<PAGE>
Filed by Forest Oil Corporation and Forcenergy Inc
pursuant to Rule 425 under the Securities Act of
1933 and deemed filed pursuant to Rule 14a-12 of
the Securities Exchange Act of 1934
Forest Oil Commission File No: 333-39255
Forcenergy Commission File No: 333-04600
Subject Companies: Forest Oil Corporation and
Forcenergy, Inc
THE FOLLOWING IS A PRESS RELEASE DISSEMINATED BY FOREST OIL CORPORATION AND
FORCENERGY INC ON JULY 10, 2000.
NEWS
FOREST OIL CORPORATION FORCENERGY INC
1600 BROADWAY, SUITE 2200 3838 NORTH CAUSEWAY
DENVER, COLORADO 80202 LAKEWAY THREE, SUITE 2300
METAIRIE, LOUISIANA 70002
Contacts:
Donald H. Stevens, Vice President Richard G. Zepernick, Jr.
and Treasurer President and Chief Executive Officer
303/812-1500 504/846-4300
FOR IMMEDIATE RELEASE
FOREST OIL CORPORATION TO MERGE WITH FORCENERGY INC
A NORTH AMERICAN NATURAL GAS COMPANY WITH SIGNIFICANT EXPOSURE TO
HIGH-IMPACT EXPLORATION OPPORTUNITIES
DENVER, COLORADO - JULY 10, 2000 - Forest Oil Corporation (Forest) (NYSE-FST)
and Forcenergy Inc (Forcenergy) (NASDAQ-FORC) jointly announced today a merger
that creates one of the ten largest independent exploration and production
companies in the U.S. The combined company, which will be called Forest Oil
Corporation and will be headquartered in Denver, Colorado, provides its
shareholders with an attractive balance of production and high impact
exploration both domestically and internationally. The merger is expected to be
treated as a tax-free reorganization and to be accounted for as a pooling of
interests. The proposed merger is expected to be immediately accretive on a
per-share basis to cash flow, production and reserves.
Under the agreement, which was unanimously approved by each company's board of
directors, Forcenergy common shareholders will receive 1.6 Forest common shares
for each Forcenergy common share they own. Forest will also exchange its common
stock for Forcenergy's outstanding preferred stock. After closing, Forest
shareholders will hold approximately 56 percent of the combined company and
Forcenergy shareholders approximately 44 percent. Forest expects to effect a 2
to 1 reverse split concurrently with the completion of the merger.
The pro forma company will initially have approximately 48 million shares
outstanding with a market capitalization over $1.5 billion, based on Forest's
closing price of $16.00 per share on July 7, 2000. Based on this closing price,
the transaction has an implied value to Forcenergy's common shareholders of
$25.60 per share, representing a 21 percent premium to Forcenergy's closing
price of $21.19 per common share on July 7, 2000. Shareholders representing
approximately 67 percent of Forcenergy and approximately 37 percent of Forest
have agreed to vote their shares in favor of the merger. The transaction is
subject to approval by shareholders of both companies and to customary
regulatory approval.
<PAGE>
Robert S. Boswell will continue in his role as Chairman and Chief Executive
Officer of Forest. Richard G. (Gus) Zepernick, Jr. is to be named President and
Chief Operating Officer of Forest. Two members of Forcenergy's Board of
Directors, Forrest E. Hoglund and Stephen A. Kaplan, will join the Forest board
for a total of 12 directors.
Robert S. Boswell comments, "This combination meets Forest's criteria of
strategic fit. It places the Company in one of North America's highest potential
frontier exploration areas in Alaska with an established platform for expansion.
It significantly increases the Company's position in the Gulf of Mexico where
Forest has historically achieved its highest rates of return and it will enable
the Company to capture additional opportunities as well as cost savings.
The increased cash flow from the combination will enable the Company to better
fund its growing portfolio of high impact exploration and development
opportunities. We are obviously quite enthused about the potential value that
will be created for our shareholders by the transaction. We are also quite
pleased to welcome the new Forcenergy employees to the Company and in
particular, Gus Zepernick, who will join the new Forest as President and Chief
Operating Officer from his position of Chief Executive Officer at Forcenergy
after a distinguished career at Ocean Energy, Inc."
