FOREST OIL CORP, PRER14A, 1995-06-23

FOREST OIL CORP
PRER14A, 1995-06-23
CRUDE PETROLEUM & NATURAL GAS

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )

Filed by the Registrant /X/
Filed by a Party other than the Registrant / /

Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12

FOREST OIL CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1) Title of each class of securities to which transaction applies:

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2) Aggregate number of securities to which transaction applies:

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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):

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4) Proposed maximum aggregate value of transaction:

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5) Total fee paid:

------------------------------------------------------------------------

/x/ Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

1) Amount Previously Paid:

------------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:

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3) Filing Party:

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4) Date Filed:

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<PAGE>
PRELIMINARY COPY

FOREST OIL CORPORATION
950 SEVENTEENTH STREET
1500 COLORADO NATIONAL BUILDING
DENVER, CO 80202

------------------------

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

JULY 26, 1995

------------------------
To the Shareholders of
FOREST OIL CORPORATION:

As a shareholder of Forest Oil Corporation, a New York corporation (the
"Company"), you are invited to be present in person or to be represented by
proxy at the Annual Meeting of Shareholders, to be held at the Petroleum Club of
Denver, 555 17th Street, Suite 3700, Denver, Colorado, on Wednesday, July 26,
1995, at 10:00 a.m., M.D.T., for the following purposes:

1. Elect two (2) Class I Directors;

2. Approve the transactions between the Company and The Anschutz
Corporation ("Anschutz") and Joint Energy Development Investments Limited
Partnership ("JEDI"), respectively, contemplated by agreements between
the Company and Anschutz and JEDI, respectively;

3. Amend the Company's Restated Certificate of Incorporation to increase
the number of authorized shares of Common Stock, par value $.10 per share
by 88,000,000 to a total of 200,000,000.

4. Consider and vote upon the ratification of the appointment of KPMG Peat
Marwick LLP as independent auditors for the Company for the fiscal year
ending December 31, 1995; and

5. Transact such other business as may be properly brought before the
meeting and any adjournments thereof.

Shareholders of the Company of record at the close of business on June 7,
1995 are entitled to vote at the meeting and all adjournments thereof.

A MAJORITY OF THE OUTSTANDING SHARES OF COMMON STOCK OF THE COMPANY MUST BE
REPRESENTED AT THE MEETING TO CONSTITUTE A QUORUM. THEREFORE, ALL SHAREHOLDERS
ARE URGED EITHER TO ATTEND THE MEETING OR TO BE REPRESENTED BY PROXY.

IF YOU DO NOT EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, SIGN,
DATE AND RETURN THE ACCOMPANYING PROXY CARD IN THE ENCLOSED BUSINESS REPLY
ENVELOPE. If you later find that you can be present or for any other reason
desire to revoke your proxy, you may do so at any time before the voting.

By order of the Board of Directors

DANIEL L. McNAMARA
SECRETARY

June , 1995
<PAGE>
PROXY STATEMENT
OF
FOREST OIL CORPORATION
950 SEVENTEENTH STREET
1500 COLORADO NATIONAL BUILDING
DENVER, COLORADO 80202

June , 1995

This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors (the "Board of Directors") of Forest Oil Corporation (the
"Company") of proxies to be voted at the Annual Meeting of Shareholders (the
"Annual Meeting") to be held on Wednesday, July 26, 1995, at the Petroleum Club
of Denver, 555 17th Street, Suite 3700, Denver, Colorado, at 10:00 a.m., M.D.T.,
and at any adjournment thereof. Each holder of record at the close of business
on June 7, 1995 of shares of the Company's Common Stock, Par Value $.10 Per
Share (the "Common Stock"), will be entitled to one vote for each share so held.
As of May 31, 1995, there were 28,558,448 shares of Common Stock issued and
outstanding.

Shares represented by properly executed proxy cards received by the Company
at or prior to the Annual Meeting will be voted according to the instructions
indicated on the proxy card. Unless contrary instructions are given, the persons
named on the proxy card intend to vote the shares so represented for (i) the
election of the nominees for directors, (ii) the transactions between the
Company and The Anschutz Corporation ("Anschutz") and Joint Energy Development
Investments Limited Partnership ("JEDI"), respectively, contemplated by
agreements between the Company and Anschutz and JEDI, respectively
(collectively, the "Transactions"), (iii) the amendment of the Company's
Restated Certificate of Incorporation to increase the number of authorized
shares of Common Stock by 88,000,000 to a total of 200,000,000, and (iv) the
ratification of the appointment of KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1995. As to any
other business which may properly come before the meeting, the persons named on
the proxy card will vote according to their judgment. The enclosed proxy may be
revoked prior to the meeting by written notice to the Secretary of the Company
at 950 Seventeenth Street, 1500 Colorado National Building, Denver, Colorado
80202, or by written or oral notice to the Secretary at the Annual Meeting at
any time prior to being voted. This Proxy Statement and the Proxy Card enclosed
herewith were first sent to Shareholders of the Company on or about June ,
1995.

THE ANSCHUTZ AND JEDI TRANSACTIONS

At the Annual Meeting, the Company's shareholders will be asked to approve
the Anschutz and JEDI Transactions described under "The Anschutz and JEDI
Transactions". Several important factors should be considered by the
shareholders with respect to the Transactions:

- Pursuant to the Transactions, the Company will issue to Anschutz an
aggregate of 18,800,000 shares of Common Stock and 620,000 shares of
Second Series Preferred Stock ("New Convertible Preferred Stock") that are
convertible into an aggregate of 6,200,000 additional shares of Common
Stock. In addition, Anschutz will acquire an option from JEDI and warrants
from the Company to acquire an aggregate of up to 30,694,444 shares of
Common Stock.

- Of the 18,800,000 shares of Common Stock to be acquired pursuant to the
Transactions, Anschutz will acquire 5,500,000 shares of Common Stock
pursuant to the automatic conversion at the second closing of the Anschutz
Transaction of a $9,900,000 promissory note issued by the Company. In
addition, Anschutz will invest an additional $35,100,000 in cash at the
second closing and will acquire the remaining 13,300,000 shares of Common
Stock, 620,000 shares of New Convertible Preferred Stock, and an option
from JEDI and warrants from the Company to acquire up to 30,694,444
additional shares of Common Stock.

1
<PAGE>

- Pursuant to the Transactions, Anschutz will acquire approximately 40% of
the then outstanding Common Stock. Anschutz will be restricted from
acquiring more than 40% of the outstanding Common Stock for five years,
except in certain circumstances. Absent such restrictions, Anschutz could
acquire an additional 6,200,000 shares of Common Stock by converting the
New Convertible Preferred Stock. In addition, on the date of the second
closing of the Anschutz Transaction, subject to the 40% limitation
Anschutz will have the right to acquire an additional 30,694,444 shares of
Common Stock (19,444,444 shares by the exercise of warrants and 11,250,000
shares by exercise of an option from JEDI) for an aggregate cash
consideration of $63,333,332 to the Company. Therefore, under certain
circumstances, based on the number of shares outstanding on May 31, 1995,
Anschutz could acquire up to an aggregate of approximately 66% of Common
Stock for an aggregate cash consideration of $108,333,332 to the Company.

- Although Anschutz will be limited with respect to the voting rights it
will acquire, such limitations are not applicable in all situations. For
example, Anschutz is allowed to vote its shares with respect to all
matters with respect to which Anschutz may have liability under Section
16(b) of the Exchange Act. Such right could give Anschutz a veto power
over certain transactions between the Company and third parties such as a
merger which requires the approval of the holders of two-thirds of the
outstanding Common Stock.

- The Anschutz and JEDI Transactions have several advantages to the Company
and its shareholders, including providing the Company with additional
equity capital, short-term liquidity, reduced leverage, lower interest
expense and a strategic alliance with Anschutz, an experienced oil and gas
investor.

- The Anschutz and JEDI Transactions have several disadvantages to the
Company and its shareholders. It is unlikely that control of the Company
could be transferred to a third party without Anschutz's consent and
agreement. It is also likely that a third party would offer to pay a
premium to acquire the Company without the prior agreement of Anschutz,
even if the Board of Directors should choose to attempt to sell the
Company in the future. It will also be unlikely that the Company will be
able to enter into a transaction accounted for as a pooling of interests
in the next two years. Finally, the 40% limitation on Anschutz's ownership
terminates after five years and earlier under certain circumstances. Under
these circumstances, based on the number of shares outstanding on May 31,
1995, Anschutz would have the ability on and after the second closing of
the Anschutz Transaction to acquire up to approximately 66% of the Common
Stock by converting its New Convertible Preferred Stock and exercising
during their respective terms its option and warrants for additional
proceeds to the Company of $63,333,332 to the Company. Therefore, upon
termination of the 40% limitation, Anschutz may have effective control
over the Company.

- If the Transactions are not approved by the shareholders, the Company will
be required to bear its expenses in connection with the Transactions,
including the fees payable to its financial advisor, which are estimated
to be approximately $2,750,000 in the aggregate. In addition, the Company
is obligated under certain circumstances to pay up to $500,000 to Anschutz
to reimburse it if the Anschutz Transaction is not consummated. If the
Anschutz Transaction is not consummated on or before May 17, 1996, and (a)
a third party (other than Anschutz) acquires 40% of the outstanding Common
Stock, (b) the Board of Directors withdraws its recommendation with
respect to the Anschutz Transaction or recommends an alternative
transaction, or (c) the Company enters into an agreement with respect to
an alternative transaction, the Company would be obligated to pay a
Subsequent Event Fee of a minimum of $1,000,000 up to a maximum of
$2,500,000.

2
<PAGE>

- If the Anschutz and JEDI Transactions are not consummated, the Company
will be faced with several problems for which it will need to seek
immediate solutions, including a loss of liquidity and the ability to
repay its current indebtedness, which includes a $9,900,000 promissory
note issued to Anschutz. One of the solutions considered by the Company
has been the sale of certain non-strategic assets. The Company has
estimated that such sales would result in a discount of approximately $3-5
million from the book value of such assets of approximately $13 million.

Under the law of New York, the Company's state of incorporation, "votes
cast" at a meeting of shareholders by the holders of shares entitled to vote are
determinative of the outcome of the matter subject to vote. Abstentions and
broker non-votes will not be considered "votes cast" based on the Company's
understanding of state law requirements. A "broker non-vote" occurs if a broker
or other nominee does not have discretionary authority and has not received
instructions with respect to a particular item. Shareholders may not cumulate
their votes.

UPON REQUEST OF ANY SHAREHOLDER, THE COMPANY'S ANNUAL REPORT FOR THE YEAR
ENDED DECEMBER 31, 1994 FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE
"SEC") ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS, THE SCHEDULES AND ANY
AMENDMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY REFERENCE THEREIN, THE
COMPANY'S QUARTERLY REPORT FOR THE QUARTER ENDED MARCH 31, 1995 FILED WITH THE
SEC ON FORM 10-Q AND THE COMPANY'S CURRENT REPORT ON FORM 8-K DATED MAY 17, 1995
WILL BE SENT TO THE SHAREHOLDER WITHOUT CHARGE BY FIRST CLASS MAIL WITHIN ONE
BUSINESS DAY OF RECEIPT OF SUCH REQUEST. ALL REQUESTS SHOULD BE ADDRESSED TO THE
SECRETARY OF THE COMPANY AT 950 SEVENTEENTH STREET, 1500 COLORADO NATIONAL
BUILDING, DENVER, COLORADO 80202 OR BY TELEPHONE TO (303) 592-2400.

3
<PAGE>
ELECTION OF DIRECTORS

The Company's By-laws currently provide that the Board of Directors shall be
divided into four classes as nearly equal in number as possible, with each class
having not less than three members, whose terms of office expire at different
times in annual succession. Currently the number of directors is fixed at 12. If
the transactions with Anschutz are approved by the shareholders at the Annual
Meeting, then Austin M. Beutner, John C. Dorn, Harold D. Hammar, and Jeffrey W.
Miller will resign as directors and the Board of Directors will appoint Philip
F. Anschutz as a Class I director, Drake S. Tempest as a Class II director and
Craig D. Slater as a Class IV director, respectively, pursuant to the
Shareholders' Agreement with Anschutz. If the transactions with Anschutz are
approved, the size of the Board will be reduced to 10 members. The reduction
will be effected by the amendment of the Company's By-Laws by the Board of
Directors. In addition, such By-Law amendment will reduce the minimum number of
directors in each class to two. If the transactions with Anschutz are not
approved, such persons will not resign and the size of the Board will be reduced
to 11 members.

Mr. Anschutz has been a Director, Chairman of the Board and President of
Anschutz for more than the past five years, and a Director, Chairman of the
Board and President of Anschutz Company, the corporate parent of Anschutz, since
the formation of Anschutz Company in August 1991. Mr. Anschutz has been a
Director of Southern Pacific Rail Corporation ("SPRC") since June 1988 and
Chairman of SPRC since October 1988. He served as President and Chief Executive
Officer of SPRC from October 1988 until July 1993. Mr. Slater has been Director
of Finance of Anschutz since 1992 and Corporate Secretary of Anschutz since
1991. Mr. Slater held other positions with Anschutz from 1988 to 1992. Mr.
Tempest has been a partner in the law firm of O'Melveny & Myers since February
1991 and was Special Counsel to such firm from 1988 to February 1991.

The Board of Directors, effective at the 1994 Annual Meeting, reapportioned
the number of Directors to three in each class. The Board of Directors,
effective at the 1995 Annual Meeting, will provide for the number of directors
to be divided as equally as possible into four classes. At the 1994 Annual
Meeting, Jack D. Riggs, previously a Class IV Director, was reclassified as a
Class I Director with a term expiring at the 1995 Annual Meeting. Mr. Riggs, a
Class I Director, is not standing for reelection. Each class of directors is
elected for a term expiring at the annual meeting to be held four years after
the date of their election. The Class I Nominees were elected at the 1991 Annual
Meeting, the Class II Directors were elected at the 1992 Annual Meeting, the
Class III Directors were elected at the 1993 Annual Meeting and the Class IV
Directors were elected at the 1994 Annual Meeting.

A majority of the votes represented at the Annual Meeting by shares of
Common Stock entitled to vote is required to elect a director.

The persons named as proxies in the enclosed proxy, who have been so
designated by the Board of Directors, intend to vote for the election of the
Class I Nominees referred to below as directors unless otherwise instructed in
the proxy.

