervals. The wells will be completed in December 2001 after the pipeline gathering system is finished. Expected rates are 1.0 - 1.5 mmcfe/d per well. This program will continue into 2002. ~ GOMEZ FIELD, TEXAS (45% - 92% WORKING INTEREST) The Forest operated Ophal Dunlap 1-18 was drilled directionally to 15,300 feet into the Wolfcamp formation. The current flow rate is 4.5 mmcfe/d. A second non-operated Wolfcamp well is currently drilling at 15,760 feet in the objective formation. ~ EAST APACHE FIELD, OKLAHOMA (30% - 50% WORKING INTEREST) The Forest operated Freda Mae 1-25 was drilling to 19,060 feet and logged 47 feet of net gas pay in the Springer interval. The Forest Belcher 4-23 is drilling at 18,765 feet. Both wells are expected to be completed and have first sales by year end. 4 Two additional non-operated wells in the East Apache Area are in progress. The Redwine 1-7, a shallow Springer well, tested 1.5 mmcfe/d. The Jerry 1-30 is drilling at 13,000 feet going to a total depth of 16,500 feet. INTERNATIONAL ~ IBHUBESI, SOUTH AFRICA (70% WORKING INTEREST) Commercialization activities have progressed with agreements being discussed with three off-take customers. A term sheet has already been signed to provide a minimum of 73 bcf over ten years on a "take-or-pay" basis at US$3.00/mmbtu. EARNINGS RELEASE AND TELECONFERENCE CALL Forest Oil Corporation will release third quarter 2001 earnings on Wednesday, November 7, 2001, after market close. The Company's management will hold a teleconference on Thursday, November 8, 2001 at 11:00 a.m. Eastern Standard Time to review the third quarter 2001 results. If you would like to participate, please call 888/781-5307 (for U.S./Canada) and 706/634-0611 (for International). A replay will be available commencing Thursday, November 8th through Friday, November 16th. You may access the replay by dialing toll free 800/642-1687 (for U.S./Canada) and 706/645-9291 (for International), reservation #1997854. Please note that the reservation number is not needed to access the teleconference. FORWARD-LOOKING STATEMENTS This news release contains certain statements that may be regarded as "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, that address activities that the Company plans, expects, believes, projects, estimates or anticipates will, should or may occur in the future are forward-looking statements. The forward-looking statements provided in this press release are based on management's examination of historical operating trends and its current belief as to the outcome and timing of future events. Forest cautions that its future natural gas and liquids production, revenues and expenses and other forward-looking statements are subject to all of the risks and uncertainties normally incident to the exploration for and production and sale of oil and gas. These risks include, but are not limited to price volatility, inflation or lack of availability of goods and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating future oil and gas production and reserves, and other risks as described in Forest's 2000 Annual Report on Form 10-K as filed with the Securities and Exchange Commission. Also, the financial results of Forest's foreign operations are subject to currency exchange rate risks. Any of these factors could cause Forest's actual results and plans to differ materially from those in the forward-looking statements. 5 * * * * * * Forest Oil Corporation is engaged in the acquisition, exploration, development, production and marketing of natural gas and crude oil in North America and selected international locations. Forest's principal reserves and producing properties are located in the United States in the Gulf of Mexico, Louisiana, Texas and Alaska, and in Canada in Alberta and the Northwest Territories. Forest's common stock trades on the New York Stock Exchange under the symbol FST. For more information about the Company please visit our website at www.ForestOil.com. # # # 6 November 7, 2001 -----END PRIVACY-ENHANCED MESSAGE-----