Published: March 18, 2010
Forest Oil Announces Canadian Deep Basin Nikanassin Play; Additional Texas Panhandle and Haynesville / Bossier Shale Wells; Leasehold Acquisitions in the Core Haynesville / Bossier Shale; and Analyst Meeting Webcast Today at 1:00 PM ET
DENVER - (BUSINESS WIRE) - Forest Oil Corporation (NYSE:FST) (Forest or the Company) today
announced well results and updated acreage information in its Canadian
Deep Basin Nikanassin Play, provided information on recently completed
Texas Panhandle and Haynesville / Bossier Shale wells, and announced
leasehold acquisitions in the core Haynesville / Bossier Shale.
Canadian Deep Basin Nikanassin Play
Forest announced today the results from its initial 10-well program in
its Canadian Deep Basin Nikanassin Play which had average 24-hour
initial test rates of 14 MMcfe/d per well and the addition of 43,000
gross and net acres in the play. Forest now has 105,000 gross (64,000
net) acres in the Canadian Deep Basin Nikanassin Play, bringing its
total acreage in the Canadian Deep Basin to 184,000 gross (105,000 net)
acres. With 10 straight successful wells in the Nikanassin utilizing new
fracture stimulation technology, Forest believes it has validated the
repeatable nature of the play. This repeatability has allowed for the
creation of an additional core development drilling program for the
Company in the Deep Basin, targeting Cretaceous sand formations, with
the Nikanassin as the anchor formation. Forest is currently running 3
rigs in the play. Detailed information on the last 10 wells is set forth
in the table below:
|
Wells (1)
|
|
Gross Natural Gas
(MMcf/d) (2)
|
|
Number of Zones
Completed
|
|
Well #1
|
|
32
|
|
4
|
|
Well #2
|
|
10
|
|
4
|
|
Well #3
|
|
29
|
|
3
|
|
Well #4
|
|
12
|
|
5
|
|
Well #5
|
|
11
|
|
3
|
|
Well #6
|
|
9
|
|
3
|
|
Well #7
|
|
12
|
|
4
|
|
Well #8
|
|
6
|
|
4
|
|
Well #9
|
|
7
|
|
4
|
|
Well #10
|
|
15
|
|
6
|
|
|
|
|
|
|
|
Average
|
|
14
|
|
4
|
|
|
|
|
|
|
|
(1) Average working interest is 48.5%
|
|
(2) Initial 24-hour test rates
|
With the significant expansion of this play by Forest and others in the
industry, increased infrastructure is needed to transport the additional
natural gas volumes. As a result, Forest estimates it has 20 - 25
MMcfe/d of net production that is shut-in awaiting infrastructure
project completions. These projects are expected to be completed and
production is expected to be placed to sales in the fourth quarter of
2010. The infrastructure is designed to provide excess production
capacity beyond Forest's 2010 drilling program.
Craig Clark, Forest's President and Chief Executive Officer, stated,
"Technology advancement and its successful application to our Nikanassin
properties have yielded another repeatable drilling program for Forest
with average gross 24-hour initial test rates of 14 MMcfe/d per well
from a 10-well program to date. These results were far greater than
previous results in the area and have even exceeded our original
expectations. With our recent successful acquisitions of 43,000 net
acres in the play, we have accumulated a total of approximately 64,000
net acres. The accumulation of the acreage has resulted in a significant
non-proved inventory of approximately 481 identified gross locations
with over 1.9 Tcfe of net unrisked potential.
"In addition to our highly successful drilling program in the southern
section of our Texas Panhandle acreage we have recently validated the
prospectivity of our northern acreage in the Panhandle through our most
recent horizontal well that came on-line at a 24-hour initial production
rate of 20 MMcfe/d in Lipscomb County, Texas. This well, along with the
extensive knowledge we have achieved through our database of more than
600 well bores across our Panhandle acreage, continues to validate the
entire acreage position in the Texas Panhandle as highly prospective.
"In total, the Company now has three growth engines which are the Texas
Panhandle, the Haynesville / Bossier Shale, and the Deep Basin
Nikanassin Play. As we move forward into 2010 and beyond, these plays
will become the main component of our capital spending and organic
growth."
