Forest Oil projects capital expenditures in 2008 of $900 million to $1 billion.
Forest expects total net sales volumes will be 183 to 190 Bcfe or an annual increase of 3% to 11% based on annualized 2007 fourth quarter volumes. These volumes anticipate a sequential decrease in the first quarter followed by sequential increases in each of the next three quarters. Net sales volumes should be comprised of approximately 75% natural gas and 25% liquids. Forest's natural gas liquids volumes are expected to comprise 40% of total liquids volumes.
Based on current prices, Forest expects natural gas price differentials in the first quarter of 2008 will average $1.25 to $1.50 per MMbtu less than the Henry Hub price.
Based on current prices, Forest expects oil differentials in the first quarter of 2008 will average $6.00 to $8.00 per Bbl less than the NYMEX West Texas Intermediate (WTI) price.
Based on current prices, Forest expects natural gas liquids differentials in the first quarter of 2008 will average 50% of the WTI price.
Forest expects production expense (which includes lease operating expense, ad valorem taxes, production taxes and product processing, gathering and transportation) will be $250 to $270 million or $1.35 to $1.45 per Mcfe.
Forest expects G&A expense will be approximately $55 to $60 million, not including stock compensation expense. This results in an anticipated cost of approximately $.30 per Mcfe.
Forest expects stock compensation expense will be approximately $20 to $23 million.
Depreciation, Depletion and Amortization (DD&A) Expense: Forest expects its DD&A rate will be $2.70 to $2.80 per Mcfe.
Forest's effective income tax rate is expected to be 36% (inclusive of applicable federal and state taxes), and Forest's current tax is expected to be 3% of the total tax expense.
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