4
<PAGE>
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THESE NOMINEES. Certain
information concerning such nominees, as well as the other current directors, is
set forth below:

<TABLE>
<CAPTION>
AGE AND PRINCIPAL OCCUPATION, SERVED
YEARS OF POSITIONS WITH COMPANY AS A
SERVICE AND BUSINESS EXPERIENCE DIRECTOR
NAME WITH COMPANY DURING LAST FIVE YEARS SINCE
- ----------------------------- -------------- -------------------------------------------------------- -----------
<S> <C> <C> <C>
CLASS I NOMINEES -- TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1999
William L. Dorn 46 - 23 Chairman of the Board and Chairman of the Executive 1982
Committee since July 1991 and Chief Executive Officer
since February 1990. Member of the Executive Committee
since August 1988. President from February 1990 until
November 1993. Executive Vice President from August 1989
until February 1990. Member of the Royalty Bonus
Committee since August 1991 and Chairman since May 1994.
James H. Lee 46 - 4 Managing Partner, Lee, Hite & Wisda Ltd. Member of the 1991
Executive Committee since February 1994.
CLASS II DIRECTORS -- TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1996
Dale F. Dorn 52 - 28 Resigned as a Vice President in September 1989; 1977
currently engaged in private investments.
Harold D. Hammar 71 - 10 Financial Consultant. Member of the Audit Committee and 1985
Compensation Committee.
Robert S. Boswell 45 - 10 President since November 1993. Vice President from May 1985
1991 until November 1993. Chief Financial Officer since
May 1991. Financial Vice President from September 1989
until May 1991. Member of the Executive Committee since
July 1991 and the Royalty Bonus Committee since August
1991. Director of Franklin Supply Company Ltd.
CLASS III DIRECTORS -- TERMS EXPIRING AT THE ANNUAL SHAREHOLDERS' MEETING IN 1997
Jeffrey W. Miller 43 - 7 Independent Biologist. 1988
Michael B. Yanney 61 - 3 Chairman and Chief Executive Officer of the America 1992
First Companies, L.L.C. and a director of Burlington
Northern Inc., Lozier Corporation, MFS Communications
Company, Inc. and America First REITs Inc. Chairman of
the Compensation Committee.
Donald H. Anderson 46 - 2 President, Chief Executive Officer and Director of 1993
Associated Natural Gas Corporation, a wholly owned
subsidiary of Panhandle Eastern Corporation, since
September 1989 and January 1989, respectively and Chief
Operating Officer and Chairman of Associated Natural
Gas, Inc., a wholly owned subsidiary of Panhandle
Eastern Corporation, since December 1994. Member of the
the Audit Committee.
</TABLE>

5
<PAGE>

SECURITY OWNERSHIP OF MANAGEMENT

The following table shows, as of May 31, 1995, the number of shares of the
Company's Common Stock beneficially owned by each director and nominee, each of
the executive officers named in the Summary Compensation Table set forth under
the caption "Executive Compensation" below, and all directors and executive
officers as a group. Unless otherwise indicated, each of the persons has sole
voting power and sole investment power with respect to the shares beneficially
owned by such person.

<TABLE>
<CAPTION>
COMMON STOCK (2)
---------------------------
NAME OF INDIVIDUAL OR NUMBER OF PERCENT
NUMBER IN GROUP (1) SHARES OF CLASS
- ---------------------------------------- ------------- ---------
<S> <C> <C>
Donald H. Anderson...................... 10,000 *
Bulent A. Berilgen...................... 122,080(3) *
Austin M. Beutner....................... -- --
Robert S. Boswell....................... 249,329(4) *
Richard J. Callahan..................... 2,000 *
Dale F. Dorn............................ 116,488(5) *
Forest D. Dorn.......................... 240,698(6) *
John C. Dorn............................ 250,485(7) *
William L. Dorn......................... 448,215(8) 1.57
Harold D. Hammar........................ 2,500 *
David H. Keyte.......................... 134,403(9) *
James H. Lee............................ 1,000 *
Jeffrey W. Miller....................... 331,220(10) 1.16
Jack D. Riggs........................... 6,635 *
Michael B. Yanney....................... 5,000 *
All directors and executive officers as
a group (19 persons, including the 15
named above)........................... 2,189,832(11) 7.66%
<FN>
- ------------------------
* The percentage of shares beneficially owned does not exceed one percent of
the outstanding shares of the class.

(1) William L. Dorn and Forest D. Dorn are brothers, and they and Dale F. Dorn
are nephews of John C. Dorn. See "Principal Holders of Securities".
</TABLE>

6
<PAGE>

<TABLE>
<S> <C>
(2) Amounts reported also include shares held for the benefit of certain
directors and executive officers by the trustee of the Company's Retirement
Savings Plan Trust as of March 31, 1994.
(3) Includes 120,000 Common shares that Bulent A. Berilgen has the vested right
to purchase pursuant to the terms of the 1992 Stock Option Plan.

(4) Includes 210,000 Common shares that Robert S. Boswell has the vested right
to purchase pursuant to the terms of the 1992 Stock Option Plan. Does not
include 225 Common shares held by Robert S. Boswell's wife or 830 shares
held by his children, of which shares Mr. Boswell disclaims beneficial
ownership.

(5) Includes 15,031 Common shares held of record by Dale F. Dorn as trustee of
a trust for the benefit of his immediate family. Dale F. Dorn has
disclaimed beneficial ownership of these shares. Also includes 12,250
Common shares that Dale F. Dorn has the right to acquire upon the
conversion of 3,500 shares of the Company's $.75 Convertible Preferred
Stock.

(6) Includes 120,000 Common shares that Forest D. Dorn has the vested right to
purchase pursuant to the terms of the 1992 Stock Option Plan. Also includes
25,800 Common shares held of record by Forest D. Dorn as co-trustee of a
trust for the benefit of his mother (see Footnote 8), of which shares Mr.
Dorn disclaims beneficial ownership. Does not include 8,628 Common shares
held by Forest D. Dorn's wife or 25,967 shares held by his children, of
which shares Mr. Dorn disclaims beneficial ownership.

(7) Includes 43,685 Common shares held of record by John C. Dorn as trustee of
trusts for the benefit of related parties. Does not include (i) 265,676
Common shares held of record by The Glendorn Foundation of which John C.
Dorn is one of the seven trustees, or (ii) 72,547 Common shares held by
John C. Dorn's wife, of which shares Mr. Dorn disclaims beneficial
ownership.

(8) Includes 210,000 Common shares that William L. Dorn has the vested right to
purchase pursuant to the terms of the 1992 Stock Option Plan. Also includes
(i) 25,800 Common shares held of record by William L. Dorn as co-trustee of
a trust for the benefit of his mother (see Footnote 6), and (ii) 74,223
Common shares held of record by William L. Dorn as trustee of trusts for
the benefit of related parties, of which shares Mr. Dorn disclaims
beneficial ownership. Does not include 14,990 Common shares held by William
L. Dorn's wife or 35,997 shares held by his children, of which shares Mr.
Dorn disclaims beneficial ownership.

(9) Includes 120,000 Common shares that David H. Keyte has the vested right to
purchase pursuant to the terms of the 1992 Stock Option Plan. Also includes
7,000 Common shares that David H. Keyte has the right to acquire upon the
conversion of 2,000 shares of the Company's $.75 Convertible Preferred
Stock.

(10) Includes 99,825 Common shares held of record by Jeffrey W. Miller as
custodian for his minor children, of which shares Mr. Miller disclaims
beneficial ownership.

(11) Includes 1,035,000 Common shares held by various executive officers who
have the vested right to purchase such shares pursuant to the terms of the
1992 Stock Option Plan and 21,350 Common shares that a director and two
executive officers have the right to acquire upon the conversion of 6,100
shares of the Company's $.75 Convertible Preferred Stock.
</TABLE>

7
<PAGE>
BOARD OF DIRECTORS AND COMMITTEES

During 1994, the Board of Directors met on six occasions. The Board of
Directors has appointed four committees, the Executive Committee, the Audit
Committee, the Compensation Committee and the Royalty Bonus Committee, which are
designed to permit action to be taken expeditiously. Only two members of each
committee are necessary to constitute a quorum. During 1994, the Executive
Committee met 15 times. William L. Dorn, Robert S. Boswell and James H. Lee are
the members of the Executive Committee. The members of the Royalty Bonus
Committee, which met once and acted by consent nine times during the year, were
William L. Dorn, Robert S. Boswell and Jack D. Riggs. Members of the Royalty
Bonus Committee are eligible to participate in royalty bonuses granted by the
Royalty Bonus Committee.

The Compensation Committee met six times during 1994. This committee makes
recommendations to the Board of Directors in the area of executive compensation,
including the selection of individual employees to be granted options from among
those eligible under the stock option plan and establishes the number of shares
issued under each option. Members of the Compensation Committee are not eligible
to participate in the Company's 1992 Stock Option Plan. The members of the
Compensation Committee are Austin M. Beutner, Richard J. Callahan, Harold D.
Hammar, Jack D. Riggs and Michael B. Yanney. A Report of the Compensation
Committee on Executive Compensation is set forth below.

The Audit Committee is appointed for the purpose of overseeing and
monitoring the Company's independent audit process and discharges its duties,
responsibilities and functions according to a plan designed to provide assurance
to the Board of Directors that the resources allocated to that process are
adequate and utilized effectively. It is also charged with the responsibility
for reviewing all related party transactions for potential conflicts of
interest. This committee met three times during the year, and its members were
Donald H. Anderson, Harold D. Hammar and Jack D. Riggs.

The Board of Directors does not currently have a standing nominating or
similar committee.

During 1994, each incumbent director of the Company, except Austin M.
Beutner and Richard J. Callahan, attended at least 75% of the aggregate number
of meetings of the Board of Directors and the committees of the Board of
Directors on which he served.

If the Transactions are approved by the shareholders at the Annual Meeting,
pursuant to the proposed Shareholders' Agreement with Anschutz, Craig D. Slater
will be appointed to the Executive Committee, Harold D. Hammar will resign from
the Audit Committee, Craig D. Slater will be appointed to the Audit Committee,
Austin M. Beutner and Harold D. Hammar will resign from the Compensation
Committee, and Drake S. Tempest will be appointed to such Committee. The Board
of Directors will also appoint a Nominating Committee consisting of William L.
Dorn, Philip F. Anschutz and Michael B. Yanney. See "The Anschutz and JEDI
Transactions."

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee of the Board of Directors consists of Messrs.
Beutner, Callahan, Hammar, Riggs and Yanney. Mr. Riggs retired as a Vice
President of the Company in 1987 and is not standing for reelection as a
director. The Executive Committee members are William L. Dorn, Robert S. Boswell
and James H. Lee. The members of the Royalty Bonus Committee are William L.
Dorn, Robert S. Boswell and Jack D. Riggs. William L. Dorn is Chairman of the
Board and Chief Executive Officer and Robert S. Boswell is President. During
1994 there were no compensation committee interlocks between the Company and any
other entity.

A real estate complex (the "Complex") owned by members of the Dorn and
Miller families, located near Bradford, Pennsylvania, had been historically used
by the Company for business purposes. In 1994, the Company notified the owners
of the Complex that it intended to terminate its annual usage after 1994.

8
<PAGE>
In 1994, in connection with the Company's termination of usage, the Company
paid $662,000 on account of the business use of such property, and an additional
$300,000 as a partial reimbursement of deferred maintenance costs. Members of
the Dorn and Miller families who were directors and/or executive officers of the
Company (and their immediate families) who owned a direct or indirect interest
in such Complex during 1994 were Dale F. Dorn, his brother and his two sisters;
William L. Dorn and Forest D. Dorn and their father and two sisters; John C.
Dorn and his four children; and Jeffrey W. Miller, his father and two sisters.

For further information with respect to other transactions with management
and others see "Transactions with Management and Others".

DIRECTOR COMPENSATION

Each director who is not an employee of the Company is compensated for
services at the rate of $20,000 annually, and in addition, is paid a fee of
$2,500 for attendance in person at each meeting or series of meetings of the
Board of Directors. All directors, whether employees or not, are reimbursed for
all costs incurred by them in their capacities as directors, including the costs
of attending directors' meetings and committee meetings. The non-employee
directors and the amounts each was paid during 1994 as directors were: John C.
Dorn, Dale F. Dorn, Harold D. Hammar, Jeffrey W. Miller, Jack D. Riggs and
Michael B. Yanney -- $30,000; Donald H. Anderson -- $27,500; Austin M. Beutner
and Richard J. Callahan -- $25,000. James H. Lee received $30,000 for his
services as a director, $2,000 for attendance at meetings of the Audit and
Compensation Committees and $41,666.68 as payment for his service on the
Executive Committee, which began March 1, 1994. Messrs. Hammar and Riggs each
received an additional $8,000 for attending meetings of the Audit and
Compensation Committees. Mr. Yanney received an additional $3,000 for attending
meetings of the Compensation Committee,and Mr. Anderson was paid an additional
$4,000 for attending meetings of the Audit Committee.

No additional amounts are paid for committee participation or special
assignments, except that (i) each member of the Compensation Committee is paid
$1,000 per meeting which he attends up to a maximum of $4,000 per year for
service on that committee, (ii) each member of the Audit Committee is paid
$1,000 per meeting which he attends up to a maximum of $4,000 per year for
service on that committee and (iii) Mr. Lee will be paid $50,000 per year for
service on the Executive Committee.

9
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth certain information regarding compensation
earned during each of the Company's last three fiscal years by the Company's
Chief Executive Officer and each of the Company's four other most highly
compensated executive officers (collectively, the "Named Executive Officers"),
based on salary and bonus earned in 1994:

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS (4)
------------------------------------------------ -------------
OTHER ANNUAL SECURITIES ALL OTHER
NAME AND BONUS COMPENSATION UNDERLYING COMPENSATION
PRINCIPAL POSITION YEAR SALARY ($) ($)(1)(2) ($)(3) OPTIONS (#) ($)(5)
- -------------------------------------------- --------- ----------- --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
William L. Dorn, 1994 $ 300,012 -0- $ 2,795 -0- $ 22,942
Chairman of the Board 1993 250,008 100,159 665 175,000 32,640
and Chief Executive Officer 1992 250,008 75,618 624 175,000 10,618
Robert S. Boswell, 1994 284,004 -0- 2,515 -0- 21,559
President 1993 234,000 88,239 607 175,000 30,503
1992 234,000 94,017 567 175,000 10,445
Bulent A. Berilgen, 1994 166,512 -0- -0- -0- 11,507
Vice President of Operations 1993 137,850 53,336 -0- 100,000 16,458
1992 131,932 41,456 -0- 100,000 6,234
David H. Keyte, 1994 165,000 -0- 21,945 -0- 11,469
Vice President and 1993 139,494 36,433 18,192 100,000 16,517
Chief Accounting Officer 1992 131,618 58,419 -0- 100,000 6,234
Forest D. Dorn, 1994 163,800 -0- 18,335 -0- 12,910
Vice President and 1993 160,650 22,013 324 100,000 20,342
General Business Manager 1992 156,250 35,219 316 100,000 8,769
<FN>
- ------------------------
(1) The following amounts indicate the awards made with respect to the years
indicated, under the Forest Oil Corporation Incentive Plan (the "Incentive
Plan"):
</TABLE>

<TABLE>
<CAPTION>
1992 1993 1994
--------- --------- ---------
<S> <C> <C> <C>
William L. Dorn...................................................... $ 68,126 $ 30,500 -0-
Robert S. Boswell.................................................... 61,965 29,020 -0-
Bulent A. Berilgen................................................... 37,565 18,135 -0-
David H. Keyte....................................................... 34,542 16,185 -0-
Forest D. Dorn....................................................... 31,328 14,819 -0-
</TABLE>

Distributions of awards are made pursuant to the Incentive Plan in equal
installments over a three-year period. Pursuant to the Incentive Plan if a
participant's employment is terminated prior to the vesting of awards, the
remainder of such awards is reallocated to other participants. Amounts
reallocated in 1994 for the years 1992 and 1993 were as follows: William L.
Dorn -- $3,445; Robert S. Boswell -- $3,224; Bulent A. Berilgen -- $1,836;
David H. Keyte -- $1,838; and Forest D. Dorn -- $2,167. See "Report of the
Compensation Committee on Executive Compensation -- Incentive Plan Awards".

(2) During 1994, the Company assigned to certain of its executive officers and
other key personnel, as additional compensation, certain bonuses of
undivided interests in overriding royalty interests in the gross production
from certain exploratory oil and gas prospects in which the Company had an
interest. The cost to the Company at the time of the assignment of such
royalty interests was

10
<PAGE>
$3,599 each for William L. Dorn, Robert S. Boswell and Forest D. Dorn,
$2,061 for Bulent A. Berilgen and $2,041 for David H. Keyte. During 1994
interests in nine exploratory oil and gas prospects were so awarded by the
Royalty Bonus Committee.

