Forest Oil Grows Proved Reserves by 26% at Year-End

Forest Oil has announced its estimated proved oil and gas reserves and estimated production results for the year ended December 31, 2008. The Company reported the following highlights:

• Record estimated proved reserves of 2,668 Bcfe, replacing 549% of production with finding, development and acquisition costs of $2.61 per Mcfe
• Net sales volumes are estimated to be a record 518 MMcfe/d for the year ended December 31, 2008, an increase of 22% compared to 2007

H. Craig Clark, President and CEO, stated, "Forest's investment results for 2008 were very solid given the difficult cost environment seen by the industry. For the year, our drilling program added reserves organically at $2.54 per Mcfe, in line with our current three-year average of $2.26. Our acquisition program added reserves at $2.68 per Mcfe and includes all costs related to adding over 150,000 net undeveloped acres primarily in Forest's core East Texas/N. Louisiana and Panhandle areas. Production grew 22% from total investments and 17% organically during 2008. Reserve replacement from all activities was 549% and a record 281% organically, both excellent, as the amount spent on our exploration and development capital program approximated discretionary cash flow. Our estimated proved reserves at December 31, 2008 were a record 2,668 Bcfe despite a reduction of 212 Bcfe for revisions, which were predominately price related due to lower year end prices. In summary, we believe these to be excellent investment results. The resulting reserve base, our large undeveloped land position, and low cost structure provide us with a very solid foundation in our core areas with many investment options moving forward."

ESTIMATED PROVED RESERVES, PRODUCTION, AND CAPITAL EXPENDITURES

Forest reported year end estimated proved reserves of approximately 2,668 Bcfe, up 26% compared to 2,119 Bcfe at December 31, 2007. Estimated proved reserves, which are 63% proved developed (consistent with Forest’s proved developed percentage pro forma for the Cordillera transaction in the third quarter of 2008), consist of approximately 75% natural gas.

The pre-tax present value of estimated proved reserves at year end, based on constant prices and costs at year end and discounted at 10%, totaled approximately $4.0 billion, compared to $6.0 billion at December 31, 2007. The valuation was based on year end NYMEX prices for natural gas of $5.71 per MMbtu and oil of $44.60 per barrel, compared to NYMEX prices for natural gas of $6.80 per MMbtu and oil of $95.98 per barrel at December 31, 2007.

Forest's estimated proved reserves were audited by DeGolyer and MacNaughton, an independent third party engineering firm. As a result of the significant decline in the NYMEX spot price in 2008, Forest anticipates it will record a non-cash ceiling test impairment of approximately $1.5 billion after-tax for the three months and year ended December 31, 2008. The majority of this impairment was due to liquids realizations decreasing approximately 60% in the fourth quarter of 2008. Forest has a portion of its expected 2009 and 2010 production hedged. The value of these derivative instruments was not included in the ceiling test calculation as the Company does not utilize cash flow hedge accounting for its derivative contracts.

CAPITAL ACTIVITIES

For the year ended December 31, 2008, Forest estimated that the Company invested $1.36 billion in exploration and development activities and $1.37 billion in acquisitions. Other costs included as capital expenditures were an estimated $15.0 million associated with asset retirement obligations and an estimated $27.7 million of capitalized interest and equity compensation.

GUIDANCE

Prices for Forest's products are determined primarily by prevailing market conditions. Market conditions for these products are influenced by regional and worldwide economic and political conditions, consumer product demand, weather, and other substantially variable factors. These factors are beyond Forest's control and are difficult to predict. In addition, prices received by Forest for its liquids and gas production may vary considerably due to differences between regional markets, transportation availability, and demand for different grades of products. Forest's financial results and resources are highly influenced by this price volatility.

Estimates for Forest's future production are based on assumptions of capital expenditure levels and the assumption that market demand and prices for liquids and gas will continue at levels that allow for economic production of these products.

The production, transportation, and marketing of liquids and gas are complex processes that are subject to disruption due to transportation and processing availability, mechanical failure, human error, and meteorological events (including, but not limited to severe weather, hurricanes, and earthquakes). Forest's estimates are based on certain other assumptions, such as well performance, which may vary significantly from those assumed. Therefore, Forest can give no assurance that Forest's future production will be as estimated.

2009 GUIDANCE

For the year ended December 31, 2009, Forest intends to invest between $500 million and $600 million on exploration and development activities, which the Company expects to be funded through internally generated discretionary cash flow in 2009. Forest will concentrate its drilling activities in its core areas with a focus in 2009 on its East Texas/North Louisiana corridor, including Haynesville/Bossier drilling, and Buffalo Wallow areas and will have limited spending throughout its other productive regions.

H. Craig Clark, President and CEO, further stated, "Our capital plan for 2009 reflects our desire to stay within anticipated cash flow, while our planned well count reflects a significant increase in capital employed in horizontal drilling. Over 33% of our capital is planned to be spent on drilling horizontal wells. Further, in 2009, we will rely almost exclusively on our Lantern rig fleet to drill our vertical and horizontal wells. In the fourth quarter of 2008, we employed as many as 43 third party rigs on our operated projects. We expect this number, which is now eight, to go to one in 2009 as Forest does not have long-term rig contracts. Our current operated rig count, including Lantern rigs, is 15.

"Our capital plan is designed to deliver approximately the same net sales volumes and estimated proved reserves in 2009 as in 2008 and will keep our attractive land base intact while focusing on capital efficiency and reducing drilling costs.

"It is critical for us to take all possible steps to protect our asset base in this difficult time to allow our shareholders to benefit from our large inventory of projects when more reasonable project economics and capital markets return. We believe the reduction in 2009 activity by us and the industry will ultimately help reduce service costs significantly. Our 2009 plan does not anticipate significant cost reductions at this time."