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As filed with the Securities and Exchange Commission on January 25, 2006
Registration No. 333-129096
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Amendment No. 2
to
Form S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
 
Mariner Energy, Inc.
(Exact name of registrant as specified in its charter)
         
Delaware   1311   86-0460233
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification No.)
 
2101 CityWest Blvd., Bldg. 4, Suite 900
Houston, Texas 77042
(713) 954-5500
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
Teresa Bushman
Vice President and General Counsel
Mariner Energy, Inc.
2101 CityWest Blvd., Bldg. 4, Suite 900
Houston, Texas 77042
(713) 954-5505
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
         
Kelly B. Rose
Baker Botts L.L.P.
910 Louisiana
One Shell Plaza
Houston, Texas 77002
(713) 229-1234
  Cyrus D. Marter IV
Forest Oil Corporation
707 Seventeenth Street
Suite 3600
Denver, CO 80202
(303) 812-1400
  Alan P. Baden
Shelley A. Barber
Vinson & Elkins L.L.P.
666 Fifth Avenue, 26th Floor
New York, NY 10103-0040
(212) 237-0000
 
      Approximate date of commencement of proposed sale of the securities to the public: As soon as practicable after this registration statement becomes effective and upon consummation of the merger described in the enclosed proxy statement/ prospectus-information statement.
      If the securities being registered on this Form are to be offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.     o
      If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o
      If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.     o
      The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
 
 


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    The information in this proxy statement/prospectus-information statement is not complete and may be changed. Mariner Energy, Inc. may not distribute or issue the shares of Mariner Energy, Inc. common stock being registered pursuant to this registration statement until the registration statement filed with the Securities and Exchange Commission is effective. This proxy statement/prospectus-information statement is not an offer to distribute these securities and Mariner Energy, Inc. is not soliciting offers to receive these securities in any state where such offer or distribution is not permitted.
SUBJECT TO COMPLETION DATED JANUARY 25, 2006
(MARINER ENERGY, INC. LOGO)
Houston, Texas
                  , 2006
Fellow Stockholder:
     We invite you to attend the annual meeting of stockholders of Mariner Energy, Inc. to be held on                   ,                   , 2006 at 10:00 a.m., Central Standard Time, at                                                            , Houston, Texas            . At the meeting, you will be asked to consider and vote upon a proposal to adopt the merger agreement entered into among Mariner, Forest Oil Corporation, Forest Energy Resources, Inc. and MEI Sub, Inc., to consider and vote upon a proposal to amend Mariner’s certificate of incorporation to increase its authorized shares of stock, to consider and vote upon a proposed amendment and restatement of Mariner’s stock incentive plan, to elect one director to serve until the annual meeting of stockholders in 2009 and to elect two directors to serve until the annual meeting of stockholders in 2007.
     If the merger agreement is adopted and the merger consummated, Forest Energy Resources will become a wholly owned subsidiary of Mariner, and Mariner will be a publicly traded company. Mariner has applied to list its common stock on the New York Stock Exchange. Each Forest shareholder will be entitled to receive one share of common stock of Mariner in exchange for each share of Forest Energy Resources common stock they own. Mariner stockholders will not receive consideration in the merger.
     We believe that this transaction will increase Mariner’s scale and balance its portfolio in the Gulf of Mexico, provide a strong financial platform for our exploration and development efforts, and enlarge our stockholder base for greater liquidity. There are, however, risks associated with the proposed transaction, some of which are described under “Risk Factors” beginning on page 23 of the accompanying proxy statement/ prospectus-information statement.
     The Mariner board of directors has determined that the merger is fair to and in the best interests of Mariner and its stockholders, and that the merger agreement is advisable. The Mariner board of directors has unanimously approved the merger agreement and recommends that the Mariner stockholders vote “for” the adoption of the merger agreement.
     In order to consummate the merger, Mariner’s certificate of incorporation must be amended to increase the number of shares of stock Mariner is authorized to issue. Mariner proposes to increase its authorized shares to 200 million, of which 180 million will be shares of common stock and 20 million will be shares of preferred stock, subject to the completion of the merger. The merger cannot be completed unless Mariner’s authorized shares are increased. The Mariner board of directors has unanimously approved the amendment to the certificate of incorporation, and recommends that the Mariner stockholders vote “for” the amendment.
     Mariner also proposes to amend and restate its stock incentive plan to, among other things, add 4.5 million shares of common stock, or approximately 5% of its outstanding shares following the completion of the merger, to the plan, subject to the completion of the merger. The Mariner board of directors has unanimously approved the amended and restated stock incentive plan, and recommends that the Mariner stockholders vote “for” the amended and restated plan.
     In considering the recommendations of the Mariner board of directors, stockholders of Mariner should be aware that members of the Mariner board of directors and executive officers of Mariner have agreements and arrangements that provide them with interests in the merger that differ from, or are in addition to, those of Mariner stockholders. Please read “The Mariner Annual Meeting — Interests of Certain Persons in the Merger” beginning on page 38 of the accompanying proxy statement/ prospectus-information statement.
     All stockholders are invited to attend the meeting. Your participation at the meeting, in person or in proxy, is important. Even if you only own a few shares, we want your shares to be represented at the meeting. The merger cannot be completed without the approval of the holders of a majority of the outstanding shares of common stock of Mariner. Whether or not you expect to attend the meeting in person, please complete, sign, date and promptly return the enclosed proxy card in the enclosed postage-prepaid envelope. Stockholders of record also have the option of voting via the Internet or by telephone. Specific instructions on how to vote via the Internet or by telephone are included on the proxy card. Each proxy is revocable and will not affect your right to vote in person if you attend the meeting.
     The proxy statement/ prospectus-information statement that accompanies this letter contains detailed information about the proposed merger and the other proposals, and we urge you to read it carefully. In particular, you should read the “Risk Factors” section beginning on page 23 for a description of various risks you should consider in evaluating the proposed merger.
     Thank you and we look forward to seeing you at the meeting.
  Sincerely yours,
 
  /s/ Scott D. Josey
 
 
  Scott D. Josey
  Chairman, Chief Executive Officer and President
     Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved the new shares of Mariner common stock to be issued in the merger or determined that this proxy statement/ prospectus-information statement is accurate or complete. Any representation to the contrary is a criminal offense.
     This proxy statement/ prospectus-information statement is dated                   , 2006, and is first being mailed to stockholders on or about                   , 2006.


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(FOREST OIL CORPORATION LOGO)
Denver, Colorado
                  , 2006
To the Shareholders of Forest Oil Corporation:
      On September 12, 2005, we announced that we would spin-off to our shareholders our offshore Gulf of Mexico operations, and that the Gulf of Mexico operations would immediately thereafter be acquired in a merger transaction by Mariner Energy, Inc. After the spin-off and merger, Mariner will be a separately traded public company that will own and operate the combination of Mariner’s business and our Gulf of Mexico operations.
      As a result of the transaction, in addition to retaining all of your shares of Forest common stock, you will receive approximately 0.8 shares of Mariner common stock for each Forest share you own on the record date of the transaction. You will not be required to pay for the shares of Mariner common stock that you receive. Forest shareholders will receive approximately 58% of the common stock of Mariner on a pro forma basis. Mariner has applied to list its common stock on the New York Stock Exchange.
      This transaction represents a significant strategic step that we believe will sharpen Forest’s focus on its onshore businesses and will provide operational clarity. While we believe the spin-off will also allow Forest shareholders to benefit from the success and upside potential of Mariner, there are risks that are described under “Risk Factors” beginning on page 23 of the accompanying proxy statement/ prospectus-information statement.
      Forest’s board of directors has determined that the spin-off of the Gulf of Mexico operations and the combination of these operations with Mariner are advisable and in the best interests of Forest and its shareholders, and has approved the proposed transaction. You need not take any action to participate in the spin-off or the merger — no vote of Forest shareholders is required in connection with this transaction. Following the completion of the merger, you will receive information explaining how to obtain your shares of Mariner common stock.
      The following document constitutes an information statement of Forest relating to the spin-off and contains important information describing the terms of the spin-off, the merger, Forest, Mariner, the Forest Gulf of Mexico operations and the combined businesses. We encourage you to read it carefully.
      We look forward to completing the spin-off and merger and to the exciting opportunities this transaction presents for our shareholders.
  Sincerely,
 
  /s/ H. Craig Clark
 
 
  H. Craig Clark
  President and Chief Executive Officer


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(MARINER ENERGY, INC. LOGO)
Houston, Texas
                    , 2006
Notice of Annual Meeting of Stockholders
To the Stockholders of Mariner Energy, Inc.
      The annual meeting of holders of common stock of Mariner Energy, Inc. will be held on                     ,                     , 2006 at 10:00 a.m., Central Standard Time, at                                                                   , Houston, Texas             ,
  •  to consider and vote upon the adoption of the Agreement and Plan of Merger, dated as of September 9, 2005, among Forest Oil Corporation, Forest Energy Resources, Inc., Mariner Energy, Inc. and MEI Sub, Inc., subject to the approval of the amendment to Mariner’s certificate of incorporation described below,
 
  •  to consider and vote upon a proposed amendment to Mariner’s Second Amended and Restated Certificate of Incorporation to increase the number of authorized shares of stock from 90 million to 200 million, subject to the completion of the merger,
 
  •  to consider and vote upon the proposed amendment and restatement of the Mariner Energy, Inc. Stock Incentive Plan,
 
  •  to elect one director to serve until the annual meeting of stockholders in 2009,
 
  •  to elect two directors to serve until the annual meeting of stockholders in 2007,
 
  •  to grant to the proxyholders the authority to vote in their discretion with respect to the approval of any proposal to postpone or adjourn the annual meeting to a later date to solicit additional proxies in favor of the other proposals, if there are not sufficient votes for approval of the other proposals at the annual meeting, and
 
  •  to transact any other business that may properly come before the annual meeting.
      The board of directors of Mariner has determined that owners of record of Mariner’s common stock at the close of business on                     , 2006 are entitled to notice of, and have the right to vote at, the Mariner annual meeting and any reconvened meeting following any adjournment or postponement of the meeting.
      The Mariner board of directors has determined that the merger is fair to and in the best interests of Mariner and its stockholders, and that the merger agreement is advisable. The Mariner board of directors has unanimously approved the merger agreement and the other proposals and recommends that the Mariner stockholders vote “for” the adoption of the merger agreement and the other proposals.
      In considering the recommendations of the Mariner board of directors, stockholders of Mariner should be aware that members of the Mariner board of directors and executive officers of Mariner have agreements and arrangements that provide them with interests in the merger that differ from, or are in addition to, those of Mariner stockholders. Please read “The Mariner Annual Meeting — Interests of Certain Persons in the Merger” beginning on page 38 of the accompanying proxy statement/ prospectus-information statement.
  By Order of the Board of Directors
  of Mariner Energy, Inc.
 
  /s/ Teresa Bushman
 
 
  Teresa Bushman
  Vice President and General Counsel
Your Vote is Important.
Whether or Not You Plan to Attend the Annual Meeting, Please Complete, Sign, Date and Return Your Proxy Card


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PROXY STATEMENT/ PROSPECTUS-INFORMATION STATEMENT
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 Amendment No.6 to Waiver and Agreement
 Consent of Deloitte & Touche LLP
 Consent of KPMG LLP
 Form of Proxy Card

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QUESTIONS AND ANSWERS ABOUT THE MERGER
      These questions and answers, together with the section titled “Summary” immediately following this section, provide a summary of the material terms of the spin-off and the merger and the other proposals to be acted upon at the annual meeting. To better understand the proposed merger and the other proposals, you should read this entire proxy statement/ prospectus-information statement carefully, as well as those additional documents to which we refer you.
      This proxy statement/ prospectus-information statement is:
  •  a proxy statement of Mariner for use in the solicitation of proxies for Mariner’s annual meeting of stockholders;
 
  •  a prospectus of Mariner relating to the issuance of shares of Mariner common stock in connection with the merger; and
 
  •  an information statement of Forest relating to the spin-off of the Forest Gulf of Mexico operations to the shareholders of Forest.
      For an explanation of oil and gas abbreviations and terms used in this proxy statement/ prospectus-information statement, see “Glossary of Oil and Natural Gas Terms” on page 183.
      In this proxy statement/ prospectus-information statement:
  •  The terms “we”, “us”, “our” and like terms, and the term “Mariner,” refer to Mariner Energy, Inc.;
 
  •  “MEI Sub” refers to MEI Sub, Inc.;
 
  •  “Forest” refers to Forest Oil Corporation;
 
  •  “Forest Energy Resources” refers to Forest Energy Resources, Inc.; and
 
  •  “Forest Gulf of Mexico operations” refers to the offshore Gulf of Mexico operations conducted by Forest that have been contributed to Forest Energy Resources and the shares of which will be spun-off to Forest shareholders.
Q: Please briefly describe the proposed merger and related transactions.
 
A: Forest has transferred and contributed the assets and certain liabilities associated with its offshore Gulf of Mexico operations to Forest Energy Resources, a newly formed subsidiary of Forest. Immediately prior to the merger, Forest will distribute all of the outstanding shares of Forest Energy Resources to Forest shareholders on a pro rata basis. Forest Energy Resources will then merge with a newly formed subsidiary of Mariner, and become a new wholly owned subsidiary of Mariner. When the merger is complete, approximately 58% of the Mariner common stock will be held by shareholders of Forest and approximately 42% of Mariner common stock will be held by the pre-merger stockholders of Mariner, each on a pro forma basis.
      Following the merger, Mariner will:
  •  be an independent public company;
 
  •  own both the Mariner operations and the Forest Gulf of Mexico operations; and
 
  •  have total assets of approximately $2.1 billion and total debt of approximately $279.0 million on a pro forma combined basis, assuming the spin-off and the merger occurred on September 30, 2005.
Q: What are Mariner stockholders being asked to vote upon?
 
A: Mariner stockholders are being asked to
  •  adopt the merger agreement entered into among Forest, Forest Energy Resources, Mariner and MEI Sub, Inc., subject to the approval of the proposed amendment to Mariner’s certificate of incorporation;

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  •  approve the proposed amendment to Mariner’s certificate of incorporation to increase the number of authorized shares of stock from 90 million to 200 million, subject to completion of the merger;
 
  •  approve the proposed amendment and restatement of Mariner’s stock incentive plan;
 
  •  to elect one director to serve until the annual meeting of stockholders of Mariner in 2009;
 
  •  to elect two directors to serve until the annual meeting of stockholders of Mariner in 2007; and
 
  •  approve the proposed granting of authority to the proxyholders to vote in their discretion on a motion to adjourn or postpone the meeting.
Q: What changes to Mariner’s stock incentive plan am I being asked to approve?
 
A: You are being asked to approve an amendment and restatement of the plan whereby 4.5 million shares of common stock would be added to the plan, the plan would be extended to October 12, 2015 and the number of shares subject to stock options or shares of restricted stock issuable under the plan to any individual would be limited to 2.85 million, subject to the completion of the merger.
 
Q: Why am I being asked to grant to the proxy holders the authority to vote in their discretion on a motion to adjourn or postpone the meeting?
 
A: We may determine to adjourn or postpone the meeting, for example, to solicit additional proxies if there are insufficient votes at the time of the meeting to adopt the merger agreement.
 
Q: What will Forest shareholders receive in the merger?
 
A: If the merger is completed, each Forest shareholder will ultimately receive shares of Mariner common stock. As a result of the spin-off, Forest shareholders will initially receive shares of Forest Energy Resources, which will then be converted in the merger into the right to receive shares of Mariner. After the merger, Forest shareholders will be entitled to receive approximately 0.8 shares of Mariner for each Forest share that they own. Forest shareholders will not be required to pay for the shares of Forest Energy Resources distributed in the spin-off transaction or the shares of Mariner issued in the merger. Shareholders will receive cash in lieu of any fractional shares of Mariner common stock. All shares of Forest Energy Resources common stock distributed in the spin-off and Mariner common stock issued in the merger will be issued in book-entry form, meaning that, although Forest shareholders will own the shares, they will not be issued physical share certificates.
 
Q: What will Mariner stockholders receive in the merger?
 
A: Mariner stockholders will keep the shares of Mariner common stock they currently own, but will not receive any additional shares in the merger.
 
Q: Does the Mariner board of directors support the merger and the other proposals?
 
A: Yes. The Mariner board of directors has determined that the merger is fair to and in the best interests of Mariner and its stockholders, and that the merger agreement is advisable. The Mariner board of directors has unanimously approved the merger agreement and the other proposals and recommends that the Mariner stockholders vote “for” the adoption of the merger agreement and the other proposals. A more detailed description of the background and reasons for the merger is set forth under “The Spin-Off and Merger” beginning on page 40.
 
Q: Do the directors and executive officers of Mariner have interests in the merger that are different from mine?
 
A: When considering the recommendations of the Mariner board of directors, you should be aware that the directors and executive officers of Mariner have interests and arrangements that may be different from your interests as stockholders, including:
  •  arrangements regarding the appointment of directors and officers of Mariner following the merger; and
 
  •  arrangements whereby the executive officers of Mariner will receive a cash payment of $1,000 each in exchange for the waiver of certain rights under their employment agreements, including the automatic

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  vesting or acceleration of restricted stock and options upon the completion of the merger and the right to receive a lump sum cash payment if the officer voluntarily terminates employment without good reason within nine months following the completion of the merger.
      At the close of business on January 20, 2006, directors and executive officers of Mariner and their affiliates as a group beneficially owned and were entitled to vote approximately 3.7 million shares of Mariner common stock (including restricted stock subject to vesting), representing approximately 10.4% of the shares of Mariner common stock outstanding on that date. All of the directors and executive officers of Mariner who are entitled to vote at the meeting have indicated that they intend to vote their shares of Mariner common stock in favor of adoption of the merger agreement.
Q: What factors did the Mariner board of directors consider in reaching its decision on the merger?
 
A: In reaching its decision on the merger, the Mariner board of directors considered a number of factors, including the following among others:
  •  the increased size of the combined company could reduce volatility and allow it to participate in larger scale drilling projects and acquisition opportunities;
 
  •  the merger would be expected to increase Mariner’s estimated proved reserves and undeveloped acreage;
 
  •  the merger could generate increased visibility in the capital markets and trading liquidity for the combined company;
 
  •  the merger would increase the number of Mariner’s producing fields, thereby reducing Mariner’s dependence on a concentrated number of properties;
 
  •  the merger would be consummated only if approved by the holders of a majority of the Mariner common stock; and
 
  •  the merger is structured as a tax-free reorganization for U.S. federal income tax purposes and, accordingly, would not be taxable either to Mariner or its stockholders.
The Mariner board of directors also identified and considered some risks and potential disadvantages associated with the merger, including, among others, the following:
  •  the risk that there may be difficulties in combining the business of Mariner and the Forest Gulf of Mexico operations;
 
  •  the risk that the potential benefits sought in the merger might not be fully realized;
 
  •  the risk that the proved undeveloped, probable and possible reserves of the Forest Gulf of Mexico operations may never be converted to proved developed reserves; and
 
  •  the fact that, in order to preserve the tax-free treatment of the spin-off, Mariner would be required to abide by restrictions that could reduce its ability to engage in certain business transactions.
In the judgment of the Mariner board of directors, the potential benefits of the merger outweigh the risks and the potential disadvantages.
 
Q: Did Mariner’s financial advisor render its opinion with respect to the fairness from a financial point of view of the exchange ratio in the merger?
 
A: Yes. Lehman Brothers Inc., Mariner’s financial advisor, has delivered to Mariner’s board of directors a written opinion that, as of September 9, 2005, based upon and subject to the factors and assumptions set forth in the opinion, the exchange ratio in the merger was fair from a financial point of view to Mariner. This opinion is attached as Annex B to this proxy statement/prospectus-information statement.
 
Q: Are there risks that Mariner stockholders should consider in deciding whether to vote on the merger?
 
A: Yes. Mariner stockholders should read the “Risk Factors” beginning on page 23 for a description of various risks Mariner stockholders should carefully consider in evaluating the proposed merger.

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Q: Can Mariner stockholders dissent and require appraisal of their shares of Mariner common stock?
 
A: No. Mariner stockholders are not entitled to dissenters’ rights or appraisal rights in connection with the merger.
 
Q: Why does Mariner want to increase the number of authorized Mariner shares?
 
A: Mariner’s certificate of incorporation currently does not authorize a sufficient number of shares of common stock to complete the merger. Mariner currently is authorized to issue 70 million shares of Mariner common stock and 20 million shares of Mariner preferred stock. As of January 20, 2006, approximately 35.6 million shares of Mariner common stock were issued and outstanding. Under the terms of the merger agreement, Mariner must issue approximately 50.6 million shares (representing approximately 0.8 shares of Mariner common stock for each share of Forest common stock) of common stock in the merger, which would result in approximately 86  million shares of Mariner common stock outstanding. Therefore, the number of authorized shares of Mariner common stock must be increased in order to complete the merger.
 
Q: What vote is required to adopt the merger agreement and the other proposals?
 
