Forest Oil Announces Completion of Acquisition in Greater Buffalo Wallow and East Texas Core Areas; Agreement to Sell Certain Assets in the Rockies; Third Quarter Net Sales Volumes Deferrals; and Updates 2008 Guidance

Business Wire, Sept 30, 2008

Forest closes Greater Buffalo Wallow and East Texas acquisition of 350 Bcfe of estimated proved reserves with additional net unrisked potential of 1.2 Tcfe and approximately 1,500 identified drilling locations; Forest's latest Cotton Valley horizontal best well to date announced at 9.9 MMcfe/d

Forest enters into agreement to sell non-core, non-strategic assets in the Rockies including the Niobrara, San Juan and various properties in Wyoming and Utah for $258 million

Forest's third quarter 2008 average net sales volumes are anticipated to be 510 - 520 MMcfe/d as a result of 1.45 Bcfe of deferred production resulting from fall 2008 hurricanes and third party downstream issues

Forest increases fourth quarter 2008 production guidance to 575 - 590 MMcfe/d to account for the Greater Buffalo Wallow and East Texas acquisition

DENVER -- Forest Oil Corporation (NYSE:FST) (Forest or the Company) announced today that it completed its previously announced acquisition of producing assets, including approximately 118,000 gross acres (85,000 net acres), located in its Greater Buffalo Wallow and East Texas/North Louisiana Core Areas with significant development potential from Cordillera Texas, L.P. (Cordillera). The assets produced an average of approximately 34 MMcfe/d in the first half of 2008 and, based on Forest's internal estimates, contain 350 Bcfe of estimated proved reserves. The acquisition adds net unrisked potential of 1.2 Tcfe and approximately 1,500 identified drilling locations in these core areas where Forest has historically demonstrated an ability to grow production.

Craig Clark, Forest's President and Chief Executive Officer, stated, "As an organization, we are always looking to upgrade our properties to areas and rock-types where Forest has demonstrated excellent execution and growth. These transactions are in line with this strategy, allowing us to further our growth in our two largest core areas, the Greater Buffalo Wallow Area and East Texas/North Louisiana. Forest anticipates growing production on these newly acquired assets by greater than 30% in 2009. As previously announced, we recently completed our best vertical Buffalo Wallow well, which had initial production of 10.7 MMcfe/d, and last week we completed our best Cotton Valley horizontal well to date which had initial production of 9.9 MMcfe/d. The first divestiture package sales agreement has been signed, and assuming completion of our divestiture program, we estimate our liquidity will be restored to over $1 billion, allowing us the ability to continue to execute on our acquisition strategy in 2009."

Prior to closing, Cordillera and Forest agreed to increase the stock component and decrease the cash component of consideration paid. Pursuant to the revised terms, Forest paid consideration of 7.25 million common shares and $529 million of cash for the assets, subject to post-closing adjustments. Based on the closing price of Forest's common stock on September 29, 2008, the total consideration was approximately $873 million. The economic effective date for the transaction was July 1, 2008, and the purchase price remains subject to customary post-closing adjustments.

David H. Keyte, Forest's Chief Financial Officer stated, "The disruption in the credit markets is adversely affecting the timing of our divestiture program as counterparties are challenged to receive adequate financing. We believe increasing the equity component in this transaction was prudent to insure our liquidity remains strong and does not distract us from execution of our operational plan. With closed or pending sales of approximately $350 million, including the Rockies agreement, Forest is now targeting additional asset sales of $450 - $750 million over the next six months. Giving effect to the Cordillera acquisition and not considering proceeds from the announced sale of the Rockies assets, Forest estimates it has current liquidity from its credit facilities in excess of $500 million."

Asset Divestiture Program

Forest has entered into an agreement to sell certain operated and non-operated properties in the Rockies, including its Niobrara, San Juan and various properties in Wyoming and Utah, for $258 million. The transaction is expected to close by early December and is subject to customary closing conditions. These properties are currently producing 21 MMcfe/d and had estimated proved reserves of 81 Bcfe at December 31, 2007.

Total dispositions, either completed or under contract, including the Rockies package, are expected to yield proceeds of approximately $350 million while disposing of associated current production and estimated proved reserves at December 31, 2007 of 25 MMcfe/d and 97 Bcfe, respectively. Proceeds from all divestiture transactions will be utilized to pay down Forest's borrowings under its credit facilities.

Third Quarter 2008 Average Net Sale Volumes

Forest's daily net sales volumes in the first two months of the third quarter averaged at the upper end of its previous third quarter guidance of 525 - 535 MMcfe/d. Forest's September production, like others in the industry, was negatively impacted by shut-ins from Hurricanes Gustav and Ike, and by disruptions related to third party downstream issues. The net sales volumes deferrals are expected to reduce third quarter net sales volumes by approximately 1.45 Bcfe with the resulting third quarter net sales volumes now expected to average between 510 - 520 MMcfe/d.