S&P lowers Forest Oil

Standard & Poor's said it lowered its corporate credit and senior unsecured debt ratings on Forest Oil Corp. to BB- from BB. S&P also lowered its senior secured bank loan rating on Forest's credit facility due 2005 to BB from BB+ and assigned a recovery rating of 1 to the facility.

All of the ratings were removed from CreditWatch where they were placed with negative implications on Jan. 27. The outlook is stable.

S&P said the ratings on Forest were placed on CreditWatch with negative implications in January following the company's announcement that it would record a reserve write-down at year-end 2003 of more than 470 billion cubic feet equivalent. The bulk of the revision (about 68% of the total write-down) was attributed to poor performance at the company's Redoubt Shoal field in Alaska.

S&P added that the ratings downgrade on Forest Oil reflects is increasing dependence on acquisitions to offset its faltered frontier development strategy, its high operating cost structure relative to its peers, and its leverage that is not commensurate with an acquire-and-exploit strategy.

The ratings further reflect the company's participation in the volatile, capital-intensive exploration and production segment of the oil and natural gas industry.

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