<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 15, 2000
FOREST OIL CORPORATION
(Exact name of registrant as specified in charter)
New York 0-13515 25-0484900
(State or other juris- (Commission (IRS Employer
diction of incorporation) file number) Identification No.)
2200 Colorado State Bank Building, 1600 Broadway, Denver, CO 80202
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 812-1400
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ITEM 5.
For information regarding this item, please refer to Exhibit 99.1
hereto, which is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) Exhibits
(99.1) Forest Oil Corporation press release announcing
year-end operations results and plans for 2000.
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FOREST OIL CORPORATION
(Registrant)
Dated: February 18, 2000 By /S/ JOAN C. SONNEN
------------------------------
Joan C. Sonnen
Vice President - Controller and
Corporate Secretary
<PAGE>
NEWS FOR FURTHER INFORMATION
FOREST OIL CORPORATION CONTACT: DONALD H. STEVENS
1600 BROADWAY, SUITE, 2200, DENVER, COLORADO 80202 VICE PRESIDENT AND TREASURER
(303) 812-1500
FOR IMMEDIATE RELEASE
FOREST OIL CORPORATION ANNOUNCES YEAR-END OPERATIONS RESULTS
AND PLANS FOR 2000
DENVER, COLORADO - FEBRUARY 15, 2000 - Forest Oil Corporation (NYSE:FST)
announced today its year-end operations summary and plans for 2000 for its
Canadian, Gulf of Mexico, Western and International business units.
CANADA
THE FOOTHILLS
In Canada, Forest announced several significant 1999 discoveries in the
Alberta foothills that were not previously announced due to land
considerations.
- - CUTPICK
Forest (40 to 57% working interest) participated in 2 wells in 1999. The first
well was completed in a cretaceous (sweet gas) formation and tested at a rate of
6.2 mmcfd. Flow testing of the second well commenced on February 13th and will
require 2 to 3 weeks for formation cleanup and evaluation. An initial test
produced 4 mmcfd out of 2 cretaceous (sweet gas) zones. Based on the success of
these wells, Forest aggressively acquired additional land in the area throughout
1999 and currently has an interest in 73 sections of land surrounding this play.
Drilling of 2 additional wells is underway and Forest plans to drill an
additional 2 to 4 wells at Cutpick in 2000.
A 23-mile pipeline has been surveyed to connect this property to the NOVA
System. Soil sampling for the stream crossings is complete and planning is
underway to build the pipeline during the fourth quarter of 2000. Production
is anticipated to commence near the end of 2000, by which time the Company
expects to have 6 to 8 wells completed. Drilling of additional wells is
expected to continue at a rate of 5 to 10 wells per year.
- - NARRAWAY
At Narraway, 10 miles from Cutpick, Forest (50 to 55% working interest)
completed and tested a discovery well at 2.8 mmcfd out of a cretaceous (sweet
gas) zone. A second well has just finished drilling and is being production
tested in 3 cretaceous (sweet gas) zones. A third well is planned to commence
drilling after spring breakup and development will continue in 2000 on this
reservoir, which is currently expected to cover 10 to 12 sections. Forest owns
an interest in 18 sections on this play and will develop the shallow cretaceous
(sweet gas) field while monitoring adjacent well activity exploring deeper
Belloy (sour gas) targets that Forest believes have potential.
<PAGE>
Construction commenced in late January 2000 on a 17-mile, 8-inch diameter
pipeline to connect the Narraway property to the NOVA System. Forest (50%
working interest) is the operator of this line, which will have an initial
capacity of 42 mmcfd. Initial production should commence in April 2000 when
construction of facilities is completed.
- - BURMIS
Forest (25 to 100% working interest) has an interest in 12,800 acres of land in
the prospect. An existing well was re-entered and tested positively to confirm
natural gas in the Mississippian (sour gas) formation. 2-D seismic is currently
being interpreted to define new drilling locations up structure from the
existing well. A 3-D seismic program may be required prior to drilling the first
deep test later this year.
- - FEDERAL
Forest (40% working interest) has shot additional seismic on the Federal
Prospect which covers 16,000 acres of land in the Northeast British Columbia
foothills. This new data identified that the preliminary drilling location
should be moved to a higher part of the structure. The first test well to be
drilled is an 8,000 foot Mississippian (sour gas) test which is expected to spud
in September 2000.
NORTHWEST TERRITORIES
- - DEEP NAHANNI (SOUR GAS)
- P-66A FOREST (50% WORKING INTEREST)
Clearing of rights-of-way for construction of roads and pipelines started in
February 2000 to bring the P-66A well on production. Initial production is
expected in July 2000 at a gross rate of 25 to 30 mmcfd. The 3-1/2" production
tubing is being replaced with 4-1/2" tubing to allow for production rates up to
45 mmcfd.
