Forest Oil (FST) to Acquire Producing Assets and 85K Net Acres in Buffalo Wallow and East Texas Areas for $892M

August 18, 2008 9:43 AM EDT

Forest Oil Corporation (NYSE: FST) announced today that it has entered into a definitive agreement with Cordillera Texas, L.P. to acquire producing assets including approximately 118,000 gross acres, or 85,000 net acres in Forest's core Greater Buffalo Wallow and East Texas/North Louisiana Focus Areas.

Forest attributes estimated proved reserves of 350 Bcfe with additional net unrisked potential of 1,200 Bcfe and approximately 1,500 additional vertical and horizontal drilling locations to the properties. The properties produced an average of approximately 34 MMcfe/d in the first half of 2008 and are focused primarily in the Granite Wash, Atoka and Morrow intervals in the Greater Buffalo Wallow Area and in the Cotton Valley and Travis Peak intervals in East Texas. The acquired acreage in East Texas also has James Lime, Haynesville/Bossier Shale and Pettet rights.

Under the terms of the agreement, Forest will pay, subject to customary closing adjustments, approximately $708 million in cash and deliver 3.5 million shares of Forest's common stock to the seller for these assets. Measured at the closing price of Forest common stock on August 15, 2008, the transaction is valued at $892 million.

Forest will initially fund the acquisition using its existing credit facility which has approximately $1.21 billion in liquidity as of July 31, 2008. Forest intends to ultimately fund the acquisition by divesting of identified non-core, non-strategic assets. The Company expects that the transaction, which is subject to customary closing conditions, will close at the end of Q308. Forest intends to update 2008 guidance upon the closing of this transaction.

Forest Oil Corporation, an oil and gas company, engages in the acquisition, exploration, development, and production of natural gas and liquids primarily in North America.

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