|Forest Oil Provides Eagle Ford Shale Update, Announces Second Half 2012 Capital and Drilling Program, Estimated Second Quarter 2012 Net Sales Volumes, and Second Half 2012 Guidance|
Strong Results from Recent Wells in the
Eagle Ford Shale Update
Since Forest’s last operational update, three horizontal wells have been completed in the central fairway of the Company’s Eagle Ford acreage position that had an average 24-hour maximum production rate of 787 Boe/d (96% oil). The first two wells had a 30-day average production rate of 535 Boe/d (95% oil), and the third well, which has been on production for 18 days, has averaged 616 Boe/d (94% oil).
Given these and earlier 2012 well results, a second drilling rig was recently moved to the field.
Drilling in the Eagle Ford is focused in the central fairway of Forest’s
acreage position, where the Company has experienced the most consistent
results and has the largest, most contiguous block of acreage. This
approach provides the opportunity to maximize drilling efficiencies,
while further reducing the average well cost below
The recent wells, and the earlier 2012 wells located in the central
fairway, meet or exceed Forest’s type curve. The type curve projects an
estimated ultimate recovery of 300 Mboe, with a pre-tax drilling rate of
return of approximately 25% based on a
Without the introduction of a joint venture partner, Forest plans to hold approximately 40,000 net acres with a 100% working interest over the next several years, initially with two rigs and eventually with three rigs. This acreage position has 500 total locations identified based on 80 acre spacing. Employing a two rig program, and the current schedule of drilling and well completions, net sales volumes from the Eagle Ford play is expected to exit the year at 3,000 Boe/d, from a second quarter 2012 average production rate of approximately 1,000 Boe/d.
Second Half 2012 Capital and Drilling Program
Forest intends to fund the Eagle Ford development program and reduce
overall capital spending rates by cutting capital from lower return
liquids projects in
Second half 2012 capital expenditures are estimated to be between
Mr. McDonald stated, “Adjusting the capital spending rate is the first step in improving the Company’s financial strength and flexibility. Over the coming months we will proceed with additional steps by identifying and selling non-reserve based and non-core assets. In our core areas where we have reduced capital spending, our acreage is held by production; therefore, we can return to those areas with a more aggressive development program in a more robust commodity price environment.”
Estimated Second Quarter 2012 Net Sales Volumes
Second quarter 2012 net sales volumes are estimated to average
approximately 335 MMcfe/d (68% natural gas and 32% oil and liquids).
Second quarter net sales volumes were negatively impacted by
approximately 8 MMcfe/d due primarily to downtime associated with a fire
at Eagle Rock’s
Second Half 2012 Guidance
The detail below represents Forest’s updated guidance for net sales
volumes and capital expenditures for the second half of 2012. The
updated guidance remains subject to the cautionary statements and
limitations contained in Forest’s
Net Sales Volumes: Net sales volumes are expected to average 320 – 330 MMcfe/d (67% natural gas, 17% oil, and 16% natural gas liquids) during the second half of the year. Natural gas volumes are forecasted to average 215 – 220 MMcf/d, oil volumes are forecasted to average 9,100 – 9,400 Bbls/d and natural gas liquids volumes are forecasted to average 8,500 – 8,800 Bbls/d.
Capital Expenditures: Forest intends to invest between
*Includes forecasted second quarter 2012 results
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 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 relating to Forest are subject to all of the risks and uncertainties normally incident to their exploration for and development and production and sale of oil and gas.
These risks relating to Forest include, but are not limited to, oil and
natural gas price volatility, its level of indebtedness, its ability to
replace production, its ability to compete with larger producers,
environmental risks, drilling and other operating risks, regulatory
changes, credit risk of financial counterparties, risks of using
third-party transportation and processing facilities and other risks as
described in reports that Forest files with the
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