<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 30, 1993
FOREST OIL CORPORATION
(Exact name of registrant as specified in charter)
New York 0-4597 25-0484900
(State of other juris- (Commission (IRS Employer
diction of incorporation) file number) Identification No.)
1500 Colorado National Building, 950-17th Street, Denver, CO 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (814) 368-7171
- --------------------------------------------------------------------------------
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Loma Vieja/Martinez Properties Historical Summaries of Oil and Gas
Revenue and Direct Operating Expenses.
(b) Pro forma financial information.
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: March 14, 1994 By /s/David H. Keyte
------------------------------
David H. Keyte
Vice President
and Chief Accounting Officer
<PAGE>
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS AND STOCKHOLDERS
FOREST OIL CORPORATION:
We have audited the accompanying Historical Summary of Oil and Gas Revenue and
Direct Operating Expenses of certain oil and gas properties of Wagner & Brown,
Ltd. acquired by Forest Oil Corporation (the Historical Summary) for the year
ended December 31, 1992. This Historical Summary is the responsibility of
Wagner & Brown, Ltd.'s management. Our responsibility is to express an opinion
on the Historical Summary based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Historical Summary is free of material misstatement.
An audit includes examining, on a test basis, evidence supporting the amounts
and disclosures in the Historical Summary. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the Historical Summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying Historical Summary was prepared for the purpose of complying
with the rules and regulations of the Securities and Exchange Commission (for
inclusion in the Current Report on Form 8-K of Forest Oil Corporation) as
described in Note 1 and is not intended to be a complete presentation of the
acquired property interests' revenue and expenses.
In our opinion, the Historical Summary referred to above presents fairly, in all
material respects, the oil and gas revenue and direct operating expenses of the
acquired property interests, as described in Note 1 for the year ended December
31, 1992, in conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick
KPMG Peat Marwick
Midland, Texas
January 18, 1994
<PAGE>
WAGNER & BROWN, LTD. PROPERTIES
Historical Summaries of Oil and Gas Revenue
and Direct Operating Expenses
<TABLE>
<CAPTION>
Nine months ended
Year Ended September 30,
December 31, 1993
1992 (unaudited)
---- -----------
<S> <C> <C>
Revenue:
Natural gas $ 2,780,645 4,190,893
Oil 48,913 11,866
---------- ----------
2,829,558 4,202,759
Direct operating expenses:
Lease operating 276,204 653,201
Production taxes 146,222 124,029
---------- ----------
422,426 777,230
---------- ----------
Revenue in excess of direct operating expenses $ 2,407,132 3,425,529
---------- ----------
---------- ----------
</TABLE>
See accompanying notes to the Historical Summaries.
<PAGE>
WAGNER & BROWN, LTD. PROPERTIES
Notes to Historical Summaries of Oil and Gas Revenue
and Direct Operating Expenses
(1) PURCHASE OF OIL AND GAS PROPERTIES AND BASIS OF PRESENTATION
On December 30, 1993, Forest Oil Corporation (Forest) acquired Wagner &
Brown, Ltd.'s (W&B) interest in the Loma Vieja/Martinez field of Zapata
County, Texas including interests in eight producing wells and certain
undeveloped acreage (the W&B Properties).
The accompanying Historical Summaries are intended to provide historical
information on the revenue and direct operating expenses of the W&B
Properties and may not be representative of future operations. The
Historical Summaries were prepared for the purpose of complying with the
rules and regulations of the Securities and Exchange Commission and are not
intended to be a complete presentation of the W&B Properties' revenue and
expenses. A provision for depreciation, depletion, and amortization has
not been included since Forest's basis in the properties differs from W&B's
basis. General and administrative expenses have not been included because
it is impractical to allocate the historical expenses incurred by W&B to
the individual properties, and such expenses may not be comparable to
amounts expected to be incurred by Forest. The Historical Summaries also
do not include federal and state income taxes or interest expense, as it is
impractical to allocate such amounts to the individual properties.
The Historical Summary for the nine months ended September 30, 1993 is
unaudited but reflects, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the revenue and direct operating expenses for the period. The
revenue and direct operating expenses for this interim period is not meant
to be indicative of future annual revenue and direct operating expenses.
