Forest Finds Success in Greater Haley

Forest Oil has announced the results of its drilling operations in the Greater Haley Area in West Texas.

The Denver-based independent's first new drilling well in Greater Haley was completed and is currently producing at a rate of 7 MMcfe/d with a flowing tubing pressure of 5,800 psi after acid stimulation. The well was drilled to a total depth of 18,400 feet. The company is the operator and has a 100-percent working interest.

Forest's second new drilling well in this area is currently completing. The well had two zones fraced (out of the scheduled four zones), with shut-in tubing pressure of 12,000 psi prior to completion operations being delayed due to a wireline-set frac plug having mechanical problems. The well is expected to be completed in the second quarter of 2006.

The company also issued updated guidance for 2006. The guidance cnsiders the company's pending Cotton Valley property acquisition, which is expected to clse on March 31. It excludes the operations and activities of offshore Gulf of Mexico assets involved in the completed spin-off from January 1, 2006, to the dividend distribution date of March 2, 2006. Highlights of the guidance follow:

  • Forest estimates that its daily production will range from 300 to 320 MMcfe/d for the full year of 2006.
  • The company forecasts that its 2006 production of oil and natural gas liquids will be between 19,000 and 21,000 Bbls/d.
  • The independent's projected 2006 natural gas production is 185 and 195 MMcf/d.
  • Forest anticipates that its oil and gas production expense will be between $195 million and $215 million. This expense includes LOE, ad valorem taxes, production taxes, and product gathering and transportation.
  • The estimated general and administrative expense, which excludes certain non-cash charges, ranges from $35 million to $39 million.
  • The company's projected depreciation, depletion, and amortization rate for 2006 is between $2.00 and $2.10 per Mcfe.
  • Forest estimates that its capital expenditures for exploration and development this year will range from $450 million to $500 million.