Forest Oil to increase spending, expand drilling

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NEW YORK (AP) — Natural gas producer Forest Oil Corp. said Thursday it will increase capital spending by 18 percent this year as it expands drilling activity.

Forest Oil, which has built up cash through sales of non-core assets over the past year, plans to operate eight more drilling rigs this year, bringing its fleet to a total of 20 rigs by the end of the first quarter. The Denver company said it plans to spend between $600 million and $700 million on capital activities in 2010.

The company said it will focus on horizontal drilling operations in unconventional natural gas deposits, including the Greater Buffalo Wallow Area, the Haynesville Shale and the Cotton Valley Sands in East Texas/North Louisiana, and the Deep Basin in Canada.

It is targeting production of 439 million to 449 million cubic feet equivalent of natural gas in 2010.

Shares fell 26 cents to $24.88 in afternoon trading.