(2) SUPPLEMENTAL FINANCIAL DATA - OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)
The following unaudited information has been prepared in accordance with
Statement of Financial Accounting Standards No. 69, "Disclosures about Oil
and Gas Producing Activities" (SFAS No. 69).
(a) EXPLORATION AND DEVELOPMENT COSTS
Direct operating expenses do not include exploration and development
expenditures related to the W&B Properties. Development and exploration
costs of $7,694,701 and $162,295 were incurred in 1992.
(Continued)
<PAGE>
2
WAGNER & BROWN, LTD. PROPERTIES
Notes to Historical Summaries of Oil and Gas Revenue
and Direct Operating Expenses
(b) ESTIMATED PROVED OIL AND GAS RESERVES
Proved oil and gas reserves are the estimated quantities of crude oil,
natural gas, and natural gas liquids which geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years
from known reservoirs under existing economic and operating conditions,
i.e., prices and costs as of the date the estimate is made. Proved
developed oil and gas reserves are reserves that can be expected to be
recovered through existing wells with existing equipment and operating
methods.
Forest's estimate of proved developed future net recoverable oil and gas
reserves of the W&B Properties and changes therein follows. Such estimates
are inherently imprecise and may be subject to substantial revisions.
<TABLE>
<CAPTION>
Oil and Natural
condensate gas
(Bbls) (MCF)
------ -----
<S> <C> <C>
Balance at December 31, 1991 3,919 9,763,575
Production (2,717) (1,549,944)
New discoveries and extensions - 3,102,848
Revision of prior year estimates - (567,905)
-------- -----------
Balance at December 31, 1992 1,202 10,748,574
-------- -----------
-------- -----------
</TABLE>
(c) STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
The standardized measure of discounted future net cash flows has been
calculated in accordance with the provisions of SFAS No. 69.
Future oil and gas sales and production and development costs have been
estimated using prices and costs in effect at the end of 1992. Future
income tax expense has not been considered as the properties are not a tax
paying entity. Future general and administrative and interest expenses
have also not been considered.
(Continued)
<PAGE>
3
WAGNER & BROWN, LTD. PROPERTIES
Notes to Historical Summaries of Oil and Gas Revenue
and Direct Operating Expenses
Changes in the demand for oil and natural gas, inflation, and other factors
make such estimates inherently imprecise and subject to substantial
revision. This table should not be construed to be an estimate of the
current market value of the proved reserves. The standardized measure of
discounted future net cash flows as of December 31, 1992, is as follows:
<TABLE>
<S> <C>
Future oil and gas sales $ 25,188,024
Future production and development costs (4,552,815)
-----------
Future net revenue 20,635,209
10% annual discount for estimated timing
of cash flows (4,179,671)
-----------
Standardized measure of discounted
future net cash flows $ 16,455,538
-----------
-----------
</TABLE>
(d) CHANGES IN STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS
RELATING TO PROVED OIL AND GAS RESERVES
An analysis of the changes in the total standardized measure of discounted
future net cash flows for the year ended December 31, 1992 is as follows:
<TABLE>
<S> <C>
Beginning of year $ 8,118,277
Changes resulting from:
Sales of oil and gas, net of production
costs (2,407,132)
Net change in sales price 6,570,239
Extensions and discoveries, net of future
production and development costs 3,265,136
Changes in estimated future develop-
ment costs 1,502,865
Accretion of discount 223,034
Revision of quantity estimates (816,881)
-----------
End of year $ 16,455,538
-----------
-----------
</TABLE>
<PAGE>
FOREST OIL CORPORATION
Condensed Pro Forma Combined Financial Statements
On July 31, 1992, Forest Oil Corporation (Forest) purchased Transco Exploration
and Production Company (TEPCO) for approximately $45,000,000 in an acquisition
accounted for as a purchase. On September 30, 1992, Forest Canada I Development
Ltd., a wholly owned Canadian subsidiary of Forest, sold its Canadian assets and
related operations to CanEagle Resources Corporation (CanEagle) for cash and
securities totaling approximately $41,000,000. On May 18, 1993, Forest acquired
six offshore properties in the Gulf of Mexico from Atlantic Richfield Company
(the ARCO Properties), effective March 1, 1993, for approximately $32,516,000
and additional consideration consisting of offshore production equipment and
facilities. On December 30, 1993, Forest acquired an interest in the Loma
Vieja/Martinez Field (the Loma Vieja/Martinez Properties) in South Texas,
effective October 1, 1993, for approximately $59,347,000.