(3) Does not include perquisites and other personal benefits because the value
of these items did not exceed the lesser of $50,000 or 10% of reported
salary and bonus of any of the Named Executive Officers, except for David H.
Keyte and Forest D. Dorn, each of whose 1994 total includes a cash auto
allowance of $15,000.

(4) No stock appreciation rights ("SARs") or restricted stock awards were
granted to any of the Named Executive Officers during any of the last three
fiscal years.

(5) The 1994 totals include (i) the fair market value of the Company's matching
contribution of Common Stock to the Retirement Savings Plan in the following
amounts: William L. Dorn -- $7,500; Robert S. Boswell -- $7,500; Bulent A.
Berilgen -- $7,500; David H. Keyte -- $7,500; and Forest D. Dorn -- $7,500;
(ii) the fair market value of the Company's profit sharing bonus
contribution of Common Stock to the Retirement Savings Plan in the following
amounts: William L. Dorn -- $5,448; Robert S. Boswell -- $5,400; Bulent A.
Berilgen -- $3,181; David H. Keyte -- $3,219; and Forest D. Dorn -- $3,707;
(iii) the Company's matching contribution pursuant to deferred compensation
agreements in the following amounts: William L. Dorn -- $7,501; Robert S.
Boswell -- $6,700; Bulent A. Berilgen -- $826; David H. Keyte -- $750; and
Forest D. Dorn -- $690; and (iv) the Company's profit sharing bonus
contribution of $322 pursuant to the deferred compensation agreement of
William L. Dorn. The 1994 totals also include the following amounts
attributable to the term life portion of premiums paid by the Company
pursuant to a split dollar insurance arrangement: William L. Dorn -- $2,171;
Robert S. Boswell -- $1,959; and Forest D. Dorn -- $1,013. The remainder of
the premium is not included and does not benefit the Named Executive
Officers because the Company has the right to the cash surrender value of
the policy.

YEAR END STOCK OPTION VALUES

No stock options were granted to the Named Executive Officers in 1994.

There were no stock option exercises by any Named Executive Officers during
1994. The following table shows the number of shares covered by both exercisable
and non-exercisable stock options as of December 31, 1994 and their values at
such date:

OUTSTANDING STOCK OPTION VALUES AS OF DECEMBER 31, 1994

<TABLE>
<CAPTION>
VALUE OF
NUMBER OF SECURITIES UNEXERCISED IN-THE-MONEY
UNEXERCISED OPTIONS OPTIONS AT FISCAL YEAR END ($)(1)
AT FISCAL YEAR END (#)
-------------------------- ----------------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------------------------------------- ----------- ------------- --------------- -----------------
<S> <C> <C> <C> <C>
William L. Dorn........................................... 175,000 175,000 $ 0 $ 0
Robert S. Boswell......................................... 175,000 175,000 0 0
Bulent A. Berilgen........................................ 100,000 100,000 0 0
David H. Keyte............................................ 100,000 100,000 0 0
Forest D. Dorn............................................ 100,000 100,000 0 0
<FN>
- ------------------------
(1) On December 31, 1994, the last reported sales price of the Common Stock as
quoted on the NASDAQ/NMS was $2.25 per share. The option price for the
options granted in 1992 is $3.00 per share and the option price for the
options granted in 1993 is $5.00 per share. Since the last reported sales
price at December 31, 1994 was lower than the option price for the options
granted in 1992 and 1993, no value is ascribed to those options in the
above table.
</TABLE>

11
<PAGE>
STOCK PERFORMANCE GRAPH

The following graph compares the yearly percentage change in the cumulative
total shareholder return on the Common Stock during the five years ended
December 31, 1994 with the cumulative return on the S & P 500 Index, the Dow
Jones Oil, Secondary Index and an index of peer companies. The graph assumes
that $100 was invested in each category on the last trading day of 1989 and that
dividends were reinvested. The companies in the peer index were selected based
on the following criteria: (i) total assets ranging from approximately $125
million to $1.1 billion, (ii) total revenue ranging from approximately $40
million to $300 million and (iii) oil and gas revenue comprising at least 54% of
total revenue. The companies included in the peer index were American
Exploration Co., DEKALB Energy Company, Devon Energy Corporation, Noble
Affiliates, Inc., Plains Petroleum Company, Pogo Producing Company, Presidio Oil
Company, Snyder Oil Corporation and The Wiser Oil Company.

The Company significantly changed the composition of its management as well
as its operating strategy during the five-year period. In December 1990 seven
executive officers and directors retired from the Company. In July 1991, William
L. Dorn was elected Chairman of the Board.

COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURNS:

<TABLE>
<CAPTION>
1989 1990 1991 1992 1993 1994
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Forest Oil Corporation...................................... 100.0 39.2 11.3 24.1 33.0 17.0
Peer Index.................................................. 100.0 79.3 70.8 82.0 117.5 111.3
Dow Jones Oil Secondary..................................... 100.0 83.2 81.7 82.3 91.3 86.4
S&P 500..................................................... 100.0 96.9 126.4 136.1 149.8 151.8
</TABLE>

[GRAPH]

REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

The Compensation Committee's duties include the annual review and approval
of the compensation of the Chairman and President, review and determination of
individual elements of compensation for the Company's executive officers, review
of the administration of the Company's Incentive Plan and other long-term
incentive plans for management and determining the terms and awards under the
Company's 1992 Stock Option Plan. During 1994, the Compensation Committee, with
the assistance of its compensation consultant, developed a compensation program
for annual cash incentive bonuses and stock option grants. Although the program
was not finalized until November 1994, it established the 1994 performance goals
based on senior management's recommendations. See "Cash Bonuses" below. In 1994,
the Compensation Committee held six meetings.

The Royalty Bonus Committee is responsible for granting bonuses of undivided
overriding royalty interests pursuant to the Company's royalty bonus program.

The Executive Committee is responsible for determining the salaries for all
officers except the Chairman and the President.

The Compensation Committee has studied the limitation on the deductibility
of compensation for federal income tax purposes pursuant to Section 162(m) of
the Internal Revenue Code of 1986, as amended (the "Code"). The Compensation
Committee does not currently intend to award levels of compensation that results
in such limitation. The Compensation Committee may authorize compensation in the
future that results in amounts above the limit if it determines that such
compensation is in the best interests of the Company. In addition, the
limitation may affect the future grant of stock options.

In March 1995, the Compensation Committee renewed the Executive Severance
Agreements and extended their term to December 1997. In addition, the definition
of "change of control" was modified. See "Transactions with Management and
Others -- Executive Severance Agreements."

12
<PAGE>
BASE SALARIES. The Company's compensation policy for base salaries is to
set compensation within a competitive range. The competitive range for base
salaries is determined by reviewing competitive pay practices of similarly
positioned energy companies, including those companies which are considered for
comparison purposes in the Company's Five-Year Cumulative Total Returns graph.
During 1994, adjustments were made to base salaries to reflect promotions and
changes of responsibilities of certain officers. The Chief Executive Officer and
President were each given an increase of $50,000 per year based on the
Committee's assessment of their performance in reducing the Company's debt, the
restructuring of the organization, and the fact that they had not had an
increase in base salary for several years. In addition, the Compensation
Committee concluded that the increased levels of their base salaries were
comparable to those of executive officers with companies in the Company's peer
group.

CASH BONUSES. During 1994, the Committee worked with its compensation
consultant to develop a new performance based annual cash incentive bonus
program. The program provides for cash bonuses to be paid to executive officers
based on the achievement of predetermined performance criteria. Each performance
criterion is selected for its strategic importance and weighted to reflect the
relative importance to the Company's annual initiatives. For the Chief Executive
Officer the threshold is zero, the target award level is 40% of base salary and
the maximum is 100% of base salary. The Committee worked with senior management
to identify the performance criteria to be used in the program for 1994 and
1995. The criteria are: 1) Profitability (which is (i) defined generally as net
income after taxes, extraordinary items and accounting changes and (ii) weighted
40% of the formula), 2) Value Added Index (which is (i) defined generally as
changes in oil and gas reserves divided by capital expenditures multiplied by
reserve replacement ratio and (ii) weighted 30% of the formula), 3) Return on
Invested Capital (which is (i) defined generally as interest expense and pretax
income divided by total assets less non-interest liabilities and (ii) weighted
10% of the formula), 4) Operating Efficiency Against Peer Companies (which is
(i) defined as the Company's performance in terms of oil and gas exploration and
production costs with respect to both revenue and production volume as compared
to its peer group of companies and (ii) weighted 10% of the formula), and 5)
Strategic Initiatives (which (i) include achieving a targeted debt to equity
ratio for the Company, the development of a strategic investment alternative,
and organization development and (ii) is weighted 10% of the formula). No
discretionary cash bonuses were paid to the executive officers for 1994.

The Company has traditionally granted year-end Christmas bonuses to all
employees, including executive officers. The 1994 year-end bonuses were an
amount equal to 3% of the first eleven months base salary for each individual
and were approved by the Executive Committee. William L. Dorn received such a
year-end bonus of $8,250.

STOCK OPTIONS. In 1994, the Compensation Committee granted stock options to
V. Bruce Thompson, Vice President and General Counsel for 100,000 shares of
Common Stock and to Joan C. Sonnen, Controller for 25,000 shares of Common
Stock, both at an exercise price of $5.00 per share. For 1995, as part of the
Company's newly-developed executive compensation program, guidelines were
established for granting stock options to executive officers based on the
achievement of predetermined performance goals, mentioned above under "Cash
Bonuses".

INCENTIVE PLAN AWARDS. The Incentive Plan, which became effective January
1, 1992, permits participating employees to earn awards payable in cash, in
whole shares of the Company's Common Stock, or in any combination of cash and
whole shares of Common Stock. The Executive Committee determines whether awards
are payable in cash or stock. The Incentive Plan operates through an incentive
pool for each fiscal year that is contingent upon the Company attaining certain
targeted levels of performance. Unless otherwise determined by the Executive
Committee, the incentive pool is funded based upon the average return on
invested capital achieved by the Company. The amount contributed to the
incentive pool is a scheduled percentage of base salary that starts at a minimum
return and increases based on average return on invested capital. The incentive
pool is divided in half. One half of the pool is awarded to all participants as
a performance distribution. A participant's

13
<PAGE>
percentage interest in the performance distribution is based upon the proportion
his base salary bears to the aggregate of the base salaries of all participants.
The other half of the incentive pool is divided among participants on an
individual basis at the discretion of the Compensation Committee.

The Incentive Plan is structured to consider the Company's performance over
a three-year period. Performance is currently measured under the Incentive Plan
based on average return on invested capital. The computations for return on
invested capital in 1992 and 1993 did not take into account a three-year period.
For 1992 and 1993, certain transitional rules applied to the computation of
return on invested capital.

In 1994, the Compensation Committee approved grants under the Company's
Incentive Plan with respect to amounts earned for 1993. Total awards of $364,729
were made pursuant to the Incentive Plan to be paid out over a three-year
period, including an award in 1994 of $30,500 to William L. Dorn. Awards were
made from the discretionary pool to individual plan participants (including
William L. Dorn) based upon the following factors (in order of importance):
level of responsibility, performance of the individual during the period, base
salary, and a comparison to Peer Group compensation of executives. The
Compensation Committee received recommendations with respect to discretionary
pool awards from the Executive Committee.

PROFIT SHARING CONTRIBUTIONS. The Company's Retirement Savings Plan and
deferred compensation agreements with certain executive officers, including
William L. Dorn, give the Company discretion to make profit sharing
contributions in cash or stock for the account of the Company's officers and
employees. In 1994, the Compensation Committee approved profit sharing
contributions of Common Stock with a fair market value of $5,448 to the
Company's Retirement Savings Plan and $322 pursuant to a deferred compensation
agreement for the account of William L. Dorn. The Compensation Committee
established the amount of the contribution for each person based on the same
percentage of base salary. The percentage was determined based on a schedule set
forth in the Incentive Plan, which is a sliding scale of targets based on
average return on invested capital.

ROYALTY BONUSES. During 1994, the Company assigned to certain of its
executive officers, other key personnel and certain retirees, as additional
compensation, certain bonuses of undivided interests in overriding royalty
interests equal to approximately 6% of the Company's net interest in all oil,
gas and other minerals produced, saved and sold from certain oil and gas
prospects in which the Company had an interest. The prospects, the size of the
interest and the participants in such bonuses are determined from time to time
by the Royalty Bonus Committee of the Board of Directors and such committee's
powers with respect thereto may be terminated at any time by the Board of
Directors. The interest of each officer and key employee in such bonuses varies
according to his salary. The interest of William L. Dorn was established based
upon his responsibilities as a director and officer, and on his salary. By the
terms of the issuing documents, such interests were to terminate, revert to and
revest in the Company on December 31, 1994 unless on such date certain
conditions with respect to production or drilling operations on the properties
subject to the royalties were fulfilled. Certain royalty interests awarded in
1993 (6 in number) terminated, reverted to and revested in the Company during
1994.

The Compensation Committee believes that the graph depicting Five Year
Cumulative Total Return, included under the caption "Stock Performance Graph",
should be considered with the following graph. The following graph has been
prepared on the same basis as the preceding graph, except that it shows stock
performance over the period from July 31, 1991 to December 31, 1994. In 1991,
William L. Dorn was elected Chairman of the Board. The Company believes that the
Dow Jones Oil, Secondary Index is meaningful because it is an independent,
objective view of the performance of other similarly sized energy companies.

14
<PAGE>
COMPARISON OF SEMI-ANNUAL CUMULATIVE TOTAL RETURN:

<TABLE>
<CAPTION>
7/31/91 12/31/91 6/30/92 12/31/92 6/30/93 12/31/93 6/30/94 12/31/94
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Forest Oil 100 95 79 201 363 276 268 142
Peer Index 100 91 92 106 157 151 171 143
DJ, Oil Secondary 100 90 86 91 107 101 105 96
S&P 500 100 109 108 117 123 129 125 131
</TABLE>

Date: June , 1995

COMPENSATION COMMITTEE
Michael B. Yanney, Chairman
Austin M. Beutner
Richard J. Callahan
Harold D. Hammar
Jack D. Riggs

EXECUTIVE COMMITTEE
William L. Dorn, Chairman
Robert S. Boswell
James H. Lee

ROYALTY BONUS COMMITTEE
William L. Dorn, Chairman
Robert S. Boswell
Jack D. Riggs

PENSION PLAN

The Company's Pension Plan is a qualified, non-contributory defined benefit
plan. On May 8, 1991, the Board of Directors suspended benefit accruals under
the Pension Plan effective as of May 31, 1991.
The following table shows the estimated maximum annual benefits payable upon
retirement at age 65 as a straight life annuity to participants in the Pension
Plan for the indicated levels of average annual compensation and various periods
of service, assuming no future changes in such plan:

<TABLE>
<CAPTION>
ESTIMATED MAXIMUM ANNUAL
PENSION BENEFITS (2)
-------------------------------
YEARS OF SERVICE
-------------------------------
REMUNERATION (1) 10 20 30
- ---------------------------------------------------------------------- --------- --------- ---------
<S> <C> <C> <C>
$100,000.............................................................. 36,846 48,060 53,400
200,000.............................................................. 73,692 96,120 106,800
300,000.............................................................. 79,282 103,412 114,902
400,000.............................................................. 79,282 103,412 114,902
<FN>
- ------------------------
(1) For each Named Executive Officer, the level of compensation used to
determine benefits payable under the Pension Plan is such officer's base
salary for 1991.

