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January 27, 2004 --- Vol. 10, No. 8January 2004

Forest slashes Redoubt Shoal reserves to 8 million barrels

Forest Oil has slashed its estimate of proved reserves at the Redoubt Shoal field in Cook Inlet to 8 million barrels, taking 49 million barrels out of its previous estimate, moved the drilling rig off the Osprey platform and replaced it with a smaller rig which will be used to work on the existing wells, but not to drill new wells.

Estimated reserves were reduced following completion of an integrated field study. The company said in a statement that the new estimate reflects both lower than expected production rates and new data evaluations showing “significantly lower oil in place.”

Forest said 36 million of the 49 million barrels dropped from its reserves estimate had been categorized as proved undeveloped.

Craig Clark, Forest Oil’s president and CEO, told a Jan. 27 conference call that the company is “very disappointed” in the reduction in proved reserves at Redoubt.

He said Forest has finished its detailed technical review and also has results back from the independent third-party review. Geological and geophysical data gathered in 2003 was combined with previous data and the reservoir was remapped using new seismic and new well data.

The rig at the Osprey platform at Redoubt Shoal was on a three-year contract and when that contract expired the rig was moved off the platform and the company moved in “a less expensive hydraulic rig from the Gulf Coast,” Clark said. That rig is expected to be operational later this month and will be used first to repair the electrical submersible pump that went down late last year in the No. 1 well, and then to complete the No. 7 well, which was drilled and cased in December.

Production began at Redoubt in December 2002 and Clark said more than a million barrels has been produced to date; current production at the field, with the No. 1 well down, is in the 1,500 to 2,000 barrel per day range.

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