The following unaudited condensed pro forma combined balance sheet assumes that
the acquisition of the Loma Vieja/Martinez Properties occurred on September 30,
1993 and reflects the September 30, 1993 historical consolidated balance sheet
of Forest giving pro forma effect to the acquisition of the Loma Vieja/Martinez
Properties. The unaudited condensed pro forma combined balance sheet should be
read in conjunction with the historical financial statements and related notes
of Forest.
The following unaudited condensed pro forma combined statement of operations for
the nine months ended September 30, 1993 assumes that the acquisition of the
ARCO Properties and Loma Vieja/Martinez Properties occurred as of January 1,
1993 and reflects the historical consolidated statement of operations of Forest
(which includes the results of operations of the ARCO Properties since their
acquisition in May 1993), as adjusted for the effects of the acquisition of the
ARCO Properties for the period from January 1, 1993 through April 30, 1993 and
for the effects of the acquisition of the Loma Vieja/Martinez Properties for the
period from January 1, 1993 through September 30, 1993. The following unaudited
condensed pro forma combined statement of operations for the year ended December
31, 1992 assumes that the acquisition of TEPCO, the sale of the Canadian assets,
and the acquisitions of the ARCO and Loma Vieja/Martinez Properties occurred as
of January 1, 1992 and reflects the historical consolidated statement of
operations of Forest (which includes the results of operations of the TEPCO
assets since their acquisition on July 31, 1992) as adjusted for the effects of
the TEPCO acquisition for the period from January 1, 1992 through July 31, 1992,
for the effects of the sale of the Canadian assets and for the effects of the
acquisitions of the ARCO and Loma Vieja/Martinez Properties for the year ended
December 31, 1992. The pro forma results of operations are not necessarily
indicative of the results of operations that would actually have been attained
if the transactions had occurred as of the beginnings of the periods presented.
These statements should be read in conjunction with the historical financial
statements and related notes of Forest.
<PAGE>
FOREST OIL CORPORATION
Condensed Pro Forma Combined Balance Sheet
September 30, 1993
(Unaudited)
<TABLE>
<CAPTION>
Pro Forma Adjustments
(See Note B) Pro Forma
Forest --------------------- Combined
Historical Debit Credit Forest
---------- ----- ------ ---------
(In Thousands)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 148,027 -- 6,000 (1) 142,027
Accounts receivable 23,608 -- -- 23,608
Other current assets 4,528 -- -- 4,528
--------- -------- -------- ---------
Total current assets 176,163 - 6,000 170,163
Property and equipment, at cost:
Oil and gas properties - full cost accounting method 1,018,430 55,048 (1) -- 1,073,478
Buildings, transportation and other equipment 12,723 -- -- 12,723
--------- -------- -------- ---------
1,031,153 55,048 -- 1,086,201
Less accumulated depreciation, depletion
and valuation allowance 774,112 -- -- 774,112
--------- -------- -------- ---------
Net property and equipment 257,041 55,048 312,089
Investment in and advances to affiliates 16,709 -- -- 16,709
Other assets 7,880 -- -- 7,880
--------- -------- -------- ---------
$ 457,793 55,048 6,000 506,841
--------- -------- -------- ---------
--------- -------- -------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Cash overdraft $ 2,666 -- -- 2,666
Current portion of production payment obligation 3,694 -- -- 3,694
Current portion of senior secured notes and
subordinated debentures 123,009 -- -- 123,009
Accounts payable 23,967 -- -- 23,967
Income taxes payable 193 -- -- 193
Retirement benefits payable to executives and directors 519 -- -- 519
Accrued expenses and other liabilities 4,896 -- -- 4,896
--------- -------- -------- ---------
Total current liabilities 158,944 -- -- 158,944
Bank debt -- -- 16,747 (1) 16,747
Nonrecourse secured loan -- -- 32,301 (1) 32,301
Production payment obligation 18,661 -- -- 18,661
Subordinated debentures 99,261 -- -- 99,261
Retirement benefits payable to executives and directors 4,250 -- -- 4,250
Other liabilities 15,170 -- -- 15,170
Deferred revenue 64,891 -- -- 64,891
Deferred income taxes 79 -- -- 79
Shareholders' equity:
Convertible preferred stock 16,077 -- -- 16,077
Capital stock 2,796 -- -- 2,796
Capital surplus 196,657 -- -- 196,657
Accumulated deficit (112,872) -- -- (112,872)
Foreign currency translation (151) -- -- (151)
Treasury stock (5,970) -- -- (5,970)
--------- -------- -------- ---------
Total shareholders' equity 96,537 -- -- 96,537
--------- -------- -------- ---------
$ 457,793 -- 49,048 506,841
--------- -------- -------- ---------
--------- -------- -------- ---------
</TABLE>
See accompanying notes to condensed pro forma combined financial statements.