(2) Normal retirement benefits attributable to the Company's contributions are
limited under certain provisions of the Code to $120,000 in 1995, as
increased annually thereafter for cost of living adjustments.
</TABLE>

The amount of the Company's contribution, payment or accrual in respect to
any specified person in the Pension Plan is not and cannot readily be separately
or individually calculated by the Pension Plan actuaries. Annual benefits at
normal retirement are approximately 24% of average annual earnings (excluding
bonuses) for any consecutive 60-month period, which produces the highest amount,
in the last 15 years prior to retirement, up to May 31, 1991, when benefit
accruals ceased plus 21% of such earnings prorated over 20 years of credited
service, and 1/2 of 1% of such earnings for each year of credited service in
excess of 20, subject to certain adjustments for lack of plan participation.
There is no Social Security offset. Such benefits are payable for life with a 10
year certain period, or the actuarial equivalent of such benefit.

15
<PAGE>

As a result of the suspension of benefit accruals under the Pension Plan and
the substitution of profit sharing contributions to the Retirement Savings Plan,
the following amounts are the estimated increases (decreases) in the annual
combined benefit payments to the Named Executive Officers under the Pension Plan
and the Retirement Savings Plan (whether combined benefits increased or
decreased is a function of the combination of length of service and salary
levels) as compared to what the payments would have been without the profit
sharing contributions:

<TABLE>
<CAPTION>
ESTIMATED
INCREASE
(DECREASE)
IN ANNUAL
PAYMENTS
------------------
<S> <C>
William L. Dorn..................................................................... $ (33,928)
Robert S. Boswell................................................................... (127,141)
Bulent A. Berilgen.................................................................. (35,472)
Forest D. Dorn...................................................................... 21,104
David H. Keyte...................................................................... (34,661)
</TABLE>

Because benefit accruals under the Pension Plan were suspended effective May
31, 1991, the years of credited service for the Named Executive Officers are as
follows: William L. Dorn -- 20; Robert S. Boswell -- 2; Bulent A. Berilgen -- 9;
Forest D. Dorn -- 14 and David H. Keyte -- 4. The estimated annual accrued
benefit payable, based on a life annuity benefit, upon normal retirement for
each of such persons is: William L. Dorn -- $45,994; Robert S. Boswell --
$4,436; Bulent A. Berilgen -- $11,832; David H. Keyte -- $5,401; and Forest D.
Dorn -- $18,886. Neither Robert S. Boswell nor David H. Keyte is vested in such
benefit pursuant to the provisions of the Pension Plan.

Certain participants in the Pension Plan have been prevented by the limits
of the Code from receiving the full amount of pension benefits to which they
would otherwise have been entitled. Such persons have had benefits credited to
them under a Supplemental Retirement Plan, which together with the benefits
payable under the Pension Plan, equaled the benefit to which they would have
been entitled under the Pension Plan but for such Code limits. The Supplemental
Retirement Plans for each participant were unfunded, non-qualified,
non-contributory benefit plans. Benefits payable vest to the same extent as the
Pension Plan benefits and are unsecured general obligations of the Company.
Benefit accruals under these plans were suspended effective May 31, 1991 in
conjunction with the suspension of benefit accruals under the Pension Plan.

PRINCIPAL HOLDERS OF SECURITIES

The Company currently has one class of voting securities outstanding. On May
31, 1995, there were 28,558,448 shares of Common Stock outstanding, with each
such share being entitled to one vote. On May 31, 1995 members of the Dorn and
Miller families, descendants of the founders of the Company, owned 3,500,436
shares of Common Stock, constituting approximately 12.26% of the voting power of
the Company. On May 19, 1995, Anschutz loaned the Company $9,900,000 for a term
of nine months. The loan may be converted into 5,500,000 shares of Common Stock
at Anschutz's election, but the loan must be so converted at the second closing
of the Anschutz Transaction described under "The Anschutz and JEDI
Transactions." If the Company's shareholders approve the Transactions described
under "The Anschutz and JEDI Transactions", based on the number of outstanding
shares of Common Stock as of May 31, 1995, Anschutz would own approximately
39.7% of the voting power of the Company, subject to the 19.9% voting
restriction contemplated by the proposed Shareholders Agreement between Anschutz
and the Company. In addition, subject to the 40% ownership restriction
contemplated by the proposed Shareholders Agreement with Anschutz, Anschutz
would have the right to acquire an additional 36,894,444 shares of Common Stock
through the exercise of warrants and an option and the conversion of preferred
stock it would acquire in such transactions. See "The Anschutz and JEDI
Transactions".

16
<PAGE>
As of March 31, 1995, to the knowledge of the Board of Directors the only
shareholders who owned beneficially more than 5% of the outstanding shares of
Common Stock were:

<TABLE>
<CAPTION>
NAME AND ADDRESS OF AMOUNT AND NATURE OF PERCENT OF
TITLE OF CLASS BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
- ---------------------- ---------------------------------- -------------------- -----------
<S> <C> <C> <C>
Common Stock (1) R.B. Haave Associates, Inc. 3,701,650(2) 12.46%
270 Madison Avenue
New York, NY 10016
Metropolitan Life 1,855,000(3) 6.57%
Insurance Company
One Madison Avenue
New York, NY 10010
Smith Barney Inc. 2,270,277(4)(5) 8.04%
1345 Avenue of the Americas
New York, NY 10115
<FN>
- ------------------------
(1) Based on Schedules 13D and 13G and amendments thereto filed with the SEC
and the Company by the reporting person through June 1, 1995 and the amount
of Common Stock outstanding on May 31, 1995.
(2) Includes 1,150,450 shares of Common Stock that the reporting person has the
right to acquire upon the conversion of 328,700 shares of the Company's
$.75 Convertible Preferred Stock.
(3) These shares are beneficially owned by State Street Research and Management
Company, a subsidiary of Metropolitan Life Insurance Company, which
disclaims beneficial ownership of these securities.

(4) Smith Barney Holdings Inc. is the sole common stockholder of Smith Barney
Inc., and The Travelers Inc. is the sole stockholder of Smith Barney
Holdings Inc. Smith Barney Holdings Inc. and The Travelers Inc. disclaim
beneficial ownership of these securities.

(5) Includes 1,750 and 45 shares of Common Stock that the reporting person has
the right to acquire upon the conversion of 500 shares of the Company's
$.75 Convertible Preferred Stock and the exercise of Warrants to purchase
shares of Common Stock, respectively.
</TABLE>

TRANSACTIONS WITH MANAGEMENT AND OTHERS

RETIREMENT BENEFITS FOR EXECUTIVES AND DIRECTORS. In December 1990, in
consideration of their many years of service the Company entered into retirement
agreements with seven executives and directors ("Retirees") pursuant to which
the Retirees will receive supplemental retirement payments in addition to the
amounts to which they are entitled under the Company's retirement plan. In
addition, the Retirees and their spouses are entitled to lifetime coverage under
the Company's group medical and dental plans, tax and other financial services
and payments by the Company in connection with certain club membership dues. The
Retirees will also continue to participate in the Company's royalty bonus
program until December 31, 1995. The Company has also agreed to maintain certain
life insurance policies in effect at December 1990, for the benefit of each of
the Retirees.

Six of the Retirees have subsequently resigned as directors. One of the
Retirees continues to serve as a director and will be paid the customary
non-employee director's fee. Pursuant to the terms of the retirement agreements,
the former directors and any other Retiree who ceases to be a director (or his
spouse) will be paid $2,500 a month until December 2000.

The Company's obligation to one Retiree under a revised retirement agreement
is payable in Common Stock or cash, at the Company's option, in May of 1996 at
approximately $190,000 per year with the balance ($149,000) payable in May 1997.
The retirement agreements for the other six

17
<PAGE>
Retirees, one of whom received in 1991 the payments scheduled to be made in 1999
and 2000, provide for supplemental retirement payments totaling approximately
$938,400 per year through 1998 and approximately $740,400 per year in 1999 and
2000.

EXECUTIVE SEVERANCE AGREEMENTS. The Company has entered into executive
severance agreements (the "Executive Severance Agreements") with certain
executive officers, including the Named Executive Officers. The Executive
Severance Agreements provide for severance benefits for termination without
cause and for termination following a "change of control" of the Company. The
Executive Severance Agreements provide that if an executive's employment is
terminated either (a) by the Company for reasons other than cause or other than
as a consequence of death, disability, or retirement, or (b) by the executive
for reasons of diminution of responsibilities, compensation, or benefits or, in
the case of change of control, a significant change in the executive's principal
place of employment, the executive will receive certain payments and benefits.
In March 1995, the Compensation Committee renewed the Executive Severance
Agreements and extended their term to December 1997. In addition, the definition
of "change of control" was modified.

In the case of termination of an executive's employment which does not occur
within two years of a change of control, these severance benefits include (a)
payment of the executive's base salary for a term of months equal to the whole
number of times that the executive's base salary can be divided by $10,000,
limited to 30 months (such amounts payable will be reduced by 50% if the
executive obtains new employment during the term of payment) and (b) continued
coverage of the executive and any of his or her dependents under the Company's
medical and dental benefit plans throughout the payment term without any cost to
the executive.

If an executive's employment by the Company is terminated under the
circumstances described above within two years after the date upon which a
change of control occurs, the Company would be obligated to take the following
actions after the last day of the executive's employment:

(a) the Company will pay to the executive an amount equal to 2.5 times the
executive's base salary;

(b) the Company will permit the executive and those of his dependents who
are covered under the Company's medical and dental benefit plans to be
covered by such plans without any cost to the executive for a two-year
period of time;

(c) the Company will cause any and all outstanding options to purchase stock
of the Company held by the executive to become immediately exercisable in
full and cause the executive's accrued benefits under any non-qualified
deferred compensation plans to become immediately non-forfeitable; and

(d) if any payment or distribution to the executive, whether or not pursuant
to such agreement, is subject to the federal excise tax on "excess
parachute payments", the Company will be obligated to pay to the
executive such additional amount as may be necessary so that the
executive realizes, after the payment of any income or excise tax on such
additional amount, an amount sufficient to pay all such excise taxes.

The Executive Severance Agreements also provide that the Company will pay
legal fees and expenses incurred by an executive to enforce rights or benefits
under such agreements. Under the Executive Severance Agreements, a "change of
control" of the Company would be deemed to occur if, as modified in March, 1995,
(i) the Company is not the surviving entity in any merger, consolidation or
other reorganization (or survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company); (ii) the Company sells,
leases or exchanges all or substantially all of its assets to any other person
or entity (other than a wholly-owned subsidiary of the Company); (iii) the
Company is dissolved and liquidated; (iv) any person or entity, including a
"group" as contemplated by Section 13(d)(3) of the Securities Exchange Act of
1934, as amended, acquires or gains ownership or control (including, without
limitation, power to vote) of more than 40% of the

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outstanding shares of the Company's voting stock (based upon voting power); or
(v) as a result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election cease to
constitute a majority of the Board of Directors.

The executive officers who have entered into Executive Severance Agreements
will be required, as a condition to the closings of the transactions
contemplated by the Purchase Agreement, to waive the obligations of the Company
pursuant to such agreements with respect to a "change of control". See "The
Anschutz and JEDI Transactions."

OTHER TRANSACTIONS. For a description of other transactions with management
and others see "Compensation Committee Interlocks and Insider Participation".

TRANSACTIONS WITH THE BLACKSTONE GROUP. In 1994, the Company engaged The
Blackstone Group to perform certain investment banking services. The Blackstone
Group advised the Company in 1994 with respect to certain potential business
transactions, none of which was consummated. It is anticipated that The
Blackstone Group also will be used by the Company in 1995 to analyze certain
potential business transactions. Austin M. Beutner, a director of the Company,
was, until March 1994, a General Partner of The Blackstone Group, which is also
providing investment banking services in 1995.

TRANSACTIONS WITH FORMER EXECUTIVE OFFICERS. John F. Dorn resigned as an
executive officer and director of the Company in 1993. John F. Dorn is the
brother of Dale F. Dorn, a director of the Company. Kenneth W. Smith resigned as
an executive officer in March 1994. The Company had previously entered into
severance agreements with the former executive officers and the Company's other
executive officers as described above under "Executive Severance Agreements". In
lieu of the severance payments due under their severance agreements, the Company
agreed to pay John F. Dorn and Kenneth W. Smith for 30 months and 24 months,
respectively, their salaries at the time of the termination of their employment.
In addition, the Company has agreed with the former executive officers with
respect to the following matters: (a) their stock options are fully vested and
are not subject to early termination; (b) they received payments from the
Company equivalent to amounts they would have received as deferred payments
under the Incentive Plan with respect to 1992 and 1993; (c) John F. Dorn
received full vesting with respect to split dollar life insurance at the
Company's expense; (d) they continued to participate in the Company's Executive
Overriding Royalty Bonus Plan until April 1, 1994; (e) they were given their
Company automobiles and office furnishings and the Company paid for the cost of
relocating their offices; (f) the Company will provide John F. Dorn with certain
accounting, financial and estate planning services for a limited period of time;
and (g) until March 31, 1996, if John F. Dorn decides to relocate from Colorado,
the Company will pay his moving expenses and purchase his home, in accordance
with the Company's employee relocation policy.

In March 1994, the Company sold certain non-strategic oil and gas properties
for $4,400,000 to an entity controlled by John F. Dorn and Kenneth W. Smith. The
properties included in this transaction contained interests in approximately 70
wells. All of the properties were non-operated working interests or overriding
royalty interests. The Company established the sales price based upon an opinion
from an independent third party. The purchaser financed 100% of the purchase
price with a loan. The loan bears interest at the rate of prime plus 1% and is
secured by a mortgage on the properties and John F. Dorn's and Kenneth W.
Smith's personal guarantees. The Company participated as a lender in the loan in
the amount of approximately $800,000. In addition, the Company agreed to
subordinate to the other lender its right of payment of principal on default.
John F. Dorn and Kenneth W. Smith have separately agreed with the Company that
their stock options will be canceled to the extent that the Company's
participation in the loan is not repaid in full. The number of stock options
canceled will be based upon a Black-Scholes valuation. Collectively, they have
options to purchase 275,000 shares of the Company's Common Stock at $3.00 per
share and 275,000 shares at $5.00 per share. In 1994, the Company paid
approximately $234,500 to the entity that purchased the properties to settle
title disputes.

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SECTION 16 REPORTING

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the SEC and the National Association of
Security Dealers, Inc. Officers, directors and greater than 10% shareholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.

Based solely on its review of copies of such forms received by it and
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the period from
January 1, 1994 to March 31, 1995, its officers, directors, and greater than 10%
beneficial owners complied with all applicable filing requirements, except that
Dale F. Dorn, John C. Dorn and Michael B. Yanney each failed to file a monthly
report of one transaction, but such transactions were reported in their year-end
reports on Form 5, which were timely filed.

THE ANSCHUTZ AND JEDI TRANSACTIONS

At the Annual Meeting the Company's shareholders will be asked to approve
the Anschutz and JEDI Transactions. Several important factors should be
considered by the shareholders with respect to the Transactions:

- Pursuant to the Transactions the Company will issue to Anschutz an
aggregate of 18,800,000 shares of Common Stock and 620,000 shares of
Second Series Preferred Stock ("New Convertible Preferred Stock") that are
convertible into an aggregate of 6,200,000 additional shares of Common
Stock. In addition, Anschutz will acquire an option from JEDI and warrants
from the Company to acquire an aggregate of up to 30,694,444 shares of
Common Stock.

