Forest Oil Corporation Oil and Gas Valuation Report Reference Code: GDGE0484V Publication Date: OCT 2008 Forest Oil Corporation, Oil and Gas Valuation Report GDGE0484V / Published 10 / 2008 © GlobalData. Refer to important disclosures at the end of this report. Page 1 Table of Contents 1 Table of Contents 1 Table of Contents ....................................................................................................................... 2 1.1 List of Tables ........................................................................................................................................................................... 5 1.2 List of Figures.......................................................................................................................................................................... 6 2 Investment Summary ............................................................................................................... 11 2.1 Strong Commodity Prices and Resource Potential Providing Attractive Valuation Upside............................. 12 2.2 Haynesville Shale Acreage Presents Potential Upside............................................................................................... 13 2.3 Large and Attractive Asset Base with Substantial Upside ........................................................................................ 16 2.4 Strategic Acquisitions Adds Value to the company.................................................................................................... 17 2.5 Utica Shale –Large Resource Potential and Acreage ................................................................................................. 22 3 Company Overview .................................................................................................................. 24 3.1 Production and Reserves ................................................................................................................................................... 25 3.2 Exploration and Appraisal.................................................................................................................................................. 29 3.3 Acquisition and Disposal.................................................................................................................................................... 35 3.4 Share Performance............................................................................................................................................................... 37 3.5 Key Management .................................................................................................................................................................. 38 4 Operations Summary ............................................................................................................... 40 4.1 The United States ................................................................................................................................................................. 40 4.1.1 Overview .......................................................................................................................................................................... 40 4.1.2 Production and Reserves .............................................................................................................................................. 40 4.1.3 Exploration and Development....................................................................................................................................... 43 4.1.4 Outlook ............................................................................................................................................................................. 45 4.2 Canada..................................................................................................................................................................................... 46 4.2.1 Overview .......................................................................................................................................................................... 46 4.2.2 Production and Reserves .............................................................................................................................................. 46 4.2.3 Exploration and Development....................................................................................................................................... 48 4.2.4 Outlook ............................................................................................................................................................................. 49 4.3 International ........................................................................................................................................................................... 50 4.3.1 Overview .......................................................................................................................................................................... 50 4.3.2 Production and Reserves .............................................................................................................................................. 50 Forest Oil Corporation, Oil and Gas Valuation Report GDGE0484V / Published 10 / 2008 © GlobalData. Refer to important disclosures at the end of this report. Page 2 Table of Contents 4.3.3 Exploration and Development....................................................................................................................................... 51 5 Financial Outlook...................................................................................................................... 52 5.1 Income Statement (2005-2012).......................................................................................................................................... 53 5.2 Balance Sheet (2005-2012) ................................................................................................................................................. 54 5.3 Cash Flow Statement (2005-2012) .................................................................................................................................... 55 5.4 Key Ratios (2005-2012)........................................................................................................................................................ 56 6 Valuation ................................................................................................................................... 57 6.1 Sum-of-Parts Analysis......................................................................................................................................................... 57 6.2 Comparative Valuation........................................................................................................................................................ 60 7 Peer Group Analysis ................................................................................................................ 62 7.1 Share Price Performance.................................................................................................................................................... 62 7.2 Operational and Financial Performance ......................................................................................................................... 63 8 E&P Operational Composite Summary................................................................................... 67 9 Key Risks .................................................................................................................................. 72 9.1 Crude oil and natural gas prices ...................................................................................................................................... 72 9.2 Political Instability ................................................................................................................................................................ 72 9.3 Competition............................................................................................................................................................................ 72 9.4 Reserves and Drilling operations..................................................................................................................................... 72 10 Market Scenario..................................................................................................................... 73 10.1 The United States ................................................................................................................................................................. 73 10.2 Reserves and Production ................................................................................................................................................... 73 10.3 Imports and Exports ............................................................................................................................................................ 74 10.4 Infrastructure ......................................................................................................................................................................... 74 10.5 Regulations ............................................................................................................................................................................ 74 10.6 Key Fiscal Regime...............................................................................................................................................................