Forest Completes Asset Divestiture

Forest Oil Corp. (FST) yesterday announced that it has closed its previously announced sale of the rest of its Permian Basin properties in West Texas and New Mexico for approximately $800 million to SandRidge Exploration and Production LLC, a wholly owned subsidiary of SandRidge Energy Inc. (SD). 

As the sale of assets has been completed earlier than expected, the company revised downward its previous guidance of 2009 oil and gas net sales volumes by 0.5 Bcfe (billion cubic feet equivalent) to a range of 181.5 to 192.5 Bcfe. The early completion will also result in a volume reduction of 5 MMcfe/d for the three months ended Dec 31, 2009. 

Forest sold these assets to increase activity and to decrease the overall debt position. The proceeds will support its ongoing development efforts in North American operated tight-gas and shale resource plays that have higher growth opportunities with very attractive returns.
 
In a separate transaction, Forest has started the procedure for the redemption of its 7¾% senior notes due 2014. The notes will be redeemed on Jan 27, 2010. The redemption price for the notes is 101.292% of their principal amount, plus accrued and unpaid interest from Nov 1, 2009 till the redemption date.
 
While the assets sale and redemption of notes has improved Forest’s liquidity position, it has also unlocked shareholder value and helped the company to significantly ramp up its activity on core development assets in the Granite Wash and Haynesville Shale in the U.S. and core Deep Basin assets in Canada.

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