Forest completed a 3-D seismic program covering the land between the Chevron
K-29 well, the N-61 well and the southern half of the exploration license (EL
383), in late 1999. Interpretation of this new data, which should be
available in March, will be used with N-61 data and is expected to lead to
the spudding of another well in the summer of 2000.
- N-61 FOREST (50% WORKING INTEREST)
All work at N-61 has been suspended. The well encountered gas at the top of the
Nahanni structure but in a tight carbonate reservoir. The well crossed the gas
water contact of the accumulation and bottomed in highly fractured water-bearing
reservoirs that were tested last year. Based on dipmeter information from the
well and the preliminary interpretation of the 3-D seismic shot in the fall of
1999, Forest believes that N-61 is on the edge of the gas field with significant
updip potential between the N-61 location and P-66A discovery 6 miles north. The
Company does not expect the initial well bore of N-61 to be commercial.
- - MATTSON (SWEET GAS)
In the southern part of Forest's Ft. Liard acreage (33% working interest),
Forest participated in drilling the I-46 well, a direct offset to Paramount's
F-36 discovery well drilled one year ago. Completion and production testing of
the I-46 well began in mid-February. Based on information on I-46 and the
testing operations to be conducted on other wells in the region which have
penetrated the Mattson formation, the joint venture intends to refine the
mapping of the extent of the play and begin the acquisition of additional
seismic data.
Page 2 of 7
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GULF OF MEXICO
OFFSHORE
The Gulf of Mexico, which continues to be the cornerstone of Forest's current
production, has had an impressive 3-year track record as illustrated by the
table below:
<TABLE>
<CAPTION>
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GULF OF MEXICO RESULTS
1999 1998 1997
---------------------------------------
<S> <C> <C> <C>
- - Revenue ($MM) $81.4 $66.6 $85.7
- - Wells Drilled 8 7 8
% SUCCESS RATE 75% 71% 75%
- - Recompletions 7 4 15
- - Production (bcfe) 34 32 32
- - Reserve Additions (bcfe) 36 31 40
- - Plowback 41% 106% 94%
- - LOE per MCFE $0.38 $0.37 $0.42
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</TABLE>
Forest currently plans to participate in 16 drilling wells, twice as many as
in each of the previous 3 years, and several recompletions in the year 2000.
The ramp up in offshore activity is being made to combat disappointing
results in South Louisiana, which are discussed below.
- - SOUTH PELTO 6
Forest (65% working interest) is currently drilling a well at 12,000 feet with a
planned total depth of 14,400 feet. The target is similar in seismic response to
the existing producing zone that has produced 49 bcfe at South Pelto 6.
- - EUGENE ISLAND 292
Forest (20% working interest) announced that a 2 well drilling program was
successful in the fourth quarter of 1999. Both wells were completed and are
currently producing at a combined rate of 11.7 mmcfed. Forest, as operator, has
proposed an additional 4 well drilling program plus miscellaneous recompletions
to its partners. Plans are to start the program in March 2000.
- - HIGH ISLAND 116
Forest (55% working interest) completed the High Island 116 B-2 well two months
behind schedule. It began production December 30, 1999, from a low-resistivity
zone. After producing up to 28 mmcfed in a zone that was not expected to
produce, the well has depleted to 3 mmcfed and a workover is underway to open
additional pay located beneath the primary sand packages. Further, the original
B-1 discovery well will be recompleted into the final sections of
low-resistivity pay. There are still two primary sand packages behind pipe in
the B-1 that have not yet been produced. Upon completion of this work, Forest
believes that production from the field could increase to 40 mmcfed. In 2000, a
well is planned to test a syncline-separated feature from the existing
reservoirs.
- - EUGENE ISLAND 53
Field production under normal Gulf of Mexico declines has decreased from 100
mmcfed to 50 mmcfed over a 20-month period. In 2000, Forest (100% working
interest) plans to drill a well to test deeper sands in a fault block adjacent
to existing reservoirs.
Page 3 of 7
<PAGE>
ONSHORE
- - MCALLEN RANCH, SOUTH TEXAS
Forest (50% working interest) drilled 5 wells in the McAllen field in 1999. Four
out of the five were successful. The most recent well (#35) was completed and
stimulated in December and placed on-line to sales at a rate of 11.5 mmcfed with
4,500 psi flowing tubing pressure. In 2000, Forest plans to drill 2 to 4 wells
in McAllen Ranch.
