Forest Oil Reports Decrease in '09 Proved Reserves

Forest Oil reported its estimated proved reserves, net sales volumes, and capital expenditures for the year ended December 31, 2009. The Company reported the following highlights:

  • Estimated proved reserves at December 31, 2009 were 2,120 Bcfe; proved undeveloped percentage remained consistent compared to December 31, 2008 at 37%
  • 2009 reserve replacement ratio was 144%; 2009 finding and development costs were $2.16 per Mcfe
  • 2009 reserve replacement ratio, excluding price revisions, was 315%; 2009 finding and development costs, excluding price revisions, were $0.99 per Mcfe
  • 2009 estimated net sales volumes were 183 Bcfe
  • 2009 estimated exploration and development capital expenditures were $569 million, including $57 million for land and leasehold acquisition costs

H. Craig Clark, President and CEO, stated, "Forest's investment results for 2009 demonstrated our ability to operate efficiently in a low commodity price environment. For the year, our drilling program added reserves at $0.99 per Mcfe with a reserve replacement ratio of 315%. Forest's 2009 drilling program focused primarily on horizontal delineation projects within its core areas, the Greater Buffalo Wallow Area, East Texas / North Louisiana, and the Deep Basin in Canada. In addition, we performed detailed field studies and commenced exploitation projects on the properties that were divested during 2009, increasing the ultimate value realized in the 2009 divestiture program. As Forest moves forward into 2010, we will focus our capital program on horizontal drilling in these same core areas that have large land positions, attractive returns, low cost structures, and future growth potential."

ESTIMATED PROVED RESERVES, ESTIMATED NET SALES VOLUMES, AND ESTIMATED CAPITAL EXPENDITURES

The following disclosure of 2009 estimated net sales volumes and capital expenditures is unaudited. Audited results will be available upon filing of Forest’s 10-K, which is expected to occur in late February or early March 2010.

Forest reported year end 2009 estimated proved reserves of 2,120 Bcfe, which were 63% proved developed and 80% natural gas, compared to 2,668 Bcfe at December 31, 2008, which were 63% proved developed and 75% natural gas. The decrease in estimated proved reserves is primarily the result of asset divestitures and price revisions offset by significant extensions and discoveries in 2009. The pricing utilized for estimated proved reserves at December 31, 2009 was based on a 12 month average of the 2009 first day of the month Henry Hub price for natural gas of $3.87 per MMbtu and a 12 month average of the 2009 first day of the month West Texas Intermediate (WTI) price for oil of $61.08 per barrel. This compares to the pricing utilized for estimated proved reserves at December 31, 2008 of the year end Henry Hub price for natural gas of $5.71 per MMbtu and the year end WTI price for oil of $44.60 per barrel. Forest's estimated proved reserves were audited by DeGolyer and MacNaughton, an independent third party engineering firm. DeGolyer and MacNaughton's audit covered properties representing over 80% of the value of Forest’s total estimated proved reserves at year end 2009
 

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