Forest Oil Corporation (FST) (Forest or the Company) provided an update on its Eagle Ford Shale operations, and announced its second half 2012 capital and drilling program, estimated second quarter 2012 net sales volumes, and second half 2012 guidance.

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 $6 million as the program incorporates pad drilling.

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 $80 WTI crude price and a $6 million well cost.

Interim CEO Patrick R. McDonald commented, "The strong results from these wells in our Eagle Ford acreage position give us confidence we have an economic and attractive oil play. While discussions continue with parties interested in our Eagle Ford asset, we have identified a go-it-alone plan that is attractive to the Company and should allow us to hold approximately 40,000 net acres. We can then look to monetize a portion of the remaining acreage through small divestitures or farm-outs."

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 East Texas and the Panhandle area. Specifically, by the fourth quarter of 2012, in addition to the two rigs running in the Eagle Ford, Forest will have two rigs running in the Panhandle, down from five currently, targeting the Hogshooter and other oil intervals and one rig running in East Texas targeting liquids intervals, down from two currently.