Gus Zepernick stated, "The combined companies will have a much stronger balance
sheet that will allow us to exploit a large inventory of lower risk exploitation
and high impact exploration projects. The stronger prospect inventory, balance
sheet and technical talent will enable the combined companies to deliver
consistent shareholder return."
<TABLE>
<CAPTION>
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SUMMARY TRANSACTION TERMS
<S> <C>
Exchange Ratio: 1.6 Forest shares for each Forcenergy common share
Accounting Structure: Pooling of interests / Full cost
Tax Structure: Tax free merger
Capitalization: Book debt/cap ratio estimated at 51%
Company Name: Forest Oil Corporation
Headquarters: Denver, Colorado
Board of Directors: 10 Forest, 2 Forcenergy
Target Closing Date: October 2000
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</TABLE>
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FOREST OIL CORPORATION
PRELIMINARY PRO-FORMA INFORMATION
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
First Quarter Results 1Q 00 1Q 00
--------------------------------------------------------------------------------
<S> <C> <C>
Net Daily Production (MMCFE) 220 490
Cash Margin ($mm)
(oil and gas revenue less production expenses) 44.8 100.0
Cash Flow ($mm) 33.0 80.9
EBITDA ($mm) 42.2 94.3
Weighted Average Shares Outstanding (millions) 26.8* 47.4*
</TABLE>
*ADJUSTED FOR PROPOSED 2:1 REVERSE SPLIT
The pro forma data shown above are based on preliminary estimates and are
unaudited.
Pro forma for the quarter ended March 31, 2000; production was split as follows:
<TABLE>
<S> <C>
Gulf Offshore 50%
Gulf Coast Onshore 13%
Western 15%
Canada 12%
Alaska 10%
</TABLE>
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<TABLE>
<CAPTION>
OPERATIONS
Pro Forma
12/31/99 12/31/99 %
---------------------------------------
<S> <C> <C> <C>
Proved Reserves (BCFE):
Gulf Coast Offshore 112 409 29
Gulf Coast Onshore 221 281 20
Western 189 353 25
Alaska -0- 169 12
Canada 196 196 14
-----------------------------------
Total 718 1,408 100
===================================
Reserve Life Index (years) 8.1 7.2
Gas / Liquids Ratio (%) 73% / 27% 59% / 41%
</TABLE>
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EXPLORATION - The merger combines exploration projects for both companies now
underway in some of the highest impact areas of North America and the world.
Forest brings the significant potential of the Northwest Territories of Canada,
the Beaufort Sea, its offshore South Africa project and other international
projects with significant reserve potential. Forcenergy contributes its
significant Cook Inlet potential in Alaska. The increased cash flow and
financial strength provided by the merger will enable the new Forest to
aggressively execute its large portfolio of exploration projects on an
accelerated timetable.
DEVELOPMENT - The new Forest has identified a broad portfolio of projects.
Forcenergy's significant asset base in the Gulf of Mexico provides a portfolio
of properties which were under-exploited due to Forcenergy's financial
difficulties in 1998 and 1999. The company plans to aggressively pursue
continued drilling in the Gulf of Mexico where the new Forest is now one of the
largest operators on the shelf. Development in the Canadian Foothills and on the
Liard Plateau in the Northwest Territories is planned to be increased. In
addition, significant growth opportunities have been identified in existing
onshore fields, where in-fill and step-out drilling, state-of-the-art
technologies in reservoir drilling, completion and production can be used to
extend field limits, increase production and recover more reserves.
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FINANCIAL STRENGTH
EARNINGS AND CASH FLOW - The proposed merger is expected to be immediately
accretive on a per share basis to cash flow, production and reserves. If the
companies had been combined for 1999, cash flow would have been about $234
million. For 2000, assuming production of 465 - 500 mmcfe/d, historical expense
rates, NYMEX prices of $3.25 and $25.00 for natural gas and oil, respectively,
and taking into account the hedged position of both companies, cash flow on a
pro forma basis is forecasted to increase further to a range of approximately
$300 - $325 million with EBITDA approaching a range of $350 - $375 million.