A: For the merger to occur, the holders of a majority of the outstanding Mariner common stock must adopt the merger agreement and approve the amendment to the certificate of incorporation. The amendment to Mariner’s stock incentive plan must be approved by a majority of votes cast by stockholders present in person or by proxy, a quorum being present. Director nominees receiving a plurality of all votes cast at the meeting will be elected to Mariner’s board of directors. Mariner stockholders will have one vote for each share of Mariner common stock they own. On                     , 2006, the record date for Mariner’s annual meeting,                      shares of Mariner common stock were issued and outstanding and entitled to vote at the meeting. The approval of Forest shareholders is not required for the spin-off or the merger.
 
Q: Where will Mariner’s common stock be listed?
 
A: We have applied to list Mariner’s common stock on the New York Stock Exchange.
 
Q: Who will be the executive officers of Mariner?
 
A: The current executive officers of Mariner will remain in their current positions following the merger.
 
Q: Who will be the directors of Mariner?
 
A: If the merger is completed, Mariner’s board will consist of seven members, five of whom will be the current directors of Mariner, and two of whom will be mutually agreed between Mariner and Forest prior to the completion of the merger. The Chairman of the Mariner board will be Mr. Scott D. Josey, the current Chairman, Chief Executive Officer and President of Mariner.
 
Q: Who are the new directors of Mariner, as mutually agreed by Forest and Mariner?
 
A: The two Mariner directors to be mutually agreed by Forest and Mariner pursuant to the terms of the merger agreement have not yet been designated. We will update this proxy statement/prospectus-information statement when information with respect to the new directors becomes available.
 
Q: When do you expect to complete the spin-off and the merger?
 
A: If the merger agreement and the proposed amendment to the certificate of incorporation are adopted and approved by the stockholders of Mariner, then Mariner, Forest, Forest Energy Resources and MEI Sub expect to complete the spin-off and the merger as soon as possible after the satisfaction (or waiver, where permissible) of the other conditions to the spin-off and the merger. We currently anticipate that the merger will be completed during the first calendar quarter of 2006.
 
Q: Who is entitled to vote at the meeting of Mariner stockholders?
 
A: Holders of Mariner common stock of record at the close of business on                     , 2006.

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Q: What should Mariner stockholders do now?
 
A: You should mail your signed and dated proxy card(s) in the enclosed envelope or vote via telephone or via the Internet by following the instructions on your proxy card(s) as soon as possible so that your shares of Mariner common stock will be represented and voted at the meeting.
 
Q: Do Mariner stockholders need to send in their share certificate(s)?
 
A: No. Mariner stockholders should not send in their share certificate(s). Mariner stockholders will not exchange their share certificates in connection with the merger; only shareholders of Forest will do so.
 
Q: If I am not going to attend the meeting, should I return my proxy card(s)?
 
A: Yes. Returning your proxy card(s) ensures that your shares of Mariner common stock will be represented at the meeting, even if you are unable to or do not attend.
 
Q: How do I vote my shares of Mariner common stock if they are held in the name of a bank, broker or other fiduciary?
 
A: Your bank, broker or other fiduciary will vote your shares of Mariner common stock with respect to the merger only if you provide written instructions to them on how to vote, so it is important that you provide them with instructions. If you do not provide them with instructions, they will not be authorized to vote with respect to the merger or the other proposals. If you wish to vote in person at the meeting and hold your shares of Mariner common stock in the name of a bank, broker or other fiduciary, you must contact your bank, broker or other fiduciary and request a legal proxy. You must bring this legal proxy to the meeting in order to vote in person. Shares of Mariner common stock held by a broker, bank or other fiduciary that are not voted because the customer has not provided instructions to the broker, bank or other fiduciary (referred to as a “broker non-vote”) will have the same effect as a vote “against” the proposals.
 
Q: Can I change my vote after I mail my proxy card(s)?
 
A: Yes. If you are a record holder of Mariner common stock, you can change your vote by:
• completing, signing and dating a new proxy card and returning it by mail so that it is received prior to the meeting;
 
• voting via telephone or via the Internet by following the instructions provided on your proxy card;
 
• sending a written notice to The Continental Stock Transfer & Trust Company that is received prior to the meeting stating that you revoke your proxy; or
 
• attending the meeting and voting in person or by legal proxy, if appropriate.
 
Internet and telephone voters may use the same procedure to revoke or change their votes as they used to cast their original votes. If your shares of Mariner common stock are held in the name of a bank, broker or other fiduciary and you have directed such person(s) to vote your shares of Mariner common stock, you should instruct such person(s) to change your vote or obtain a legal proxy to do so yourself. Telephone and Internet voting will close at 8:00 p.m. Eastern time on the day before the meeting. Thereafter, voting (including revocation of proxies) can be made by mail or facsimile received prior to the meeting, or in person at the meeting.
Q: What if I do not vote, or abstain from voting, or do not instruct my broker to vote my shares of Mariner common stock?
 
A: If you do not vote, it will have the same effect as a vote against the merger and the proposal to amend Mariner’s certificate of incorporation. Shares that are not voted will not count for purposes of calculating a quorum, which is necessary to have a valid meeting of stockholders. If a quorum of stockholders is not present in person or by proxy at the meeting, no vote will be taken on the merger and the other proposals. Shares that are not voted have the effect of reducing the number of shares required to approve the proposal to amend and restate Mariner’s stock incentive plan and to elect directors, which require the affirmative vote of a majority of a quorum, but do not have the effect of reducing the number of shares required to adopt the merger agreement and to approve the proposed amendment to Mariner’s certificate of

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incorporation, both of which require the affirmative vote of a majority of Mariner’s outstanding shares. Abstentions and broker non-votes also will have the effect of votes against the merger and the proposal to amend Mariner’s certificate of incorporation. If you sign your proxy card but do not indicate how you want to vote, your shares of Mariner common stock will be voted for the merger and the other proposals.
 
Q: What factors did the Forest board of directors consider in reaching its decision on the spin-off and merger?
 
A: In reaching its decision on the spin-off and the merger, the Forest board of directors considered a number of factors, including the following among others:
• the transaction creates two highly focused and valuable enterprises for Forest’s shareholders, Forest and Mariner;
 
• the merger of the Forest Gulf of Mexico operations with the Mariner business creates a high quality, well positioned Gulf of Mexico independent with an excellent track record and growth outlook;
 
• following the spin-off, Forest will be a highly-focused onshore resource company with an acquire and exploit strategy and a portfolio of long-life, concentrated assets in high quality basins that provide a foundation for sustainable growth;
 
• the determination to execute a tax-free transaction designed to increase the value of Forest’s Gulf of Mexico assets; and
 
• the determination that a spin-off followed by a merger transaction represents a better alternative for Forest’s shareholders than any other type of transaction considered, providing optionality and returning value directly to Forest’s shareholders.
 
The Forest board of directors also considered some risks and potential disadvantages associated with the spin-off and merger, including the following among others:
 
• the lack of a liquid trading market and established market value for the Mariner shares;
 
• the risk that there may be difficulties in combining the business of Mariner and the Forest Gulf of Mexico operations;
 
• the risk that the potential benefits sought in the merger might not be fully realized; and
 
• the risk that the proved undeveloped, probable and possible reserves of the Mariner business may never be converted to proved developed reserves.
 
In the judgment of the Forest board of directors, the potential benefits of the spin-off and the merger outweigh the risks and the potential disadvantages.
Q: Do Forest shareholders need to send in any share certificates?
 
A: No. If the merger is completed, Forest shareholders will exchange their shares of Forest Energy Resources for share certificates representing Mariner common stock. Forest shareholders who are entitled to receive shares of Forest Energy Resources (i.e., shareholders of record on the record date for the distribution) will be mailed book entry statements evidencing their shares of Forest Energy Resources. The exchange of Forest Energy Resources and Mariner shares will be effected through book-entry, without the exchange of physical share certificates.
 
Q: Has Forest set a record date for the distribution of Forest Energy Resources shares in the spin-off?
 
A: No. Forest will publicly announce the record date when it has been determined.
 
Q: Can Forest shareholders dissent and require appraisal of their shares of Forest Energy Resources common stock?
 
A: No. Forest shareholders are not entitled to dissenters’ rights or appraisal rights in respect of the Forest Energy Resources stock they receive in the merger.

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Q: What should Forest shareholders do now?
 
A: Forest shareholders should carefully read this proxy statement/prospectus-information statement, which contains important information about the spin-off, the merger, Mariner, the Forest Gulf of Mexico operations and the combined businesses. Forest shareholders are not required to take any action to approve the spin-off or the merger. As described above, if the merger is completed, shares of Forest Energy Resources will be converted into shares of Mariner common stock.
 
Q: Who can answer my questions?
 
A: If Mariner stockholders have any questions regarding the meeting or need assistance in voting their shares of Mariner common stock, please contact our transfer agent:
The Continental Stock Transfer & Trust Company
17 Battery Place, 8th Floor
New York, New York 10004
Facsimile: (212) 509-5152
Telephone: (212) 616-7610
 
All other questions from Mariner stockholders should be directed to:
 
Mariner Energy, Inc.
Attention: Investor Relations
Until February 3, 2006:
2101 CityWest Blvd., Bldg. 4, Suite 900
Houston, Texas 77042
Facsimile: (713) 954-5555
Telephone: (713) 954-5500
 
After February 3, 2006:
One BriarLake Plaza, Suite 2000
2000 West Sam Houston Parkway South
Houston, Texas 77042
Facsimile: (713) 954-5555
Telephone: (713) 954-5500
 
All other questions from Forest shareholders should be directed to:
 
Forest Oil Corporation
Attention: Investor Relations
707 17th Street, Suite 3600
Denver, Colorado 80202
Facsimile: (303) 812-1510
Telephone: (303) 812-1400

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SUMMARY
      This summary, together with the section titled “Questions and Answers About the Merger” immediately preceding this summary, provides a summary of the material terms of the spin-off and the merger and the other proposals to be acted upon at the meeting. To better understand the proposed merger and the other proposals, you should read this entire proxy statement/prospectus-information statement carefully, as well as those additional documents to which we refer you. We have included page references at various points in this summary to direct you to a more detailed description of the topics presented.
The Companies
Mariner Energy, Inc.
Until February 3, 2006:
2101 CityWest Blvd., Bldg. 4, Suite 900
Houston, Texas 77042
(713) 954-5500
(713) 954-5500
After February 3, 2006:
One BriarLake Plaza, Suite 2000
2000 West Sam Houston Parkway South
Houston, Texas 77042
Facsimile: (713) 954-5555
Telephone: (713) 954-5500
      Mariner Energy, Inc. is an independent oil and gas exploration, development and production company with principal operations in the Gulf of Mexico, both shelf and deepwater, and the Permian Basin in West Texas. As of December 31, 2004, Mariner had 237.5 Bcfe of estimated proved reserves, of which approximately 64% were natural gas and 36% were oil and condensate. As of December 31, 2004, the present value, discounted at 10% per annum, of estimated future net revenues from Mariner’s estimated proved reserves, before income tax (“PV10”), was approximately $668 million, and Mariner’s standardized measure of discounted future net cash flows attributable to its estimated proved reserves was approximately $494 million. Please see “Mariner — Estimated Proved Reserves” for a reconciliation of PV10 to the standardized measure of discounted future net cash flows. As of December 31, 2004, approximately 46% of Mariner’s estimated proved reserves were classified as proved developed. For the year ended December 31, 2004, Mariner’s total net production was 37.6 Bcfe. Of Mariner’s estimated proved reserves, 48% are located in the Permian Basin in West Texas, 37% in the Gulf of Mexico deepwater and 15% on the Gulf of Mexico shelf as of December 31, 2004. In the three-year period ended December 31, 2004, Mariner deployed approximately $337 million of capital on acquisitions, exploration and development while adding approximately 191 Bcfe of estimated proved reserves and producing approximately 111 Bcfe.
MEI Sub, Inc.
c/o Mariner Energy, Inc.
Until February 3, 2006:
2101 CityWest Blvd., Bldg. 4, Suite 900
Houston, Texas 77042
(713) 954-5500
(713) 954-5500
After February 3, 2006:
One BriarLake Plaza, Suite 2000
2000 West Sam Houston Parkway South
Houston, Texas 77042
Facsimile: (713) 954-5555
Telephone: (713) 954-5500

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      MEI Sub, Inc. is a wholly owned subsidiary of Mariner. MEI Sub was organized on August 30, 2005 for the purposes of merging with Forest Energy Resources in the merger. It has not carried on any activities other than in connection with the merger agreement.
Forest Oil Corporation
707 17th Street, Suite 3600
Denver, Colorado 80202
Facsimile: (303) 812-1400
      Forest is an independent oil and gas company engaged in the acquisition, exploration, development and production of natural gas and liquids in North America and selected international locations. Forest was incorporated in New York in 1924, as the successor to a company formed in 1916, and has been a publicly held company since 1969. Forest operates from offices located in Denver, Colorado; Lafayette and Metairie, Louisiana; Anchorage, Alaska; and Calgary, Alberta, Canada.
Forest Energy Resources, Inc.
c/o Forest Oil Corporation
707 17th Street, Suite 3600
Denver, Colorado 80202
Facsimile: (303) 812-1400
      Forest Energy Resources is a wholly owned subsidiary of Forest. Forest Energy Resources was formed in Delaware on August 18, 2005 for the purpose of completing the spin-off of the Forest Gulf of Mexico operations. As of December 31, 2004, the Forest Gulf of Mexico operations that have been contributed to Forest Energy Resources prior to the merger had 339.7 Bcfe of estimated proved reserves, of which approximately 79% were natural gas and 21% were oil and condensate. As of December 31, 2004, the PV10 of the Forest Gulf of Mexico operations was approximately $1,222.2 million, and the standardized measure of discounted future net cash flows attributable to its estimated proved reserves was approximately $925.8 million. Please see “The Forest Gulf of Mexico Operations — Estimated Proved Reserves” for a reconciliation of PV10 to the standardized measure of discounted future net cash flows. As of December 31, 2004, approximately 76% of the Forest Gulf of Mexico operations’ estimated proved reserves were classified as proved developed. For the year ended December 31, 2004, the Forest Gulf of Mexico operations’ total net production was 81.1 Bcfe. In the three-year period ended December 31, 2004, the Forest Gulf of Mexico operations deployed approximately $560 million of capital on acquisitions, exploration and development while adding approximately 182 Bcfe of estimated proved reserves and producing approximately 215 Bcfe.

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Ownership Structure Before and After the Spin-off and Merger
      The following diagrams and accompanying descriptions serve to describe generally the transactions that will take place in connection with the spin-off and merger. For more information, please read “The Spin-off and Merger.”
1.     Current Corporate Ownership Structure
(CHART)
      Forest Energy Resources is a wholly owned subsidiary of Forest. MEI Sub is a wholly owned subsidiary of Mariner.
2.     The Contribution and Spin-Off
(CHART)
      Forest has contributed the assets and certain liabilities associated with its Gulf of Mexico operations to Forest Energy Resources. Forest will, immediately prior to the merger, distribute all of the shares of Forest Energy Resources to its shareholders on a pro rata basis.
3.     The Merger
(CHART)
      MEI Sub will merge with and into Forest Energy Resources, with Forest Energy Resources surviving as a wholly owned subsidiary of Mariner. Forest Energy Resources will be renamed Mariner Energy Resources, Inc. In conjunction with the merger, shares of Forest Energy Resources stock will automatically be converted into shares of Mariner stock.

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4.     Corporate Ownership Structure following the Spin-Off and Merger
(CHART)
      At the conclusion of the merger, Forest shareholders will own approximately 58% of Mariner and the stockholders of Mariner who owned shares prior to the merger will own the remaining 42% of Mariner.
Material United States Federal Tax Consequences of the Spin-Off and the Merger (page 61)
      It is a condition to the completion of the spin-off that Forest receive an opinion from its tax counsel to the effect that the contribution and transfer of the assets and liabilities of the Forest Gulf of Mexico operations to Forest Energy Resources and the spin-off by Forest of all the shares of Forest Energy Resources common stock to the holders of Forest common stock generally will be treated as a tax-free transaction for U.S. federal income tax purposes. As a tax-free transaction for U.S. federal income tax purposes, the spin-off will be tax-free to Forest shareholders and will generally be tax-free to Forest.
      It is a condition to the completion of the merger that Forest, Forest Energy Resources and Mariner receive opinions from their respective tax counsels to the effect that the merger will constitute a tax-free reorganization for U.S. federal income tax purposes. As a tax-free reorganization for U.S. federal income tax purposes, the merger will be tax-free to the stockholders of Mariner and tax-free to the shareholders of Forest, except for cash received in lieu of fractional shares of Mariner for shares of Forest Energy Resources.
      We encourage you to consult your own tax advisor for a full understanding of the tax consequences of the spin-off and/or the merger to you.
Conditions to the Completion of the Merger (page 82)
      The merger will be completed only if certain conditions, including the following, are satisfied (or waived in certain cases):
  •  the adoption of the merger agreement by Mariner stockholders holding a majority of the Mariner common stock and the approval of the proposed amendment to Mariner’s certificate of incorporation;
 
  •  the absence of legal restrictions that would prevent the completion of the transactions;
 
  •  the receipt by Forest, Mariner and Forest Energy Resources of an opinion from their respective counsel to the effect that the merger will be treated as a reorganization for federal income tax purposes;
 
  •  the completion of the spin-off in accordance with the distribution agreement;
 
  •  the receipt of material consents, approvals and authorizations of governmental authorities;
 
  •  the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Act;
 
  •  the SEC declaring effective the registration statements of Mariner relating to the shares of Mariner common stock to be issued in the merger and those shares held by its existing stockholders;
 
  •  the representations and warranties contained in the merger agreement being materially true and correct, and the performance in all material respects by the parties of their covenants and other agreements in the merger agreement;

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  •  the approval for listing on the New York Stock Exchange or Nasdaq of Mariner’s common stock; and
 
  •  Mariner and Forest receiving the consents required pursuant to their credit facilities (with Mariner or Forest Energy Resources having entered into a new or amended credit facility sufficient to operate the combined businesses), and Forest receiving any consents required from its bondholders.
      On November 14, 2005, the waiting period under the Hart-Scott-Rodino Act with respect to the merger expired. On October 19, 2005, Forest received the consent required pursuant to its credit facility. As of January 20, 2006, no other conditions to closing have been satisfied. On December 16, 2005, Mariner received clearance from the New York Stock Exchange to file a listing application for its common stock, and on December 22, 2005 Mariner filed a listing application and other ancillary documents with the New York Stock Exchange. Mariner is currently negotiating the definitive documents for its new credit facility, which documents also will grant the consent required pursuant to its existing facility. Mariner and Forest are actively working to obtain necessary consents, approvals and authorizations from governmental authorities, including the Minerals Management Service.
      Based on its current valuation of the Forest Gulf of Mexico operations and the current amount of distributions permitted by the covenants contained in the indentures governing Forest’s outstanding bonds, Forest believes that no consents of its bondholders will be required for the spin-off and the merger. If Forest’s belief that bondholder consents are not necessary remains unchanged as the merger closing approaches, it intends to waive conditions in the merger agreement and distribution agreement related to such consents.
      Neither Mariner nor Forest currently believes that any other condition to closing is likely to be waived. Mariner and Forest will recirculate revised proxy materials and resolicit proxies if there are any material changes in the terms of the merger, including those that result from waivers of conditions to closing.
      Pursuant to the terms of the merger agreement, the closing of the merger will occur as promptly as practicable, and in no event later than the second business day following the satisfaction or, if permissible, waiver of the conditions to closing set forth in the merger agreement, or at such other time as Mariner and Forest Energy Resources mutually agree.
Termination of the Merger Agreement (page 84)
      Forest and Mariner may mutually agree to terminate the merger agreement without completing the merger. In addition, either party may terminate the merger agreement if:
  •  the other party breaches its representations, warranties, covenants or agreements under the merger agreement so as to create a material adverse effect, and the breach has not been cured within 30 days after notice was given of such breach;
 
  •  the parties do not complete the merger by March 31, 2006;
 
  •  a governmental order prohibits the merger; or
 
  •  Mariner does not receive the required approval of its stockholders.
      In addition, Mariner may terminate the merger agreement if it receives a proposal to acquire Mariner that Mariner’s board of directors determines in good faith to be more favorable to Mariner’s stockholders than the merger. Forest may terminate the merger agreement if Mariner’s board of directors withdraws or modifies its approval of the merger to Mariner’s stockholders.
Termination Fee and Expenses (page 85)
      Mariner must pay Forest a termination fee of $25 million and out-of-pocket fees and expenses of up to $5 million if Mariner terminates the merger agreement to accept an alternative proposal that Mariner’s board of directors determines in good faith to be more favorable to Mariner’s stockholders than the merger. In addition, Mariner must pay Forest a termination fee of $25 million and reimbursement of out-of-pocket fees and expenses of up to $5 million if the merger agreement is terminated for the other reasons set forth under “The Merger Agreement — Termination Fees and Expenses” on page 85.