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- If the Transactions are not approved by the shareholders the Company will
be required to bear its expenses in connection with the Transactions,
including the fees payable to its financial adviser, which are estimated
to be approximately $2,750,000 in the aggregate. In addition, the Company
is obligated under certain circumstances to pay up to $500,000 to Anschutz
to reimburse it if the Anschutz Transaction is not consummated. If the
Anschutz Transaction is not consummated on or before May 17, 1996, and (a)
a third party (other than Anschutz) acquires 40% of the outstanding Common
Stock, (b) the Board of Directors withdraws its recommendation with
respect to the Anschutz Transaction or recommends an alternative
transaction, or (c) the Company enters into an agreement with respect to
an alternative transaction, the Company would be obligated to pay a
Subsequent Event Fee of a minimum of $1,000,000 up to a maximum of
$2,500,000.

BACKGROUND. The Company was first approached concerning a possible
investment by Anschutz in February 1995 by Batchelder Partners, Inc.
("Batchelder"), an investment banking firm that has on different occasions
represented both the Company and Anschutz in certain matters. At the time the
Company was approached by Anschutz it was faced with short term liquidity needs.
During 1994 and the first quarter of 1995, the Company's operating cash flows
and working capital were adversely affected by a severe industry-wide decline in
the price of natural gas. These factors made it unlikely that the Company would
be able to raise equity capital in the public markets. The Company had nearly
exhausted its bank line of credit and had also considered the liquidation of
certain non-strategic assets to meet its liquidity needs.

In response to this set of circumstances, the Company's Board of Directors
formed a subcommittee consisting of Messrs. Anderson, Callahan, Beutner, Yanney,
Lee, William L. Dorn and Boswell to consider the alternatives available to the
Company. In addition, the Board of Directors requested that the Company engage a
financial advisor to assist the Board of Directors in evaluating, from a
financial point of view, certain alternatives being considered by the Company.
Dillon, Read & Co. Inc. ("Dillon Read") was engaged to serve as a financial
advisor to the Company and its Board of Directors and to

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render general financial advisory services to the Company. Dillon Read was asked
by the Board of Directors to generally comment on the Company's financial
condition, prospects and strategic alternatives available to the Company.

The Board of Directors considered various alternatives to address the
Company's needs and assessed them from a number of perspectives, including
likelihood of completion. After reviewing a number of possible alternatives that
had been pursued by management, the Board of Directors determined that the
Anschutz investment represented a more practical and expeditious solution to the
Company's liquidity needs than attempting to raise equity capital through
private sources, in the public equity markets or by other alternatives
considered. Dillon Read also confirmed that the public equity markets were not a
viable alternative for the Company as a means of raising capital. In addition,
the Board of Directors believed that pursuing an Anschutz investment would give
the Company an opportunity to pursue its long-term growth strategy. The Board of
Directors instructed management to focus its attention on the Anschutz
investment in order to determine whether a satisfactory transaction could be
achieved from the Company's perspective. The Board of Directors requested that
Dillon Read advise the Board of Directors on the reasonableness, from a
financial point of view, of certain aspects of the proposed Anschutz and JEDI
transactions.

The Company, Anschutz and representatives of JEDI conducted extensive
negotiations prior to reaching agreement with respect to the terms of the
transactions. The Company believed that additional equity capital should be
obtained at or above the then current market price of the Company's Common
Stock. Anschutz agreed to invest equity capital if the JEDI loan was
restructured, with the Company substantially reducing its interest cost and
converting a substantial portion of the loan to equity on which Anschutz would
have an option. The Company and JEDI discussed several alternatives for
restructuring the JEDI loan in combination with the Anschutz investment,
including exchanging equity for part of the loan. In order to agree to the
interest rate reduction and the grant of an option on equity received in the
loan restructuring, JEDI required, among other things, that any equity proceeds
received by the Company pursuant to the Transactions, other than the amounts
paid upon the initial investment, be used to reduce the principal amount of the
JEDI loan.

The Board of Directors relied in part on Dillon Read as to the
reasonableness, from a financial point of view, of certain aspects of the
Transactions to the Company. The Company's primary consideration in structuring
the ownership and voting restrictions to be included in a Shareholders Agreement
was to limit Anschutz's ownership position and control of the Company. The terms
of the Anschutz and JEDI Transactions were considered and approved by the Board
of Directors at three meetings, one prior to the execution of the letters of
intent and two prior to execution of the definitive agreements. The Company
signed letters of intent with both Anschutz and JEDI on April 17, 1995. The JEDI
letter of intent was amended on April 27, 1995. Batchelder acted as an
intermediary between the parties and the Company agreed to compensate Batchelder
in the amount of $1 million if the Transactions are consummated and pay all of
its expenses.

THE TRANSACTIONS. On May 17, 1995, the Company entered into definitive
agreements with Anschutz and with JEDI, a Delaware limited partnership, whose
general partner is Enron Capital Corp., an affiliate of Enron Corp., with
respect to the transactions summarized below. The Purchase Agreement between the
Company and Anschutz dated May 17, 1995 (the "Anschutz Agreement") and the
Restructure Agreement between the Company and JEDI dated May 17, 1995 (the "JEDI
Agreement") are included as exhibits to the Company's Form 8-K which was filed
with the Commission on May 26, 1995. See "General and Other Matters --
Incorporation by Reference".

Pursuant to the Anschutz Agreement, for a total consideration of $45,000,000
Anschutz will purchase an aggregate of 18,800,000 shares of Common Stock and
620,000 shares of Second Series Preferred Stock ("New Convertible Preferred
Stock") that are convertible into an aggregate of 6,200,000 additional shares of
Common Stock. The New Convertible Preferred Stock will have a liquidation
preference and will receive dividends ratably with the Common Stock. The
Anschutz investment will be made in two closings. In the first closing, which
occurred on May 19, 1995,

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Anschutz loaned the Company $9,900,000 for a term of nine months. The loan bears
interest at 8% per annum for 16 weeks and at 12.5% per annum thereafter. The
loan is nonrecourse to the Company and secured by oil and gas properties owned
by the Company, the preferred stock of Archean Energy Ltd. (a private Canadian
exploration and production company) owned by the Company, and $2,000,000 of
cash. The loan may be accelerated by Anschutz in certain events, including
default on other indebtedness in the aggregate of amount of $500,000, judgments
against the Company (not adequately covered by insurance) in excess of
$1,000,000, and a "change of control" within the meaning of the Company's
Indenture (the "Note Indenture") with respect to its 11 1/4% Senior Subordinated
Notes due 2003 (the "11 1/4% Notes"). The loan may be converted into 5,500,000
shares of Common Stock at Anschutz's election, but the loan must be so
converted, if not previously repaid, at the second closing. At the second
closing, expected to occur following receipt of approval by the Company's
shareholders of the transactions contemplated by the Anschutz Agreement and the
JEDI Agreement, Anschutz will separately purchase from the Company, for an
additional payment of $35,100,000, 13,300,000 shares of Common Stock and the New
Convertible Preferred Stock and Anschutz will acquire warrants to purchase
19,444,444 shares of Common Stock with an exercise price of $2.10 per share (the
"$2.10 Warrants") and will acquire from JEDI an option to acquire up to an
additional 11,250,000 shares of Common Stock, subject to certain restrictions.
The $2.10 Warrants are exercisable during the first 18 months after the second
closing, subject to extension in certain circumstances to 36 months after the
second closing. See "Descriptions of Securities to be Issued" below.

At the second closing Anschutz will agree pursuant to a Shareholders
Agreement with the Company (the "Shareholders Agreement") to certain voting,
acquisition, transfer and certain other limitations regarding all its shares of
Common Stock for five years after the second closing, including (a) a limit on
voting, subject to certain exceptions, that would require Anschutz to vote all
equity securities of the Company owned by Anschutz having voting power in excess
of an amount equal to 19.99% of the aggregate voting power of the equity
securities of the Company then outstanding in the same proportion as all other
equity securities of the Company voted with respect to the matter (other than
equity securities owned by Anschutz) are voted, (b) limit to three the number of
persons associated with Anschutz that may at any time be elected as directors of
the Company and limit the total number of directors to 10 and (c) a limit on the
acquisition of additional shares of Common Stock by Anschutz (whether pursuant
to the conversion of the New Convertible Preferred Stock, the exercise of the
warrants or the option received from JEDI, each as described below, or
otherwise), subject to certain exceptions, that would prohibit any acquisition
by Anschutz that would result in Anschutz beneficially owning 40% or more of the
shares of Common Stock then issued and outstanding. While the foregoing
limitations are in effect, Anschutz will have a minority representation on the
Board of Directors. See "Shareholders Agreement" below.

At the first closing the Company and Anschutz also entered into a
Registration Rights Agreement (the "Anschutz Registration Rights Agreement")
pursuant to which the Company has agreed to register pursuant to the Securities
Act of 1933, as amended (the "Securities Act"), any Common Stock acquired by
Anschutz in connection with the Anschutz Agreement. Anschutz has the right to
demand such registration on four separate occasions and will have certain
"piggy-back" registration rights with respect to Company registrations. The
Company will bear the cost of any registration pursuant to the Anschutz
Registration Rights Agreement. At the second closing the Company will also enter
into a registration rights agreement with JEDI on terms substantially similar to
the Anschutz Registration Rights Agreement, including two demand registration
rights.

The JEDI Agreement contemplates that, at the second closing referred to
above, Forest and JEDI will restructure JEDI's existing loan which had a
principal balance of approximately $62,100,000 at May 15, 1995. JEDI will
relinquish the net profits interest that it holds in certain Forest properties
and will reduce the interest rate relating to the loan. As noted above, the
restructuring of the JEDI loan is a condition to the Anschutz Transaction. In
addition, the restructuring of the JEDI loan is conditioned upon the
consummation of the Anschutz Transaction. As a result of the loan restructuring
and the issuance of the warrants described below, the Company anticipates a
reduction of the

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recorded amount of the related liability to approximately $45,000,000 and a
reduction of interest expense of approximately $2,000,000 per annum. See "Pro
Forma Capitalization" below. Subject to certain conditions, the Company may
satisfy the JEDI loan by conveying to JEDI the properties securing the loan
during a 30-day period beginning beginning 18 months after the second closing
or, if the $2.10 Warrants have been extended, during a 30-day period beginning
36 months after the second closing. Any such conveyance during the first 36
months after the second closing must be approved by Anschutz, if the option from
JEDI has not then been exercised or terminated. The Company believes that the
option to convey the properties to JEDI affords the Company greater flexibility
in managing its capital structure. Although the Company has no current plans
regarding the possible exercise of such option, the Company would likely do so
if at the time the option became exercisable the outstanding balance of the JEDI
loan was significantly greater than the value of the properties securing the
JEDI loan. Prior to the exercise or termination of the JEDI option, JEDI has
agreed that it will not assign all or any portion of the JEDI loan or the $2.00
Warrants to an unaffiliated person without the approval of the Company. The
Company has agreed to not give such approval without the consent of Anschutz.

The JEDI Agreement also contemplates that, at the second closing, JEDI will
receive warrants to purchase 11,250,000 shares of the Common Stock with an
exercise price of $2.00 per share (the "$2.00 Warrants"). For up to the first 36
months after the second closing, the $2.00 Warrants may be exercised only on the
dates and in the respective numbers of shares required to be delivered by JEDI
to Anschutz pursuant to the exercise of the option granted by JEDI to Anschutz,
as described below. The Anschutz Agreement also provides that, at the second
closing, JEDI will grant to Anschutz an option on the 11,250,000 shares of
Common Stock issuable upon exercise of the $2.00 Warrants during the first 36
months after the second closing. The Company has agreed to use the proceeds from
the exercise of the $2.00 Warrants and the $2.10 Warrants to repay principal and
interest on the JEDI loan.

The Anschutz Agreement and the JEDI Agreement require the Company to pay
Anschutz and JEDI certain fees and expenses in connection with the transactions
contemplated thereby in certain circumstances. The Anschutz Agreement also
requires the Company to pay to Anschutz a fee of a minimum of $1,000,000 up to a
maximum of $2,500,000 upon the occurrence of certain events prior to the second
closing (or, if the second closing does not occur, by May 17, 1996), such as a
merger, consolidation or other business combination between the Company and a
person other than Anschutz. The Company is also obligated in certain
circumstances to pay up to $500,000 of expenses incurred by Anschutz if the
second closing does not occur. In the Anschutz Agreement, the Company has agreed
not to solicit proposals for transactions that would require the Company to pay
such fee and to keep Anschutz generally informed regarding the receipt and
disposition by the Company of proposals regarding such transactions made by
other persons.

The Anschutz Agreement contains representations and warranties regarding
corporate existence and power, authorization, approvals and consents, binding
effect, financial information, financial condition, absence of defaults under
outstanding debt instruments, absence of certain changes or events, taxes,
litigation, compliance with laws, licenses, employee matters, labor disputes,
subsidiaries, property, oil and gas interests, equipment, leases, proprietary
rights, insurance, debt, capitalization, environmental matters, books and
records, material contracts, documents filed with the Securities and Exchange
Commission, required votes of shareholders, Section 912 of the New York Business
Corporation Law, absence of merger agreements, and fees for brokers and finders.

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<PAGE>

The Anschutz Agreement also contains covenants by the Company, including, a
covenant not to solicit transaction proposals from other parties, additional
affirmative covenants requiring the maintenance of records, maintenance of
properties, conduct of business, maintenance of insurance, compliance with laws,
payment of taxes, reporting of specified information to Anschutz, reservation of
shares of Common Stock to be issued pursuant to the Anschutz Agreement,
qualification of such shares for inclusion in the Nasdaq National Market,
maintenance of existence, compliance with laws, coordination of publicity
regarding the transactions, maintenance of confidentiality of information and
further assurances, and negative covenants with respect to amendment of charter
documents, issuance of securities, creation of liens and encumbrances,
incurrence of debt, restricted payments, investments, merger agreements or
agreements with respect to other business combinations, leases, dispositions of
assets, transactions with affiliates, accounting changes, dispositions of
capital stock of a subsidiary, compensation of executive officers, modifying or
withdrawing the Board of Directors' recommendations that holders of shares of
Common Stock approve the transactions, union contracts, settling or compromising
tax liabilities, settling litigation, delisting securities of the Company from
the Nasdaq National Market, amending any of the transaction documents without
the prior approval of Anschutz and imposing limitations on the rights of
Anschutz as a shareholder.

The Anschutz Agreement also contains a covenant by the Company that it will
amend the Rights Agreement dated as of October 14, 1993 between the Company and
Mellon Securities Trust Company, as Rights Agent, (the "Rights Agreement") with
respect to the transactions contemplated by the Anschutz Agreement and the JEDI
Agreement. The amendment of the Rights Agreement will exempt from the provisions
of the Rights Agreement shares of Common Stock acquired by Anschutz and JEDI
pursuant to the Anschutz Agreement (including shares later acquired pursuant to
the conversion of the New Convertible Preferred Stock or the exercise of the
$2.10 Warrants or the option received from JEDI) and JEDI Agreement,
respectively. The amendment to Rights Agreement will not exempt other shares of
Common Stock acquired by Anschutz or JEDI from the provisions of the Rights
Agreement. In the Anschutz Agreement, the Company has agreed to waive the
provisions of the Rights Agreement with respect to Anschutz if, and to the same
extent, it waives such provisions with respect to any other person.

