Forest Oil's $1.62B Borrowing Base Reaffirmed
Forest announced that its bank group reaffirmed the Company's $1.62 billion borrowing base and $1.8 billion commitment amount related to its credit facilities maturing in June 2012. The next redetermination of the borrowing base is scheduled to be in the fourth quarter of 2009. As of March 2, 2009, Forest had borrowed $853 million on its credit facilities and had $767 million of liquidity available to be drawn.
Forest further entered into an amendment with its banking group which provides that Forest will not permit the total debt outstanding to EBIDTA ratio (leverage ratio), to be greater than (i) 4.50 to 1.00 for four consecutive fiscal quarters ending in 2009 and 2010; (ii) 4.00 to 1.00 for four consecutive fiscal quarters ending in 2011; and (iii) 3.50 to 1.00 for four consecutive fiscal quarters ending in 2012. Prior to this amendment, Forest's leverage ratio was not permitted to be greater than 3.50 to 1.00 for any four consecutive fiscal quarters within the term of the credit facilities.
Michael Kennedy, Vice President -- Finance and Treasurer, stated, "We are pleased to have our current borrowing base reaffirmed which is a testament to the significant improvement of our reserve base since our last redetermination. Improvements in reserve quality more than offset reductions in bank pricing assumptions for determining borrowing bases. This supports recent positive actions by rating agencies regarding the quality of Forest's credit. We also are pleased with the amendment in the leverage ratio covenant as it allows us greater flexibility to operate in the case of an extended low commodity price cycle. In these uncertain times, we believe it is critical to have significant liquidity and to mitigate the effect of further commodity price declines on our covenants."
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