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Certificate of Incorporation and By-Laws (page 61)
      The proposed amendment to Mariner’s certificate of incorporation is in the form attached as Annex E to this proxy statement/ prospectus-information statement. Following the merger, the certificate of incorporation and by-laws of Mariner would differ from the current certificate of incorporation and by-laws only with respect to the number of authorized shares of stock, which pursuant to the proposed amendment would be increased from 90 million to 200 million.
Financing Arrangements Relating to the Spin-Off and the Merger (page 93)
      At the closing of the merger Mariner and Mariner Energy Resources expect to enter into a new $500 million senior secured revolving credit facility, and Mariner will enter into an additional $40 million senior secured letter of credit facility. The revolving credit facility will mature on the fourth anniversary of the closing, and the letter of credit facility will mature on the third anniversary of the closing. The outstanding principal balance of loans under the revolving credit facility may not exceed the borrowing base, which will be initially set at $400 million. In addition, Forest Energy Resources expects to enter into a new senior term loan facility in connection with the spin-off, which facility is expected to be repaid with borrowings under Mariner’s and Mariner Energy Resources’ $500 million revolving credit facility.
Ancillary Agreements (page 90)
      In addition to the merger agreement and the distribution agreement, Forest, Forest Energy Resources and Mariner have entered into a tax sharing agreement relating to the allocation of certain tax liabilities. The tax sharing agreement is attached as Annex D to this proxy statement/ prospectus-information statement. See “Ancillary Agreements — Tax Sharing Agreement” beginning on page 90. In addition, Forest and Forest Energy Resources have entered into an employee benefits agreement addressing certain benefits matters for former Forest employees who become employees of Forest Energy Resources in connection with the spin-off and the merger. See “Ancillary Agreements — Employee Benefits Agreement” beginning on page 91. Finally, Forest and Forest Energy Resources have entered into a transition services agreement under which Forest will provide certain services to Forest Energy Resources for a limited period of time following the merger. See “Ancillary Agreements — Transition Services Agreement” beginning on page 92.
Regulatory Matters (page 69)
      None of the parties is aware of any other material governmental or regulatory approval required for the completion of the merger, other than the effectiveness of the registration statement of which this proxy statement/ prospectus-information statement is a part and the effectiveness of Mariner’s registration statement on Form S-1 relating to the currently-outstanding shares of Mariner common stock, and compliance with applicable antitrust law (including the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended) and the corporate law of the State of Delaware. On November 14, 2005, the waiting period under the Hart-Scott-Rodino Act with respect to the merger expired.
Comparison of Stockholder Rights (page 179)
      Forest’s shareholders, whose rights are currently governed by Forest’s certificate of incorporation, by-laws and New York law, will, if the merger is completed, also become stockholders of Mariner and their rights will be governed by Mariner’s certificate of incorporation, by-laws and Delaware law. Material differences exist in the terms of these documents and statutes which may affect the rights of stockholders of Mariner and Forest.

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SUMMARY SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
Sources of Information
      We are providing the following selected consolidated financial data of Mariner and selected consolidated financial data of the Forest Gulf of Mexico operations, to help you in your analysis of the financial aspects of the merger and related transactions. We derived this information from the audited and unaudited financial statements for Mariner and from the audited and unaudited statements of revenues and direct operating expenses of the Forest Gulf of Mexico operations for the periods presented. You should read this information in conjunction with the financial information included elsewhere in this proxy statement/prospectus-information statement. See “Where You Can Find More Information; Incorporation by Reference” beginning on page 185, “Index to Financial Statements” on page F-1 and “Unaudited Pro Forma Combined Condensed Financial Information” beginning on page 95.
How We Prepared the Unaudited Pro Forma Combined Condensed Financial Information
      The unaudited pro forma combined condensed financial information is presented to show you how Mariner might have looked if the Forest Gulf of Mexico operations had been an independent company and combined with Mariner for the periods presented. We prepared the pro forma financial information using the purchase method of accounting, with Mariner treated as the acquiror. See “The Spin-Off and Merger — Accounting Treatment” beginning on page 69.
      If the Forest Gulf of Mexico operations had been an independent company, and if Mariner and the Forest Gulf of Mexico operations had been combined in the past, they might have performed differently. You should not rely on the pro forma financial information as an indication of the financial position or results of operations that Mariner would have reported if the spin-off and merger had taken place earlier or of the future results that Mariner will achieve after the merger. See “Unaudited Pro Forma Combined Condensed Financial Information” beginning on page 95.

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Summary Historical Consolidated Financial Data of Mariner
      The following table shows Mariner’s summary historical consolidated financial data as of and for each of the four years ended December 31, 2003, the period from January 1, 2004 through March 2, 2004, the period from March 3, 2004 through December 31, 2004, the period from March 3, 2004 through September 30, 2004 and the nine-month period ended September 30, 2005. The summary historical consolidated financial data as of and for the four years ended December 31, 2003, the period from January 1, 2004 through March 2, 2004 and the period from March 3, 2004 through December 31, 2004 are derived from Mariner’s audited financial statements included herein, and the summary historical consolidated financial data for the period from March 3, 2004 through September 30, 2004 and the nine-month period ended September 30, 2005 are derived from unaudited financial statements of Mariner. You should read the following data in connection with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Mariner” and the consolidated financial statements included elsewhere in this proxy statement/ prospectus-information statement, where there is additional disclosure regarding the information in the following table, including pro forma information regarding the merger. Mariner’s historical results are not necessarily indicative of results to be expected in future periods.
      On March 2, 2004, Mariner’s former indirect parent, Mariner Energy LLC, merged with MEI Acquisitions Holdings, LLC, an affiliate of the private equity funds, Carlyle/ Riverstone Global Energy and Power Fund II, L.P. and ACON Investments LLC. The financial information contained herein is presented in the style of Pre-2004 Merger activity (for all periods prior to March 2, 2004) and Post-2004 Merger activity (for the March 3, 2004 through December 31, 2004 period and the March 3, 2004 through September 30, 2004 period) to reflect the impact of the restatement of assets and liabilities to fair value as required by “push-down” purchase accounting at the March 2, 2004 merger date.
                                                                       
    Post-2004 Merger     Pre-2004 Merger
           
        Period from     Period from    
        Period from   March 3,     January 1,    
    Nine Months   March 3,   2004     2004    
    Ended   2004 through   through     through   Year Ended December 31,
    September 30,   September 30,   December 31,     March 2,    
    2005   2004   2004     2004   2003   2002   2001   2000
                                   
    (In millions, except per share data)
Statement of Operations Data:
                                                                 
 
Total revenues(1)
  $ 151.2     $ 122.5     $ 174.4       $ 39.8     $ 142.5     $ 158.2     $ 155.0     $ 121.1  
 
Lease operating expenses
    20.2       15.1       21.4         4.1       24.7       26.1       20.1       17.2  
 
Transportation expenses
    1.7       3.7       1.9         1.1       6.3       10.5       12.0       7.8  
 
Depreciation, depletion and amortization
    43.4       37.4       54.3         10.6       48.3       70.8       63.5       56.8  
 
Impairment of production equipment held for use
    0.5       1.0       1.0                                  
 
Derivative settlement
                              3.2                    
 
Impairment of Enron related receivables
                                    3.2       29.5        
 
General and administrative expenses
    26.7       6.2       7.6         1.1       8.1       7.7       9.3       6.5  
                                                   
 
Operating income
    58.7       59.1       88.2         22.9       51.9       39.9       20.6       32.8  
 
Interest income
    0.7       0.2       0.2         0.1       0.8       0.4       0.7       0.1  
 
Interest expense
    (5.4 )     (4.4 )     (6.0 )             (7.0 )     (10.3 )     (8.9 )     (11.0 )
                                                   
 
Income before income taxes
    54.0       54.9       82.4         23.0       45.7       30.0       12.4       21.9  
 
Provision for income taxes
    (18.4 )     (19.2 )     (28.8 )       (8.1 )     (9.4 )                  
                                                   
 
Income before cumulative effect of change in accounting method net of tax effects
    35.6       35.7       53.6         14.9       36.3       30.0       12.4       21.9  
 
Income before cumulative effect per common share
                                                                 
   
Basic
    1.10       1.20       1.80         .50       1.22       1.01       .42       .74  
   
Diluted
    1.07       1.20       1.80         .50       1.22       1.01       .42       .74  
 
Cumulative effect of changes in accounting method
                              1.9                    
                                                   
 
Net income
  $ 35.6     $ 35.7     $ 53.6       $ 14.9     $ 38.2     $ 30.0     $ 12.4     $ 21.9  
                                                   
 
Net income per common share
                                                                 
   
Basic
    1.10       1.20       1.80         .50       1.29       1.01       .42       .74  
   
Diluted
    1.07       1.20       1.80         .50       1.29       1.01       .42       .74  
Capital Expenditure and Disposal Data:
                                                                 
 
Exploration, including leasehold/seismic
  $ 23.6     $ 35.7     $ 40.4       $ 7.5     $ 31.6     $ 40.4     $ 66.3     $ 46.7  
 
Development and other
    106.8       50.2       93.2         7.8       51.7       65.7       98.2       61.4  
 
Proceeds from property conveyances
                              (121.6 )     (52.3 )     (90.5 )     (29.0 )
                                                   
 
Total capital expenditures net of proceeds from property conveyances
  $ 130.4     $ 85.9     $ 133.6       $ 15.3     $ (38.3 )   $ 53.8     $ 74.0     $ 79.1  
                                                   
 
(1) Includes effects of hedging.

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    Post-2004 Merger     Pre-2004 Merger
           
          December 31,
    September 30,   December 31,      
    2005   2004     2003   2002   2001   2000
                           
    (In millions)
Balance Sheet Data:(1)
                                                 
 
Property and equipment, net, full cost method
  $ 393.3     $ 303.8       $ 207.9     $ 287.6     $ 290.6     $ 287.8  
 
Total assets
    502.2       376.0         312.1       360.2       363.9       335.4  
 
Long-term debt, less current maturities
    79.0       115.0               99.8       99.8       129.7  
 
Stockholder’s equity
    178.6       133.9         218.2       170.1       180.1       141.9  
 
Working capital (deficit)(2)
    (30.2 )     (18.7 )       38.3       (24.4 )     (19.6 )     (15.4 )
 
(1)  Balance sheet data as of December 31, 2004 reflects purchase accounting adjustments to oil and gas properties, total assets and stockholder’s equity resulting from the acquisition of our former indirect parent on March 2, 2004.
 
(2)  Working capital (deficit) excludes current derivative assets and liabilities, deferred tax assets and restricted cash.
                                                                   
    Post-2004 Merger     Pre-2004 Merger
           
        Period from     Period from    
        Period from   March 3,     January 1,    
    Nine Months   March 3,   2004     2004    
    Ended   2004 through   through     through   Year Ended December 31,
    September 30,   September 30,   December 31,     March 2,    
    2005   2004   2004     2004   2003   2002   2001   2000
                                   
    (In millions)
Other Financial Data:
                                                                 
EBITDA(1)
  $ 102.7     $ 97.5     $ 143.5       $ 33.4     $ 100.3     $ 113.9     $ 113.6     $ 89.6  
Net cash provided by operating activities
    135.4       96.8       135.9         20.3       103.5       60.3       113.5       63.9  
Net cash (used) provided by investing activities
    (142.1 )     (85.9 )     (133.6 )       (15.3 )     38.3       (53.8 )     (74.0 )     (79.1 )
Net cash (used) provided by financing activities
    8.7       (74.9 )     64.9               (100.0 )           (30.0 )     17.4  
Reconciliation of Non-GAAP Measures:
                                                                 
EBITDA(1)
  $ 102.7     $ 97.5     $ 143.5       $ 33.4     $ 100.3     $ 113.9     $ 113.6     $ 89.6  
Changes in working capital
    25.1       9.7       6.9         (13.2 )     21.8       (20.4 )     7.5       (15.5 )
Non-cash hedge gain(2)
    (3.6 )     (5.1 )     (7.9 )             (2.0 )     (23.2 )            
Amortization/other
    0.9       0.5       0.8                     (0.1 )     0.6       0.7  
Stock compensation expense
    17.6                                              
Net interest expense
    (4.7 )     (4.2 )     (5.8 )       0.1       (6.2 )     (9.9 )     (8.2 )     (10.9 )
Income tax expense
    (2.6 )     (1.6 )     (1.6 )             (10.4 )                  
                                                   
Net cash provided by operating activities
  $ 135.4     $ 96.8     $ 135.9       $ 20.3     $ 103.5     $ 60.3     $ 113.5     $ 63.9  
                                                   
 
(1)  EBITDA means earnings before interest, income taxes, depreciation, depletion and amortization. For the nine months ended September 30, 2005, EBITDA includes $17.6 million in non-cash stock compensation expense related to restricted stock and stock options granted in 2005. We believe that EBITDA is a widely accepted financial indicator that provides additional information about our ability to meet our future requirements for debt service, capital expenditures and working capital, but EBITDA should not be considered in isolation or as a substitute for net income, operating income, net cash provided by

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operating activities or any other measure of financial performance presented in accordance with generally accepted accounting principles or as a measure of a company’s profitability or liquidity.
 
(2)  In accordance with SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 137 and No. 138, we de-designated our contracts effective December 2, 2001 after the counterparty (an affiliate of Enron Corp.) filed for bankruptcy and recognized all market value changes subsequent to such de-designation in our earnings. The value recorded up to the time of de-designation and included in Accumulated Other Comprehensive Income (“AOCI”), has reversed out of AOCI and into earnings as the original corresponding production, as hedged by the contracts, is produced. We have designated subsequent hedge contracts as cash flow hedges with gains and losses resulting from the transactions recorded at market value in AOCI, as appropriate, until recognized as operating income in our Statement of Operations as the physical production hedged by the contracts is delivered.

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Summary Selected Consolidated Statements of Revenues and Direct Operating Expenses of the Forest Gulf of Mexico Operations
      The selected financial data for the Forest Gulf of Mexico operations for the nine months ended September 30, 2005 and 2004 and the years ended December 31, 2004, 2003 and 2002 were derived from the historical records of Forest. You should read the following data in connection with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Forest Gulf of Mexico Operations” and the consolidated statements of revenues and direct operating expenses of the Forest Gulf of Mexico operations included elsewhere in this proxy statement/ prospectus-information statement. Complete financial and operating information related to the Forest Gulf of Mexico operations, including balance sheet and cash flow information, are not presented below because the Forest Gulf of Mexico operations were not maintained as a separate business unit, and therefore the assets, liabilities or indirect operating costs applicable to the operations were not segregated.
                                             
    Nine Months Ended   Years Ended
    September 30,   December 31
         
    2005   2004   2004   2003   2002
                     
    (In millions, except production data)
Statement of Operations Data:
                                       
 
Oil and natural gas revenues(1)
  $ 326.7     $ 324.4     $ 453.1     $ 342.0     $ 228.9  
 
Direct Operating Expenses:
                                       
   
Lease operating expenses
    57.4       63.0       80.1       45.7       52.1  
   
Transportation
    2.5       1.4       2.2       2.7       3.8  
   
Production taxes
    1.9       1.2       1.5       1.5       1.0  
                               
 
Total direct operating expenses
    61.8       65.6       83.8       49.9       56.9  
                               
 
Revenues in excess of direct operating expenses
  $ 264.9     $ 258.8     $ 369.3     $ 292.1     $ 172.0  
                               
Summary Production Data:
                                       
 
Production Data:
                                       
 
Natural gas (MMcf)
    41,442       46,036       61,684       58,785       50,566  
 
Oil and condensate (MBbls)
    1,845       2,004       2,624       2,143       1974  
 
Natural gas liquids (MBbls)
    628       186       606       2       6  
 
Total (MMcfe)
    56,280       59,176       81,064       71,655       62,446  
 
Per day (MMcfe)
    206       216       221       196       171  
Average realized sales price per unit:
                                       
 
Natural gas ($/Mcf):
                                       
   
Sales price received
  $ 7.14     $ 6.02     $ 6.30     $ 5.41     $ 3.39  
   
Effects of hedging
    (1.13 )     (0.45 )     (0.56 )     (0.63 )     0.17  
                               
   
Net sales price received
    6.01       5.57       5.74       4.78       3.56  
                               

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    Nine Months Ended   Years Ended
    September 30,   December 31
         
    2005   2004   2004   2003   2002
                     
    (In millions, except production data)
 
Oil ($/bbl):
                                       
   
Sales price received
  $ 51.97     $ 38.13     $ 40.06     $ 30.19     $ 24.85  
   
Effects of hedging
    (19.95 )     (6.61 )     (8.55 )     (1.90 )      
                               
   
Net sales price received
    32.02       31.52       31.51       28.29       24.85  
                               
 
Natural gas liquids ($/bbl):
                                       
   
Sales price received
  $ 29.54     $ 25.40     $ 27.28     $ 19.00     $ 12.33  
Average realized sales price per Mcfe (including effects of hedging) ($/Mcfe)
  $ 5.81     $ 5.48     $ 5.59     $ 4.77     $ 3.67  
 
Production costs per Mcfe:
                                       
 
Lease operating expenses
  $ 1.02       1.06       0.99       0.64       0.83  
 
Transportation
  $ 0.04       0.02       0.03       0.04       0.06  
 
Production taxes
  $ 0.03       0.02       0.02       0.02       0.02  
 
(1)  Includes effects of hedging.

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Summary Selected Unaudited Pro Forma Combined Condensed Financial Information
      The following summary selected unaudited pro forma combined condensed financial information has been prepared to reflect the merger. This unaudited pro forma combined condensed financial information is based on the historical financial statements of Mariner and the historical statements of revenues and direct operating expenses of the Forest Gulf of Mexico operations, all of which are included in this proxy statement/ prospectus-information statement, and the estimates and assumptions set forth in the Notes to the Unaudited Pro Forma Combined Condensed Financial Information of Mariner beginning on page 95. The unaudited pro forma combined condensed operating results give effect to the merger as if it had occurred on January 1, 2004. The unaudited pro forma combined condensed balance sheet gives effect to the merger as if it had occurred on September 30, 2005.
      The unaudited pro forma combined condensed financial information is for illustrative purposes only. The financial results may have been different had the Forest Gulf of Mexico operations been an independent company and had the companies always been combined. You should not rely on the unaudited pro forma combined condensed financial information as being indicative of the historical results that would have been achieved had the merger occurred in the past or the future financial results that Mariner will achieve after the merger.
      The merger will be accounted for using the purchase method of accounting, with Mariner treated as the acquiror. In addition, the purchase price allocation is preliminary and will be finalized following the closing of the merger. The final purchase price allocation will be determined after closing based on the actual fair value of current assets, current liabilities, indebtedness, long-term liabilities, proven and unproven oil and gas properties, identifiable intangible assets and unvested stock options that are outstanding at closing. We are continuing to evaluate all of these items; accordingly, the final purchase price may differ in material respects from that presented in the unaudited pro forma combined condensed balance sheet.
                   
    As of and for the    
    Nine Months Ended   For the Year Ended
    September 30, 2005   December 31, 2004
         
    (In thousands, except per share
    and proved reserve data)
OPERATING RESULTS:
               
 
Revenues
  $ 477,967     $ 667,326  
 
Net income
  $ 71,221     $ 106,298  
Earnings per share
               
 
Basic
  $ 0.86     $ 1.32  
 
Diluted
  $ 0.85     $ 1.32  
Weighted average shares outstanding
               
 
Basic
    83,075       80,385  
 
Diluted
    83,950       80,385  
BALANCE SHEET DATA:
               
 
Total assets
  $ 2,118,526          
 
Total debt
  $ 279,000          
 
Stockholders’ equity
  $ 1,152,134          
                   
    As of June 30,   As of December 31,
    2005   2004
         
ESTIMATED PROVED RESERVES:
               
 
Oil (MBbls)*
    29,261       25,905  
 
Gas (MMcf)
    423,352       421,741  
 
Equivalent (MMcfe)
    598,918       577,173  
 
Proved developed percentage
    63.9 %     63.7 %
 
Includes 3,285.6 MBbls of natural gas liquids.

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Comparative Per Share Data
      The following table presents historical per share data of Mariner common stock and combined per share data of Mariner and the Forest Gulf of Mexico operations on an unaudited pro forma basis after giving effect to the spin-off and the merger. The merger will be accounted for using the purchase method of accounting, with Mariner treated as the acquiror. The combined pro forma per share data was derived from the Unaudited Pro Forma Combined Condensed Financial Information as presented beginning on page 95. The assumptions related to the preparation of the Unaudited Pro Forma Combined Condensed Financial Information are described beginning at page 95. The data presented below should be read in conjunction with the historical consolidated financial statements of Mariner and the historical statements of revenues and direct operating expenses of the Forest Gulf of Mexico operations included elsewhere in this proxy statement/ prospectus-information statement.
      The Mariner unaudited pro forma equivalent data was calculated with reference to the total number of shares of Mariner common stock expected to be outstanding after the merger, including the shares to be issued to Forest shareholders and the currently-outstanding shares of Mariner common stock.
      The pro forma combined per share data may not be indicative of the operating results or financial position that would have occurred if the merger had been consummated at the beginning of the periods indicated, and may not be indicative of future operating results or financial position.
                     