BALANCE SHEET - The new Forest will have a stronger balance sheet than either
company had individually. This increased financial strength and critical mass
should give the new Forest a lower cost of capital and a better ability to fund
its drilling and development projects primarily in North America. On a pro-forma
consolidated basis as of March 31, 2000, the combined companies would have had a
total book capitalization of about $1.25 billion, including approximately $600
million of equity. The book debt-to-total capitalization ratio would have been
approximately 51 percent.
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ADVISORS
Salomon Smith Barney Inc. served as the advisor to Forest Oil for this
transaction. In addition, Chase Securities Inc. provided a fairness opinion on
the transaction. Advisors to Forcenergy were the firms of Petrie Parkman & Co.
and Lehman Brothers Inc.
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TELECONFERENCE CALL
Forest Oil Corporation and Forcenergy Inc management will hold a teleconference
call Monday, July 10, 2000 at 11:00 a.m. Eastern Daylight Time (EDT) to review
the proposed transaction. If you would like to participate, please call
toll-free by dialing 1-888/781-5307 (for U.S.) and 1-706/634-0611, reference
Forest Oil Corporation.
A replay of the teleconference call will be available Monday afternoon, July 10,
2000. The replay can be accessed by dialing toll-free 1-800/642-1687 (for U.S.)
and 1-706/645-9291 (for International), reservation #338843.
In addition, you may log on to the Forest Oil website at www.forestoil.com to
view the presentation live through Webcast by clicking Investor Relations
button.
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INVESTOR NOTICES
This press release includes "forward-looking statements" as defined by the
Securities and Exchange Commission. Such statements are those concerning the
companies' merger and strategic plans, expectations and objectives for future
operations. All statements included in this press release that address
activities, events or developments that the companies expect, believe or
anticipate will or may occur in the future are forward-looking statements. This
includes completion of the proposed merger, reserve estimates, production, cash
flow and EBITDA estimates, future financial performance, future equity issuance
and other matters. These statements are based on certain assumptions made by the
companies based on their experience and perception of historical trends, current
conditions, expected future developments and other factors they believe are
appropriate in the circumstances. Such statements are subject to a number of
assumptions, risks and uncertainties, many of which are beyond the control of
the companies. Statements regarding future production are subject to all of the
risks and uncertainties normally incident to the exploration for and development
and production of oil and gas. These risks include, but are not limited to,
inflation or lack of availability of goods and services, environmental risks,
drilling risks and regulatory changes. Investors are cautioned that any such
statements are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the forward-looking
statements.
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Investors and security holders are advised to read the joint proxy
statement/prospectus that will be included in the Registration Statement on Form
S-4 to be filed with the SEC in connection with the proposed merger. Forest and
Forcenergy will file the joint proxy statement/prospectus with the SEC.
Investors and security holders may obtain a free copy of the joint proxy
statement/prospectus (when available) and other documents filed by Forest and
Forcenergy with the SEC at the SEC's web site at www.sec.gov. The joint proxy
statement/prospectus and such other documents (relating to Forest) may also be
obtained for free from Forest by directing such request to: Forest Oil
Corporation, 1600 Broadway, Suite 2200, Denver, Colorado 80202, Attention:
Donald H. Stevens, Vice President and Treasurer; telephone: 303-812-1400;
e-mail: [email protected]. The joint proxy statement/prospectus
and such other documents (relating to Forcenergy) may also be obtained for free
from Forcenergy by directing such request to: Forcenergy Inc, 3838 North
Causeway, Lakeway Three, Suite 2300, Metairie, Louisiana, 70002; Attn: Tom
Getten, Vice President and General Counsel; telephone: 504-846-4300.
Forest, its directors, executive officers and certain members of management and
employees may be considered "participants in the solicitation" of proxies from
Forest's shareholders in connection with the merger. Information regarding such
persons and a description of their interests in the merger will be contained in
the Registration Statement on Form S-4 when it is filed.
Forcenergy, its directors, executive officers and certain members of management
and employees may be considered "participants in the solicitation" of proxies
from Forcenergy's shareholders in connection with the merger. Information
regarding such persons and a description of their interests in the merger will
be contained in the Registration Statement on Form S-4 when it is filed.
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