<PAGE>
FOREST OIL CORPORATION
Condensed Pro Forma Combined Statement of Operations
Nine Months Ended September 30, 1993
(Unaudited)
<TABLE>
<CAPTION>
Loma Vieja/ Pro Forma Pro Forma
Forest Effects of Martinez Adjustments Combined
Historical ARCO Historical (Note B) Forest
---------- ---------- ---------- ----------- ---------
(In Thousands Except Per Share Amounts)
<S> <C> <C> <C> <C> <C>
Revenue:
Oil and gas sales:
Gas $ 57,933 12,628 4,191 -- 74,752
Oil and condensate 19,665 2,059 12 -- 21,736
Products and other -- 1,428 -- -- 1,428
------- ------- ------- ------- -------
77,598 16,115 4,203 97,916
Miscellaneous, net 1,717 (300) -- (270) (2) 1,147
------- ------- ------- ------- -------
Total revenue 79,315 15,815 4,203 (270) 99,063
Expenses:
Oil and gas production 13,789 2,477 777 -- 17,043
General and administrative 7,556 -- -- -- 7,556
Interest 19,068 -- -- 4,625 (3) 23,693
Depreciation and depletion 44,730 6,307 -- 2,185 (4) 53,222
------- ------- ------- ------- -------
Total expenses 85,143 8,784 777 6,810 101,514
------- ------- ------- ------- -------
Earnings (loss) before income taxes,
cumulative effects of changes in
accounting principles and extraordinary
loss on extinguishment of debt (5,828) 7,031 3,426 (7,080) (2,451)
Income tax expense (benefit): (1,271) 1,231 -- (818) (5) (858)
------- ------- ------- ------- -------
Earnings (loss) before cumulative
effects of changes in account-
ing principles and extraordinary
loss on extinguishment of debt (4,557) 5,800 3,426 (6,262) (1,593)
Cumulative effects of changes
in accounting principles (1,123) -- -- -- (1,123)
------- ------- ------- ------- -------
Net earnings (loss) before
extinguishment of debt (5,680) 5,800 3,426 (6,262) (2,716)
Extraordinary loss on extinguishment
of debt, net of tax benefit of
$4,652,000 (10,749) -- -- -- (10,749)
------- ------- ------- ------- -------
Net earnings (loss) $ (16,429) 5,800 3,426 (6,262) (13,465)
------- ------- ------- ------- -------
------- ------- ------- ------- -------
Weighted average number
of common shares outstanding 20,032 20,032
------- -------
------- -------
Net loss attributable to common stock $ (18,137) (15,173)
------- -------
------- -------
Primary and fully diluted loss per share:
Loss before cumulative effects
of changes in accounting
principles and extraordinary
loss on extinguishment of debt $ (.32) (.16)
Cumulative effects of changes
in accounting principles (.06) (.06)
------- -------
Loss before extraordinary loss
on extinguishment of debt (.38) (.22)
Extraordinary loss on
extinguishment of debt (.53) (.53)
------- -------
Net loss attributable
to common stock $ (.91) (.75)
------- -------
------- -------
</TABLE>
See accompanying notes to condensed pro forma combined financial statements.