    Mariner
     
        Combined
    Historical   Pro Forma
         
Earnings (loss) per share —
               
 
Nine months ended September 30, 2005(1)
               
   
Basic
  $ 1.10     $ 0.86  
             
   
Diluted
  $ 1.07     $ 0.85  
             
 
Year ended December 31, 2004(2)
               
   
Basic
  $ 2.30     $ 1.32  
             
   
Diluted
  $ 2.30     $ 1.32  
             
Book Value per share — As of September 30, 2005(3)
  $ 5.01     $ 13.36  
             
Cash dividends declared per common share
  $     $  
 
(1)  Mariner’s historical basic and diluted earnings per share calculation for the nine months ended September 30, 2005 assumes Mariner had 32,438,240 and 33,312,831 weighted average shares of common stock outstanding, respectively. Mariner’s pro forma basic and diluted earnings per share calculation for the nine months ended September 30, 2005 assumes Mariner had 83,075,250 and 83,949,841 weighted average shares of common stock outstanding, respectively.
 
(2)  Mariner’s historical basic and diluted earnings per share calculation for the year ended December 31, 2004 assumes Mariner had 29,748,130 and 29,748,130 weighted average shares of common stock outstanding, respectively. Mariner’s pro forma basic and diluted earnings per share calculation for the year ended December 31, 2004 assumes Mariner had 80,385,140 and 80,385,140 weighted average shares of common stock outstanding, respectively.
 
(3)  Book value per share calculation assumes that Mariner had 35,615,400 shares of common stock outstanding and 86,252,410 combined pro forma shares of common stock outstanding as of September 30, 2005.

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Comparative Stock Price and Dividends
      In March 2005, Mariner completed a private placement of 16,350,000 shares of its common stock to qualified institutional buyers, non-U.S. persons and accredited investors. There is no established public trading market for the shares of Mariner common stock, and it is not expected that a public trading market will be established until the completion of the merger. The shares of Mariner’s common stock issued to qualified institutional buyers in connection with its March 2005 private equity placement are eligible for the PORTAL Market®.
      Forest Energy Resources was incorporated as a wholly owned subsidiary of Forest in August 2005. There is no established public trading market for the shares of Forest Energy Resources common stock.
      Mariner has not paid any cash dividends on its shares of common stock for the fiscal years 2003, 2004 or 2005, and it anticipates that it will not pay any dividends in 2006. Forest Energy Resources has not paid any cash dividends on its shares of common stock for the fiscal year 2005, and it anticipates that it will not pay any dividends in 2006. The payment of any dividends by Mariner prior to the merger is subject to the limitations included in the merger agreement and in its credit facility, and following the merger the payment of dividends by Mariner and Forest Energy Resources will be subject to restrictions included in their credit facilities.

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RISK FACTORS
      You should consider carefully the following risk factors, which we believe include all material risks associated with our business, the merger, and the offering of our common stock, together with all of the other information included in this prospectus, in determining whether to vote to adopt the merger agreement and the other proposals at the meeting. Realization of any of the following risks could have a material adverse effect on our business, financial condition, cash flows and results of operations. In that case, the trading price of our common stock could decline and you could lose all or part of your investment.
Risks Related to the Spin-Off and the Merger
The market value of our common stock could decline if large amounts of our common stock are sold following the spin-off and merger.
      The market price of our common stock could decline as a result of sales of a large number of shares in the market after the completion of the spin-off and merger or the perception that these sales could occur. Immediately after the merger, Forest shareholders will hold, in the aggregate, approximately 58% of our common stock on a pro forma basis. Currently, Forest shareholders include index funds tied to various stock indices, and institutional investors subject to various investing guidelines. Because we may not be included in these indices at the time of the merger or may not meet the investing guidelines of some of these institutional investors, these index funds and institutional investors may decide to sell the Mariner common stock they receive in the merger. These sales may negatively affect the price of our common stock and also may make it more difficult for us to obtain additional capital by selling equity securities in the future at a time and at a price that we deem appropriate.
      Historically, Forest has operated with properties in diverse geographic locations, including the Gulf Coast, the Western United States, Alaska, Canada and other international locations. In contrast, following the spin-off and merger, Mariner will operate as a stand-alone oil and gas exploration, development and production company with operations primarily in the Gulf of Mexico and in West Texas. Shareholders of Forest who chose to invest in a geographically diverse company may not wish to continue to invest in one that is less geographically diverse, such as Mariner. As a result, such shareholders may seek to sell the shares of our common stock received in the merger.
The integration of the Forest Gulf of Mexico operations following the merger will be difficult, and will divert our management’s attention away from our normal operations.
      There is a significant degree of difficulty and management involvement inherent in the process of integrating the Forest Gulf of Mexico operations. These difficulties include:
  •  the challenge of integrating the Forest Gulf of Mexico operations while carrying on the ongoing operations of our business;
 
  •  the challenge of managing a significantly larger company, with more than twice the PV10 of Mariner on a stand-alone basis;
 
  •  faulty assumptions underlying our expectations;
 
  •  the difficulty associated with coordinating geographically separate organizations;
 
  •  the challenge of integrating the business cultures of the two companies;
 
  •  attracting and retaining personnel associated with the Forest Gulf of Mexico operations following the merger; and
 
  •  the challenge and cost of integrating the information technology systems of the two companies.
      The process of integrating operations could cause an interruption of, or loss of momentum in, the activities of our business. Members of our senior management may be required to devote considerable amounts of time to this integration process, which will decrease the time they will have to manage our

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business. If our senior management is not able to effectively manage the integration process, or if any significant business activities are interrupted as a result of the integration process, our business could suffer.
If we fail to realize the anticipated benefits of the merger, stockholders may receive lower returns than they expect.
      The success of the merger will depend, in part, on our ability to realize the anticipated growth opportunities from combining the Forest Gulf of Mexico operations with Mariner. Even if we are able to successfully combine the two businesses, it may not be possible to realize the full benefits of the proved reserves, enhanced growth of production volume, cost savings from operating synergies and other benefits that we currently expect to result from the merger, or realize these benefits within the time frame that is currently expected. The benefits of the merger may be offset by operating losses relating to changes in commodity prices, or in oil and gas industry conditions, or by risks and uncertainties relating to the combined company’s exploratory prospects, or an increase in operating or other costs or other difficulties. If we fail to realize the benefits we anticipate from the merger, stockholders may receive lower returns on our stock than they expect.
We expect to incur significant charges relating to the integration plan that could materially and adversely affect our period-to-period results of operations following the merger.
      We are developing a plan to integrate the Forest Gulf of Mexico operations with our operations after the merger. Following the merger, we anticipate that from time to time we will incur charges to our earnings in connection with the integration. These charges will include expenses incurred in connection with relocating and retaining employees and increased professional and consulting costs. We also expect to incur significant expenses related to being a public company. We will not be able to quantify the exact amount of these charges or the period(s) in which they will be incurred until after the merger is completed. Some factors affecting the cost of the integration include the timing of the closing of the merger, the training of new employees, the amount of severance and other employee-related payments resulting from the merger, and the limited length of time during which transitional services are provided by Forest.
The number of shares Forest shareholders will receive in the merger is not subject to adjustment based on the value of the Mariner or the Forest Gulf of Mexico operations. Accordingly, because this value may fluctuate, the market value of the Mariner common stock that Forest shareholders receive in the merger may not reflect the value of the individual companies at the time of the merger.
      Following the spin-off and the merger, the holders of Forest common stock will ultimately become entitled to receive approximately 0.8 shares of Mariner common stock for each Forest share they own. This ratio will not be adjusted for changes in the value of our company or the Forest Gulf of Mexico operations. If our value relative to the Forest Gulf of Mexico operations increases (or the value of the Forest Gulf of Mexico operations decreases relative to our value) prior to the completion of the merger, the market value of the Mariner common stock that Forest shareholders receive in the merger may not reflect the then-current relative values of the individual companies.
Regulatory agencies may delay or impose conditions on approval of the spin-off and the merger, which may diminish the anticipated benefits of the merger.
      Completion of the spin-off and merger is conditioned upon the receipt of required government consents, approvals, orders and authorizations. While we intend to pursue vigorously all required governmental approvals and do not know of any reason why we would not be able to obtain the necessary approvals in a timely manner, the requirement to receive these approvals before the spin-off and merger could delay the completion of the spin-off and merger, possibly for a significant period of time after Mariner stockholders have approved the merger proposal at the meeting. In addition, these governmental agencies may attempt to condition their approval of the merger on the imposition of conditions that could have a material adverse effect on our operating results or the value of our common stock after the spin-off and merger are completed.

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      Any delay in the completion of the spin-off and merger could diminish anticipated benefits of the spin-off and merger or result in additional transaction costs, loss of revenue or other effects associated with uncertainty about the transaction. Any uncertainty over the ability of the companies to complete the spin-off and merger could make it more difficult for us to retain key employees or to pursue business strategies. In addition, until the spin-off and merger are completed, the attention of our management may be diverted from ongoing business concerns and regular business responsibilities to the extent management is focused on matters relating to the transaction, such as obtaining regulatory approvals.
In order to preserve the tax-free treatment of the spin-off, we will be required to abide by potentially significant restrictions which could limit our ability to undertake certain corporate actions (such as the issuance of our common shares or the undertaking of a change in control) that otherwise could be advantageous.
      The tax sharing agreement imposes ongoing restrictions on Forest and on us to ensure that applicable statutory requirements under the Internal Revenue Code and applicable Treasury regulations continue to be met so that the spin-off remains tax-free to Forest and its shareholders. As a result of these restrictions, our ability to engage in certain transactions, such as the redemption of our common stock, the issuance of equity securities and the utilization of our stock as currency in an acquisition, will be limited for a period of two years following the spin-off. Please see “The Spin-Off and Merger — Material United States Federal Tax Consequences of the Spin-Off and the Merger — Material U.S. Tax Consequences of the Spin-Off.”
      If Forest or Mariner takes or permits an action to be taken (or omits to take an action) that causes the spin-off to become taxable, the relevant entity generally will be required to bear the cost of the resulting tax liability to the extent that the liability results from the actions or omissions of that entity. Please read “Ancillary Agreements — Tax Sharing Agreement.” If the spin-off became taxable, Forest would be expected to recognize a substantial amount of income, which would result in a material amount of taxes. Any such taxes allocated to us would be expected to be material to us, and could cause our business, financial condition and operating results to suffer. These restrictions may reduce our ability to engage in certain business transactions that otherwise might be advantageous to us and our stockholders and could have a negative impact on our business and stockholder value.
Some of our directors and executive officers have interests that are different from, or in addition to, the interests of our stockholders.
      When considering the recommendations of our board of directors, you should be aware that some of our directors and executive officers have interests and arrangements that may be different from your interests as stockholders, including:
  •  arrangements regarding the appointment of directors and officers of Mariner following the merger; and
 
  •  arrangements whereby our executive officers will receive a cash payment of $1,000 each in exchange for the waiver of certain rights under their employment agreements, including the automatic vesting or acceleration of restricted stock and options upon the completion of the merger and the right to receive a lump sum cash payment if the officer voluntarily terminates employment without good reason within nine months following the completion of the merger.
See “Interests of Certain Persons in the Merger” beginning on page 38.
Risks Related to the Combined Operations After the Merger
Oil and natural gas prices are volatile, and a decline in oil and natural gas prices would reduce our revenues, profitability and cash flow and impede our growth.
      Our revenues, profitability and cash flow depend substantially upon the prices and demand for oil and natural gas. The markets for these commodities are volatile and even relatively modest drops in prices can affect significantly our financial results and impede our growth. Oil and natural gas prices are currently at or near historical highs and may fluctuate and decline significantly in the near future. Prices for oil and natural

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gas fluctuate in response to relatively minor changes in the supply and demand for oil and natural gas, market uncertainty and a variety of additional factors beyond our control, such as:
  •  domestic and foreign supply of oil and natural gas;
 
  •  price and quantity of foreign imports;
 
  •  actions of the Organization of Petroleum Exporting Countries and other state-controlled oil companies relating to oil price and production controls;
 
  •  level of consumer product demand;
 
  •  domestic and foreign governmental regulations;
 
  •  political conditions in or affecting other oil-producing and natural gas-producing countries, including the current conflicts in the Middle East and conditions in South America and Russia;
 
  •  weather conditions;
 
  •  technological advances affecting oil and natural gas consumption;
 
  •  overall U.S. and global economic conditions; and
 
  •  price and availability of alternative fuels.
      Further, oil prices and natural gas prices do not necessarily fluctuate in direct relationship to each other. Because approximately 73% of our pro forma estimated proved reserves as of December 31, 2004 (including reserves of the Forest Gulf of Mexico operations) were natural gas reserves, our financial results are more sensitive to movements in natural gas prices. Lower oil and natural gas prices may not only decrease our revenues on a per unit basis but also may reduce the amount of oil and natural gas that we can produce economically. This may result in our having to make substantial downward adjustments to our estimated proved reserves and could have a material adverse effect on our financial condition and results of operations.
Reserve estimates depend on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will affect materially the quantities and present value of our reserves and the reserves of the Forest Gulf of Mexico operations, which may lower our bank borrowing base and reduce our access to capital.
      Estimating oil and natural gas reserves is complex and inherently imprecise. It requires interpretation of the available technical data and making many assumptions about future conditions, including price and other economic conditions. In preparing estimates we and Forest project production rates and timing of development expenditures. We and Forest also analyze the available geological, geophysical, production and engineering data. The extent, quality and reliability of this data can vary. This process also requires economic assumptions about matters such as oil and natural gas prices, drilling and operating expenses, capital expenditures, taxes and availability of funds. Actual future production, oil and natural gas prices, revenues, taxes, development expenditures, operating expenses and quantities of recoverable oil and natural gas reserves most likely will vary from our and Forest’s estimates, perhaps significantly. In addition, we may adjust estimates of proved reserves to reflect production history, results of exploration and development, prevailing oil and natural gas prices and other factors, many of which are beyond our control. At December 31, 2004, 36% of our pro forma proved reserves (including reserves of the Forest Gulf of Mexico operations) were proved undeveloped.
      If the interpretations or assumptions we use in arriving at our estimates prove to be inaccurate, the amount of oil and natural gas that we ultimately recover may differ materially from the estimated quantities and net present value of reserves shown in this proxy statement/ prospectus-information statement. See “Mariner — Estimated Proved Reserves” for information about our oil and gas reserves and “The Forest Gulf of Mexico Operations — Estimated Proved Reserves” for more information about the oil and gas reserves of the Forest Gulf of Mexico operations.

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In estimating future net revenues from proved reserves, we and Forest assume that future prices and costs are fixed and apply a fixed discount factor. If these assumptions or discount factor are materially inaccurate, our revenues, profitability and cash flow could be materially less than our estimates.
      The present value of future net revenues from our proved reserves and the proved reserves of the Forest Gulf of Mexico operations referred to in this proxy statement/ prospectus-information statement is not necessarily the actual current market value of our estimated oil and natural gas reserves. In accordance with SEC requirements, we and Forest base the estimated discounted future net cash flows from our proved reserves and the proved reserves of the Forest Gulf of Mexico operations on fixed prices and costs as of the date of the estimate. Actual future prices and costs fluctuate over time and may differ materially from those used in the present value estimate. In addition, discounted future net cash flows are estimated assuming that royalties to the MMS with respect to our affected offshore Gulf of Mexico properties will be paid or suspended for the life of the properties based upon oil and natural gas prices as of the date of the estimate. See “Mariner — Royalty Relief.” Since actual future prices fluctuate over time, royalties may be required to be paid for various portions of the life of the properties and suspended for other portions of the life of the properties.
      The timing of both the production and expenses from the development and production of oil and natural gas properties will affect both the timing of actual future net cash flows from our proved reserves and the proved reserves of the Forest Gulf of Mexico operations and their present value. In addition, the 10% discount factor that we and Forest use to calculate the net present value of future net cash flows for reporting purposes in accordance with the SEC’s rules may not necessarily be the most appropriate discount factor. The effective interest rate at various times and the risks associated with our business or the oil and gas industry in general will affect the appropriateness of the 10% discount factor in arriving at an accurate net present value of future net cash flows.
Unless we replace our oil and natural gas reserves, our reserves and production will decline.
      Our future oil and natural gas production depends on our success in finding or acquiring additional reserves. If we fail to replace reserves through drilling or acquisitions, our level of production and cash flows will be affected adversely. In general, production from oil and natural gas properties declines as reserves are depleted, with the rate of decline depending on reservoir characteristics. Our total proved reserves decline as reserves are produced unless we conduct other successful exploration and development activities or acquire properties containing proved reserves, or both. Our ability to make the necessary capital investment to maintain or expand our asset base of oil and natural gas reserves would be impaired to the extent cash flow from operations is reduced and external sources of capital become limited or unavailable. We may not be successful in exploring for, developing or acquiring additional reserves.
Relatively short production periods or reserve life for Gulf of Mexico properties subjects us to higher reserve replacement needs and may impair our ability to replace production during periods of low oil and natural gas prices.
      Due to high production rates, production of reserves from reservoirs in the Gulf of Mexico generally declines more rapidly than from reservoirs in other producing regions. As a result, our reserve replacement needs from new prospects may be greater than those of other oil and gas companies. If the merger is consummated, the proportion of short-lived Gulf of Mexico properties relative to our total properties will increase substantially. Also, our revenues and return on capital will depend significantly on prices prevailing during these relatively short production periods. Our ability to slow or shut in production from producing wells during periods of low prices for oil and natural gas may be limited by reservoir characteristics or by our need to generate revenues to fund ongoing capital commitments or repay debt.

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Any production problems related to our Gulf of Mexico properties could reduce our revenue, profitability and cash flow materially.
      A substantial portion of our exploration and production activities are located in the Gulf of Mexico. This concentration of activity makes us more vulnerable than some other industry participants to the risks associated with the Gulf of Mexico, including delays and increased costs relating to adverse weather conditions such as hurricanes, which are common in the Gulf of Mexico during certain times of the year, drilling rig and other oilfield services and compliance with environmental and other laws and regulations.
Our exploration and development activities may not be commercially successful.
      Exploration activities involve numerous risks, including the risk that no commercially productive oil or natural gas reservoirs will be discovered. In addition, the future cost and timing of drilling, completing and producing wells is often uncertain. Furthermore, drilling operations may be curtailed, delayed or canceled as a result of a variety of factors, including:
  •  unexpected drilling conditions;
 
  •  pressure or irregularities in formations;
 
  •  equipment failures or accidents;
 
  •  adverse weather conditions, including hurricanes, which are common in the Gulf of Mexico during certain times of the year;
 
  •  compliance with governmental regulations;
 
  •  unavailability or high cost of drilling rigs, equipment or labor;
 
  •  reductions in oil and natural gas prices; and
 
  •  limitations in the market for oil and natural gas.
      If any of these factors were to occur with respect to a particular project, we could lose all or a part of our investment in the project, or we could fail to realize the expected benefits from the project, either of which could materially and adversely affect our revenues and profitability.
Our exploratory drilling projects are based in part on seismic data, which is costly and cannot ensure the commercial success of the project.
      Our decisions to purchase, explore, develop and exploit prospects or properties depend in part on data obtained through geophysical and geological analyses, production data and engineering studies, the results of which are often uncertain. Even when used and properly interpreted, 3-D seismic data and visualization techniques only assist geoscientists and geologists in identifying subsurface structures and hydrocarbon indicators. They do not allow the interpreter to know conclusively if hydrocarbons are present or producible economically. In addition, the use of 3-D seismic and other advanced technologies require greater predrilling expenditures than traditional drilling strategies. Because of these factors, we could incur losses as a result of exploratory drilling expenditures. Poor results from exploration activities could have a material adverse effect on our future cash flows, ability to replace reserves and results of operations.
Oil and gas drilling and production involve many business and operating risks, any one of which could reduce our levels of production, cause substantial losses or prevent us from realizing profits.
      Our business is subject to all of the operating risks associated with drilling for and producing oil and natural gas, including:
  •  fires;
 
  •  explosions;
 
  •  blow-outs and surface cratering;

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  •  uncontrollable flows of underground natural gas, oil and formation water;
 
  •  natural disasters;
 
  •  pipe or cement failures;
 
  •  casing collapses;
 
  •  lost or damaged oilfield drilling and service tools;
 