The consent of a majority of the holders of the 11 1/4% has been obtained to
the waiver of the "change of control" covenant in the Note Indenture with
respect to the transactions contemplated by the Anschutz Agreement and the JEDI
Agreement and any future acquisition of equity securities of the Company by
Anschutz (whether pursuant to the Anschutz Agreement or otherwise). The purchase
by Anschutz of Common Stock at the second closing and the other transactions
contemplated by the Anschutz Agreement are also subject to, among other things,
the prior approval of the Company's shareholders, Hart-Scott-Rodino clearance
and waiver of the provisions of the Company's Rights Agreement and the closing
of the transactions contemplated by the JEDI Agreement. The Company and Anschutz
have made filings as required by the Hart-Scott-Rodino Antitrust Improvements
Act of 1976. It is expected that the necessary clearances will be received prior
to the Annual Meeting.

The Company has received the opinion, from a financial point of view, of
Dillon, Read & Co. Inc. ("Dillon Read") with respect to the transactions. A copy
of the Dillon Read opinion is included in this Proxy Statement as Annex A. See
"Financial Advisor" below. The Board of Directors believes that the transactions
contemplated by the Anschutz Agreement and the JEDI Agreement will improve the
Company's liquidity and will position the Company to execute on its business
plan. Management and the Board of Directors believe that the Transactions are in
the best interests of the Company and its shareholders.

A majority of the votes represented at the Annual Meeting by shares of
Common Stock entitled to vote is required for approval of the transactions
contemplated by the Anschutz and JEDI Agreements as described in this Proxy
Statement.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE
TRANSACTIONS CONTEMPLATED BY THE ANSCHUTZ AND JEDI AGREEMENTS AS DESCRIBED IN
THIS PROXY STATEMENT.

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The persons named in the enclosed proxy, who have been so designated by the
Board of Directors, intend to vote for the proposal described above unless
otherwise instructed in the proxy. The Company believes that the members of the
Board of Directors and the senior management of the Company intend to vote or
direct the vote of all shares of Common Stock of which they have beneficial
ownership in favor of this proposal.

DESCRIPTION OF SECURITIES TO BE ISSUED

Subject to the approval of the shareholders of the Company, at the second
closing Anschutz will acquire 5,500,000 shares of Common Stock pursuant to the
conversion of the Company's $9,900,000 loan from Anschutz (unless previously
repaid), 13,300,000 shares of Common Stock, 620,000 shares of New Convertible
Preferred Stock, the $2.10 Warrants to purchase 19,444,444 shares of Common
Stock and an option from JEDI to acquire 11,250,000 shares of Common Stock
acquired by JEDI pursuant to the exercise of the $2.00 Warrants to be granted to
JEDI pursuant to the JEDI Agreement.

The New Convertible Preferred Stock will be issued in a series designated as
"Second Series Convertible Preferred Stock". Each share of New Convertible
Preferred Stock (1) will have the right to receive dividends on the dates and in
the form that dividends shall be payable on the Common Stock, in each case in an
amount equal to the amount of such dividend payable on the number of shares of
Common Stock into which such share of New Convertible Preferred Stock shall be
convertible immediately preceding the record date for the determination of the
shareholders entitled to receive such dividend, (2) will have no right to vote,
(3) will have the right, upon any liquidation, dissolution or winding up of the
Company, before any distribution is made on any shares of Common Stock, to be
paid the amount of $18.00 and, after there shall have been paid to each share of
Common Stock the amount of $1.80, will have the right to receive distributions
on the dates and in the form that distributions shall be payable on the Common
Stock, in each case in an amount equal to the amount of such distributions
payable on the number of shares of Common Stock into which such share of New
Convertible Preferred Stock is convertible (assuming for such purpose that such
conversion were possible) immediately preceding the record date for the
determination of the shareholders entitled to receive such distribution and (4)
will be convertible into 10 shares of Common Stock, which conversion may be made
from time to time on or before the date that is the fifth anniversary of the
second closing, but which in any event shall be made on such fifth anniversary.
The rights of the holders of the New Convertible Preferred Stock to receive
dividends are junior and subordinate to the rights of the holders of the
Company's $.75 Convertible Preferred Stock to the same extent that the rights of
the holders of the Common Stock are subordinate in right to receive dividends to
the rights of the holders of $.75 Convertible Preferred Stock to receive
dividends, and the rights of the holders of the New Convertible Preferred Stock
will rank pari passu with the Company's $.75 Convertible Preferred Stock as to
liquidation preference.

The $2.10 Warrants will be issued to Anschutz. The $2.10 Warrants will
expire 18 months after the second closing (or, if the Shareholders Agreement
would limit such exercise or the Company shall have previously sold in excess of
$60,000,000 of equity securities in a transaction in which Anschutz has agreed
not to sell shares for a period of nine months, 36 months after the second
closing).

The $2.00 Warrants will be issued to JEDI and will expire on the earlier of
December 31, 2002 or 36 months following exercise of the Company's option to
convey properties in satisfaction of the JEDI loan (the "Conveyance Option"). At
the second closing JEDI will grant a 36 month option to Anschutz to purchase
from JEDI up to 11,250,000 shares at a purchase price per share of $2.00 plus an
amount equal to the lesser of (a) 18% per annum from the second closing date to
the date of exercise of the option, or (b) $3.10. JEDI will satisfy its
obligations under the option to Anschutz by exercising the $2.00 Warrants.
Provided the Conveyance Option has not been exercised, the Company may terminate
the $2.00 Warrants at any time beginning 36 months after the second closing if
the average closing price of the common stock for the 90 days and 15 days
preceding the termination is in excess of $2.50 per share.

26
<PAGE>

PRO FORMA CAPITALIZATION

The following table sets forth the actual capitalization of the Company as
of March 31, 1995 and the pro forma capitalization adjusted to give effect, at
the First Closing, to a $9,900,000 nonrecourse loan to the Company by Anschutz
and to give effect, at the Second Closing, to (i) conversion of the Anschutz
loan of $9,900,000 into 5,500,000 shares of Common Stock, (ii) the issuance of
13,300,000 shares of Common Stock, 620,000 shares of New Convertible Preferred
Stock and the $2.10 Warrants to purchase 19,444,444 shares of Common Stock to
Anschutz for a total consideration of $35,100,000, (iii) the restructuring of
JEDI's loan and the issuance of the $2.00 Warrants to purchase 11,250,000 shares
of Common Stock in connection therewith and (iv) related costs associated with
the foregoing transactions.

<TABLE>
<CAPTION>
MARCH 31, PRO FORMA PRO FORMA
1995 FIRST CLOSING SECOND CLOSING
------------ ------------- --------------
(IN THOUSANDS)
<S> <C> <C> <C>
Debt, including current portion:
Short-term convertible note payable to Anschutz................... $ -- 9,900(1) -- (2)
Bank debt......................................................... 45,000 37,100(1) -- (3)
Nonrecourse secured loan.......................................... 57,641 57,641 45,226(4)
Production payment obligation..................................... 17,904 17,904 17,904
11 1/4% subordinated notes........................................ 99,328 99,328 99,328
------------ ------------- --------------
Total debt, including current portion........................... 219,873 221,873 162,458
Retirement benefits payable to executives and directors,
including current portion.......................................... 4,034 4,034 4,034
Other liabilities................................................... 16,008 16,008 16,008
Deferred revenue.................................................... 29,289 29,289 29,289
Shareholders' equity:
New Convertible Preferred Stock, 620,000 shares outstanding on a
pro forma basis after the Second Closing......................... -- -- 8,518(3)
$.75 Convertible Preferred Stock, 2,880,973 shares issued and
outstanding...................................................... 15,845 15,845 15,845
Common Stock, par value $.10 per share, 28,295,311 shares
issued and outstanding at March 31, 1995 and after
the First Closing and 47,095,311 shares outstanding
on a pro forma basis after the Second Closing (6)................ 2,829 2,829 4,709(2)(3)
Capital surplus................................................... 188,593 188,593 232,060(2)(3)(5)
Accumulated deficit............................................... (202,643) (202,643) (202,975)(2)(3)(4)(5)
Foreign currency translation...................................... (1,312) (1,312) (1,312)
Treasury stock, at cost, 44,664 shares............................ (770) (770) (770)
------------ ------------- --------------
Total shareholders' equity...................................... 2,542 2,542 56,075
------------ ------------- --------------
Total capitalization.......................................... $ 271,746 273,746 267,864
------------ ------------- --------------
------------ ------------- --------------
<FN>

(1) The First Closing occurred on May 19, 1995. The pro forma effects shown
above include receipt by the Company of a $9,900,000 convertible
nonrecourse loan from Anschutz, use of $7,900,000 proceeds therefrom to
reduce the Company's outstanding bank debt, and deposit of the remaining
$2,000,000 of proceeds in an escrow account.
(2) At Second Closing, the $9,900,000 loan from Anschutz will be converted into
5,500,000 shares of Common Stock, resulting in additional par value of
$550,000 and capital surplus of $9,350,000. Interest expense of
approximately $132,000 will be incurred between the first and second
closings.
</TABLE>

27
<PAGE>

<TABLE>
<S> <C>
(3) At Second Closing, the Company will receive from Anschutz $35,100,000 in
cash which, in conjunction with the $2,000,000 escrow account referred to
in (1) above, will be used to repay bank debt. In return for such
consideration, Anschutz will receive 13,300,000 shares of Common Stock,
620,000 shares of New Convertible Preferred Stock and warrants to purchase
19,444,444 shares of Common Stock at a purchase price of $2.10 per share.
Based on the relative fair market values of the Common Stock, New
Convertible Preferred Stock and the $2.10 Warrants, the Company estimates
that it will record a value of approximately $18,271,700 for the Common
Stock (of which $1,330,000 represents par value and the remainder is
Capital Surplus); a value of approximately $8,517,600 for the New
Convertible Preferred Stock; and Capital Surplus of approximately
$8,310,700 representing the fair value of the $2.10 Warrants.
(4) At Second Closing, the principal balance of the nonrecourse secured loan,
which was approximately $62,101,000 at March 31, 1995, will be reduced by
the $16,875,000 fair market value of the $2.00 Warrants which will be
issued to JEDI, resulting in a new principal balance of $45,226,000. The
$12,415,000 difference between the $57,641,000 carrying value of the loan
at March 31, 1995 and the new principal balance will be credited to Capital
Surplus.
(5) A portion of the costs related to the JEDI restructuring, expected to be
approximately $200,000, will be charged to expense. The costs related to
the Anschutz transaction and the equity component of the JEDI transaction,
expected to total approximately $3,550,000, will be charged to Capital
Surplus.
(6) The number of shares of Common Stock outstanding does not include, as of
March 31, 1995, 3,270,000 shares issuable upon exercise of outstanding
share options, 1,244,715 shares issuable upon exercise of the Company's
existing warrants, or 10,083,406 shares issuable upon conversion of the
Company's $.75 Convertible Preferred Stock.
</TABLE>

SHAREHOLDERS AGREEMENT

In connection with the proposed issuance to Anschutz, Anschutz will enter
into the Shareholders Agreement with the Company (as defined above) providing
for certain voting and other limitations regarding its shares of Common Stock
for the lesser of (i) five years after the second closing and (ii) the first day
on which the sum of the number of shares of Common Stock owned by Anschutz and
its affiliates and any shares of Common Stock subject to acquisition by Anschutz
and its affiliates (regardless of any conditions or restrictions on such rights)
is less than 20% of the total of all shares of Common Stock issued and
outstanding and subject to issuance (regardless of any conditions or
restrictions on such rights). The Shareholders Agreement requires the Company
to, among other things, except as otherwise approved by the Board of Directors,
including a majority of the Independent Directors (as defined below), or by vote
of the holders of two-thirds of the shares of Common Stock then issued and
outstanding (in which Anschutz Excess Securities (as defined below) are voted in
accordance with the restrictions contained in the Shareholders Agreement) (a)
fix the number of directors of the Company at ten, who are to be three persons
selected by Anschutz (the "Anschutz Designees"), two persons who are officers of
the Company and five persons unaffiliated with Anschutz who are not and have not
been at any time during the preceding two years an officer or employee of the
Company or a director, officer or employee of a beneficial owner of 5% or more
of the shares of Common Stock then issued and outstanding or an affiliate of
such beneficial owner ("Independent Directors"), (b) appoint an Anschutz
Designee chosen by Anschutz to each of the Executive Committee, the Compensation
Committee and the Audit Committee (or committees having similar functions) of
the Board of Directors, (c) appoint a Nominating Committee composed of three
directors, one of whom shall be an Anschutz Designee, one of whom shall be an
officer of the Company and one of whom shall be an Independent Director, (d)
requires that nominees to the Board of Directors other than the Anschutz
Designees shall be selected by a vote of at least two members of the Nominating
Committee, of whom one shall be an Independent Director, (e) if any Anschutz
Designee shall cease to be a director for any reason, fill the vacancy resulting
thereby with an Anschutz Designee and (f) call meetings of the Board of
Directors and committees thereof upon the written request of any Anschutz
Designee who is a director.

28
<PAGE>
The Shareholders Agreement also contains a limit on voting that would
require Anschutz to vote all equity securities of the Company having voting
power in excess of an amount equal to 19.99% of the aggregate voting power of
the equity securities of the Company then outstanding (the "Anschutz Excess
Securities") in the same proportion as all other equity securities of the
Company voted with respect to the matter (other than equity securities held by
Anschutz) are voted, except that Anschutz may vote the Anschutz Excess
Securities without restriction (a) for the election of the permitted number of
Anschutz Designees, (b) with respect to all matters with respect to which
Anschutz may have liability under Section 16(b) of the Exchange Act (unless the
Company has obtained a final judgment to the effect that Anschutz will have no
such liability) and (c) with respect to other matters as approved by the Board
of Directors, including a majority of Independent Directors.

The exception with respect to Section 16(b) of the Exchange Act could have
the effect of permitting Anschutz to vote the Anschutz Excess Securities without
restriction in connection with a proposed merger of the Company with a third
party, which merger had been approved by the Board of Directors (regardless of
how the directors appointed by Anschutz might vote on such merger). Depending
upon its percentage ownership, if permitted to vote the Anschutz Excess
Securities, Anschutz could have a veto power over certain transactions between
the Company and third parties such as a merger which requires the approval of
the holders of two-thirds of the outstanding Common Stock.

The Shareholders Agreement also contains an agreement on the part of
Anschutz not to transfer the beneficial ownership of any of its shares of Common
Stock and Preferred Stock (including shares later acquired pursuant to the
conversion of the New Convertible Preferred Stock or the exercise of the $2.10
Warrants or the option received from JEDI), except (a) in a public offering of
Common Stock pursuant to a registration statement effective under the Securities
Act, (b) to a person or Group (as defined in Section 13(d)(3) of the Exchange
Act) who represents that it will then beneficially own 9.9% or less of the total
number of shares of Common Stock then issued and outstanding and those subject
to issuance (even if then subject to conditions or restrictions), (c) to a
person or Group who will then beneficially own more than 9.9% but less than 20%
of the total number of shares of Common Stock issued and outstanding and those
subject to issuance (even if then subject to conditions or restrictions) if such
person or Group assumes by written instrument satisfactory to both Anschutz and
the Company the transfer restrictions previously applicable to Anschutz, (d) any
transfer approved by the Board of Directors, including a majority of the
Independent Directors, which approval shall not be unreasonably withheld with
respect to a transfer to any person or Group who represents that it will then
beneficially own more than 9.9% and less than 20% of the total number of shares
of Common Stock issued and outstanding and those subject to issuance (even if
then subject to conditions or restrictions), (e) a transfer in connection with
certain business combination transactions or tender or exchange offers, upon the
liquidation or dissolution of the Company or as effected by operation of law and
(f) the pledge or grant of a security interest in certain cases.