Texas Panhandle
Forest announced today initial 24-hour production rates for three
additional wells in the Texas Panhandle Granite Wash:
|
Operated Wells
|
|
Working
Interest (%)
|
|
Gross Natural Gas
(MMcf/d)
|
|
Gross Oil &
Condensate
(Bbls/d)
|
|
Gross Natural
Gas Liquids
(Bbls/d)
|
|
Gross Equivalent
(MMcfe/d)
|
|
Well #5
|
|
50.0
|
|
8.6
|
|
700
|
|
1,200
|
|
20
|
|
Well #6
|
|
50.0
|
|
10.7
|
|
600
|
|
1,400
|
|
23
|
|
Well #7
|
|
56.0
|
|
13.2
|
|
600
|
|
2,200
|
|
30
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
|
|
52.0
|
|
10.8
|
|
633
|
|
1,600
|
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Program Average
|
|
68.0
|
|
11.8
|
|
843
|
|
1,800
|
|
28
|
|
|
|
|
|
|
|
|
|
|
|
|
The results from these three recent Texas Panhandle Granite Wash wells
brings Forest's total average 24-hour initial production rate from its
horizontal Granite Wash program to 28 MMcfe/d, of which 57% of the
equivalent rate is liquids. Forest will continue its three rig program
in this area to focus on liquids-rich prospects in the current commodity
price environment.
The first four wells of the Texas Panhandle Granite Wash program have
performed in excess of Forest's pre-drill decline curve, and have
resulted in significant production and revenue realizations. The
following is the detail relative to gross cumulative production and
gross revenue related to these wells through February 28, 2010:
|
Operated Wells
|
|
Working
Interest (%)
|
|
No. of Days
On-line
|
|
Gross
Equivalent
(Bcfe)
|
|
Average Per
Day
(MMcfe/d)
|
|
Gross
Revenue
($MM)
|
|
Well #1
|
|
97.9
|
|
312
|
|
1.55
|
|
5.0
|
|
6,309
|
|
Well #2
|
|
93.8
|
|
147
|
|
2.32
|
|
15.8
|
|
14,962
|
|
Well #3
|
|
56.2
|
|
94
|
|
2.38
|
|
25.3
|
|
15,877
|
|
Well #4
|
|
71.9
|
|
54
|
|
1.49
|
|
27.6
|
|
10,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average / Total
|
|
80.0
|
|
152
|
|
1.93
|
|
18.4
|
|
47,575
|
|
|
|
|
|
|
|
|
|
|
|
|
In addition to Forest's Texas Panhandle Granite Wash program, the
Company has participated in two successful wells in the northern
sections of its acreage, targeting the lower Morrow interval. Forest's
first horizontal well in Lipscomb County was drilled and completed with
a 24-hour initial production rate of 8 MMcfe/d, while its second
horizontal well was drilled and completed with a 24-hour initial
production rate of 20 MMcfe/d. These wells are significant as they
confirm the prospectivity of Forest's northern acreage in the Texas
Panhandle where it holds 47,000 gross (37,000 net) acres. Forest will
continue its one rig drilling program in the northern area of the Texas
Panhandle.
Haynesville / Bossier Shale
Forest recently acquired and farmed-in to a total of 25,000 gross
(17,000 net) acres in Shelby County, Texas and Sabine Parish, Louisiana.
The properties are located in the area where there has been recent
industry success, including Forest's well in Sabine Parish that had an
initial 24-hour production rate of 21 MMcfe/d. Forest has approximately
40,000 gross (28,000 net) acres in the core area of the Haynesville /
Bossier Shale, which includes Red River and Sabine Parishes in Louisiana
and Shelby County in Texas. The Company has a total of approximately
103,000 gross (72,000 net) acres prospective for the Haynesville /
Bossier Shale within the defined limits of the play that exist today.
Based on 80-acre spacing, the properties add a substantial number of
drilling locations to Forest's current inventory in the play. In total,
Forest has 467 gross drilling locations, not including existing proved
undeveloped locations, in Red River and Sabine Parishes, Louisiana and
Shelby County, Texas and 776 locations in Harrison, Panola, Gregg, and
Rusk Counties, Texas. Forest is currently running 3 rigs in the play,
with approximately 15 wells planned in 2010. The first well in 2010, the
fifth well since inception of the program, had an initial 24-hour
production rate of 20 MMcfe/d, which brings Forest's total program
average 24-hour initial production rate to 18 MMcfe/d.
2010 Analyst Meeting
Forest will discuss these items and other corporate matters today at its
2010 Analyst Meeting in New York. To access the live webcast, visit
Forest's website at www.forestoil.com
today at 1:00 PM ET. The slides that accompany the conference
presentation will be posted to Forest's website today by 12:00 PM ET, in
advance of the start of the meeting. The webcast will include
presentations from Forest's senior management and will last
approximately three hours. If you are unable to listen to the live
webcast, a replay will be available through Thursday, April 15, 2010 and
can be accessed from www.forestoil.com.
Reserve Information
The Securities and Exchange Commission (SEC) permits oil and gas
companies, in their filings with the SEC, to disclose only proved,
probable and possible reserves that meet the SEC's definitions of such
terms. The discussion regarding the Canadian Deep Basin Nikanassin and
Haynesville / Bossier Shale Play above includes a reference to "net
unrisked potential." Forest uses the terms resource "potential" or
"upside" or other descriptions of volumes of reserves potentially
recoverable through additional drilling or recovery techniques, and the
SEC's guidelines strictly prohibit Forest from including such reserve
estimates in filings with the SEC. These estimates are by their nature
more speculative than estimates of proved reserves and accordingly are
subject to substantially greater risk of being actually realized by
Forest. Forest discloses only proved reserves in its filings with the
SEC. Forest's proved reserves as of December 31, 2009 were estimated
by Forest's internal staff of engineers and comply with the recently
revised rules and definitions promulgated by the SEC. Forest engaged
independent reserve engineers to audit a substantial portion
of its proved reserves. The reserve audit procedures followed by the
independent reserve engineers on behalf of Forest are described in
Forest's Annual Report on Form 10-K. For the years ended December 31,
2009, 2008, and 2007, Forest engaged DeGolyer and MacNaughton, an
independent petroleum engineering firm, to perform reserve audit
services with respect to its proved reserves. Investors are urged to
consider closely the disclosure in Forest's Annual Report on Form 10-K
for fiscal year ended December 31, 2009, copies of which are available
for free from Forest by writing Forest at 707 17th Street, Suite 3600,
Denver, CO 80202, Attention: Investor Relations, or by calling Investor
Relations at 303-812-1400, or visiting Forest's website at www.forestoil.com.
FORWARD-LOOKING STATEMENTS
This news release includes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements
of historical facts, that address activities that Forest assumes, plans,
expects, believes, projects, estimates or anticipates (and other similar
expressions) will, should or may occur in the future are forward-looking
statements. The forward-looking statements provided in this press
release are based on management's current belief, based on currently
available information, as to the outcome and timing of future events.
Forest cautions that its future natural gas and liquids production,
revenues, cash flows, liquidity, plans for future operations, expenses,
outlook for oil and natural gas prices, timing of capital expenditures,
and other forward-looking statements are subject to all of the risks and
uncertainties normally incident to Forest's exploration for and
development and production and sale of oil and gas.
These risks include, but are not limited to, oil and natural gas price
volatility, Forest's access to cash flows and other sources of liquidity
to fund its capital expenditures, its level of indebtedness, its ability
to replace production, the impact of the current financial crisis on
Forest's business and financial condition, a lack of availability of
goods and services, environmental risks, drilling and other operating
risks, regulatory changes, the uncertainty inherent in estimating future
oil and gas production or reserves, economic conditions and other risks
as described in reports that Forest files with the Securities and
Exchange Commission (SEC), including its Annual Report on Form 10-K,
Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Also,
the financial results of Forest's foreign operations are subject to
currency exchange rate risks. Any of these factors could cause Forest's
actual results and plans to differ materially from those in the
forward-looking statements.
Forest Oil Corporation is engaged in the acquisition, exploration,
development, and production of natural gas and liquids in North America
and selected international locations. Forest's principal reserves and
producing properties are located in the United States in Arkansas,
Louisiana, Oklahoma, Texas, Utah, and Wyoming, and in Canada. Forest's
common stock trades on the New York Stock Exchange under the symbol FST.
For more information about Forest, please visit its website at www.forestoil.com.
Forest Oil Corporation
Patrick J. Redmond
VP - Corporate
Planning and Investor Relations
303-812-1441
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