  •  abnormally pressured formations; and
 
  •  environmental hazards, such as natural gas leaks, oil spills, pipeline ruptures and discharges of toxic gases.
      If any of these events occurs, we could incur substantial losses as a result of injury or loss of life, severe damage to and destruction of property, natural resources and equipment, pollution and other environmental damage, clean-up responsibilities, regulatory investigation and penalties, suspension of our operations and repairs to resume operations.
Our offshore operations involve special risks that could increase our cost of operations and adversely affect our ability to produce oil and gas.
      Offshore operations are subject to a variety of operating risks specific to the marine environment, such as capsizing, collisions and damage or loss from hurricanes or other adverse weather conditions. These conditions can cause substantial damage to facilities and interrupt production. As a result, we could incur substantial liabilities that could reduce or eliminate the funds available for exploration, development or leasehold acquisitions, or result in loss of equipment and properties. For more information on the impact of recent hurricanes on Mariner’s operations and the Forest Gulf of Mexico operations, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Mariner — Recent Developments” beginning on page 107 and “Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Forest Gulf of Mexico Operations — Recent Developments” beginning on page 145.
      Exploration for oil or natural gas in the deepwater of the Gulf of Mexico generally involves greater operational and financial risks than exploration on the shelf. Deepwater drilling generally requires more time and more advanced drilling technologies, involving a higher risk of technological failure and usually higher drilling costs. Our deepwater wells use subsea completion techniques with subsea trees tied back to host production facilities with flow lines. The installation of these subsea trees and flow lines requires substantial time and the use of advanced remote installation mechanics. These operations may encounter mechanical difficulties and equipment failures that could result in significant cost overruns. Furthermore, the deepwater operations generally lack the physical and oilfield service infrastructure present in the shallow waters of the Gulf of Mexico. As a result, a significant amount of time may elapse between a deepwater discovery and our marketing of the associated oil or natural gas, increasing both the financial and operational risk involved with these operations. Because of the lack and high cost of infrastructure, some reserve discoveries in the deepwater may never be produced economically.
Our hedging transactions may not protect us adequately from fluctuations in oil and natural gas prices and may limit future potential gains from increases in commodity prices or result in losses.
      We enter into hedging arrangements from time to time to reduce our exposure to fluctuations in oil and natural gas prices and to achieve more predictable cash flow. These financial arrangements typically take the form of price swap contracts and costless collars. Hedging arrangements expose us to the risk of financial loss in some circumstances, including situations when the other party to the hedging contract defaults on its contract or production is less than expected. During periods of high commodity prices, hedging arrangements may limit significantly the extent to which we can realize financial gains from such higher prices. For example, in calendar year 2004, on a pro forma basis (including the Forest Gulf of Mexico operations), our hedging arrangements reduced the benefit we received from increases in the prices for oil and natural gas by approximately $76.9 million. Although we currently maintain an active hedging program, we may choose not

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to engage in hedging transactions in the future. As a result, we may be affected adversely during periods of declining oil and natural gas prices.
We will require additional capital to fund our future activities. If we fail to obtain additional capital, we may not be able to implement fully our business plan, which could lead to a decline in reserves.
      We depend on our ability to obtain financing beyond our cash flow from operations. Historically, we have financed our business plan and operations primarily with internally generated cash flow, bank borrowings, proceeds from the sale of oil and natural gas properties, entering into exploration arrangements with other parties, the issuance of public debt, privately raised equity and, prior to the bankruptcy of Enron Corp. (our indirect parent company until March 2, 2004), borrowings from Enron affiliates. In the future, we will require substantial capital to fund our business plan and operations. We expect to be required to meet our needs from our excess cash flow, debt financings and additional equity offerings (subject to certain federal tax limitations during the two-year period following the spin-off). Sufficient capital may not be available on acceptable terms or at all. If we cannot obtain additional capital resources, we may curtail our drilling, development and other activities or be forced to sell some of our assets on unfavorable terms.
      The issuance of additional debt would require that a portion of our cash flow from operations be used for the payment of interest on our debt, thereby reducing our ability to use our cash flow to fund working capital, capital expenditures, acquisitions and general corporate requirements, which could place us at a competitive disadvantage relative to other competitors. Additionally, if revenues decrease as a result of lower oil or natural gas prices, operating difficulties or declines in reserves, our ability to obtain the capital necessary to undertake or complete future exploration and development programs and to pursue other opportunities may be limited, which could result in a curtailment of our operations relating to exploration and development of our prospects, which in turn could result in a decline in our oil and natural gas reserves.
Properties we acquire (including the Forest Gulf of Mexico properties) may not produce as projected, and we may be unable to determine reserve potential, identify liabilities associated with the properties or obtain protection from sellers against such liabilities.
      Properties we acquire, including the Forest Gulf of Mexico properties, may not produce as expected, may be in an unexpected condition and may subject us to increased costs and liabilities, including environmental liabilities. The reviews we conduct of acquired properties prior to acquisition are not capable of identifying all potential adverse conditions. Generally, it is not feasible to review in depth every individual property involved in each acquisition. Ordinarily, we will focus our review efforts on the higher value properties or properties with known adverse conditions and will sample the remainder. However, even a detailed review of records and properties may not necessarily reveal existing or potential problems or permit a buyer to become sufficiently familiar with the properties to assess fully their condition, any deficiencies, and development potential. Inspections may not always be performed on every well, and environmental problems, such as ground water contamination, are not necessarily observable even when an inspection is undertaken.
Market conditions or transportation impediments may hinder our access to oil and natural gas markets or delay our production.
      Market conditions, the unavailability of satisfactory oil and natural gas transportation or the remote location of our drilling operations may hinder our access to oil and natural gas markets or delay our production. The availability of a ready market for our oil and natural gas production depends on a number of factors, including the demand for and supply of oil and natural gas and the proximity of reserves to pipelines or trucking and terminal facilities. In deepwater operations, the availability of a ready market depends on the proximity of and our ability to tie into existing production platforms owned or operated by others and the ability to negotiate commercially satisfactory arrangements with the owners or operators. We may be required to shut in wells or delay initial production for lack of a market or because of inadequacy or unavailability of pipeline or gathering system capacity. When that occurs, we are unable to realize revenue from those wells

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until the production can be tied to a gathering system. This can result in considerable delays from the initial discovery of a reservoir to the actual production of the oil and natural gas and realization of revenues.
The unavailability or high cost of drilling rigs, equipment, supplies or personnel could affect adversely our ability to execute on a timely basis our exploration and development plans within budget, which could have a material adverse effect on our financial condition and results of operations.
      Shortages or the high cost of drilling rigs, equipment, supplies or personnel could delay or affect adversely our exploration and development operations, which could have a material adverse effect on our financial condition and results of operations. An increase in drilling activity in the U.S. or the Gulf of Mexico could increase the cost and decrease the availability of necessary drilling rigs, equipment, supplies and personnel.
Competition in the oil and natural gas industry is intense, and many of our competitors have resources that are greater than ours giving them an advantage in evaluating and obtaining properties and prospects.
      We operate in a highly competitive environment for acquiring prospects and productive properties, marketing oil and natural gas and securing equipment and trained personnel. Many of our competitors are major and large independent oil and natural gas companies, and possess and employ financial, technical and personnel resources substantially greater than ours. Those companies may be able to develop and acquire more prospects and productive properties than our financial or personnel resources permit. Our ability to acquire additional prospects and discover reserves in the future will depend on our ability to evaluate and select suitable properties and consummate transactions in a highly competitive environment. Also, there is substantial competition for capital available for investment in the oil and natural gas industry. Larger competitors may be better able to withstand sustained periods of unsuccessful drilling and absorb the burden of changes in laws and regulations more easily than we can, which would adversely affect our competitive position. We may not be able to compete successfully in the future in acquiring prospective reserves, developing reserves, marketing hydrocarbons, attracting and retaining quality personnel and raising additional capital.
Financial difficulties encountered by our farm-out partners or third-party operators could affect the exploration and development of our prospects adversely.
      From time to time, we enter into farm-out agreements to fund a portion of the exploration and development costs of our prospects. Moreover, other companies operate some of the other properties in which we have an ownership interest. Liquidity and cash flow problems encountered by our partners and co-owners of our properties may lead to a delay in the pace of drilling or project development that may be detrimental to a project.
      In addition, our farm-out partners and working interest owners may be unwilling or unable to pay their share of the costs of projects as they become due. In the case of a farm-out partner, we may have to obtain alternative funding in order to complete the exploration and development of the prospects subject to the farm-out agreement. In the case of a working interest owner, we may be required to pay the working interest owner’s share of the project costs. We cannot assure you that we would be able to obtain the capital necessary in order to fund either of these contingencies.
We cannot control the drilling and development activities on properties we do not operate, and therefore we may not be in a position to control the timing of development efforts, the associated costs or the rate of production of the reserves.
      Other companies operate some of the properties in which we have an interest. As a result, we have a limited ability to exercise influence over operations for these properties or their associated costs. Our dependence on the operator and other working interest owners for these projects and our limited ability to influence operations and associated costs could materially adversely affect the realization of our targeted

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returns on capital in drilling or acquisition activities. The success and timing of drilling and development activities on properties operated by others therefore depend upon a number of factors that are outside of our control, including timing and amount of capital expenditures, the operator’s expertise and financial resources, approval of other participants in drilling wells and selection of technology.
Compliance with environmental and other government regulations could be costly and could affect production negatively.
      Exploration for and development, production and sale of oil and natural gas in the U.S. and the Gulf of Mexico are subject to extensive federal, state and local laws and regulations, including environmental and health and safety laws and regulations. We may be required to make large expenditures to comply with these environmental and other requirements. Matters subject to regulation include, among others, environmental assessment prior to development, discharge and emission permits for drilling and production operations, drilling bonds, and reports concerning operations and taxation.
      Under these laws and regulations, and also common law causes of action, we could be liable for personal injuries, property damage, oil spills, discharge of pollutants and hazardous materials, remediation and clean-up costs and other environmental damages. Failure to comply with these laws and regulations or to obtain or comply with required permits may result in the suspension or termination of our operations and subject us to remedial obligations as well as administrative, civil and criminal penalties. Moreover, these laws and regulations could change in ways that substantially increase our costs. We cannot predict how agencies or courts will interpret existing laws and regulations, whether additional or more stringent laws and regulations will be adopted or the effect these interpretations and adoptions may have on our business or financial condition. For example, the Oil Pollution Act of 1990 (the “OPA”) imposes a variety of regulations on “responsible parties” related to the prevention of oil spills. The implementation of new, or the modification of existing, environmental laws or regulations promulgated pursuant to the OPA could have a material adverse impact on us. Further, Congress or the MMS could decide to limit exploratory drilling or natural gas production in additional areas of the Gulf of Mexico. Accordingly, any of these liabilities, penalties, suspensions, terminations or regulatory changes could have a material adverse effect on our financial condition and results of operations. See “Mariner — Regulation” for more information on our regulatory and environmental matters.
Our insurance may not protect us against our business and operating risks.
      We maintain insurance for some, but not all, of the potential risks and liabilities associated with our business. For some risks, we may not obtain insurance if we believe the cost of available insurance is excessive relative to the risks presented. As a result of market conditions, premiums and deductibles for certain insurance policies can increase substantially, and in some instances, certain insurance may become unavailable or available only for reduced amounts of coverage. As a result, we may not be able to renew our existing insurance policies or procure other desirable insurance on commercially reasonable terms, if at all.
      Although we maintain insurance at levels we believe are appropriate and consistent with industry practice, we are not fully insured against all risks, including drilling and completion risks that are generally not recoverable from third parties or insurance. In addition, pollution and environmental risks generally are not fully insurable. Losses and liabilities from uninsured and underinsured events and delay in the payment of insurance proceeds could have a material adverse effect on our financial condition and results of operations. The impact of Hurricanes Katrina and Rita have resulted in escalating insurance costs and less favorable coverage terms.

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Risks Related to our Common Stock After the Merger
An active market for our common stock may not develop and the market price for shares of our common stock may be highly volatile and could be subject to wide fluctuations after this offering.
      We are a private company, and there is no public market for our common stock. An active market for our common stock may not develop or may not be sustained after this offering. In addition, we cannot assure you as to the liquidity of any such market that may develop or the price that our stockholders may obtain for their shares of our common stock.
      Even if an active trading market develops, the market price for shares of our common stock may be highly volatile and could be subject to wide fluctuations. Some of the factors that could negatively affect our share price include:
  •  actual or anticipated downward revisions in our reserve estimates;
 
  •  our operating results being less than anticipated;
 
  •  reductions in oil and gas prices;
 
  •  publication of unfavorable research reports about us or the exploration and production industry;
 
  •  increases in market interest rates which may increase our cost of capital;
 
  •  the enactment of more stringent laws or regulations applicable to our business, or unfavorable court rulings or enforcement or legal actions;
 
  •  increases in royalties or taxes payable in the operation of our business;
 
  •  a general decline in market valuations of similar companies;
 
  •  adverse market reaction to any increased indebtedness we incur in the future;
 
  •  departures of key management personnel;
 
  •  increases to our asset retirement obligations;
 
  •  adverse actions taken by our stockholders;
 
  •  negative speculation in the press or investment community; and
 
  •  adverse general market and economic conditions.
We do not anticipate paying any dividends on our common stock in the foreseeable future.
      We do not expect to declare or pay any cash or other dividends in the foreseeable future on our common stock. Our existing revolving credit facility restricts our ability to pay cash dividends on our common stock, and we may also enter into other credit agreements or other borrowing arrangements in the future that restrict our ability to declare or pay cash dividends on our common stock.
Mariner stockholders will experience substantial and immediate dilution as a result of the merger, and may experience dilution of their ownership interests due to the future issuance of additional shares of our common stock, which could have an adverse effect on our stock price.
      If the merger is completed, the current owners of Mariner’s common stock will experience substantial and immediate dilution from the issuance of shares of Mariner common stock to Forest shareholders, such that the Mariner stockholders will own approximately 42% of the Mariner common stock following the merger. Additionally, we may in the future issue our previously authorized and unissued securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue 70 million shares of common stock and 20 million shares of preferred stock with such designations, preferences and rights as determined by our board of directors. As a result of the proposed amendment to our certificate of incorporation, our authorized shares would be increased to 180 million shares of common stock and 20 million shares of preferred stock. Pursuant to the proposed addition of shares to our stock incentive

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plan, the maximum number of shares issuable under the plan would, if the proposal is approved, be increased to 6.5 million shares.
      The potential issuance of such additional shares of common stock may create downward pressure on the trading price of our common stock. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock (subject to certain federal tax limitations during the two-year period following the spin-off) in connection with the hiring of personnel, future acquisitions, future public offerings or private placements of our securities for capital raising purposes, or for other business purposes. Future sales of substantial amounts of our common stock, or the perception that sales could occur, could have a material adverse effect on the price of our common stock.
Provisions in our organizational documents and under Delaware law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock.
      The existence of some provisions in our organizational documents and under Delaware law could delay or prevent a change in control of our company, which could adversely affect the price of our common stock. The provisions in our certificate of incorporation and bylaws that could delay or prevent an unsolicited change in control of our company include a staggered board of directors, board authority to issue preferred stock, and advance notice provisions for director nominations or business to be considered at a stockholder meeting. In addition, Delaware law imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock. See “Description of Mariner Capital Stock.”

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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
      Various statements in this proxy statement/prospectus-information statement, including those that express a belief, expectation, or intention, as well as those that are not statements of historical fact, are forward-looking statements. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and our future production, revenues, income and capital spending. Our forward-looking statements are generally accompanied by words such as “estimate,” “project,” “predict,” “believe,” “expect,” “anticipate,” “potential,” “plan,” “goal” or other words that convey the uncertainty of future events or outcomes. The forward-looking statements in this proxy statement/prospectus-information statement speak only as of the date of this proxy statement/prospectus-information statement; we disclaim any obligation to update these statements unless required by securities law, and we caution you not to rely on them unduly. We have based these forward-looking statements on our current expectations and assumptions about future events. While our management considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. We disclose important factors that could cause our actual results to differ materially from our expectations under “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Forest Gulf of Mexico Operations,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Mariner” and elsewhere in this proxy statement/prospectus-information statement. These risks, contingencies and uncertainties relate to, among other matters, the following:
  •  the volatility of oil and natural gas prices;
 
  •  discovery, estimation, development and replacement of oil and natural gas reserves;
 
  •  cash flow, liquidity and financial position;
 
  •  business strategy;
 
  •  amount, nature and timing of capital expenditures, including future development costs;
 
  •  availability and terms of capital;
 
  •  timing and amount of future production of oil and natural gas;
 
  •  availability of drilling and production equipment;
 
  •  operating costs and other expenses;
 
  •  prospect development and property acquisitions;
 
  •  marketing of oil and natural gas;
 
  •  competition in the oil and natural gas industry;
 
  •  the impact of weather and the occurrence of natural disasters such as fires, floods and other catastrophic events and natural disasters;
 
  •  governmental regulation of the oil and natural gas industry;
 
  •  developments in oil-producing and natural gas-producing countries;
 
  •  the contemplated transactions, including strategic plans, expectations and objectives for future operations, the completion of those transactions, and the realization of expected benefits from the transactions; and
 
  •  disruption from the merger making it more difficult to manage Mariner’s business.

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THE MARINER ANNUAL MEETING
Purpose, Time and Place
      The Mariner annual meeting will be held on                     ,                     , 2006 at 10:00 a.m., Central Standard Time, at                                                                  , Houston, Texas             . The purpose of the meeting is:
  •  to consider and vote upon the adoption of the Agreement and Plan of Merger, dated as of September 9, 2005, among Forest, Forest Energy Resources, Mariner and MEI Sub, subject to the approval of the proposed amendment to Mariner’s certificate of incorporation,
 
  •  to consider and vote upon a proposed amendment to Mariner’s Second Amended and Restated Certificate of Incorporation to increase the number of authorized shares of stock from 90 million shares to 200 million shares, subject to the completion of the merger,
 
  •  to consider and vote upon the proposed amendment and restatement of the Mariner stock incentive plan,
 
  •  to elect one director to serve until the annual meeting of stockholders of Mariner in 2009,
 
  •  to elect two directors to serve until the annual meeting of stockholders of Mariner in 2007,
 
  •  to approve the proposed granting of authority to the proxyholders to vote in their discretion on a motion to adjourn or postpone the meeting, and
 
  •  to transact any other business that may properly come before the meeting.
We currently expect that no other matters will be considered at the meeting.
Recommendation of the Mariner Board of Directors
      The Mariner board of directors has determined that the merger is fair to and in the best interests of Mariner and its stockholders, and that the merger agreement is advisable. The Mariner board of directors has unanimously approved the merger agreement, the proposed amendment to the certificate of incorporation and the proposed amendment and restatement of the stock incentive plan, and recommends that the Mariner stockholders vote “for” the adoption of the merger agreement and the other proposals.
      In considering the recommendations of the Mariner board of directors, stockholders of Mariner should be aware that members of the Mariner board of directors and executive officers of Mariner have agreements and arrangements that provide them with interests in the merger that differ from, or are in addition to, those of Mariner stockholders. Please read “— Interests of Certain Persons in the Merger.”
Record Date; Stock Entitled to Vote; Quorum
      Stockholders of record of Mariner common stock at the close of business on                     , 2006, the record date for the Mariner meeting, are entitled to receive notice of, and have the right to vote at, the meeting and any reconvened meeting following any adjournment or postponement of the meeting. On the record date,                     shares of Mariner common stock were issued and outstanding and entitled to vote at the meeting. Stockholders of record of shares of Mariner common stock on the record date are each entitled to one vote per share on the proposals.
      A quorum of stockholders is necessary to have a valid meeting of stockholders. The holders of a majority of the stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, will constitute a quorum at the meeting. Shares that are not voted will not count for purposes of calculating a quorum.
      Abstentions and broker “non-votes” count as present for establishing a quorum. A broker “non-vote” occurs on an item when a broker is not permitted to vote on that item without instructions from the beneficial

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owner of the shares and no instructions are given. We expect that, in the event that a quorum is not present at the meeting, the meeting will be adjourned or postponed to solicit additional proxies.
Votes Required
      Adoption of the merger agreement and the approval of the proposed amendment to Mariner’s certificate of incorporation will require the affirmative vote of the holders of a majority of the shares of Mariner common stock outstanding on the record date.
      The proposal to amend and restate Mariner’s stock incentive plan requires the affirmative vote of a majority of the shares of Mariner common stock represented in person or by proxy at the meeting. For purposes of the vote, abstentions will be counted and have the same effect as a vote “against” these proposals. In addition, failing to vote or to instruct your broker to vote will have the same effect as a vote “against” these proposals. Director nominees receiving a plurality of all votes cast at the meeting will be elected to Mariner’s board of directors. Abstentions and broker non-votes have no effect on the election of directors.
      Nonvoted shares have the effect of reducing the number of shares required to approve the proposal to amend and restate Mariner’s stock incentive plan, and to elect directors, which require the affirmative vote of a majority of the shares of Mariner common stock represented in person or by proxy at the meeting, but do not have the effect of reducing the number of shares required to adopt the merger agreement and to approve the proposed amendment to Mariner’s certificate of incorporation, both of which require the affirmative vote of a majority of Mariner’s outstanding shares.
Voting by Proxy
Submitting Proxies
      Stockholders of record may vote their stock by:
  •  attending the meeting and voting their stock in person at the meeting,
 
  •  completing the enclosed proxy card, signing and dating it and mailing it in the enclosed postage pre-paid envelope, or
 
