Forest Oil Announces 2006 Estimated Proved Reserves and Production With Robust Reserve Replacement and Attractive F&D Costs and Schedules Year End Earnings Release and Teleconference

Business Wire, Feb 5, 2007

Forest's reserve replacement ratio was 372% from all capital activities, with finding, development and acquisition costs of $2.15 per Mcfe

Forest's organic reserve replacement ratio was 258%, with finding and development costs of $2.09 per Mcfe

Forest's full year estimated 2006 average net sales volumes is anticipated to increase 14% to 310 MMcfe/d

Forest updates hedging portfolio; adds 40 Bbtu/d for the last three quarters of 2007 related to the proposed acquisition of The Houston Exploration Company

DENVER -- Forest Oil Corporation (NYSE:FST) (Forest or the Company) today announced its estimated proved oil and gas reserves and production results for the fourth quarter and year ended December 31, 2006. The Company reported the following highlights:

* Forest's estimated proved reserves increased 25% in 2006 (as compared to Remainco) to 1,455 Bcfe at December 31, 2006

* Forest replaced 372% of 2006 Remainco net sales volumes and 134% of the reserves distributed in the spin-off of the Company's Gulf of Mexico operations. The Company now has estimated proved reserves comparable to December 31, 2005 but with a focus on repeatable drilling programs in onshore North American resource plays.

* Estimated proved reserves pro forma for the recently announced proposed acquisition of The Houston Exploration Company (Houston Ex) increase to over 2.1 Tcfe as of December 31, 2006

* Forest's estimated net sales volumes are anticipated to be 317 MMcfe/d in the fourth quarter of 2006, an increase of 12% compared to Remainco's 283 MMcfe/d in the fourth quarter of 2005

H. Craig Clark, President and CEO, stated, "The results from the implementation of the 4-point strategy which we began over three years ago are clearly evident in the operating results for the fourth quarter and full year 2006. Our focus on costs and efficient exploitation efforts on growth assets have enabled us to achieve these very favorable results in a difficult cost year for the industry. Our disciplined and balanced investment approach allowed us to increase reserves 25% during the year and increase production 14%. We have essentially replaced the Gulf of Mexico with our 2006 activity alone.

During the fourth quarter, like other Texas operators, Forest was exposed to severe and inclement weather in Texas which negatively impacted production. However, we were still able to meet our increased production guidance for the quarter and the year. In addition, with the rest of the industry, we booked our 2006 proved reserves using year end natural gas prices that are substantially lower than those used at year end 2005 which negatively affected proved reserve volumes. Despite these challenges Forest had an excellent quarter and year in growing both production and reserves at very attractive costs.

We intend to fully implement the same successful 4-point strategy on the assets acquired in the proposed acquisition of Houston Ex. Our continued focus on costs and our disciplined investment approach has made Forest very successful in achieving superior results within the framework of a low risk investment and business model."

   ESTIMATED PROVED RESERVES, PRODUCTION, AND CAPITAL EXPENDITURES

Forest reported year end estimated proved reserves of approximately 1,455 Bcfe, all of which are located in North America. The estimated proved reserves, which are 71% proved developed, consist of approximately 53% natural gas and 47% liquids. The pre-tax present value of estimated proved reserves at year end, based on constant prices and costs and discounted at 10% totaled $3.3 billion. The valuation was based on gas prices of $5.64 per MMbtu and oil prices of $61.05 a barrel NYMEX, compared to gas prices of $10.08 per MMbtu and oil prices of $61.04 a barrel one year earlier. Forest's estimated proved reserves were audited by an independent third party engineering firm.

Forest Remainco's estimated average net sales volumes for the quarter and year ended December 31, 2006 are anticipated to be 317 MMcfe/d and 310 MMcfe/d, respectively. Forest Remainco's unaudited exploration and development capital expenditures for the year ended December 31, 2006 were $589 million. Total unaudited exploration, development and acquisition capital expenditures for the year ended December 31, 2006 were $904 million. The following table reflects the 2006 activity related to Forest Remainco's estimated proved reserve amounts, and includes calculations of finding and development costs and reserve replacement ratios utilizing these estimated net sales volumes and unaudited capital expenditure amounts:

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                             DERIVATIVES

Forest currently has derivatives in place for 2007 through 2010 covering the aggregate average daily volumes and weighted average prices shown below. Forest recently increased its volume of natural gas hedged by 40 Bbtu/d for the last 9 months of 2007 related to the proposed acquisition of Houston Ex with swaps averaging approximately $7.77 per MMBtu. The following is a summary of derivatives Forest has in place as of February 4, 2007: