Event Brief of Q3 2006 Forest Oil Corporation Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

PARTICIPANTS

. Patrick Redmond, Forest Oil Corporation, Director, IR . Dave Keyte, Forest Oil Corporation, CFO . Craig Clark, Forest Oil Corporation, President, CEO . David Tameron, Jefferies & Company, Analyst . Brian Singer, Goldman Sachs, Analyst . Subash Chandra, Morgan Keegan, Analyst . Andrew O'Connor, Wells Capital Management, Analyst . Ray Deacon, BMO Capital Markets, Analyst . Eric Hagen, First Albany Capital, Analyst . Jeff Robertson, Lehman Brothers, Analyst . Russ Kavoti, Analyst

OVERVIEW

The Co. reported that 3Q06 adjusted earnings were $29.7m, or $0.48 a share and EBITDA was $133m.

FINANCIAL DATA

A. Key Data From Call 1. 3Q06 adjusted earnings = $29.7m. 2. 3Q06 adjusted EPS = $0.48. 3. 3Q06 EBITDA = $133m. 4. 3Q06 CapEx = $165m.

PRESENTATION SUMMARY

S1. 3Q06 Financial Review (D.K.) 1. Highlights: 1. Adjusted earnings were $29.7m, or $0.48 a share vs. $35.3m, or $0.57 a share in 3Q05. 2. The higher production volumes generated by FST were offset by: 1. Lower per-unit realization after hedges. 2. Higher interest expense. 3. Higher effective tax rate. 3. Oil and gas sales after the effect of hedging were about $188m in 2006, an 8% increase over 2005. 1. Oil and gas sales on per-unit basis decreased 7% from $7.07 to $6.53 in 2006. 1. Decrease was NYMEX driven, largely by 22% decrease in NYMEX gas prices, 3Q06 vs. 3Q05, offset somewhat by about 10% increase or so in oil prices. 4. Natural gas differentials improved to about $1.39, liquids

differentials widened at $12.30 from $11.25 in 2Q06 due to higher percentage of NGLs in liquids production mix. 5. Production averaged "313m" a day, up about 17% from 2005, of which about 13% was organic. 1. Production was down sequentially about 1% despite 11% sequential increase in a combined rate on Big Three properties. 2. Continues to be on target to deliver 14-15% production

growth for 2006. 3. Production expenses continued to show improvement as lease Opex on a per-unit basis stayed essentially flat YoverY, and overall production expense dropped from $1.80 per unit in 2005 to $1.71 per unit in 2006. 1. This particular drop was due to increased severance tax credits received in 2006, due to increased drilling

expenditures in tight gas areas of Texas. 2. The severance tax credit has made a big difference in the economics of FST's acquisitions in Panhandle in East Texas vs. other parts of North America.

6. G&A expense excluding stock-based comp decreased 3% to $9.2m

in 2005 to $9.0m in 2006. 1. On a per-unit basis this represents an 18% decrease from $0.38 to $0.31 per unit, considering that the Co. has torn out 40% of the production base with spin-off in March.

7. Interest expense increased due to higher debt levels due to

East Texas acquisition and increased floating rates. 8. Overall, cash cost per unit were down 3%, as 7% decrease in production and G&A expense was offset by a 14% increase in interest and cash taxes. 1. Cash costs were $2.66 vs. $2.74 in 3Q05.

2. The nine-month comparison, 2006 vs. 2005 shows a similar improvement. 9. EBITDA was $133m, or up 9% from 2005 as production growth and cash cost control outpaced decreases in topline.

10. Cash flow per share was up slightly to $1.79 per share in

2006 vs. $1.78 per share in 2005, as EBITDA increases were

offset by higher interest expense. 11. CapEx was $165m.

1. The majority of this capital was split in the Big Three properties.

2. Total FD&A CapEx YTD is about $760m, and that money has been

invested at what Co. believes to be similar FD&A cost per unit to those achieved in 2005. 12. As a result of hedging, to date for 2007, FST has 55 MMBtu per day, or about 30% of 3Q06 production of its gas hedged at an avg. price protection of $8.52 and avg. ceiling of $10.39. 1. This is in a mix of swaps and collars.

2. On the oil side, 7,500 barrels of oil per day, or about 35%

of 3Q06 liquid production are hedged at an avg. floor of $69.25 and avg. ceiling of $80.65, blend of swaps and collars. 2. Forest Alaska: 1. Newly formed subsidiary, Forest Alaska, has additional hedges that have been put into place. 2. Last week, Co. announced the formation of a new Alaskan subsidiary. 1. This entity will own all of the proved reserves and producing fields in Alaska and will undertake the further development of those fields through its own internally generated cash flow. 2. This entity has separately begun its hedging program, and as of 11/09/06 has about 3,300 barrels a day hedged from 2007 through 2009 at about $67 a barrel. 1. This is the completion of the current planned hedging

program for the subsidiary. 2. This allows the subsidiary to go into the market and launch a term debt offering which Co. believes to begin next week. 3. Over the next several weeks the term financing institution markets will be put into place, and a subsidiary debt which will be non-recourse to FST will be used to finance approx.

$350m distribution to the Co. with the remaining proceeds being kept for working capital at the Forest Alaska level. 1. From that point forward, Forest Alaska will internally fund its property development without any call on FST's capital. 3. Transaction does the following: 1. It monetizes the free cash flow stream from Alaska for immediate redeployment into FST's core onshore business.

2. It allows FST to continue to participate in the equity upside in the further development of the Alaska business, which appears prospective. 3. It allows Co.'s equity and note holders to focus their analysis and prospects to the core onshore business of FST.

4. It also helps to lock in the higher oil prices for Alaska

field development. 3. Summary: 1. Feels 3Q06 was right on expectations.

2. Production continues to build in Big Three assets. 3. Cash cost structure is solid and performance has been better than expected. 4. Capital investments continue to produce FD&A costs, in line with prior year results. 5. Announced Alaska transaction should ensure that the core onshore program would have the capital it needs to continue to perform while leaving Alaska with the capital it needs for its development as well.

S2. 3Q06 Business Review (C.C.) 1. Overview: 1. FST is taking the next step in creating shareholder value, which comes from:

1. Alaska. 2. Reinvesting in the core assets. 1. 3Q06 results were as FST expected from these assets. 2. FST somewhat anticipated the commodity price downturn with a portfolio that needs a whole lot of commodity price help to beat economics.

2. Highlights: 1. Production grew 17% YtoY for Remainco. 2. Net production records in the Big Three again. 3. Had some records in: 1. Oilfields in West Texas. 2. Ansell in Alberta with the new well. 3. Katy, just for FST's operatorship. 1. Production is up at Katy more than it was when FST took it. 4. Had exploration success at Ansell and Hinton. 5. Some recent discovery in the Cotton Valley area, Canada Foothills, and even something south of Buffalo Wallow. 6. Had continued cost control on cash costs and progress in holding …