Highlights:

— Average net sales volumes raised 15% to 550 MMcfe/d, for the first quarter of 2009, compared with the year-ago quarter

— Total cash costs per-unit reduced to 10% to $2.19 per Mcfe, for the first quarter of 2009, compared with the year-ago quarter

— Adjusted net earnings per share decreased 73% to $.29 per share, for the first quarter of 2009, compared with the year-ago quarter

— Adjusted EBITDA decreased 34% to $193.1 million, for the first quarter of 2009, compared with the year-ago quarter

— Adjusted discretionary cash flow decreased 41% to $156.5 million compared with the year-ago quarter

— First operated Buffalo Wallow horizontal well was drilled with an initial production rate of 17 MMcfe/d

H. Craig Clark, president and chief executive ofiicer, stated, “We were once again pleased with the production performance and cost control from our asset base. After taking into account the Rockies divestiture in late 2008, our production was essentially flat from the fourth quarter of 2008 despite a significant decline in rig count. The progress shown in the first quarter is a good start to 2009, as the company continues to cut costs from drill bit activities, production expense and G&A. Due to continued low commodity prices, we have reduced our current operated rig count to 8 rigs from 15 at the start of 2009. The quarter also kicked off our horizontal drilling programs in the Haynesville and Granite Wash. We are encouraged with the early success in both plays with our first wells exceeding our expectations. We now add the Granite Wash horizontal program to our list of high potential projects. We have a dominant position in the play and intend to transform this development program to focus on horizontal drilling.”

First Quarter 2009 Results

— The non-cash effect of a ceiling test write-down of oil and gas properties, totaling $1.576 billion ($1.244 billion net of tax, including the related valuation allowance recorded against deferred tax assets)

— The non-cash effect of net unrealized gains related to recording derivative instruments, totaling $67.5 million ($43.1 million net of tax)

— The non-cash effect of unrealized losses on other investments and unrealized foreign currency exchange losses, totaling $5.9 million ($4.5 million net of tax)

Without the effects of these items, the company’s adjusted net earnings were $27.9 million or $.29 per basic share. This is a decrease of 70% compared to Forest Oil’s adjusted net earnings of $92.7 million or $1.06 per basic share in the corresponding 2008 period.

Forest Oil’s adjusted EBITDA reduced 34% for the first quarter of 2009 to $193.1 million, compared to adjusted EBITDA of $294.1 million in the year-ago quarter. The coampny’s adjusted discretionary cash flow decreased 41% for the three months ended March 31, 2009 to $156.5 million, compared to adjusted discretionary cash flow of $265.2 million in the corresponding 2008 period.

The decline in adjusted net earnings, EBITDA and discretionary cash flow was primarily due to significantly lower realized commodity prices for the three months ended March 31, 2009 compared to the corresponding 2008 period.

Total Cash Costs

Total cash costs per-unit declined 10% for the three months ended March 31, 2009 to $2.19 per Mcfe compared to $2.43 per Mcfe in the corresponding 2008 period. The decrease in cash costs per-unit was a result of the decrease in operational costs including lease operating expenses, production and property taxes, and general and administrative expense. These decreases were counterbalanced by increased interest expense due to increased debt balances.

Depreciation and Depletion Expense

Forest Oil’s depreciation and depletion expense per-unit declined 21% for the first quarter of 2009 to $2.11 per Mcfe compared to $2.66 per Mcfe in the corresponding 2008 period. The decrease was mainly due to a non-cash ceiling test write-down of oil and gas properties for the three months ended December 31, 2008.

Exploration and Development Capital Expenditures

Forest Oil invested $244.5 million in exploration and development activities (excluding capitalized interest, equity compensation and asset retirement obligations) for the three months ended March 31, 2009. This compares to a $242.7 million investment for the three months ended March 31, 2008. Capital expenditure activity was weighted toward the first quarter of 2009 due to the completion of significant work-in-progress at year-end and Canadian winter drilling activity.

In response to commodity price declines, Forest Oil reduced its existing operated rig count from 15 at the beginning of 2009 to eight operated rigs at present. The company intends to reallocate capital based on returns in each area along with the potential for well cost reductions. At the present time, the reallocation is weighted toward horizontal projects with oil, condensate and liquids exposure.

Liquidity:

To raise its liquidity, Forest Oil issued $600 million principal amount of 8.5% senior notes due 2014 in a private offering in February of 2009. The company used the net proceeds from the offering to repay a portion of the outstanding borrowings under its bank credit facilities. At March 31, 2009, the company had about $913 million outstanding under its bank credit facilities. Forest Oil’s existing borrowing base totals $1.62 billion resulting in about $705 million of remaining borrowing capacity under its bank credit facilities at March 31, 2009.

Natural Gas, Oil, And Basis Derivatives:

Since the commencement of 2009, Forest Oil’s added to its hedge positions for 2009 and 2010 including the following NYMEX and basis derivative transactions:

— NYMEX gas swap contracts for 50 Bbtu/d of April through October 2009 production at a weighted average price of $4.42 per MMBtu

— NYMEX gas swap contracts for 150 Bbtu/d of 2010 production at a weighted average price of $6.36 per MMBtu

— NYMEX basis swap contracts for 18 Bbtu/d of Houston Ship Channel 2009 production at NYMEX less a weighted average differential of $.34

— NYMEX basis swap contracts for 40 Bbtu/d of NGPL TxOk 2010 production at NYMEX less a weighted average differential of $.44

As of May 4, 2009, including the transactions described above, Forest Oil’s had natural gas and oil derivatives in place for the remainder of 2009 and 2010 covering the aggregate average daily volumes and weighted average prices. The derivatives (excluding basis derivatives) provide price protection on an anticipated 63% and 34% of remaining 2009 guided natural gas and oil net sales volumes, correspondingly. None of these natural gas and oil derivatives contain knock-out provisions that would cause a derivative to cease to exist at prices below an established threshold. Forest Oil’s bank group is included entirely of commercial banks. These banks or their affiliates are also the company’s derivative counterparties.