  •  voting via telephone or via the Internet by following the instructions provided on the enclosed proxy card.
If a proxy card is signed by a stockholder of record and returned without specific voting instructions, the stock represented by the proxy will be voted “for” the proposals presented at the meeting.
      Stockholders whose shares of Mariner common stock are held in the name of a bank, broker or other fiduciary must either direct the record holder of their shares of Mariner common stock as to how to vote their shares of Mariner common stock or obtain a proxy from the record holder to vote at the meeting.
      All proxies received at or prior to the meeting will be counted in the vote on the adoption of the merger and the approval of the other proposals.
Revoking Proxies
      Stockholders of record may revoke their proxies at any time prior to the time their proxies are voted at the meeting. Stockholders can revoke their proxies and change their votes by:
  •  completing, signing and dating a new proxy card and returning it by mail so that it is received prior to the meeting;
 
  •  voting via telephone or via the Internet by following the instructions provided on your proxy card;

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  •  sending a written notice to The Continental Stock Transfer & Trust Company that is received prior to the meeting stating that you revoke your proxy; or
 
  •  attending the meeting and voting in person or by legal proxy, if appropriate.
      Internet and telephone voters may use the same procedure to revoke or change their votes as they used to cast their original votes. If your shares of Mariner common stock are held in the name of a bank, broker or other fiduciary and you have directed such person(s) to vote your shares of Mariner common stock, you should instruct such person(s) to change your vote or obtain a legal proxy to do so yourself. Telephone and Internet voting will close at 8:00 p.m. Eastern time on the day before the meeting. Thereafter, voting (including revocations of proxies) can be made by mail or facsimile received prior to the meeting, or in person at the meeting.
      Any written notice of a revocation of a proxy should be sent to the following address:
  The Continental Stock Transfer & Trust Company
  17 Battery Place
  8th Floor
  New York, New York 10004
  Facsimile: (212) 509-5152
Other Business; Adjournments
      Mariner is not aware of any other business to be acted upon at the meeting. If, however, other matters are properly brought before the meeting or any adjourned meeting, your proxies will have discretion to act on those matters or to adjourn the meeting, according to their best judgment.
Proxy Solicitation
      The cost of solicitation of proxies from stockholders will be paid by Mariner, other than the costs of printing, filing and mailing this proxy statement/prospectus-information statement and the registration statement of which it is a part, which will be borne equally by Mariner and Forest. In addition to solicitation by mail, the directors, officers and employees of Mariner may also solicit proxies from stockholders by telephone, facsimile or in person. Mariner also will make arrangements with brokerage houses and other custodians, nominees and fiduciaries to send the proxy materials to beneficial owners. Upon request, Mariner will reimburse those brokerage houses and custodians for their reasonable expenses in so doing.
      Mariner has retained Mellon Investor Services LLC to provide advice and to aid with the solicitation of proxies from Mariner stockholders for the meeting. Mellon Investor Services LLC will receive a fee of $4,500, plus $4.25 per stockholder contact, as compensation for its services, and will be reimbursed for its related reasonable out-of-pocket expenses.
      Do not send any stock certificate(s) with your proxy cards. Mariner stockholders will not be required to send in their stock certificates if the merger is completed. After the merger is completed, the shares of Forest Energy Resources common stock held by Forest shareholders will be exchanged for shares of Mariner common stock via book-entry procedures.
Interests of Certain Persons in the Merger
      In considering the recommendation of the Mariner board of directors to vote for the proposals to adopt the merger agreement and to approve the other proposals, stockholders of Mariner should be aware that members of the Mariner board of directors and executive officers of Mariner have agreements and arrangements that provide them with interests in the merger that differ from, or are in addition to, those of Mariner stockholders. The Mariner board of directors was aware of these agreements and arrangements during its deliberations of the merits of the merger and in determining to recommend to the stockholders of Mariner

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that they vote for the proposal to adopt the merger agreement. These agreements and arrangements can be summarized as follows:
        Governance Structure. Under the terms of the merger agreement, the board of directors of Mariner after completion of the merger will be comprised of seven individuals, five of whom are current directors of Mariner, and two of whom will be mutually agreed to by Mariner and Forest prior to the completion of the merger.
 
        Payments for Waivers of Rights under Employment Agreements. The executive officers of Mariner will receive cash payments of $1,000 each in exchange for the waiver of certain rights under their employment agreements, including the automatic vesting or acceleration of restricted stock and options upon the completion of the merger and the right to receive a lump sum cash payment, equal to 2.0 (2.5 for Mr. Polasek and 2.99 for Mr. Josey) times the sum of the officer’s base salary and three year average annual bonus, if the officer voluntarily terminates employment without good reason within nine months following the completion of the merger.
 
        Severance Arrangements. The executive officers have employment agreements that will remain in effect after the completion of the merger. These agreements generally entitle the officers to severance benefits in the event of a resignation for good reason, a termination without cause or, in the case of Scott Josey’s agreement, Mariner’s non-renewal of the agreement. These severance benefits are comprised of (i) a payment equal to 18 months of salary continuation (two years for Mr. Josey and Mr. Polasek) at the highest rate in effect prior to termination, (ii) health care coverage for a period of eighteen months (two years for Mr. Josey and Mr. Polasek), (iii) an amount equal to the sum of all bonuses paid to the officer in the year prior to the year in which termination occurs, (iv) 100% vesting of all restricted shares under our Equity Participation Plan, and (v) 50% vesting of all other rights under any other equity plans, including our Stock Incentive Plan.
 
        The employment agreements also provide for certain change of control benefits. Upon termination for any reason other than cause at any time within nine months after a change of control that occurs while the executive is employed, or upon the occurrence of a change of control within nine months following resignation of employment for good reason or termination without cause, the agreements provide for the following benefits: (i) a lump sum payment equal to 2.0 (2.5 for Mr. Polasek and 2.99 for Mr. Josey) times the sum of the officer’s base salary and three year average annual bonus, and (ii) 100% vesting of all rights under any equity plans, including our Equity Participation Plan and our Stock Incentive Plan. The officers are entitled to a full tax gross-up payment if the aggregate payments and benefits to be provided constitute a “parachute payment” subject to a Federal excise tax. Pursuant to the waivers described above, the executive officers will waive their rights to the automatic vesting or acceleration of restricted stock and options upon completion of the merger and to receive a lump sum payment if they terminate their employment with Mariner without good reason within nine months following the completion of the merger.
Stock Ownership of Directors and Executive Officers
      As of the close of business on December 21, 2005, directors and executive officers of Mariner and their affiliates as a group beneficially owned and were entitled to vote approximately 3.7 million shares of Mariner common stock (including restricted stock subject to vesting), representing approximately 10.4% of the shares of Mariner common stock outstanding on that date.
      All of the directors and executive officers of Mariner who are entitled to vote at the meeting have indicated that they intend to vote their shares of Mariner common stock in favor of adoption of the merger agreement.
Appraisal and Dissenters’ Rights
      In accordance with the Delaware General Corporation Law, there will be no appraisal rights or dissenters’ rights available to holders of Mariner common stock in connection with the merger.

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THE SPIN-OFF AND MERGER
      The discussion in this proxy statement/prospectus-information statement of the merger and the principal terms of the merger agreement is subject to and qualified in its entirety by reference to the merger agreement, a copy of which is attached to this proxy statement/prospectus-information statement as Annex A and is incorporated by reference into this proxy statement/prospectus-information statement.
Background of the Merger
      At regular meetings of Forest’s board held on November 10, 2004 and February 23, 2005, Forest’s management made presentations regarding the estimated value of Forest’s business units. Forest’s board and management agreed to examine alternatives to increase the value of the Forest Gulf of Mexico operations. The alternatives were taxable and non-taxable divestments of the Forest Gulf of Mexico operations, and included an outright cash sale of those operations, an initial public offering, and some form of a merger transaction. Forest’s board determined that, due to the disparity in the market value and tax basis of the Forest Gulf of Mexico operations, a non-taxable alternative would be most attractive to Forest and its shareholders. One specific alternative presented by management was merging the Forest Gulf of Mexico operations with another company that was more focused on offshore activities and possessed a complementary asset base. Forest’s directors instructed Forest’s management to consider means to accomplish such a merger and to discuss such a strategy with financial advisors and legal and tax counsel.
      On April 18, 2005, Mr. David Keyte, the Chief Financial Officer of Forest, spoke briefly with Mr. Scott Josey, the Chief Executive Officer, President and Chairman of Mariner, at a meeting of the Independent Petroleum Association of America in New York City. Mr. Keyte told Mr. Josey that Forest was interested in examining the possibility of spinning off its Gulf of Mexico operations utilizing a “reverse Morris Trust” structure. In general terms, a reverse Morris Trust structure in this context would entail a Forest distribution of the stock of one of its subsidiaries (preexisting or newly formed) to Forest shareholders, followed by a merger between such subsidiary and Mariner. Mr. Josey expressed interest in a potential transaction, and Messrs. Keyte and Josey agreed to discuss the matter with greater specificity at a later date.
      Forest’s initial contact with Mariner regarding a potential transaction was not the result of affiliations between the parties. Forest and Mariner do not have common directors, and no member of senior management of either party is a former employee of, or is otherwise affiliated with, the other party. Mariner’s largest stockholder, FMR Corp. (which holds approximately 12.2% of Mariner’s outstanding shares), is also the second largest shareholder of Forest (holding approximately 12.7% of Forest’s outstanding shares). FMR Corp. has no board representation or other management control over either party. Mr. Forrest E. Hoglund, the Chairman of Forest’s board of directors, served as Chairman of the Board of EOG Resources, Inc., an affiliate of Enron Corp., from 1987 to 1999 and as President from 1990 to 1996. During part of this period, Mariner was also an affiliate of Enron Corp., though the companies’ respective management teams were separate. Neither Mr. Hoglund nor Mariner is currently affiliated with Enron Corp.
      On May 10, 2005, at a regularly scheduled board meeting at Forest’s offices in Denver, Colorado, Forest management made a presentation to the Forest board of directors regarding a potential spin-off and merger of the Forest Gulf of Mexico operations, utilizing a reverse Morris Trust structure. Forest’s management identified five potential merger parties that met certain criteria relating to size and complementary Gulf of Mexico asset base. The Forest board authorized Forest management to begin efforts to evaluate and pursue the potential spin-off. As a result, during the week of May 16, 2005, Mr. Keyte contacted each of the five potential merger parties.
      On or about May 21, 2005, Forest sent to Mariner a confidentiality agreement regarding the proposed transaction and any subsequent due diligence reviews. From May 21, 2005 through May 23, 2005, Forest and Mariner negotiated the terms of the confidentiality agreement and on May 23, 2005, Forest and Mariner executed the confidentiality agreement. Over the course of the following week, Forest executed confidentiality agreements with three other potential merger parties, and Forest management made presentations regarding a possible spin-off and merger to each such party.

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      On May 24, 2005, Mr. Keyte, Mr. Michael Kennedy, the Investor Relations Manager of Forest, and Mr. Josey met in Houston, Texas. At the meeting, Mr. Keyte made a presentation detailing the transaction contemplated by Forest. The presentation described the transaction structure and provided information on the assets, reserves, acreage, personnel and performance metrics (including production and EBITDA) of the Forest Gulf of Mexico operations. The presentation also covered the pro forma operational and financial characteristics of the combined company based on preliminary figures. Mr. Keyte identified several potential advantages to Mariner of undertaking the proposed transaction, including increased liquidity, an attractive, balanced asset portfolio in the Gulf of Mexico, and property prospects for future development. Mr. Keyte did not propose economic terms for the transaction, such as the ownership stake Forest shareholders would hold in Mariner after the completion of the transaction. After this, Mr. Josey made a presentation regarding Mariner and the merits of consummating a transaction with Mariner. The presentation provided an overview of Mariner’s operations, properties, production and reserves; management structure; exploration and development projects, including the Swordfish project (please see “Mariner — Significant Properties — Gulf of Mexico Deepwater” for more information on this project); and financial data, including capital expenditures. Prior to the conclusion of the meeting, Mr. Keyte requested that Mariner’s management team make a presentation to Forest’s board of directors at a later date.
      On June 2, 2005, Forest made available to Mariner, for purposes of its due diligence review, electronic data regarding the reserves, lease operating expenses, capital expenditures, production, general and administrative expenses and financial performance of the Forest Gulf of Mexico operations. Forest also made the same information available to the other potential merger parties. Representatives of Mariner and the other potential merger parties conducted reviews of these materials on an ongoing basis over the course of the following weeks.
      On June 16, 2005, the executive committee of Forest’s board of directors, consisting of Messrs. Forrest E. Hoglund, James H. Lee and Craig Clark, met in Houston, Texas with members of Forest management and representatives of Citigroup Global Markets Inc. (“Citigroup”) (one of Forest’s financial advisors) to discuss the contemplated spin-off and merger. Representatives of two potential merger parties (other than Mariner) then sequentially joined the meeting and made presentations to the executive committee.
      On June 22, 2005, the executive committee of Forest’s board of directors held a meeting in Forest’s offices in Denver, Colorado. Members of Forest management and representatives of Citigroup were also present at the meeting. At this meeting, the executive committee was briefed on the status of discussions with potential merger parties. Mr. Josey, accompanied by Messrs. Dalton Polasek, Chief Operating Officer, Rick Lester, Vice President and Chief Financial Officer, Mike van den Bold, Vice President and Chief Exploration Officer, and Jesus Melendrez, Vice President — Corporate Development of Mariner, then joined the meeting and made a presentation to the executive committee and the other attendees. The presentation provided an overview of Mariner’s operations, properties, production and reserves; management structure; exploration and development projects, including the King Kong/Yosemite, Pluto II, Bass Lite, LaSalle, Swordfish, Green Pepper and Rigel projects; prospect inventory; drilling programs; seismic databases; and financial data, including a capital expenditure budget for 2005. Mr. Josey presented Mariner’s views on its own enterprise value and discussed a proposed method for establishing an exchange ratio focused primarily upon the PV10 values of the parties’ estimated proved reserves. He did not propose an exchange ratio for the transaction or other specific economic terms. Mr. Josey advised Forest that Mariner would require that the evaluation of Mariner for purposes of establishing an exchange ratio give effect to its anticipated West Texas acquisition.
      On June 23, 2005, a special committee of Forest’s board of directors was formed to consider proposals to spin-off the Forest Gulf of Mexico operations. The directors named to be members of the committee were Messrs. Hoglund, Dod A. Fraser, Mr. Lee, James D. Lighter, and Patrick R. McDonald.
      On June 28, 2005, Mariner and the other potential merger parties received a written request from Forest for a non-binding, preliminary proposal to acquire the Forest Gulf of Mexico operations. The proposal was requested to be submitted no later than July 6 and to include certain information, including the percentage of shares of the combined entity to be held by Forest shareholders, key assumptions used in arriving at the level

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of consideration to be offered, transaction structure, and a statement of intent with respect to employees of the Forest Gulf of Mexico operations.
      On June 29, 2005, Mr. Clark, Forest’s Chief Executive Officer, and other members of Forest’s management and technical teams made a presentation to another potential merger party on the attributes and upside potential of the Forest Gulf of Mexico operations. Representatives of Citigroup were also present at the meeting. The size of the other potential merger party in comparison to the Forest Gulf of Mexico operations was identified as an issue that might preclude Forest from structuring the spin-off as a tax-free transaction. Therefore, Forest could be required to include more assets in the transaction, either in the form of additional oil and gas operations or cash.
      On July 6, 2005, Mariner submitted to Forest a non-binding preliminary written proposal to acquire the Forest Gulf of Mexico operations. In the proposal, Mariner indicated its willingness to consummate a transaction in which Forest shareholders would hold between 53% and 56% of Mariner’s shares after the transaction, and Mariner would assume $300 million of indebtedness as part of the merger, which would be incurred by Forest’s subsidiary prior to being spun off by Forest in order to fund a distribution to Forest prior to the spin-off. Mariner stated that it had based its valuation of the Forest Gulf of Mexico operations at between 90% and 100% of the value of the Forest Gulf of Mexico operations estimated proved reserves and 100% of the value of Mariner’s estimated proved reserves. The proposal was subject to due diligence, and assumed an economic effective date of June 30, 2005 (i.e., all revenues and expenditures of the Forest Gulf of Mexico operations would accrue to the account of Mariner from that date). Mariner also included supporting schedules providing details on Mariner’s calculations of the respective values of the companies, based on the parties’ respective PV10 values at June 30, 2005. Mariner’s schedules estimated Mariner’s value, based upon PV10 values for its estimated proved reserves, and adjusted for debt, working capital and derivatives, at approximately $883 million. Mariner’s schedules estimated the Forest Gulf of Mexico operations’ value, based upon PV10 values for its estimated proved reserves, and adjusted for $300 million of debt, in a range from $978 million to $1.1 billion.
      Also on July 6, 2005, one of the other potential merger parties submitted a written proposal to Forest to acquire the Forest Gulf of Mexico operations and certain other substantial assets of Forest for a maximum valuation of $1.335 billion in stock. The other proposal provided for no cash payment to Forest, and for a repurchase of the other party’s stock to accommodate the other parties’ assessment of relative value.
      On July 11, 2005, the special committee of Forest’s board of directors met by teleconference with members of Forest management and representatives of Citigroup and Credit Suisse First Boston (“CSFB”) (another of Forest’s financial advisors). At this meeting, the special committee was briefed on the status of discussions with the potential merger parties and the parties’ July 6 proposals. After discussion, the special committee concluded that, with respect to the Forest Gulf of Mexico operations, the valuation contained in the other potential merger party’s proposal was comparable to the valuation contained in Mariner’s proposal but that, with respect to Forest’s other assets, the other potential merger party’s valuation was insufficient. Further, the other party’s transaction structure was very complex, which Forest believed made the transaction less viable.
      On July 14, 2005, Mr. Clark and other members of Forest’s management and technical teams made a presentation to Mr. Josey and other members of Mariner’s management and technical teams in Houston, Texas, on the attributes and upside potential of the Forest Gulf of Mexico operations. Representatives of Citigroup and CSFB were also present at the meeting. The presentation provided detail on several pending exploration and development projects.
      On July 15, 2005, members of Forest management, together with representatives of Citigroup and CSFB, met in Houston, Texas with the other party that had submitted a proposal to discuss the potential benefits of a transaction.
      Following further technical and reserve due diligence, on July 21, 2005, Mariner submitted a revised non-binding preliminary written proposal to Forest. In the proposal, Mariner stated that it had revised the basis of its valuation to 100% of the value of the proved reserves of the Forest Gulf of Mexico operations, and was

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therefore confirming its willingness to enter into a transaction in which Forest shareholders would hold approximately 56% of Mariner’s shares, subject to due diligence and adjustment based upon material changes occurring prior to the execution of the merger agreement. As with the July 6, 2005 proposal, Mariner would assume $300 million of indebtedness, and the transaction would have an economic effective date of June 30, 2005. Mariner also requested that Forest enter into an exclusivity agreement, whereby Forest would agree to negotiate exclusively with Mariner for a period of 45 days.
      On July 25, 2005, in accordance with Forest’s instructions, representatives of Citigroup met with Mr. Josey by teleconference. At the conclusion of the discussion, Mr. Josey indicated that he would ask the Mariner board to consider a transaction in which Forest shareholders would hold approximately 57% of the equity interests of the combined company after the merger, subject to due diligence and adjustment based upon material changes occurring prior to execution of the merger agreement.
      On July 27, 2005, the special committee of Forest’s board of directors met by teleconference. Members of Forest management and representatives of Citigroup, CSFB and Vinson & Elkins L.L.P., outside counsel to Forest, were also present at the meeting. At this meeting, the special committee was updated on discussions with the potential merger parties since the committee’s July 11th meeting and on the proposals of Mariner and one other party. The special committee also discussed alternative transactions involving the Forest Gulf of Mexico operations, including an initial public offering, an outright sale of the underlying assets, and the creation of a net-profits master limited partnership. The special committee instructed Forest management to pursue negotiations with Mariner. The special committee based its decision on the following factors: (i) Mariner’s deepwater property portfolio was complementary to Forest’s Gulf of Mexico portfolio, (ii) a spin-off followed by a merger transaction could be done with Mariner without having to involve assets other than the Forest Gulf of Mexico operations, and (iii) the other potential merger party’s valuation of Forest’s other producing operations did not appear to be sufficient.
      On July 27, 2005, in accordance with Forest’s instructions, a representative of Citigroup advised Mr. Josey that Forest’s board had approved management’s pursuit of a transaction with Mariner. Subsequently, Mr. Josey advised Mr. Clark by teleconference that Mariner was not willing to proceed unless Forest would agree to an exchange ratio adjustment for changes in Mariner’s working capital and debt since June 30, 2005.
      On July 28, 2005, Mr. Clark and Mr. Josey again met by teleconference. They discussed the proposed exchange ratio and adjustments and agreed to commence negotiating definitive documentation. Mr. Clark advised Mr. Josey that Forest would give Mariner access to additional due diligence materials.
      On July 29, 2005, Forest distributed a draft non-binding term sheet for the transaction. The term sheet reflected the 57% exchange ratio and other agreed-upon terms, and was subject to mutual due diligence. Over the following three days, representatives of Forest and Mariner discussed various provisions in the term sheet, including whether interim operating covenants would apply to Mariner as well as the Forest Gulf of Mexico operations, board representation and whether or in what manner transaction expenses would be split between the parties.
      Subsequently, Forest and Mariner executed an exclusivity agreement effective August 1, 2005, whereby the parties agreed to negotiate exclusively with each other through August 22, 2005. The agreement also contained a customary standstill provision, which provided that neither company would pursue an acquisition of the other party without that party’s consent.
      On August 2, 2005, Forest and Mariner finalized the terms of the non-binding term sheet for the transaction. The term sheet reflected the 57% exchange ratio, provided that interim operating covenants would be applicable to both Mariner and the Forest Gulf of Mexico operations, provided for the addition of two mutually agreeable members to Mariner’s board and provided that transaction costs would be borne by both parties.
      On August 4 and 5, 2005, representatives of Forest conducted a due diligence review of certain legal and employee benefits materials of Mariner at the offices of Baker Botts L.L.P., Mariner’s outside counsel, in Houston, Texas. Materials provided included general corporate materials, litigation summaries, material