The Shareholders Agreement also provides that Anschutz will neither alone,
nor through or with its affiliates, acquire shares of Common Stock which, when
combined with shares of Common Stock then owned by Anschutz and its affiliates,
would result in Anschutz beneficially owning 40% or more of the shares of Common
Stock then issued and outstanding (provided that shares of Common Stock which
may be acquired pursuant to the conversion of the New Convertible Preferred
Stock or the exercise of the $2.10 Warrants or the option received from JEDI
that have not been issued shall not be included in such determination), except
that such restriction shall not apply to (i) acquisitions following a business
combination transaction that (A) has been approved by the Board of Directors
(including a majority of the Independent Directors) or by the holders of
two-thirds of the shares of Common Stock voted with respect to such transaction
in which Anschutz Excess Securities are voted in accordance with the
Shareholders Agreement) and (B) results in the beneficial ownership by any
person or Group of 20% or more of the shares of Common Stock then issued and
outstanding (or if all or any part of the shares of Common Stock are changed
into or exchanged for shares of capital stock of any other person, 20% of such
issued and outstanding shares), (ii) acquisitions following the commencement of
a tender or exchange offer made by any person or Group (other than and not
including

29
<PAGE>
Anschutz or an affiliate of, or any person acting in concert with, Anschutz) to
acquire beneficial ownership of 40% or more of the shares of Common Stock then
issued and outstanding, (iii) acquisitions after any person or Group (other than
and not including an affiliate of Anschutz) shall own beneficially shares of
Common Stock which exceed the sum of the number of shares of Common Stock then
owned by Anschutz and its affiliates plus the number then subject to acquisition
upon the conversion, exercise or exchange by Anschutz and its affiliates of
equity securities of the Company or other rights then owned (whether or not
subject to restrictions or conditions) and (iv) acquisitions approved by the
Board of Directors, including a majority of Independent Directors. If Anschutz's
percentage ownership were diluted by future increases in the outstanding Common
Stock, the 40% restriction on Anschutz's ownership would not preclude Anschutz
from acquiring shares of Common Stock in the open market up to the 40% level,
regardless of Anschutz's ability to exercise warrants or options or to convert
the New Convertible Preferred Stock.

The Shareholders Agreement also provides that the Company will not take or
recommend to its shareholders any action which would impose on Anschutz or its
affiliates any limitations on their legal rights, other than those imposed by
the express terms of the Shareholders Agreement, and that the Company will not
take any action that will or may, directly or indirectly, result in Anschutz or
any affiliate having liability under Section 16(b) of the Exchange Act with
respect to securities acquired pursuant to the Anschutz Agreement (including
shares acquired upon the conversion of the New Convertible Preferred Stock or
the exercise of the $2.10 Warrants or the option received from JEDI). The
Company has the right to seek a declaratory judgment as to whether any action
described in the preceding sentence or the provisions with respect to the
limitations on the voting of the Anschutz Excess Securities on a matter shall be
effective and in doing so whether Anschutz will have Section 16(b) liability
with respect to such matters. The Shareholders Agreement also provides that the
voting restrictions on the Anschutz Excess Securities, and the transfer
restrictions and the cap on purchases of Common Stock by Anschutz in excess of
40%, shall no longer apply if any of the Anschutz Designees are not elected to
the Board of Directors (and Anschutz and its affiliates voted all the shares of
Common Stock owned by them in favor of such election) or one or more directors
who are Anschutz Designees are not appointed to the Committees as provided in
the Shareholders' Agreement (and the directors who are Anschutz Designees voted
in favor of such appointment).

FINANCIAL ADVISOR

The Company retained Dillon Read to act as its financial advisor. On May 15,
1995, Dillon Read delivered an opinion to the Board of Directors indicating that
the transactions, taken as a whole, including the consideration to be received
by the Company, represent a reasonable means under the circumstances of raising
capital for the Company and that it was reasonable to conclude that the
consideration to be received by the Company in the transactions is fair to the
Company and to the Common Stockholders of the Company from a financial point of
view. In reaching this opinion, Dillon Read relied upon the accuracy and
completeness of all financial and other information provided to it by the
Company, as well as all publicly available information, and did not
independently verify such information. A copy of Dillon Read's written opinion
is attached as Annex A hereto.

In arriving at its opinion, Dillon Read reviewed the Anschutz Agreement and
the JEDI Agreement, and certain business and financial information relating to
the Company, including certain financial information, third party oil and gas
reserve estimates and other analyses and estimates provided to Dillon Read by
the Company, and reviewed and discussed the business and prospects of the
Company with representatives of the Company's management. Dillon Read also
considered certain financial data of the Company and compared that information
to similar data for publicly held companies in businesses Dillon Read believed
to be generally comparable to that of the Company. Dillon Read also considered
the financial terms of certain other transactions, including minority
investments, which have recently been effected and considered such other
information, financial studies and analyses, and financial, economic and market
criteria as Dillon Read deemed relevant. Dillon Read also reviewed market prices
for the Company's common stock for dates prior to the date of the announcement
of the transactions on April 18, 1995.

30
<PAGE>
Dillon Read did not make an independent evaluation or appraisal of any of
the assets or liabilities (contingent or otherwise) of the Company, nor was
Dillon Read furnished with any such evaluations or appraisal. With respect to
the financial projections, estimates and analyses which the Company furnished to
Dillon Read, Dillon Read utilized such information and, with the Board's
consent, relied thereon. Further, Dillon Read assumed that such information was
prepared in good faith by the Company's management and was reasonably based upon
the Company's historical financial performance and certain estimates and
assumptions which were reasonable at the time made. Dillon Read's opinion was
based on economic, monetary and market conditions existing on April 17, 1995.

In rendering its opinion, Dillon Read took into consideration that without
effecting the transactions, the Company believed that it was facing near-term
liquidity issues necessitating the sale of certain assets to raise cash at a
discount of approximately $3 - $5 million to the value that the Company believed
could be realized without timing constraints, as well as a highly leveraged
balance sheet which limited the Company's ability to maintain, much less
increase, its asset base. Dillon Read also considered the recent depressed state
of the natural gas market and the resulting impact on the valuations of
publicly-traded domestic natural gas producers. Additionally, Dillon Read
considered a number of benefits to the Company which result from the
transactions including a significant improvement in the liquidity of the
Company, the availability of cash to make budgeted capital expenditures and a
material reduction in financial leverage, as well as over $2 million in annual
interest expense savings.

Dillon Read is an internationally recognized investment banking firm which,
as a part of its investment banking business, is continually engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for estate, corporate and other purposes. Dillon Read was selected by
the Company and its Board of Directors as financial advisor based on such
qualifications.

In connection with Dillon Read's engagement by the Company, the Company paid
Dillon Read $100,000 upon its being retained to act as the Company's financial
advisor on March 7, 1995 and has agreed to pay Dillon Read $100,000 for each
90-day period of Dillon Read's engagement, payable on June 30, 1995 and
September 30, 1995. The Company also agreed to pay Dillon Read certain fees for
acting as financial advisor to the Company depending upon the type and size of
the transactions entered into by the Company. If all of the transactions
summarized in this Proxy Statement are consummated, Dillon Read shall be
entitled to receive an aggregate additional fee of $991,250 pursuant to such fee
arrangements. The Company also agreed to indemnify Dillon Read pursuant to
customary indemnification provisions and to reimburse certain of Dillon Read's
expenses. In the ordinary course of its business, Dillon Read may trade the
securities of the Company and may at any time hold a long or short position in
such securities for its own account or for the accounts of its customers.

INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK

The Board of Directors recommends that the shareholders adopt an amendment
to the Company's Restated Certificate of Incorporation, which would amend the
Company's Restated Certificate of Incorporation to increase the authorized
number of shares of Common Stock by 88,000,000 to a total of 200,000,000. As of
May 31, 1995, there were 28,558,448 shares of the Company's Common Stock
outstanding. On such date, 10,083,406 shares of Common Stock were reserved for
issuance upon conversion of the Company's $.75 Covertible Preferred Stock. Also,
1,244,715 shares of Common Stock were reserved for issuance upon the exercise of
the Company's Warrants, and 1,740,000 shares of Common Stock were reserved for
issuance upon the exercise of stock options granted pursuant to the terms of the
Company's Stock Option Plan. The Company also may issue up to 55,694,444
additional shares pursuant to the Anschutz Agreement. See "The Anschutz and JEDI
Transactions."

31
<PAGE>

If the amendment to increase the number of authorized shares of Common Stock
is approved, the increased number of authorized shares of Common Stock will be
available for issuance, from time to time, for such purposes and consideration,
and on such terms, as the Board of Directors may approve and no further vote of
the shareholders of the Company will be sought, except as required by applicable
law or by the rules of the Nasdaq National Market. The Company believes that
upon the consummation of the Anschutz and JEDI Transactions the limited number
of currently authorized but unissued shares of Common Stock would unduly
restrict its ability to respond to business needs and opportunities. The
availability of additional shares of Common Stock for issuance will afford the
Company flexibility in the future by assuring that there will be sufficient
authorized but unissued shares of Common Stock for possible stock dividends,
stock splits, acquisitions, financing requirements and other corporate purposes.
The Company has no definite plans for the use of the Common Stock for which
authorization is sought other than pursuant to the Anschutz and JEDI
Transactions as described above. Unreserved shares of Common Stock may be
issued, under certain circumstances, to pay dividends on the Company's $.75
Convertible Preferred Stock. Additionally, the Board of Directors has, from time
to time, distributed shares of Common Stock as dividends on the Company's Common
Stock and has contributed shares of Common Stock to the Company's Retirement
Savings Plan and Annual Incentive Plan. The Company may issue Common Stock under
similar such circumstances in the future.

Pursuant to the requirements of the Nasdaq National Market on which the
Company's $.75 Convertible Preferred Stock, Common Stock and Warrants are
listed, shareholder approval is required (in addition to the initial
authorization of the shares) for the issuance of Common Stock (or securities
convertible into Common Stock) under certain circumstances. These circumstances
primarily include (i) adoption of certain types of stock option or purchase
plans or other arrangements in which stock may be acquired by officers or
directors of the Company, (ii) issuances which would result in a change of
control of the Company and (iii) issuances in connection with certain
transactions involving the acquisition of stock or assets of another company.

The existence of additional authorized shares of Common Stock could have the
effect of rendering more difficult or discouraging hostile takeover attempts.
Other than the Anschutz and JEDI Transactions, the Company is not aware of any
existing or planned effort on the part of any party to accumulate material
amounts of voting stock, or to acquire the Company by means of a merger, tender
offer, solicitation of proxies in opposition to management or otherwise, or to
change the Company's management, nor is the Company aware of any person having
made any offer to acquire the voting stock or assets of the Company.

The Company's Restated Certificate of Incorporation and By-laws currently
contain the following provisions which also may make more difficult or
discourage takeover attempts. The By-laws provide for staggered elections for
the Board of Directors. See "Election of Directors" above. This system makes it
more difficult for shareholders electing directors to change the majority of the
Company's directors; absent an amendment to the By-laws or a series of director
resignations it could take three annual meetings to change the majority of the
Company's directors. In addition to the shareholders' rights plan, the Company
has entered into Executive Severance Agreements with certain executive officers.
See "Election of Directors -- Transactions with Management and Others --
Executive Severance Agreements" above.

The terms of the additional shares for which authorization is sought will be
identical to the terms of the shares of Common Stock now authorized and
outstanding, and the amendment will not affect the terms, or the rights of the
holders of, those shares. The Company's Common Stock has no cumulative voting,
conversion, preemptive or subscription rights, and is not redeemable.

A certificate authorizing the increased number of shares of Common Stock
will be filed with the Department of State of New York if shareholder approval
is obtained.

32
<PAGE>

It is therefore proposed that the first paragraph of Paragraph 3 of the
Company's Restated Certificate of Incorporation relating to the number of shares
of capital stock authorized for issuance be amended so as to read in its
entirety as follows:

"3. The aggregate number of shares of capital stock which the
Corporation shall have authority to issue is Two Hundred and Ten Million
(210,000,000), consisting of Two Hundred Million (200,000,000) shares of
Common Stock, Par Value $.10 Per Share, and Ten Million (10,000,000) shares
of Preferred Stock, Par Value $.01 Per Share, which shares of Preferred
Stock shall be classified into two classes, Senior Preferred Stock and
Junior Preferred Stock as described in Paragraph 3.II, each class of which
shall be issuable in one or more series."

Adoption of this amendment requires the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock.

THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THIS
PROPOSAL.

The persons named in the enclosed proxy, who have been so designated by the
Board of Directors, intend to vote for the proposal described above unless
otherwise instructed in the proxy. The Company believes that the members of the
Board of Directors and the senior management of the Company intend to vote or
direct the vote of all shares of Common Stock of which they have beneficial
ownership in favor of this proposal.

APPOINTMENT OF INDEPENDENT AUDITORS

Subject to ratification by the shareholders of the Company, the Board has
designated the firm of KPMG Peat Marwick LLP, Suite 2300, 707 Seventeenth
Street, Denver, Colorado 80202 as independent auditors to examine and audit the
Company's financial statements for the year 1995. This firm has audited the
Company's financial statements for approximately 45 years and is considered to
be well qualified. The designation of such firm as auditors is being submitted
for ratification or rejection at the Annual Meeting. Action by shareholders is
not required under the law for the appointment of independent auditors, but the
ratification of their appointment is submitted by the Board in order to give the
shareholders of the Company the final choice in the designation of auditors. The
Board will be governed by the decision of a majority of the votes entitled to be
cast. A majority of the vote represented at the Annual Meeting by shares of
Common Stock entitled to vote is required to ratify the appointment of KPMG Peat
Marwick LLP.

A representative of KPMG Peat Marwick LLP will be present at the Annual
Meeting with the opportunity to make a statement if he desires to do so and will
also be available to respond to appropriate questions. A representative of the
firm was present at the last Annual Meeting for the same purpose.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL.

SHAREHOLDER PROPOSALS

Any shareholder proposals to be included in the Board of Directors'
solicitation of proxies for the 1996 Annual Meeting of Shareholders must be
received by Daniel L. McNamara, Secretary, at 1500 Colorado National Building,
950 - 17th Street, Denver, CO 80202, no later than December 2, 1995.

GENERAL AND OTHER MATTERS

The Board of Directors knows of no matter, other than those referred to in
this Proxy Statement, which will be presented at the Annual Meeting. However, if
any other matters are properly brought before the meeting or any of its
adjournments, the person or persons voting the proxies will vote them in
accordance with their judgment on such matters. Should any nominee for director
be unwilling or unable to serve at the time of the Annual Meeting, or any
adjournment thereof, the persons named in the proxy will vote it for the
election of such other person for such directorship as the Board of

33
<PAGE>
Directors may recommend unless, prior to the Annual Meeting, the Board of
Directors has eliminated that directorship by reducing the size of the Board of
Directors. The Board of Directors is not aware that any nominee named herein
will be unwilling or unable to serve as a director.