<PAGE>
FOREST OIL CORPORATION
Condensed Pro Forma Combined Statement of Operations (Note A)
For the Year Ended December 31, 1992
(Unaudited)
<TABLE>
<CAPTION>
Effects of Effects of Effects of Loma Vieja/ Pro Forma Pro Forma
Forest Tepco Canadian ARCO Martinez Adjustments Combined
Historical Acquisition Sale Acquisition Historical (Note B) Forest
---------- ----------- ---------- ----------- ---------- ----------- ---------
(In Thousands Except Per Share Amounts)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue:
Oil and gas sales:
Gas $ 72,011 10,806 (1,354) 39,926 2,781 -- 124,170
Oil and condensate 26,299 960 (2,453) 13,292 49 -- 38,147
Products and other 929 -- (1,336) -- -- -- (407)
-------- ------- ------- ------- ------- ------- -------
99,239 11,766 (5,143) 53,218 2,830 161,910
Miscellaneous, net 13,947 -- 1,528 (450) -- (360) (2) 14,665
-------- ------- ------- ------- ------- ------- -------
Total revenue 113,186 11,766 (3,615) 52,768 2,830 (360) 176,575
Expenses:
Oil and gas production 15,865 1,257 (1,269) 5,687 422 -- 21,962
General and administrative 11,611 114 (54) -- -- -- 11,671
Interest 27,800 105 (194) -- -- 6,167 (3) 33,878
Depreciation and depletion 46,624 6,417 (2,688) 22,392 -- 2,940 (4) 81,619
-------- ------- ------- ------- ------- ------- -------
Total expenses 101,900 7,893 (4,205) 28,079 422 9,107 149,130
-------- ------- ------- ------- ------- ------- -------
Earnings (loss) before
income taxes 11,286 3,873 590 24,689 2,408 (9,467) 33,379
Income tax expense (benefit) 3,988 1,201 183 8,377 -- (2,400) (5) 11,349
-------- ------- ------- ------- ------- ------- -------
Net earnings (loss) $ 7,298 2,672 407 16,312 2,408 (7,067) 22,030
-------- ------- ------- ------- ------- ------- -------
-------- ------- ------- ------- ------- ------- -------
Weighted average number
of common shares
outstanding 13,774 13,774
-------- -------
-------- -------
Net earnings attributable
to common stock $ 4,950 19,682
-------- -------
-------- -------
Primary earnings per share $ .36 1.43
-------- -------
-------- -------
Fully diluted earnings
per share $ .29 .84
-------- -------
-------- -------
</TABLE>
See accompanying notes to condensed pro forma combined financial statements.
<PAGE>
FOREST OIL CORPORATION
Notes to Condensed Pro Forma Combined Financial Statements
September 30, 1993
(Unaudited)
A. BASIS OF PRESENTATION
On July 31, 1992, Forest purchased Transco Exploration and Production
Company (TEPCO) for approximately $45,000,000. In conjunction with the
acquisition, a volumetric production payment from certain of the TEPCO
properties was sold for approximately $38,500,000 (net of fees). In
addition, Forest issued a $2,000,000 promissory note to Transco Energy
Company as part of the purchase price. Approximately $4,062,000 was paid
in cash, including acquisition costs. The amounts shown for the TEPCO
acquisition in the condensed pro forma combined statement of operations for
the year ended December 31, 1992 represent the historical results of TEPCO
for the seven months ended July 31, 1992 and adjustments for the pro forma
effects of the acquisition of TEPCO by Forest.
On September 30, 1992, Forest Canada I Development Ltd. (FCID), a wholly
owned subsidiary of Forest Oil Corporation, sold its Canadian assets and
related operations to CanEagle Resources Corporation (CanEagle) for
approximately $51,250,000 in Canadian funds ($41,000,000 U.S.). CanEagle
was formed for the purpose of acquiring the assets and related operations
of FCID. An independent third party financed the purchase by CanEagle. In
the transaction, FCID received cash of approximately $28,000,000 CDN
($22,400,000 U.S.) net of expenses, and provided financing to the third
party in the aggregate principal amount of $22,000,000 CDN ($17,300,000
U.S.). The pro forma combined statement of operations for the year ended
December 31, 1992 includes the effects of the sale of the Canadian
properties, representing the reversal of the historical results of
operations for the nine months ended September 30, 1992, as adjusted for
the pro forma effects of the sale. No gain or loss was recognized on the
sale of the Canadian assets.
