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Exhibit 99.1
[LOGO]
NEWS
FOR FURTHER INFORMATION
FOREST OIL CORPORATION CONTACT: DONALD H. STEVENS
1600 BROADWAY, SUITE 2200 VICE PRESIDENT AND TREASURER
DENVER, COLORADO 80202 (303) 812-1500
FOR IMMEDIATE RELEASE
FOREST OIL CORPORATION ANNOUNCES
FINANCIAL FORECAST INFORMATION
DENVER, COLORADO - DECEMBER 7, 2000 - Forest Oil Corporation (Forest) (NYSE:FST)
announced today its 2000 and 2001 financial forecast and underlying assumptions
for 2001.
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. The forward-looking statements provided in this press
release are based on management's examination of historical operating trends.
Forest cautions that its future natural gas and liquids production, revenues and
expenses are subject to all of the risks and uncertainties normally incident to
the exploration for and development and production and sale of oil and gas.
These risks include, but are not limited to, price volatility, inflation or lack
of availability of goods and services, environmental risks, drilling risks,
regulatory changes, the uncertainty inherent in estimating future oil and gas
production or reserves, and other risks as outlined below. Also, the financial
results of Forest's foreign operations are subject to currency exchange rate
risks. Additional risks are mentioned below in the context of line items most
affected by such risks and included in Forest's 1999 Annual Report on Form 10-K
as filed with the Securities and Exchange Commission.
SPECIFIC ASSUMPTIONS AND RISKS RELATED TO PRICE AND PRODUCTION ESTIMATES
Prices for Forest's products are determined primarily by prevailing market
conditions. Market conditions for these products are influenced by regional and
worldwide economic growth, weather and other substantially variable factors.
These factors are beyond Forest's control and are difficult to predict. In
addition to volatility in general, Forest's oil and gas prices may vary
considerably due to differences between regional markets, transportation
availability and demand for different grades of products. Consequently, Forest's
financial results and resources are highly influenced by this price volatility.
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Estimates for Forest's future production are based on the assumption that market
demand and prices for oil and gas will continue at levels that allow for
profitable production of these products.
The production, transportation and marketing of oil and gas and NGLs are complex
processes which are subject to disruption due to transportation and processing
availability, mechanical failure, human error, meteorological events including,
but not limited to, hurricanes, and numerous other factors. These estimates are
based on certain other assumptions, such as well performance, which may vary
significantly from those assumed. Therefore, we can give no assurance that our
future production will be as estimated.
Given these general limitations and those discussed below, the assumptions
underlying Forest's forecast for 2001 are set forth below.
2001 PROJECTIONS
DAILY PRODUCTION We currently assume that our daily production will be between
510 and 550 mmcfe per day.
OIL PRODUCTION We currently assume that our oil production will be between
25,000 and 30,000 barrels per day.
OIL PRICES We have assumed that our realized oil price will average between
$22.50 and $26.50 per barrel based upon NYMEX prices averaging between $25.00
and $29.00.
GAS PRODUCTION We currently assume our natural gas production will be between
330-365 mmcf per day.
GAS PRICES We have assumed that our realized natural gas price will average
between $3.75 and $4.25 per mcf based upon NYMEX prices averaging between $4.00
and $4.50 per mmbtu.
NGL PRODUCTION We currently assume that our NGL production in 2001 will be
between 2,500 and 3,000 barrels per day.
NGL PRICES We have assumed that our realized NGL prices will average between 50
and 60 percent of the assumed NYMEX prices.
PRODUCTION EXPENSE Our production and operating expenses (which include
production taxes) vary in response to several factors. Among the most
significant of these factors are additions to or deletions from our property
base, changes in production taxes, general changes in the prices of services and
materials that are used in the operation of our properties and the amount of
repair and workover activity required. For 2001, we currently assume that our
production expense on a per unit basis will average between $0.70 and $0.75 per
mcfe.
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DEPRECIATION, DEPLETION AND AMORTIZATION (DD&A) We currently assume that the
DD&A rate for 2001 will be between $1.20 and $1.26 per mcfe. We assume DD&A will
increase due to rising service costs, causing our 2000 and 2001 finding and
development costs to increase above our three-year average of $1.05 per mcfe.