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contracts, employment agreements, benefits arrangements and summaries, licenses and permits and environmental and regulatory information.
      On August 5, 2005, Vinson & Elkins distributed a draft merger agreement to Mariner and Baker Botts.
      On August 7, 2005, Mr. Josey met with representatives of Lehman Brothers (Mariner’s financial advisor) in the offices of Mariner. They discussed the general terms and structure of the transaction and the proposed exchange ratio.
      On August 8 and 9, 2005, technical teams from Forest conducted a due diligence review and valuation analysis of Mariner’s proved reserves, drilling inventory and undeveloped acreage. Forest continued its technical, reserve, accounting, employee benefits, title and legal due diligence review over the course of the following weeks.
      On August 9, 2005, representatives of Mariner and Baker Botts began a due diligence review of certain legal, title and employee benefits materials at the offices of Forest in Denver, Colorado, and Mariner’s technical team conducted further due diligence and continued its evaluation of Forest’s proved reserves, drilling inventory and undeveloped acreage. Materials provided included general corporate materials, litigation summaries, land, lease and title materials, material contracts, employment agreements, benefits arrangements and summaries, licenses and permits and environmental and regulatory information. With the assistance of appropriate legal, title, financial, tax, engineering, and human resources consultants, Mariner continued its technical, reserve, accounting, employee benefits, title and legal due diligence review over the course of the following weeks.
      On August 10, 2005, Messrs. Clark and Keyte, Mr. Matthew Wurtzbacher, Senior Vice President, Corporate Planning and Development of Forest, and Mr. Cyrus Marter, Vice President and General Counsel of Forest, and Messrs. Josey, Lester, and Melendrez, and Ms. Teresa Bushman, Vice President and General Counsel of Mariner, together with representatives of Vinson & Elkins, Baker Botts, Citigroup and Lehman Brothers, met in the offices of Vinson & Elkins in Houston, Texas. Vinson & Elkins explained how the draft merger agreement had addressed some of the details of the proposed transaction structure, which led to a discussion of whether Mariner or Forest Energy Resources would be the surviving entity in the business combination. Discussion of the structural issue was postponed pending further analysis. The parties also discussed interim operations following the execution of the merger agreement, with Mariner suggesting that both parties covenant to continue their exploration and development programs in accordance with their capital budgets. Forest indicated that it was amenable to this approach. Finally, the draft agreement proposed superior offer termination provisions in favor of Forest, which Mariner and Baker Botts stated would not be acceptable. Also, Mariner and Baker & Botts objected to the Mariner fiduciary provisions since they did not include a fiduciary termination provision. A fiduciary termination provision allows a party’s board of directors, if required by its fiduciary duties, to terminate the agreement in order to accept a subsequent superior offer. Representatives of Forest, Mariner, Baker Botts and Vinson & Elkins negotiated and exchanged drafts of the merger agreement, distribution agreement and other ancillary agreements over the course of the following week.
      On August 15, 2005, Messrs. Keyte and Marter of Forest, and Messrs. Josey, Lester and Melendrez and Ms. Bushman of Mariner, together with representatives of Citigroup, Vinson & Elkins and Baker Botts, met by teleconference to discuss the draft distribution agreement. The companies discussed, and reached agreement in principle on, the manner in which known and unknown liabilities, including environmental and plugging and abandonment liabilities, would be allocated between Mariner and Forest. The companies also discussed the mechanism for handling revenues and expenses associated with the Forest Gulf of Mexico operations between July 1, 2005 and the closing of the merger.
      On August 16, 2005, representatives of Baker Botts and Vinson & Elkins met by teleconference to discuss the “deal protection” provisions proposed by Forest in the draft merger agreement. Vinson & Elkins indicated Forest’s unwillingness to proceed with a transaction in which it did not have the right to terminate the agreement in the face of a superior proposal to purchase the Forest Gulf of Mexico operations or Forest as a

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whole. Baker Botts indicated that Mariner would not be willing to enter into a merger agreement that included such a termination right.
      On August 18, 2005, representatives of Mariner, Forest, Baker Botts and Weil, Gotshal & Manges LLP (Forest’s outside tax counsel) met by teleconference to discuss the draft tax sharing agreement and related documents. During the meeting, Forest and Weil, Gotshal & Manges discussed certain factual circumstances involving forward contracts to sell Forest stock entered into by a Forest shareholder who held more than 10% of Forest stock, the effect of which could have imposed increased restraints on Mariner in the future in order to maintain favorable tax treatment of the spin-off.
      Also on August 18, representatives of Mariner, Forest, Citigroup, Baker Botts and Vinson & Elkins met by teleconference to discuss the other transaction agreements. Following this teleconference, Lehman Brothers contacted Citigroup to notify them of Mariner’s unwillingness to proceed further until the potential tax issue regarding how the forward contracts entered into by the 10% Forest shareholder could impact the tax-free nature of the spin-off was resolved to Mariner’s satisfaction.
      On August 19, 2005, Lehman Brothers contacted Citigroup to discuss various matters pertaining to the transaction and to propose that, in order to resolve the potential tax issue raised on August 18, the cash distribution to Forest be decreased by $100 million (thereby decreasing the amount of debt to be incurred in the transaction) and the number of Mariner shares to be issued to Forest shareholders be correspondingly increased.
      On August 21, 2005, Mr. Josey of Mariner sent Messrs. Clark and Keyte of Forest a list of the most significant outstanding issues, including the potential tax issue, the superior offer termination provision, the representations on diligence materials and public filings, the treatment of Forest stock options, retention arrangements, the allocation of specified abandonment and derivative liabilities and the status of Mariner’s then-pending drill-to-earn transaction in West Texas. The parties agreed to meet in person to attempt to resolve the issues identified.
      On August 22, 2005, Messrs. Josey, Clark, Keyte and Melendrez met in Forest’s offices in Denver, Colorado. At the meeting, the parties agreed, in order to resolve the potential tax issue, to decrease the cash distribution to Forest by $100 million, to have Mariner assume certain mark-to-market derivative liabilities of approximately $50 million at June 30, 2005, and to increase the number of Mariner shares to be issued to Forest shareholders to approximately 58%. They also discussed the superior offer termination provision and the amount of the termination fee, without reaching agreement. The parties’ respective counsels revised the transaction agreements accordingly, and the transaction teams continued to negotiate various provisions in the agreements and to discuss various diligence issues over the course of the week.
      On August 23, 2005, Messrs. Keyte and Josey met briefly by teleconference to discuss, among other things, the West Texas drill-to-earn transaction, the superior offer termination provision and the amount of the termination fee. That same day, the parties agreed to extend the exclusivity period under their existing agreement until August 29.
      On August 24, 2005, Forest’s board of directors held a regular meeting at Forest’s offices in Denver, Colorado. Members of Forest management and representatives of Citigroup and CSFB were also present during the portion of the meeting devoted to the potential spin-off and merger transaction. At this meeting, the board was briefed on financial and other aspects of the transaction, including the status of negotiations with Mariner and the current terms of the transaction agreements. Also on August 24, 2005, Messrs. Clark and Josey met by teleconference to discuss additional diligence requests regarding reserves, current projects and plugging and abandonment costs from Mariner and Forest. Mr. Clark and Mr. Josey agreed to speak again when responsive data had been gathered.
      On August 25, 2005, Messrs. Clark and Josey met by teleconference, during which the requested diligence information described above was exchanged and additional diligence matters were discussed.
      On August 27, 2005, Mr. Marter of Forest, and Messrs. Lester and Melendrez and Ms. Bushman of Mariner, together with representatives of Vinson & Elkins and Baker Botts, met in the offices of Vinson &

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Elkins in Houston, Texas. The parties discussed and negotiated some of the outstanding issues remaining with respect to the transaction agreements, including the scope and pricing of the transition services to be provided by Forest after the closing, and the allocation of certain specified abandonment and environmental liabilities of the Forest Gulf of Mexico operations. The parties reached substantial agreement on transition services, but did not agree which party would bear the abandonment and environmental liabilities associated with two properties.
      On August 28, 2005, Messrs. Keyte, Wurtzbacher and Marter of Forest, and Messrs. Lester and Melendrez and Ms. Bushman of Mariner, together with representatives of Vinson & Elkins and Baker Botts, met in the offices of Vinson & Elkins in Houston, Texas. The parties negotiated and discussed the outstanding issues remaining with respect to the transaction agreements, including Forest’s proposed superior offer termination right, the status of Mariner’s then-pending drill-to-earn transaction in West Texas and the specified abandonment and environmental liabilities. The parties agreed that Mariner would obtain a performance bond to secure its performance in the drill-to-earn program, and that it would assume a portion of the abandonment and environmental liabilities, subject to a cap. Mr. Keyte stated that Forest would be willing to proceed without a superior offer termination provision in favor of Forest. The parties also agreed that Mariner would have the ability to terminate the agreement in certain circumstances in order to accept a superior proposal to acquire Mariner. Finally, the parties agreed on a termination fee of $25 million and an expense reimbursement provision payable by Mariner if the merger agreement were terminated or rejected by its stockholders in order to accept an alternative transaction. The Mariner representatives did not insist on a termination fee or reimbursement provision applicable to Forest because there would be no provisions in the merger agreement pursuant to which Forest could terminate the agreement in order to accept an alternative transaction. The parties concluded the meeting by agreeing to keep each other updated on developments related to Hurricane Katrina, which was expected to reach the parties’ properties in the Gulf of Mexico that evening.
      On August 29, 2005, Messrs. Clark and Josey met in Mariner’s offices in Houston, Texas to discuss retention arrangements for Mariner’s executive officers and for the employees of the Forest Gulf of Mexico operations. During the meeting, they reviewed organizational charts and discussed the companies’ benefits and incentive plans. The parties discussed the basic retention parameters for both sets of employees, including the terms of Mariner’s executive officers’ waivers of change of control benefits, with details to be agreed upon later. The parties also agreed to exchange periodic updates on the impact of Hurricane Katrina on the companies’ respective assets and equipment. Baker Botts and Vinson & Elkins exchanged drafts of the transaction documents over the course of the day. That same day, the Forest board of directors held a special meeting by teleconference. Members of Forest management and representatives of Citigroup, Vinson & Elkins and Weil, Gotshal & Manges were also present at the meeting. Forest management and a representative of Vinson & Elkins briefed the board on the status of negotiations with Mariner and the current form of the transaction agreements. Mr. Kenneth Heitner of Weil, Gotshal & Manges briefed the board regarding the various tax issues that were relevant to the spin-off, how those issues were addressed in the transaction agreements, and the constraints that Mariner and Forest would face in the future in order to maintain favorable tax treatment of the spin-off. Vinson & Elkins advised the board regarding various corporate law matters and confirmed that a superior offer termination provision in favor of Forest was not necessary from a legal point of view. Forest management also briefed the board regarding Forest’s on-going investigation of the potential impact of Hurricane Katrina on both Forest and Mariner.
      On August 30, 2005, the board of directors of Mariner held a special meeting by teleconference, at which Mariner’s management, together with Lehman Brothers and Baker Botts, updated the board on the proposed transaction and related matters, including the strategic and business considerations relating to the transaction, the ongoing diligence review, the status of discussions between the parties and the principal terms of the transaction agreements. Lehman Brothers discussed with the board the expected financial terms of the transaction and the preliminary valuation analyses it had performed with respect to Mariner and the Forest Gulf of Mexico operations, noting that the valuation inputs and ranges used in the analysis were subject to change until due diligence was completed and the terms of the transaction were finalized. A representative of Baker Botts reviewed in detail the fiduciary termination provisions of the agreement and certain other

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principal terms of the transaction agreements. Following extensive discussion, including discussions regarding the potential impact of Hurricane Katrina on both Mariner and the Forest Gulf of Mexico operations, the Mariner board authorized continuing discussions regarding the proposed transaction.
      On August 31, 2005, Messrs. Clark and Josey met by teleconference to finalize their agreement with respect to retention arrangements and to provide one another with updates regarding the potential impact of Hurricane Katrina on the companies’ respective assets.
      On September 1, 2005, the Forest board of directors met by teleconference. Members of Forest management and representatives of Citigroup, Vinson & Elkins and Weil, Gotshal & Manges were also present at the meeting. At this meeting, the Forest board was updated on financial and other aspects of the transaction, including Forest’s investigation of the potential impact of Hurricane Katrina on Forest and Mariner and the status of negotiations with Mariner. The Forest board then granted full authority to the executive committee to finalize the transaction agreements.
      On September 3 and 4, 2005, representatives from Forest and Mariner conducted visual inspections by helicopter and fixed-wing aircraft of certain of Forest’s and Mariner’s properties in the Gulf of Mexico in order to assess the damage sustained as a result of Hurricane Katrina.
      From September 2 through September 6, 2005, the parties exchanged revised drafts of the transaction agreements. On September 6, 2005, the executive committee of Forest’s board met by teleconference. Members of Forest management were also present at the meeting. The executive committee was briefed by management on the status of discussions with Mariner and regarding Forest’s investigation of the potential impact of Hurricane Katrina on Forest and Mariner. The executive committee instructed Forest management regarding necessary changes to the transaction agreements, focusing on the need to clarify the impact of Hurricane Katrina.
      On September 7, 2005, Mr. Keyte of Forest and Mr. Melendrez of Mariner met by teleconference to resolve the remaining issues relating to the transaction, including the limitation applicable to the specified abandonment and environmental liabilities and the scope of the condition to closing that Forest obtain the consent of its bondholders. The parties reached compromises on both points and also agreed to exchange written reports detailing the damage sustained to their respective assets as a result of Hurricane Katrina, which reports, along with finalized projections for both companies, were subsequently exchanged on September 8, 2005.
      On September 9, 2005, the board of directors of Mariner held a special meeting by teleconference, to review the proposed transaction. At the meeting, Mariner’s management, together with representatives of Lehman Brothers and Baker Botts, apprised the Mariner board of the status of discussions and reviewed the terms of the transaction as reflected in the final forms of the transaction agreements. Lehman Brothers delivered its oral opinion (subsequently confirmed in writing) to the board that, as of September 9, 2005, based upon and subject to the factors and assumptions set forth in the opinion, the exchange ratio in the merger was fair from a financial point of view to Mariner. There were no material differences between Lehman Brothers’ written opinion and the oral opinion given at the board meeting. Baker Botts advised the board regarding certain corporate law matters. Following extensive discussion, the Mariner board approved the merger and the merger agreement and resolved to recommend that Mariner’s stockholders vote to adopt the merger agreement. That same day, the executive committee of Forest’s board of directors met by teleconference. Members of Forest management and representatives of Citigroup and Vinson & Elkins were also present at the meeting. At this meeting, the executive committee was briefed on the final form of the transaction agreements (including the agreed upon financial terms of the transaction as reflected in the transaction documents) and on Forest’s latest assessment of Hurricane Katrina’s impact on Forest and Mariner. After full discussion, the executive committee approved the final form of the merger agreement and other transaction agreements. Shortly after the meetings, the merger agreement and other transaction agreements were executed by the parties to the agreements.

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Reasons for the Merger; Recommendation of the Mariner Board of Directors
      The Mariner board of directors has determined that the merger is fair to and in the best interests of Mariner and its stockholders, and that the merger agreement is advisable. The Mariner board of directors has unanimously approved the merger agreement, the proposed amendment to the certificate of incorporation and the proposed amendment and restatement of the stock incentive plan, and recommends the adoption of the merger agreement and the approval of the other proposals by the Mariner stockholders.
      In considering the recommendation of the Mariner board of directors with respect to the merger, you should be aware that some executive officers and directors of Mariner have interests in the merger that may be different from, or in addition to, the interests of Mariner stockholders generally. The Mariner board of directors was aware of these interests in approving the merger and merger agreement. Please refer to “The Mariner Annual Meeting — Interests of Certain Persons in the Merger” beginning on page 38 for more information about these interests.
      In reaching its decision on the merger, the Mariner board of directors considered a number of factors, including the following:
  •  the increased size of the combined company, which would have approximately three times the pro forma daily net production of Mariner on a stand-alone basis, could reduce volatility related to large-scale deepwater projects, and could allow it to participate in larger scale exploratory and development drilling projects and acquisition opportunities than would be available to Mariner on a stand-alone basis;
 
  •  the merger would be expected to increase Mariner’s estimated proved reserves, on a pro forma basis as of December 31, 2004, by approximately 243%, making Mariner larger on a reserve basis than many of its peer companies, and would more than double Mariner’s undeveloped acreage;
 
  •  the integration of the businesses and the realization of expected benefits could be facilitated by the fact that Mariner is already active in the Gulf of Mexico with assets that are complementary to the Forest Gulf of Mexico assets;
 
  •  the merger could generate increased visibility in the capital markets and trading liquidity for the combined company, which could enhance the market valuation of Mariner common stock;
 
  •  the merger would increase the number of Mariner’s producing fields by approximately 400%, thereby diversifying Mariner’s asset base and reducing Mariner’s dependence on a concentrated number of properties;
 
  •  the assets comprising the Forest Gulf of Mexico operations, which historically have been used as a cash flow generator for Forest, could be candidates for increased exploitation;
 
  •  oil and natural gas prices are currently at or near historical highs, which could increase the revenues and enhance the profitability of the Forest Gulf of Mexico operations;
 
  •  the merger would be consummated only if approved by the holders of a majority of the Mariner common stock;
 
  •  the merger is structured as a tax-free reorganization for U.S. federal income tax purposes and, accordingly, would not be taxable either to Mariner or its stockholders;
 
  •  the board’s belief that the potential financial benefits stemming from the enhanced growth prospects of the combined company outweigh the anticipated direct and indirect costs of the merger;
 
  •  the terms of the merger agreement permit Mariner to terminate the merger agreement at any time before the meeting to accept a superior proposal, subject to its obligation to comply with certain procedural requirements and to pay a termination fee and expense reimbursement; and

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  •  the opinion, dated September 9, 2005, of Lehman Brothers Inc. to the Mariner board of directors that, as of that date, based upon and subject to the factors and assumptions set forth in the opinion, the exchange ratio in the merger was fair from a financial point of view to Mariner.
      The Mariner board of directors also identified and considered some risks and potential disadvantages associated with the merger, including the following:
  •  the risk that there may be difficulties in combining the business of Mariner and the Forest Gulf of Mexico operations;
 
  •  the risk that the potential benefits sought in the merger might not be fully realized;
 
  •  the risk that the proved undeveloped, probable and possible reserves of the Forest Gulf of Mexico operations may never be converted to proved developed reserves;
 
  •  the risks inherent in owning properties located in the Gulf of Mexico, including the risks of future hurricanes that could damage or destroy the acquired properties;
 
  •  the risk that current high commodity prices could fall, thereby reducing the profitability of the acquired operations;
 
  •  the risk that the merger might not be completed;
 
  •  the fact that, in order to preserve the tax-free treatment of the spin-off, Mariner would be required to abide by restrictions that could reduce its ability to engage in certain business transactions that otherwise might be advantageous;
 
  •  the fact that under the merger agreement, Mariner could be required to pay Forest a termination fee and expense reimbursement in certain circumstances; and
 
  •  certain of the other matters described under “Risk Factors” beginning on page 23.
      In the judgment of the Mariner board of directors, the potential benefits of the merger outweigh the risks and the potential disadvantages. In view of the variety of factors considered in connection with its evaluation of the proposed merger and the terms of the merger agreement, the Mariner board of directors did not quantify or assign relative weights to the factors considered in reaching its conclusion. Rather, the Mariner board of directors views its recommendation as being based on the totality of the information presented to and considered by it. In addition, individual Mariner directors may have given different weights to different factors.
Certain Financial Projections
      In connection with the due diligence process during negotiations, Mariner and Forest provided each other with financial and operating projections for 2005 and 2006. Mariner’s projections are summarized below.
                 