On May 24, 1994, the Company renewed Directors and Officers Liability
Coverages designed to indemnify the directors and officers of the Company and
its subsidiaries against certain liabilities incurred by them in the performance
of their duties and also providing for reimbursement in certain cases to the
Company and its subsidiaries for sums paid by them to directors and officers as
indemnification for similar liability. This type of coverage was originally
purchased by the Company on May 24, 1978. The 1994 renewal was for a one-year
period. Primary insurance of $10,000,000 was renewed with National Union Fire
Insurance Company and the excess insurance coverage of $10,000,000 was renewed
with Reliance Insurance Company and National Union Fire Insurance Company for a
total coverage of $20,000,000. Aggregate premiums for the 12-month period ending
May 24, 1995 are $510,122. No claims have been filed and no payments have been
made to the Company or its subsidiaries or to any of their directors or officers
under this coverage.

The Restated Certificate of Incorporation of the Company limits the personal
liability of the Company's directors to the fullest extent permitted by the New
York Business Corporation Law ("BCL"), as currently formulated or as it might be
revised in the future. The Restated Certificate of Incorporation provides that a
director will not be liable for damages for any breach of duty unless it is
finally established that (a) the director's acts or omissions were in bad faith
or involved intentional misconduct or a knowing violation of law; or (b) the
director personally gained a financial profit or other advantages to which he
was not legally entitled; or (c) the director's acts violated Section 719 of the
BCL which provides that directors who vote for, or concur in, certain types of
corporate action proscribed by the BCL will be jointly and severally liable for
any injury resulting from such action.

The cost of preparing, assembling, and mailing this Proxy Statement, the
enclosed proxy card and the Notice of Annual Meeting will be paid by the
Company. Additional solicitation by mail, telephone, telegraph or personal
solicitation may be done by directors, officers, and regular employees of the
Company. Such persons will receive no additional compensation for such services.
Brokerage houses, banks and other nominees, fiduciaries and custodians nominally
holding shares of Common Stock of record will be requested to forward proxy
soliciting material to the beneficial owners of such shares, and will be
reimbursed by the Company for their reasonable expenses. The Company has
retained Morrow & Co., Inc. to assist in such solicitation and has agreed to pay
reasonable and customary fees for its services and to reimburse it for
reasonable out-of-pocket expenses in connection therewith.

INCORPORATION BY REFERENCE. The Company hereby incorporates by reference
into this Proxy Statement the following information from its Annual Report on
Form 10-K which has previously been furnished to shareholders: Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations and Item 8. Financial Statements and Supplementary Data. Also
incorporated by reference is the Company's Form 10-Q for the quarter ended March
31, 1995, which has also been previously furnished to shareholders.

You are urged to complete, sign, date and return your proxy promptly. You
may revoke your proxy at any time before it is voted. If you attend the Annual
Meeting, as we hope you will, you may vote your shares in person.

By order of the Board of Directors

DANIEL L. McNAMARA
SECRETARY
June , 1995

34
<PAGE>

ANNEX A

[LETTERHEAD - DILLON, READ & CO. INC.]

May 15, 1995

Board of Directors
Forest Oil Corporation
1500 Colorado National Building
950 Seventeenth Street
Denver, Colorado 80202

Dear Directors:

You have requested our opinion, from a financial point of view, with
respect to the transactions (the "Transactions") summarized in the Letter of
Intent dated as of April 17, 1995, between Forest Oil Corporation ("Forest" or
the "Company") and The Anschutz Corporation ("Anschutz"), the Letter of
Understanding of the same date and the revised Letter of Understanding dated as
of April 27, 1995, between the Company and Joint Energy Development Investments
Limited Partnership ("JEDI"), an affiliate of Enron Corporation (the
"Purchasers") as well as the draft agreements (the "Preliminary Drafts") dated
as of May 5, 1995, between the Company and Anschutz, dated as of May 5, 1995
between JEDI and the Company and dated as of May 10, 1995, between the Company
and JEDI (together, the "Preliminary Agreements").

We have assumed that the business terms of the Transactions are as set
forth in the Preliminary Agreements mentioned above between the Purchasers and
the Company. Forest will sell to Anschutz 18,800,000 shares of common stock and
620,000 shares of preferred stock of Forest that are convertible into 6,200,000
additional shares of common stock for a total consideration of $45 million or
$1.80 per share of common stock. The preferred stock will have a liquidation
preference and will receive dividends ratably with the common stock. In
addition, Anschutz will receive warrants and an option to purchase common stock
as described below. The investment will be made in two closings. In the first
closing, expected to occur in May 1995, Anschutz will loan the Company $9.9
million for a term of nine months. The loan will bear interest at 8% per annum
for 16 weeks and at 12.5% per annum thereafter. The loan will be secured by
various assets of Forest. The loan may be converted into 5,500,000 shares of
Forest's common stock at Anschutz's election, but the loan must be so converted
at the second closing. At the second closing, expected to occur in July 1995
following receipt of shareholder approval of the Transactions, Anschutz will
purchase the remaining 13,300,000 shares of common stock and the convertible
preferred stock. In connection with this purchase, Anschutz will agree to
certain voting, acquisition, and transfer limitations regarding shares of common
stock for five years after the second closing, including (i) a limitation on
voting, subject to

<PAGE>

May 15, 1995
Page 2

certain exceptions, that would require Anschutz to vote all shares of common
stock owned by Anschutz in excess of an amount equal to 19.99% of the shares of
common stock then outstanding in the same proportion as all other shares of
common stock are voted, (ii) a limit on the number of Anschutz designated
directors to three in addition to five independent directors and two officer
directors and (iii) a limit on the acquisition of additional shares of common
stock by Anschutz (whether pursuant to the exercise of the $2.10 warrants or the
option received from JEDI, as described below, or otherwise), subject to certain
exceptions, that would prohibit any acquisition by Anschutz that would result in
Anschutz owning 40% or more of the shares of common stock then issued and
outstanding.

At the second closing, Forest and JEDI will restructure JEDI's existing
loan currently having a principal balance of approximately $62.1 million. In
exchange for certain warrants referred to below, JEDI will relinquish the net
profits interest that it holds in certain Forest properties and will reduce the
interest rate relating to the loan from 12 1/2% per annum to an initial blended
rate of 8% per annum. As a result of the loan restructuring and the issuance of
the warrants, the Company anticipates a reduction of the recorded amount of the
related liability to approximately $45 million and a reduction of interest
expense on the JEDI loan of approximately $2 million per annum. In addition, on
a one-time basis 18 months after the second closing, the Company may put its
interest in the underlying properties back to JEDI in full satisfaction of the
loan.

At the second closing, JEDI will receive warrants to purchase 11,250,000
shares of the Company's common stock for $2.00 per share and Anschutz will
receive warrants to purchase 19,444,444 shares of common stock at $2.10 per
share. The $2.00 warrants expire on the scheduled maturity of the JEDI loan,
except that the Company may terminate the warrants at any time beginning 36
months after the second closing, if the average closing price of the common
stock for the 90 days and 15 days preceding the date on which notice of
termination is given is in excess of $2.50 per share. For the first 36 months
after the second closing, the $2.00 warrants may be exercised only on the dates
and in the respective numbers of shares required to be delivered by JEDI to
Anschutz pursuant to the exercise of the option granted by JEDI to Anschutz, as
described below. The $2.10 warrants are exercisable during the first 18 months
after the second closing, subject to extension in certain circumstances to 36
months after the second closing. If the $2.10 warrants are extended, the
Company's right to put its interest in the underlying properties back to JEDI
will also be extended to a date 36 months after the second closing. At the
second closing, JEDI will grant to Anschutz an option to purchase up to
11,250,000 shares of common stock during the first 36 months after the second
closing at a share price which results in an 18% per annum return to JEDI, with
the exception of a $3.10 per share maximum price. It is a condition to the
restructuring of the JEDI loan that the Company covenant to use the proceeds
from the exercise of the warrants to repay the JEDI loan.

<PAGE>

May 15, 1995
Page 3

The Company is required to pay to Anschutz a fee of up to $2.5 million upon
the occurrence on or before the first anniversary date of the definitive
agreement between the Company and Anschutz (and prior to the second closing) of
certain events, such as a merger, consolidation or other business combination
between the Company and a person other than Anschutz if the second closing does
not occur. The Company has agreed not to solicit proposals for transactions
that would require the Company to pay such a fee, subject to the duty of the
Board of Directors to act in a manner which is consistent with its fiduciary
obligations.

The Transactions are subject to the preparation and execution of definitive
agreements and to the approval of Forest's board of directors and certain of its
creditors. We have assumed, with your consent, that the Preliminary Drafts
mentioned above set forth the final business terms of the Transactions and are
substantially in the form in which they are to be executed. The purchase by
Anschutz of common stock at the second closing and the transactions between
Anschutz and JEDI described above are also subject to, among other things, the
prior approval of Forest's shareholders.

Dillon, Read & Co. Inc. ("Dillon Read") has acted as financial advisor to
the Company in connection with the Transactions. In the course of our
engagement, we have participated in negotiations with respect to the
Transactions and are familiar with the financial terms of the Transactions.

In arriving at our opinion we have reviewed the Preliminary Agreements with
Anschutz and JEDI, respectively, and certain business and financial information
relating to Forest, including certain financial information, third party oil and
gas reserve estimates and other analyses and estimates provided to us by the
Company, and have reviewed and discussed the business and prospects of Forest
with representatives of the Company's management. We have considered certain
financial data of Forest and have compared that information to similar data for
publicly held companies in businesses we believe to be generally comparable to
that of Forest. We have also considered the financial terms of certain other
transactions, including minority investments, which have recently been effected
and have considered such other information, financial studies and analyses, and
financial, economic and market criteria as we deemed relevant. We have also
reviewed market prices for the Company's common stock for dates prior to the
date of the announcement of the Transactions on April 18, 1995.

In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have, with your
consent, relied on its being complete and accurate in all material respects. We
have not made an independent evaluation or appraisal of any of the assets or
liabilities (contingent or otherwise) of Forest, nor have we been furnished with
any such evaluation or appraisals. Furthermore, in rendering our opinion we, at
your direction, did not seek alternatives to the Transactions. With respect to
the financial projections, estimates and analyses which you have furnished to
us, we have utilized such

<PAGE>

May 15, 1995
Page 4

information and have, with your consent, relied thereon. Further, we have
assumed that such information was prepared in good faith by the Company's
management and was reasonably based upon the Company's historical financial
performance and certain estimates and assumptions which were reasonable at the
time made. Our opinion is based on economic, monetary and market conditions
existing on the date thereof.

In the ordinary course of business, we may trade the debt and equity
securities of the Company for our own account and for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.

In rendering our opinion we took into consideration, at your direction,
that without effecting the Transactions, the Company believes that it is facing
near-term liquidity issues necessitating the sale of certain assets to raise
cash at a discount of approximately $3 million to the value that the Company
believes could be realized without timing constraints, as well as a highly
leveraged balance sheet which limits the Company's ability to maintain, much
less increase, its asset base. We also considered the recent depressed state of
the natural gas market and the resulting impact on the valuations of publicly
traded domestic natural gas producers. Additionally, we considered a number of
benefits to the Company which result from the Transactions including a
significant improvement in the liquidity of the Company, the availability of
cash to make budgeted capital expenditures and a material reduction in financial
leverage as well as over $2 million in annual interest expense savings on the
JEDI loan.

Based upon and subject to the foregoing and after reviewing other factors
including current market, economic and business considerations; such other
factors we deem relevant; and, in particular, the factors enumerated in the
preceding paragraph including the recent depressed state of the natural gas
market, it is our opinion that the Transactions, taken as a whole, including the
consideration to be received by the Company, represent a reasonable means under
the circumstances of raising capital for the Company and that it is reasonable
to conclude that the consideration to be received by the Company in the
Transactions is fair to the Company and to the common stockholders of the
Company from a financial point of view.

Very truly yours,

Dillon, Read & Co. Inc.

By: /s/ ROBERT H. HOTZ
-------------------------
Robert H. Hotz
Managing Director

<PAGE>
FOREST OIL CORPORATION

PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF SHAREHOLDERS

The undersigned shareholder of Forest Oil Corporation, a New York
corporation (the Company), hereby appoints William L. Dorn, Daniel L. McNamara
and Linda M. Trulick, or any one of them, attorneys, agents and proxies of the
undersigned, with full power of substitution to each of them, to vote all the
shares of Common Stock, Par Value $.10 per share, of the Company which are
entitled to one vote per share and which the undersigned may be entitled to vote
at the Annual Meeting of Shareholders of the Company to be held at the Petroleum
Club of Denver, 555 17th Street, Suite 3700, Denver, Colorado, on Wednesday,
July 26, 1995, at 10:00 A.M., M.D.T., and at any adjournment of such meeting,
with all powers which the undersigned would possess if personally present:

1. Elect two (2) Class I Directors;

2. Approve the transactions with The Anschutz Corporation and Joint Energy
Development Investments Limited Partnership;

3. Amend the Company's Restated Certificate of Incorporation to increase the
number of authorized shares of Common Stock, Par Value $.10 Per Share, by
88,000,000 to a total of 200,000,000;

4. Consider and vote upon the ratification of the appointment of KPMG Peat
Marwick LLP as independent auditors for the Company for the fiscal year
ended December 31, 1995;

5. Vote upon such other matters as may be properly brought before the meeting
or any adjournment thereof hereby revoking all previous proxies and
ratifying all that any of said proxies, their substitutes, or any of them,
may lawfully do by virtue hereof.

If no directions are given, the individuals designated above will vote for
the above proposals and, at their discretion, on any other matter that may come
before the meeting.

The undersigned acknowledges receipt of the Notice of Annual Meeting of
Shareholders and Proxy Statement of the Company.

(CONTINUED AND TO BE VOTED, DATED AND SIGNED ON REVERSE SIDE)
<PAGE>
FOREST OIL CORPORATION

COMMON STOCK PROXY ONE (1) VOTE PER SHARE
PLEASE MARK VOTES / / OR /X/

SPECIAL NOTES
I PLAN TO ATTEND THE MEETING / /
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE FOLLOWING PROPOSALS:

<TABLE>
<S> <C> <C> <C>
No. 1. Election of Directors. No. 2. Approve the transactions with The
Nominees are William L. Dorn and Anschutz Corporation and Joint
James H. Lee. Energy Development Investments
(To withhold authority to vote for Limited Partnership.
all nominees check the block marked
"Withheld". To withhold authority
to vote for any individual
nominee write that nominee's
name on the space provided
below.)
-------------------------------
FOR / / WITHHELD / / FOR / / AGAINST / / ABSTAIN / /
No. 3. Amendment of Restated Certificate No. 4. Ratification of the Appointment of
of Incorporation to increase Independent Auditors.
authorized shares.
FOR / / AGAINST / / ABSTAIN / / FOR / / AGAINST / / ABSTAIN / /
</TABLE>

(Signature(s) should agree with names on
Stock Certificates as shown herein.
Attorneys, executors, administrators,
trustees, guardians or custodians should
give full title as such.) Please
complete, date and sign this proxy and
return it promptly in the enclosed
envelope whether or not you plan to
attend the meeting. No postage is
required.
Dated: ____________________________, 1995
_________________________________________
_________________________________________
Signature of Shareholder(s)
THIS PROXY IS SOLICITED ON BEHALF
OF THE BOARD OF DIRECTORS
- ------------------------------------------------------------
IF YOU PLAN TO ATTEND THE ANNUAL MEETING OF SHAREHOLDERS, PLEASE MARK THE
APPROPRIATE BOX IN THE SPECIAL NOTES SECTION OF THE PROXY CARD ABOVE.