Forest's Decrease in Q4 2007 Earnings Blamed on Taxes



For the three months ended December 31, 2007, Forest Oil reported net earnings of $27.6 million or $.32 per basic share. This earnings amount is a decrease of 10% compared to Forest's net earnings of $30.8 million or $.49 per basic share in the corresponding period in 2006.

The net earnings for the three months ended December 31, 2007 were affected by the non-cash effect of net unrealized losses relating to mark-to-market valuation on derivative instruments and investments, and foreign currency exchange totaling $89.2 million ($56.7 million net of tax)and a reduction in the deferred tax liabilities of $14.1 million($14.1 million net of tax) primarily due to lower statutory tax rates in Canada. The statutory tax rate in Canada was lowered from 32% to 25% over the period from 2007 to 2012, respectively.

Without the effect of these items, Forest's adjusted net earnings would have been $70.2 million or $.81 per basic share. This earnings amount is an increase of 181% over Forest's adjusted net earnings of $25.0 million or $.40 per basic share in the corresponding 2006 period. Fourth quarter results were slightly ahead of expectations because of better than expected margins. Noticeable improvements in NGL recoveries and price realizations and lower cash costs drove increased margins.

Forest's adjusted EBITDA increased 105% for the three months ended December 31, 2007 to $265.6 million compared to adjusted EBITDA of $129.3 million in the corresponding 2006 period. Forest's adjusted discretionary cash flow increased 132% for the three months ended December 31, 2007 to $237.8 million compared to adjusted discretionary cash flow of $102.3 million in the corresponding 2006 period. The increases are primarily the result of the acquisition of Houston Exploration partially offset by the sale of the Alaska assets.


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