2007 Yields 5% Increase in Earnings for Forest

For the year ended December 31, 2007, Forest Oil reported net earnings of $169.3 million or $2.22 per basic share. This earnings amount is an increase of 5% compared to Remainco's net earnings of $161.6 million or $2.60 per basic share in the corresponding period in 2006. The net earnings for the year 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 $114.8 million ($71.6 million net of tax); the write-off of unamortized debt costs and prepayment premiums of $12.2 million ($7.8 million net of tax) related to Forest's repayment of the Forest Alaska term loan facilities; the gain on sale of Australia overriding interest of $7.2 million ($4.6 million net of tax); and a reduction in the deferred tax liabilities of $21.0 million ($21.0 million net of tax) to reflect lower statutory tax rates in Canada, release of valuation allowances, and a lower apportioned effective state income tax rate. 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 $223.1 million or $2.93 per basic share. This earnings amount is an increase of 102% over Remainco's adjusted net earnings of $110.4 million or $1.77 per basic share in the corresponding 2006 period. Increased production, higher realizations, lower costs, and solid investment results drove positive financial results.

Forest's adjusted EBITDA increased 69% for the year ended December 31, 2007 to $871.4 million compared to Remainco's adjusted EBITDA of $516.5 million in the corresponding 2006 period. Forest's adjusted discretionary cash flow increased 71% for the year ended December 31, 2007 to $742.0 million compared to Remainco's adjusted discretionary cash flow of $434.6 million in the corresponding 2006 period. The increases are primarily the result of the acquisition of Houston Exploration.

H. Craig Clark, President and CEO, stated, "The Company had an excellent year with attractive results. The successful integration of Houston Exploration and sale of the Alaska assets significantly narrowed our operational focus and improved both the quality of our asset base and the inventory of undrilled locations to drive organic growth. Despite the significant transition required to effect these extensive changes and improvements in our business, we were able to maintain excellent organic and all-in reserve replacement costs while keeping our proved undeveloped reserve percentage flat.

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