S&P rates Forest Oil notes

Standard & Poor's said it assigned its BB- rating to Forest Oil Corp.'s (BB-/stable/--) $100 million 8% senior unsecured notes maturing 2011.

Proceeds will be used to reduce debt following the acquisition of The Wiser Oil Co.

S&P said the ratings on Forest reflect increasing dependence on acquisitions to offset its faltered frontier development strategy, high operating cost structure relative to its peers and leverage 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.

S&P said production from recent acquisitions should help offset accelerating production declines from its existing Gulf Coast properties.

Gradual cost reductions achieved through opportunistic acquisitions coupled with the favorable commodity price environment should bolster profitability measures, with EBITDA interest coverage averaging around 9x and funds from operations to total debt over 50%.

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