Forest Oil Corporation has announced financial and operational results for the fourth quarter and full year 2008. The Company reported the following highlights for the three months ended December 31, 2008:
Due primarily to a previously announced non-cash oil and gas property impairment, Forest reported a net loss of $1.4 billion, or $(14.50) per basic share, for the three months ended December 31, 2008.
The Company reported the following highlights for the year ended December 31, 2008:
Due primarily to a previously announced non-cash oil and gas property impairment, Forest reported a net loss of $1.0 billion, or $(11.46) per basic share, for the year ended December 31, 2008.
H. Craig Clark, President and CEO, stated, "Forest had another successful year with records in adjusted net earnings, adjusted EBITDA, adjusted discretionary cash flow and net sales volumes to go along with the record estimated proved reserves previously announced. Forest was able to achieve double-digit organic production growth by employing exploration and development capital of only 107% of adjusted EBITDA during the year. In addition to good organic production growth, we were able to replace 281% of our production organically and we grew our overall proved reserve base 26% to 2,668 Bcfe. These metrics demonstrate the high quality of our asset base and our ability to grow our development plays efficiently. In addition to these achievements, we also reduced our per-unit cash costs for the third consecutive year.
"Our capital expenditures in 2008 included the addition of significant undeveloped acreage, primarily in East Texas/North Louisiana, including acreage prospective in the Haynesville/Bossier play and leasehold in the Texas Panhandle. The combination of our quality investment program and our dispositions of non-core assets have resulted in a higher quality asset base at the end of the year.
"Due to dramatic shifts in the global economic outlook, our 2009 plan has changed from one of growth to one of conservatism. Our goal in 2009 is to preserve our strong reserve base and significant land positions, while targeting free cash flow to reduce debt. As previously announced, we are budgeting capital expenditures of $500 - $600 million, a 60% reduction from 2008 spending with the goal to keep production flat from 2008. The capital program in 2009 will include a significant component of horizontal drilling in tight-gas sands and shales where we have already seen success. In addition to our highly successful Cotton Valley horizontal drilling program, we have now successfully started our Haynesville horizontal drilling program with our first horizontal well initially producing 14 MMcfe/d.
"Forest has historically acquired its acreage in emerging plays through its acquisition program and has been deliberate in the early development period in order to provide prudent, thorough technical evaluation and avoid mechanical failures. As we have done in the past, we will focus on improving our wellbore economics by proactively driving down both drilling and production costs to achieve the best possible rates of return from our asset base."
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