CAPITAL EXPENDITURES We have assumed capital expenditures for 2001 will be
approximately $400 million. Some of the factors impacting the level of capital
expenditures include absolute crude oil and natural gas prices, the volatility
in these prices and the cost and availability of oil field services. A breakdown
of the estimated capital expenditures is as follows:
<TABLE>
<CAPTION>
ASSUMED CAPITAL EXPENDITURES
(in millions)
Gulf of Mexico
--------------
Canada Alaska Onshore Offshore International Total
------ ------ ------- -------- ------------- -----
<S> <C> <C> <C> <C> <C> <C>
Exploration $35 35 25 100 25 220
Development 15 50 30 85 - 180
-- -- -- --- -- ---
Total $50 85 55 185 25 400
== == == === == ===
</TABLE>
GENERAL AND ADMINISTRATIVE EXPENSE (G&A) We currently assume our G&A expense on
a per unit basis will be between $0.15 and $0.17 per mcfe.
INTEREST EXPENSE We currently assume our interest expense will be between $50
million and $60 million, depending on the timing of cash flows and capital
expenditures.
INCOME TAXES We currently assume our effective income tax rate will be 33
percent (inclusive of applicable federal and state taxes) in 2001 and our
current tax will be 25 to 30 percent of the total tax expense.
HEDGING The following price protection positions are presently in place. These
positions have already been considered in estimating our realized prices for
2001.
<TABLE>
<CAPTION>
2001 2002 2003
---------------------------
<S> <C> <C>
NATURAL GAS SWAPS:
Contract volumes (BTU) 8,355 6,080 --
Weighted average price (per MMBTU) 2.53 2.48 --
NATURAL GAS COLLARS:
Contract volumes (BBTU) 15,645 -- --
Weighted average ceiling price (per MMBTU) 6.07 -- --
Weighted average floor price (per MMBTU) 3.91 -- --
</TABLE>
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<TABLE>
<CAPTION>
2001 2002 2003
---------------------------
<S> <C> <C> <C>
OIL SWAPS:
Contract volumes (MBBLS) 365 -- --
Weighted average price (per BBL) 28.43 -- --
OIL COLLARS:
Contract volumes (MBBLS) 2,190 -- --
Weighted average ceiling price (per BBLS) 31.70 -- --
Weighted average floor price (per BBL) 25.39 -- --
</TABLE>
PRICE SENSITIVITY We estimate that oil and gas revenues will change by
approximately $1,000,000 to $1,300,000 for each $0.10 per mmbtu change in NYMEX
natural gas prices and by approximately $900,000 to $1,100,000 for each $1.00
per barrel change in NYMEX oil prices.
FINANCIAL FORECAST In order to provide a financial forecast for 2001, we have
assumed the mid-point of the range for each assumption. The selection of a
mid-point is not meant to portray any further accuracy than any other number
within the range, but is an arbitrary number within the range. Based upon this
methodology, we have attached a summary of certain forecasted financial and
operating data for 2000 and 2001.
POST-MERGER TELECONFERENCE CALL AND WEBCAST
Forest Oil Corporation will host a teleconference and webcast on December 7,
2000 at 10:30 a.m. MST to discuss the Company's Financial Forecast. A Q&A period
will follow. You may access the call by dialing toll free 888/781-5307 (for
U.S./Canada) and 706/634-0611 (for International) and requesting the Forest Oil
teleconference. You may log on to the Forest Oil website at www.forestoil.com to
view the presentation live. A replay will be available from Thursday, December
7th through Thursday, December 14th. You may access the replay by dialing toll
free 800/642-1687 (for U.S./Canada) and 706/645-9291 (for International),
reservation #731323. Please note that the reservation number is not needed to
access the teleconference, only the replay.
Forest Oil Corporation is engaged in the acquisition, exploration, development,
production and marketing of natural gas and crude oil in North America and
selected international locations. Forest's principal reserves and producing
properties are located in the United States in the Gulf of Mexico, Louisiana,
Texas, Cook Inlet, Alaska and in Canada in Alberta and the Northwest
Territories. Forest's common stock trades on the New York Stock Exchange under
the symbol FST.
# # # # #
December 7, 2000
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<TABLE>
<CAPTION>
FOREST OIL CORPORATION
Forecasted Financial Information
Year ending December 31,
2000E 2001E
----- -----
<S> <C> <C>
Cash flow per share $8.10 $10.40
Earnings per share $2.50 $4.10
EBITDA (millions) $450 $600
Production (BCFE) 182 193
Return on equity 18.8% 21.6%
Return on capital employed 14.0% 17.8%
Total debt at end of period (millions) $630 $500
Debt to total capitalization at end of period 46% 37%
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