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[ERNST & YOUNG LLP LETTERHEAD]
November 3, 2000
Mr. David H. Keyte
Executive Vice President and Chief Financial Officer
Forest Oil Corporation
1600 Broadway, Suite 2200
Denver, Colorado 80202
Dear Mr. Keyte:
This opinion is being delivered to Forest Oil Corporation in connection with
the Agreement and Plan of Merger dated as of July 10, 2000 (the "Agreement"),
by and among Forest Oil Corporation, a New York Corporation ("Parent"),
Forest Acquisition I Corporation, a Delaware corporation and wholly-owned
subsidiary of Parent ("Sub"), and Forcenergy, Inc, a Delaware corporation
(the "Company"), and Amendment No. 1 to the Agreement dated as of October 16,
2000 (the "Amendment"). (The Agreement and the Amendment are hereinafter
referred to as the "Plan of Merger.") Pursuant to the Plan of Merger, Sub
will merge with and into the Company (the "Merger") and the Company will be
the surviving corporation in the Merger. As a result of the Merger, each
issued and outstanding share of common stock and preferred stock of the
Company will be converted into common stock of Parent. As soon as practicable
following the Merger, Parent will cause the Company to merge with and into
Parent with Parent surviving (the "Upstream Merger", and collectively with
the Merger, the "Acquisition"). Unless otherwise indicated, any capitalized
terms used herein and not otherwise defined have the meaning ascribed to them
in the Plan of Merger or Form S-4 (the "Registration Statement") filed with
the Securities and Exchange Commission.
We have acted as tax advisors to Parent in connection with the Acquisition.
As such, and for purposes of rendering this opinion, we have examined (or
will examine on or prior to the Effective Date) and are familiar with the
Plan of Merger and such other presently existing documents, records and
federal income tax matters as we have deemed necessary or appropriate in
connection with rendering this opinion.
In addition, we have assumed (i) that the Acquisition will be consummated in
accordance with the provisions of the Agreement and the Amendment, (ii) the
truth and accuracy, on the date of the Agreement, the date of the Amendment,
and on the date hereof, of the representations and warranties made by Parent
and the Company in the Agreement and the Amendment, (iii) the truth and
accuracy of the representations made to us by Parent, the Company, and the
Company shareholders in their respective letters to us dated November 2,
2000, November 3, 2000, and November 3, 2000, respectively and delivered to
us for purposes of this opinion, and, (iv) that any representation made "to
the knowledge" or similarly qualified is correct without such qualification.
The conclusion expressed herein represents our judgment of the proper treatment
of certain aspects of the Acquisition under the income tax laws of the United
States based
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upon the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations, rulings and other pronouncements of the Internal Revenue Service
(the "IRS") currently in effect, and judicial decisions, all of which are
subject to change, prospectively or retroactively. No assurance can be given
that such changes will not take place, or that such changes would not affect
the conclusion expressed herein. Furthermore, our opinion represents only our
best judgment of how a court would conclude if presented with the issues
addressed herein and is not binding upon either the IRS or any court. Thus,
no assurance can be given that a position taken in reliance on our opinion
will not be challenged by the IRS or rejected by a court.
Our opinion relates solely to the tax consequences of the Acquisition under
the federal income tax laws of the United States, and we express no opinion
(and no opinion should be inferred) regarding the tax consequences of the
Acquisition under the laws of any other jurisdiction. This opinion addresses
only the specific issue set forth below, and does not address any other tax
consequences that may result from the Acquisition or any other transaction
(including any transaction undertaken in connection with the Acquisition).
No opinion is expressed as to any transaction other than the Acquisition as
described in the Plan of Merger or as to any transaction whatsoever,
including the Acquisition, if all of the transactions described in the Plan
of Merger are not consummated in accordance with the terms of the Plan of
Merger and without waiver or breach of any material provision thereof, or if
all the representations, warranties, statements and assumptions upon which we
rely are not true and accurate at all relevant times. In the event any one of
the statements, representations, warranties or assumptions upon which we rely
to issue this opinion is incorrect, our opinion might be adversely affected
and may not be relied upon.
Based upon and subject to the foregoing, we are of the opinion that the
Acquisition will constitute a reorganization within the meaning of Section
368(a) of the Code, and each of Parent, Sub, and the Company will be a party
to the reorganization within the meaning of Section 368(b) of the Code.
We hereby consent to the filing of this opinion as an exhibit to the Joint
Proxy Statement and the references to this firm under the headings "The
Merger - U.S. Federal Income Tax Consequences of the Merger" and "Legal and
Tax Matters" in the Registration Statement.
This opinion is being delivered to you in connection with the Plan of Merger and
is intended solely for your benefit; it may not be relied upon for any other
purpose or by any other person or entity, and may not be made available to any
other person or entity (except for the consented filing with the Securities
and Exchange Commission of Form S-4) without our prior written consent.
Very truly yours,
/s/ Ernst & Young LLP