On May 18, 1993, Forest acquired six offshore blocks in the Gulf of Mexico
from Atlantic Richfield Company (ARCO), effective March 1, 1993, for
approximately $32,516,000 and additional consideration consisting of
offshore equipment and facilities. The purchase was financed in part by
the sale of a nonrecourse volumetric production payment for approximately
$27,261,000, covering delivery of approximately 13 billion cubic feet of
natural gas over a three-year period at an average price of $2.08 per
thousand cubic feet. The amounts shown for the ARCO acquisition in the
condensed pro forma combined statement of operations for the year ended
December 31, 1992 and the nine months ended September 30, 1993 include the
historical revenue and oil and gas production expenses of the ARCO
Properties for the year ended December 31, 1992 and the four months ended
April 30, 1993, respectively, and adjustments for the pro forma effects of
the acquisition of the ARCO Properties by Forest.
On December 30, 1993, Forest acquired an interest in the Loma
Vieja/Martinez Field in South Texas from Wagner & Brown, Ltd., effective
October 1, 1993. The Company financed the $59,347,000 purchase price with
$6,000,000 of cash from internal funds, $36,600,000 of proceeds of a
nonrecourse secured loan from a private institutional lender and
$16,747,000 of funds obtained under a secured master credit facility with a
bank. The nonrecourse loan, which bears annual interest at the rate of
12.5%, was recorded at $32,301,000 to reflect the conveyance to the lender
of a 20% interest in the net profits, as defined, of the Loma
Vieja/Martinez Properties. Payments of principal and interest under the
nonrecourse secured loan are due monthly commencing March 15, 1994 and are
equal to 90% of total net operating income from the secured properties,
reduced by 80% of allowable capital expenditures, as defined. Payments, if
any, under the net profits conveyance will commence upon repayment of the
principal amount of the nonrecourse secured loan and will cease when the
lender has received an internal rate of return, as defined, of 18% (15.25%
through December 30, 1996). The loan discount of $4,299,000 will be
amortized over the life of the loan using the effective interest method.
<PAGE>
FOREST OIL CORPORATION
Notes to Condensed Pro Forma Combined Financial Statements
September 30, 1993
(Unaudited)
A. BASIS OF PRESENTATION (CONT'D)
The accompanying condensed pro forma balance sheet includes pro forma
adjustments to give effect to the acquisition of the Loma Vieja/Martinez
Properties as of September 30, 1993. The condensed pro forma combined
statements of operations include the historical revenue and oil and gas
production expenses of the Loma Vieja/Martinez Properties for the
respective periods presented and adjustments for the pro forma effects of
the acquisition.
B. PRO FORMA ADJUSTMENTS
The following pro forma adjustments have been made to the Balance Sheet of
Forest at September 30, 1993 and to the Statements of Operations for the
year ended December 31, 1992 and the nine months ended September 30, 1993:
1. To reflect the acquisition of the Loma Vieja/Martinez Properties and
the related production payment and bank financing.
2. To adjust interest income to reflect reduced short-term investments
following the acquisition of the Loma Vieja/Martinez Properties.
3. To increase interest expense for interest associated with the debt
incurred in connection with the acquisition of the Loma Vieja/Martinez
Properties.
4. To adjust depletion expense to reflect the pro forma units of
production depletion rate for the combined properties.
5. To record the income tax effects of the pro forma adjustments for the
acquisition of the Loma Vieja/Martinez Properties.
C. PRO FORMA SUPPLEMENTAL FINANCIAL DATA - OIL AND GAS PRODUCING ACTIVITIES
(UNAUDITED)
ESTIMATED PROVED OIL AND GAS RESERVES - The Company's estimate of its pro
forma proved and proved developed future net recoverable oil and gas
reserves at December 31, 1992 follows. Such estimates are inherently
imprecise and may be subject to substantial revisions.
Proved oil and gas reserves are the estimated quantities of crude oil,
natural gas and natural gas liquids which geological and engineering data
demonstrate with reasonable certainty to be recoverable in future years
from known reservoirs under existing economic and operating conditions;
i.e., prices and costs as of the date the estimate is made. Prices include
consideration of changes in existing prices provided only by contractual
arrangement, but not on escalations based on future conditions. These
quantities have been decreased for overproduced volumes recognized as
revenue. Proved developed oil and gas reserves are reserves that can be
expected to be recovered through existing wells with existing equipment and
operating methods. Additional oil and gas expected to be obtained through
the application of fluid injection or other improved mechanisms of primary
recovery are included as "proved developed reserves" only after testing by
a pilot project or after the operation of an installed program has
confirmed through production response that increased recovery will be
achieved.