- - ATCHAFALAYA BAY FIELD, SOUTH LOUISIANA
Forest (25% working interest) participated in the drilling of a 17,600 foot well
early in 1999. The S/L 5097 #2 well was placed on production in July at a rate
of 33.9 mmcfed and is currently producing at that same rate. Forest anticipates
drilling an additional well in this field in 2000.
- - KATY, EAST TEXAS
Forest (50% working interest) participated in a pilot frac program to improve
field productivity. The initial pilot increased production from 300 mcfed to 5.0
mmcfed in 1 well bore. These results will be monitored to further determine
whether this pilot frac can be further applied to 25 to 50 wells in the field.
- - SOUTH LOUISIANA PROPERTIES
Forest is continuing the field studies on the onshore Louisiana properties
purchased in February 1998. After continued disappointing production results
from these properties, Forest changed the management of these fields in the
fourth quarter. The offshore Vice President, who has managed that very
successful business unit, has been given the additional responsibility for this
business unit. Forest plans to significantly reduce development expenditures
related to proved reserves and to begin a low-risk exploration program similar
to the program in the offshore unit. As a result, anticipated production from
the onshore business unit will be reduced in 2000. Forest has reduced its
estimates of 2000 production by 25 to 30 mmcfed from these properties.
WESTERN REGION
- - ELM PROSPECT, JONAH FIELD - GREEN RIVER BASIN, WYOMING
The Elm Federal Well 23-13, located in the southwest corner of the Jonah Field,
(Forest 64% working interest) was drilled in January 2000. Production casing was
set to 9,700 feet. The well encountered 1,600 feet of gross Lance formation with
405 feet of net pay. Seven separate zones will be fracture stimulated with sand
and water. The first 2 zones were stimulated on February 9th and 10th. The well
is currently flowing 6 mmcfd at 2,400 psi FTP. The remaining 5 zones will be
completed over the next 2 months. Forest has additional lands and may drill 2
more wells in this corner of the field in 2000.
Page 4 of 7
<PAGE>
INTERNATIONAL
Forest currently holds 17 concessions covering some 21.7 million gross
undeveloped acres in 8 different countries.
- - THAILAND
Forest (100% working interest) will drill a 1,000-meter test well at the Phu Din
#1 in onshore northeast Thailand. If this well is successful, Forest will begin
delineation drilling on its 700,000 acres of land. This well will drill a
prospect on trend with Exxon's Nam Phong field.
- - SWITZERLAND
In early third quarter, Forest (100% working interest) will spud the Weiach #2,
a 2,000-meter test well, in northern Switzerland. This well is being drilled 350
meters away from a well which encountered significant gas shows in tight
sandstones and coals. If this well is successful, Forest will begin further
delineation drilling on its 3.4 million acres of land.
- - SOUTH AFRICA
In November 1999, Forest (70% working interest) was awarded Block 1 (5 million
acres) in South Africa. The Block has an existing undeveloped gas discovery (35
mmcfd) and is located directly to the north of Block 2 (70% working interest)
where a 3-D seismic survey was completed in late 1999 over the AK gas discovery
(50 mmcfd). While wells on Block 1 and 2 have tested at 85 mmcfd of production,
Forest currently estimates commerciality will be reached at 200 mmcfd.
CAPITAL EXPENDITURES
In 1999, Forest began to allocate significant capital to Frontier (Canadian
and International) exploration and development. The project lead-time in
Frontier areas can be up to 3 to 4 years before their potential can be
realized. In 1999, Forest spent $102 million in capital expenditures net of
asset sales. Of this amount, $35 million or 35% was spent on Frontier areas.
In the U.S. business units, the Company spent $67 million net of property
sales of which $22 million were exploration expenditures. The Company's
non-Frontier exploration program yielded 42 bcfe of new proved reserves while
the Frontier areas yielded negligible reserves in 1999.
- - 1999 CAPITAL EXPENDITURES BY BUSINESS UNIT
<TABLE>
<CAPTION>
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GULF COAST
($mm) ---------- CANADIAN CONSOLIDATED
-------------------------------------------------------------------------------------
OFFSHORE ONSHORE WESTERN FOREST INTERNATIONAL TOTAL
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Exploration $ 14 7 1 38 8 68
Development 13 28 6 5 - 52
Acquisitions 0 0 1 - 1 2
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Gross capital expenditures 27 35 8 43 9 122
Sales proceeds (0) (1) (2) (11) (6) (20)
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Net capital expenditures $ 27 34 6 32 3 102
=====================================================================================
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</TABLE>
Page 5 of 7
<PAGE>
- - 2000 PLANNED CAPITAL EXPENDITURES BY BUSINESS UNIT
Forest plans to begin first production in both the Northwest Territories and the
foothills of Alberta and, as a result, development expenditures will increase in
2000. Forest plans to spend $40 to $50 million a year on the Frontier
exploration and development in the next two to three years. Offshore Gulf
activity is expected to increase dramatically and Onshore Gulf capital activity
is being significantly reduced and repositioned to focus on new reserve
additions, rather than proved reserves. The following summarizes the planned
2000 expenditures.