<PAGE>
FOREST OIL CORPORATION
Notes to Condensed Pro Forma Combined Financial Statements
September 30, 1993
(Unaudited)
C. PRO FORMA SUPPLEMENTAL FINANCIAL DATA - OIL AND GAS PRODUCING ACTIVITIES
(UNAUDITED) (CONT'D)
<TABLE>
<CAPTION>
Oil and Condensate Gas
---------------------- ------
(Thousands of Barrels) (MMCF)
---------------------- ------
<S> <C> <C>
Proved reserves at December 31, 1992
Forest Oil Corporation 7,560 194,655
ARCO Properties 693 28,515
Loma Vieja/Martinez Properties 1 10,749
----- -------
Pro forma combined proved reserves 8,254 233,919
----- -------
----- -------
Proved developed reserves at December 31, 1992
Forest Oil Corporation 6,418 176,282
ARCO Properties 693 28,292
Loma Vieja/Martinez Properties 1 10,749
----- -------
Pro forma combined proved developed reserves 7,112 215,323
----- -------
----- -------
</TABLE>
STANDARDIZED MEASURE OF DISCOUNTED FUTURE NET CASH FLOWS - The standardized
measure of discounted net cash flows at December 31, 1992 is calculated in
accordance with the provisions of Statement of Financial Accounting
Standard No. 69.
Future oil and gas sales and production and development costs have been
estimated using prices and costs in effect at the end of the years
indicated, except in those instances where the sale of oil and natural gas
is covered by contracts, energy swap agreements or volumetric production
payments. In the case of contracts, the applicable contract prices,
including fixed and determinable escalations, were used for the duration of
the contract. Thereafter, the current spot price was used. The contracts
include natural gas sales contracts with a company which is involved in
Chapter 11 bankruptcy proceedings. The ultimate outcome of such
proceedings and the impact, if any, on future oil and gas sales cannot
presently be determined. Future oil and gas sales include the estimated
effects of existing energy swap agreements and the volumeric production
payments and have been reduced for overproduced volumes recognized as
revenue.
Future income tax expenses are estimated using the statutory tax rate of
35%. Estimates for future general and administrative and interest expenses
have not been considered.
<PAGE>
FOREST OIL CORPORATION
Notes to Condensed Pro Forma Combined Financial Statements
September 30, 1993
(Unaudited)
C. PRO FORMA SUPPLEMENTAL FINANCIAL DATA - OIL AND GAS PRODUCING ACTIVITIES
(UNAUDITED) (CONT'D)
Changes in the demand for oil and natural gas, inflation and other factors
make such estimates inherently imprecise and subject to substantial
revision. This table should not be construed to be an estimate of the
current market value of proved reserves. Management does not rely upon the
information that follows in making investment decisions. (In Thousands)
<TABLE>
<S> <C>
Forest Oil Corporation:
Future oil and gas sales $ 549,643
Future production and development costs (200,432)
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Future net revenue 349,211
10% annual discount for estimated timing of cash flows (103,636)
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Present value of future net cash flows before income taxes 245,575
Present value of future income tax expense (18,566)
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Standardized measure of discounted future net cash
flows at December 31, 1992 $ 227,009
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ARCO Properties:
Future oil and gas sales $ 76,156
Future production and development costs (15,758)
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Future net revenue 60,398
10% annual discount for estimated timing of cash flows (7,332)
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Present value of future net cash flows before income taxes 53,066
Present value of future income tax expense (7,736)
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Standardized measure of discounted future net cash
flows at December 31, 1992 $ 45,330
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Loma Vieja/Martinez Properties:
Future oil and gas sales $ 25,188
Future production and development costs (4,553)
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Future net revenue 20,635
10% annual discount for estimated timing of cash flows (4,180)
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Present value of future net cash flows before income taxes 16,455
Present value of future income tax expense (3,100)
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Standardized measure of discounted future net cash
flows at December 31, 1992 $ 13,355
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Pro Forma Combined Forest Oil Corporation:
Future oil and gas sales $ 650,987
Future production and development costs (220,743)
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Future net revenue 430,244
10% annual discount for estimated timing of cash flows (115,148)
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Present value of future net cash flows before income taxes 315,096
Present value of future income tax expense (29,402)
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Pro forma standardized measure of discounted
future net cash flows at December 31, 1992 $ 285,694
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</TABLE>