<TABLE>
<CAPTION>
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GULF COAST
($mm) ---------- CANADIAN CONSOLIDATED
OFFSHORE ONSHORE WESTERN FOREST INTERNATIONAL TOTAL
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Exploration $ 33 7 9 9 10 68
Development 9 6 4 29 - 48
Acquisitions - - - - - -
---------------------------------------------------------------------------------------
Gross capital expenditures $ 42 13 13 38 10 116
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</TABLE>
PROVED RESERVES
- - PROVED RESERVES BY BUSINESS UNIT
Forest estimates that proved reserves at December 31, 1999 decreased by 7% to a
total of 718 bcfe. Of this total, 73% is natural gas and 19% is proved
undeveloped. The decrease from a year ago is due primarily to downward revisions
to the onshore Louisiana properties, property sales and the continuing
significant investment in the Frontier areas.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
(bcfe) GULF COAST CANADIAN CONSOLIDATED
OFFSHORE ONSHORE WESTERN FOREST TOTAL
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PROVED RESERVES AT 12/31/98 115 262 177 221 775
Extensions and discoveries 29 10 3 6 48
Production (34) (17) (14) (23) (88)
Revisions 7 (33) 25 (3) (4)
Sales of reserves (5) (1) (2) (5) (13)
------------------------------------------------------------------------
PROVED RESERVES AT 12/31/99 112 221 189 196 718
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- - PRESENT VALUE AND YEAR-END PRICING
The following table summarizes the future net cash flows before income taxes
discounted by 10% at December 31, 1999 and 1998, and the respective NYMEX
natural gas and liquids prices used in computing such cash flows.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------
1999 1998
---------------------------
<S> <C> <C>
Present value of future net cash flows before income taxes $ 731.9 $ 547.5
NYMEX oil price ($/bbl) $ 26.49 $ 12.05
NYMEX natural gas price ($/mmbtu) $ 2.34 $ 2.14
- --------------------------------------------------------------------------------------------------
</TABLE>
Page 6 of 7
<PAGE>
2000 PRODUCTION ESTIMATES
Due to the capital reallocation in the Onshore Gulf unit and poorer than
expected performance from properties acquired in South Louisiana in February
1998, Forest estimates the range of its average daily production for 2000
will be 235 to 260 mmcfed. The Company estimates it is currently producing
225 to 230 mmcfed. The production estimates do not include potential effects
of producing property dispositions in Oklahoma and west Texas.
EARNINGS RELEASE AND TELECONFERENCE CALL
Forest Oil Corporation will release fourth quarter and year-end results
February 16, 2000 after the close of business. The Company's management will
hold a teleconference call Thursday, February 17, 2000 at 11:00 a.m. Eastern
Standard Time to review the fourth quarter 1999 and year-end results. If you
would like to participate, please call toll-free (800) 633-8479 and request
the Forest Oil teleconference.
A replay of the teleconference call will be available Friday, February 18,
2000 to February 25, 2000. The replay can be accessed between 9:00 a.m. EST
and 3:00 p.m. EST by dialing toll-free (800) 633-8284 (for U.S.) and (858)
812-6440 (for International), reservation #14326571.
* * * * * *
This news release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Although the Company believes that its expectations are
based on reasonable assumptions, it can give no assurance that expected
results will be achieved. Important factors that could cause actual results
to differ materially from those in the forward looking statements herein
include the timing and extent of changes in commodity prices for oil and gas,
operating risks and other risk factors as described in the Company's 1998
Annual Report on Form 10-K as filed with the Securities and Exchange
Commission.
Forest Oil Corporation is engaged in the acquisition, exploration,
development, production and marketing of natural gas and crude oil in North
America. Forest's principal reserves and producing properties are located in
the United States in the Gulf of Mexico, Louisiana, Texas and in Canada in
Alberta and the Northwest Territories. Forest's common stock trades on the
New York Stock Exchange under the symbol FST.
February 15, 2000
###
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