    2005   2006
         
Revenue (in millions)
  $ 230.2     $ 421.4  
EBITDA (in millions)
  $ 185.2     $ 353.9  
Net income (in millions)
  $ 60.9     $ 158.7  
Net income per common share
  $ 1.71     $ 4.45  
Capital expenditures (in millions)
  $ 257.4     $ 250.5  

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      Mariner’s projections were based on a number of assumptions, including the following:
  •  weighted average common shares outstanding of 35.6 million in both periods;
 
  •  NYMEX prices for oil and Henry Hub prices for gas, as adjusted for pricing differentials and hedging contracts in place at such date as follows:
                 
    2005   2006
         
Oil (per Bbl)
  $ 41.27     $ 48.83  
Gas (per Mcf)
  $ 6.86     $ 7.87  
Total (per Mcfe)
  $ 6.87     $ 7.94  
  •  annual production as follows:
                 
    2005   2006
         
Oil (MBbls)
    1.9       2.4  
Gas (Bcf)
    21.6       38.8  
Total (Bcfe)
    33.2       53.1  
  •  a depreciation, depletion and amortization rate of $1.84 per Mcfe for 2005 and $1.80 per Mcfe for 2006;
 
  •  an effective income tax rate of 35% in each period; and
 
  •  various assumptions relating to delays in scheduled commencement of production at Pluto, Swordfish, Ochre and Dice, suspension of production at producing fields and increased capital expenditures due to Hurricane Katrina.
      Forest’s projections for the Forest Gulf of Mexico Operations are summarized below.
                 
    Six Months Ended    
    December 31,    
    2005   2006
         
Revenue (in millions)
  $ 214.1     $ 529.4  
EBITDA (in millions)
  $ 173.5     $ 450.5  
Net income (in millions)
  $ 43.9     $ 124.3  
Net income per common share
  $ 0.87     $ 2.45  
Capital expenditures (in millions)
  $ 123.0     $ 202.3  
      Forest’s projections were based on a number of assumptions, including the following:
  •  weighted average common shares outstanding of 50.6 million in each period;
 
  •  NYMEX prices for oil and Henry Hub prices for gas, as adjusted for pricing differentials and hedging contracts in place at such date as follows:
                 
    Six Months Ended    
    December 31,    
    2005   2006
         
Oil (per Bbl)
  $ 47.42     $ 48.41  
Gas (per Mcf)
  $ 6.64     $ 7.13  
Total (per Mcfe)
  $ 7.02     $ 7.35  

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  •  production as follows:
                 
    Six Months Ended    
    December 31,    
    2005   2006
         
Oil (MBbls)
    1.5       2.9  
Gas (Bcf)
    21.3       54.7  
Total (Bcfe)
    30.5       72.0  
  •  a depreciation, depletion and amortization rate of $3.26 per Mcfe for 2005 and $3.43 per Mcfe for 2006;
 
  •  an effective income tax rate of 35% in each period;
 
  •  the allocation from July 1, 2005 to December 31, 2005 of general and administrative expenses as set forth in the distribution agreement;
 
  •  net hedging losses of $11.7 million for the six months ended December 31, 2005 and $19.5 million in 2006;
 
  •  various assumptions relating to general and administrative expenses to reflect the allocation set forth in the distribution agreement; and
 
  •  transaction-related expenses of $12 million for the six months ended December 31, 2005.
      Mariner and Forest make public only very limited information as to future performance and neither company provides specific or detailed information as to earnings or performance over an extended period. The foregoing prospective financial information is included in this proxy statement/prospectus–information statement only because this information was provided to the other party during negotiations. The prospective financial information of Mariner and Forest, which was prepared by the respective management of Mariner and Forest, was not prepared with a view to public disclosure or with a view toward complying with the published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants regarding prospective financial information. The projections do not purport to present operations in accordance with GAAP. The internal financial forecasts (upon which these projections were based in part) are, in general, prepared solely for internal use and capital budgeting and other management decisions and are subjective in many respects and thus susceptible to interpretations and periodic revision based on actual experience and business developments. Neither Mariner’s nor Forest’s independent auditors, nor any other independent accountants, have compiled, examined or performed any procedures with respect to the prospective financial information, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the prospective financial information.
      In addition to the specific assumptions set forth above, the projections also reflect numerous assumptions made by management of both companies, including assumptions with respect to general business, economic, market and financial conditions and other matters, including effective tax rates and interest rates and the anticipated amount of borrowings, all of which are difficult to predict and many of which are beyond the control of the preparing party. Accordingly, there can be no assurance that the assumptions made in preparing the projections will prove accurate. Actual results may be materially greater or less than those contained in the projections. The inclusion of the projections in this proxy statement/prospectus–information statement should not be regarded as an indication that the projections will be predictive of actual future events, and the projections should not be relied upon as such.
      The projections were disclosed to the other party and its representatives as a matter of due diligence, and are included in this proxy statement/ prospectus/information statement on that account. Each of Mariner and Forest believes that the projections prepared by it were reasonable at the time they were made; however, none of Mariner or Forest or any of their respective representatives has made or makes any representation to any stockholder regarding the ultimate performance of Mariner or the Forest Gulf of Mexico operations compared to the information contained in the projections, and none of them intends to update or otherwise revise the projections to reflect circumstances existing after the date when made or to reflect the occurrence of future

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events in the event that any or all of the assumptions underlying the projections are shown to be in error. In particular, these projections were prepared prior to, and do not take into account the full effects of business interruptions due to, Hurricanes Katrina and Rita in August 2005 and September 2005, respectively.
Opinion of Mariner’s Financial Advisor
      Mariner engaged Lehman Brothers to act as its financial advisor in connection with the merger. On September 9, 2005, Lehman Brothers rendered its written opinion to the board of directors of Mariner, that, as of that date, based upon and subject to the matters stated in its opinion letter, from a financial point of view, the exchange ratio of 1.0 share of Mariner common stock for each share of Forest Energy Resources common stock in the merger was fair to Mariner.
      The Mariner board of directors determined that the process leading up to the execution of the merger agreement was procedurally fair to all stockholders, including unaffiliated stockholders. The board did not obtain an independent advisor’s opinion with respect to procedural fairness, because numerous factors supported the conclusion that sufficient procedural safeguards existed to protect the interests of all stockholders, including the following:
  •  the fact that Mariner’s board of directors unanimously approved the merger, including all directors with no interest in the merger other than their interests as stockholders of Mariner;
 
  •  the fact that the stockholders of Mariner will be given the opportunity to vote on the merger, and that the merger agreement would not be adopted without the affirmative vote of at least a majority of Mariner’s common stock;
 
  •  the fact that Mariner does not have a controlling stockholder, and that directors and officers of Mariner own less than 11% of the outstanding stock of Mariner;
 
  •  the fact that independent financial and legal advisors were retained to assist in the negotiation of the terms of the merger agreement, the distribution agreement and the other ancillary agreements; and
 
  •  the fact that Mariner received a written opinion from its independent financial advisor as to the fairness, from a financial point of view, of the merger consideration.
      The full text of Lehman Brothers’ opinion dated September 9, 2005, which sets forth assumptions made, procedures followed, matters considered and limitations upon the review undertaken in connection with the opinion, is included as Annex B to this joint proxy statement/prospectus-information statement. The following is a summary of Lehman Brothers’ opinion and the methodology that Lehman Brothers used to render its opinion. This summary is qualified in its entirety by reference to the full text of the opinion.
      Lehman Brothers’ advisory services and opinion were provided for the information and assistance of the board of directors of Mariner in connection with its consideration of the merger. Lehman Brothers’ opinion is not intended to be and does not constitute a recommendation to any stockholder of Mariner as to how such stockholder should vote in connection with the merger. Lehman Brothers was not requested to opine as to, and Lehman Brothers’ opinion does not in any manner address, Mariner’s underlying business decision to proceed with or effect the merger.
      In arriving at its opinion, Lehman Brothers reviewed, among other things:
  •  the merger agreement, the distribution agreement, the other transaction agreements and the specific terms of the merger;
 
  •  publicly available information concerning Mariner that Lehman Brothers believed to be relevant to its analysis, including, without limitation, the Amendment No. 1 to the Registration Statement on Form S-1 filed on July 26, 2005 by Mariner;
 
  •  publicly available information concerning Forest that Lehman Brothers believed to be relevant to its analysis, including, without limitation, the Annual Report on Form 10-K for the year ended

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  December 31, 2004 and the Quarterly Reports on Form 10-Q for the periods ended March 31, 2005 and June 30, 2005;
 
  •  financial and operating information with respect to the business, operations and prospects of Mariner as furnished to Lehman Brothers by Mariner, including financial projections and oil and gas reserve estimates as of June 30, 2005 for Mariner as prepared by the management of Mariner;
 
  •  financial and operating information with respect to the Forest Gulf of Mexico operations as furnished to Lehman Brothers by Forest, including financial projections and oil and gas reserve estimates as of June 30, 2005 for the Forest Gulf of Mexico operations as prepared by the management of Forest;
 
  •  a comparison of the historical financial results and present financial condition of Mariner and the Forest Gulf of Mexico operations with each other and with those of other companies that Lehman Brothers deemed relevant;
 
  •  a comparison of the financial terms of the merger with the financial terms of certain other transactions that Lehman Brothers deemed relevant;
 
  •  commodity prices assumptions used by the management of Mariner, commodity prices assumptions published by Lehman Brothers equity research, and commodity prices as quoted on the NYMEX on August 19, 2005 (collectively the “Commodity Price Assumptions”);
 
  •  estimates of certain proved reserves generated by third-party reserve engineers as of December 31, 2004 for Mariner and the Forest Gulf of Mexico operations;
 
  •  the potential pro forma impact of the merger on the current financial condition and future financial performance of Mariner, including the impact on Mariner’s operating metrics, including, the composition of its reserves between oil and gas; the percentage of reserves attributable to onshore, the shelf of the Gulf of Mexico and deepwater Gulf of Mexico; and the ratio of reserves as of June 30, 2005 to 2005 expected production;
 
  •  the relative contributions of Mariner and the Forest Gulf of Mexico operations to the current and future financial performance of the combined company on a pro forma basis;
 
  •  the report dated as of September 9, 2005, prepared by the management of Mariner, assessing the damage to the Gulf of Mexico assets of Mariner caused by Hurricane Katrina; and
 
  •  the report dated as of September 9, 2005, prepared by the management of Forest, assessing the damage to the Gulf of Mexico assets of the Forest Gulf of Mexico operations caused by Hurricane Katrina.
      In addition, Lehman Brothers had discussions with the managements of Mariner and Forest concerning their respective businesses, operations, assets, financial conditions, reserves, production profiles, hedging levels, exploration programs and prospects of Mariner and the Forest Gulf of Mexico operations and undertook such other studies, analyses and investigations as Lehman Brothers deemed appropriate.
      In arriving at its opinion, Lehman Brothers assumed and relied upon the accuracy and completeness of the financial and other information used by Lehman Brothers without assuming any responsibility for independent verification of such information. Lehman Brothers further relied upon the assurances of the managements of Mariner and Forest that they were not aware of any facts or circumstances that would make such information inaccurate or misleading. With respect to the financial projections of Mariner, upon advice of Mariner, Lehman Brothers assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Mariner as to the future financial performance of Mariner and that Mariner would perform substantially in accordance with such projections. With respect to the financial projections of the Forest Gulf of Mexico operations, upon advice of Forest, Lehman Brothers assumed that such projections were reasonably prepared on a basis reflecting the best currently available estimates and judgments of the management of Forest as to the future financial performance of the Forest Gulf of Mexico operations and that the Forest Gulf of Mexico operations would perform substantially in accordance with such projections. However, in the course of its analysis and in arriving at its opinion, Lehman Brothers also considered the various Commodity Price Assumptions, which

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resulted in certain adjustments to the projections of Mariner and the Forest Gulf of Mexico operations. Lehman Brothers discussed these adjusted projections with the management of Mariner and they agreed with the appropriateness of the use of such adjusted projections, as well as Forest’s management projections, in performing its analysis.
      In arriving at its opinion, Lehman Brothers did not conduct a physical inspection of the properties and facilities of Mariner and the Forest Gulf of Mexico operations and did not make or obtain from third parties any evaluations or appraisals of the assets and liabilities of Mariner or the Forest Gulf of Mexico operations. Lehman Brothers’ opinion is necessarily based upon market, economic and other conditions as they existed on, and could be evaluated as of, the date of its opinion letter.
      In arriving at its opinion, Lehman Brothers did not ascribe a specific range of value to Mariner or the Forest Gulf of Mexico operations, but rather made its determination as to the fairness to Mariner, from a financial point of view, of the exchange ratio in the merger on the basis of the financial, comparative and other analyses described below. The preparation of a fairness opinion involves various determinations as to the most appropriate and relevant methods of financial, comparative and other analyses and the application of those methods to the particular circumstances, and, therefore, such an opinion is not readily susceptible to summary description. Furthermore, in arriving at its fairness opinion, Lehman Brothers did not attribute any particular weight to any analysis or factor considered by it, but rather made qualitative judgments as to the significance and relevance of each analysis and factor. Accordingly, Lehman Brothers believes that its analyses must be considered as a whole and that considering any portion of such analyses and factors considered, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying the opinion. In its analyses, Lehman Brothers made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Mariner or Forest. Any estimates contained in the analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth in the analyses. In addition, analyses relating to the value of businesses do not purport to be appraisals or to reflect the prices at which businesses could actually be sold.
      The following is a summary of the material financial analyses used by Lehman Brothers in connection with providing its opinion to Mariner’s board of directors. The financial analyses summarized below include information presented in tabular format. In order to fully understand the methodologies used by Lehman Brothers and the results of financial, comparative and other analyses, the tables must be read together with the text of each summary. The tables alone do not constitute a complete description of the financial, comparative and other analyses. Considering any portion of such analyses and of the factors considered, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying Lehman Brothers’ opinion.
Valuation Analyses Used to Derive Implied Exchange Ratios
      Lehman Brothers separately analyzed the value of Mariner and the Forest Gulf of Mexico operations in accordance with the following methodologies: net asset valuation analysis, comparable company analysis and comparable transaction analysis. Each of these methodologies was used to generate a reference enterprise value range for each of Mariner and the Forest Gulf of Mexico operations. The enterprise value range for each entity was adjusted for appropriate on- and off-balance sheet assets and liabilities to arrive at a common equity value range (in aggregate dollars) for each entity. The equity value range for each entity was used to derive implied exchange ratios which were then compared to the exchange ratio agreed to in the merger. The implied exchange ratios, derived using the various valuation methodologies listed, supported the conclusion that the exchange ratio agreed to in the merger was fair to Mariner from a financial point of view.

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      The various valuation methodologies noted above and the implied exchange ratios derived therefrom are included in the following table. This table should be read together with the more detailed descriptions set forth below. In particular, in applying the various valuation methodologies to the particular businesses, operations and prospects of Mariner and the Forest Gulf of Mexico operations, and the particular circumstances of the merger, Lehman Brothers made qualitative judgments as to the significance and relevance of each analysis. In addition, Lehman Brothers made numerous assumptions with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of Mariner or Forest. Accordingly, the methodologies and the implied exchange ratios derived therefrom set forth in the table must be considered as a whole and in the context of the narrative description of the financial analyses, including the assumptions underlying these analyses. Considering the implied exchange ratios set forth in the table without considering the full narrative description of the financial analyses, including the assumptions underlying these analyses, could create a misleading or incomplete view of the process underlying, and conclusions represented by, Lehman Brothers’ opinion.
             
        Implied
        Exchange
Valuation Methodology   Summary Description of Valuation Methodology   Ratio Range*
         
Net Asset Valuation Analysis
  Net present valuation of after-tax cash flows generated by producing to exhaustion existing proved reserves, using selected hydrocarbon pricing scenarios and discount rates plus the evaluation of probable and possible reserves and certain other assets and liabilities        
    — Case I Commodity Prices     0.84 - 1.11  
    — Case II Commodity Prices     0.95 - 1.30  
    — Case III Commodity Prices     0.88 - 1.14  
Comparable Company Analysis
  Market valuation benchmark based on trading multiples of selected comparable companies for selected financial and asset-based measures     0.78 - 1.14  
Comparable Transactions Analysis
  Market valuation benchmark based on consideration paid in selected comparable transactions     0.80 - 1.32  
Exchange Ratio in the Merger
        1.00*  
 
Shares of Forest Energy Resources will be exchanged for shares of Mariner on a one-for-one basis. The exchange ratio represents the number of Mariner shares to be issued in the merger for each Forest Energy Resources share. As a result of this exchange ratio and the number of shares of Forest Energy Resources to be issued in the spin-off, Forest shareholders will receive approximately 0.8 shares of Mariner common stock for each share of Forest common stock they own and cash in lieu of any fractional shares.
Net Asset Valuation Analysis
      Lehman Brothers estimated the present value of the future after-tax cash flows expected to be generated from each entity’s proved reserves as of June 30, 2005, based on estimated reserves and production cost estimates. The present values of the future after-tax cash flows were determined using a range of discount rates and risking factors based on geography and reserve category risk and assuming a tax rate of 35%. Lehman Brothers added to such estimated proved reserves the estimated values of certain other assets and liabilities, including each of Mariner’s and the Forest Gulf of Mexico operations’ probable and possible reserves, each of Mariner’s and the Forest Gulf of Mexico operations’ exploration portfolio, and each of Mariner’s and the Forest Gulf of Mexico operations’ current commodity hedging portfolio. The net asset valuation analysis was performed under three commodity price scenarios (Case I, Case II and Case III), which are described below.

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      Certain of the natural gas and oil price forecasts employed by Lehman Brothers were based on New York Mercantile Exchange, or NYMEX, price forecasts (Henry Hub, Louisiana delivery for natural gas and West Texas Intermediate, Cushing, Oklahoma delivery for oil) from which adjustments were made to reflect location and quality differentials. NYMEX gas price quotations are stated in heating value equivalents per million British Thermal Units, or MMBtu, which are adjusted to reflect the value per thousand cubic feet, or MCF, of gas. NYMEX oil price quotations are stated in dollars per barrel, or BBL, of crude oil. In addition to the NYMEX prices, Lehman Brothers considered the impact of a flat pricing scenario in which we employed natural gas and oil prices of $5.00 per MMBtu, and $45.00 per BBL respectively. In another pricing scenario, we valued the proved developed producing reserves using NYMEX pricing and all other categories using $5.00 per MMBtu and $45.00 per BBL for gas and oil, respectively. The table below presents a summary of natural gas and oil price forecasts employed by Lehman Brothers for each commodity price scenario.
                                                           
                            Escalation
    2005E   2006E   2007E   2008E   2009E   2010E   Thereafter
                             
Natural Gas ($MMBtu)
                                                       
Case I: All reserve classifications
  $ 5.00     $ 5.00     $ 5.00     $ 5.00     $ 5.00     $ 5.00       0.0%  
Case II:
                                                       
 
Proved developed producing reserves
  $ 9.24     $ 8.89     $ 8.29     $ 7.85     $ 7.47     $ 7.14       0.0%  
 
All other reserve classifications
  $ 5.00     $ 5.00     $ 5.00     $ 5.00     $ 5.00     $ 5.00       0.0%  
Case III: All reserve classifications
  $ 9.24     $ 8.89     $ 8.29     $ 7.85     $ 7.47     $ 7.14       0.0%  
Oil ($/BBL)
                                                       
Case I: All reserve classifications
  $ 45.00     $ 45.00     $ 45.00     $ 45.00     $ 45.00     $ 45.00       0.0%  
Case II:
                                                       
 
Proved developed producing reserves
  $ 64.06     $ 64.81     $ 62.71     $ 60.55     $ 59.15     $ 58.45       0.0%  
 
All other reserve classifications
  $ 45.00     $ 45.00     $ 45.00     $ 45.00     $ 45.00     $ 45.00       0.0%  
Case III: All reserve classifications
  $ 64.06     $ 64.81     $ 62.71     $ 60.55     $ 59.15     $ 58.45       0.0%  
      The net asset valuation analyses yielded valuations for Mariner and the Forest Gulf of Mexico operations that implied a range of exchange ratios of 0.84 to 1.11 for Case I, a range of exchange ratios of 0.95 to 1.30 for Case II and a range of exchange ratios of 0.88 to 1.14 for Case III.
Comparable Company Analysis
      With respect to Mariner, Lehman Brothers reviewed the public stock market trading multiples for the following exploration and production companies, which Lehman Brothers selected because their businesses and operating profiles are reasonably similar to that of Mariner:
  •  Bois d’Arc Energy, Inc.
 
  •  Comstock Resources, Inc.
 
  •  Energy Partners, Ltd.
 
  •  The Houston Exploration Company
 
  •  Remington Oil and Gas Corporation
 
  •  Spinnaker Exploration Company
 
  •  Stone Energy Corporation
 
  •  W&T Offshore, Inc.
      As part of its comparable company analysis, Lehman Brothers calculated and analyzed Mariner’s and each comparable company’s equity and adjusted capitalization multiples of certain historical and projected financial and operating criteria (such as earnings before interest, taxes, depreciation, depletion, amortization and exploration expense, or EBITDE; net income; discretionary cash flow, or DCF; proved reserves; and daily production). The adjusted capitalization of each comparable company was obtained by adding its total debt to

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the sum of the market value of its common equity, the book value of its preferred stock and the book value of any minority interest minus its cash balance. The ratios of each comparable company of adjusted capitalization to proved reserves and to daily production were calculated by excluding from each selected company’s adjusted capitalization calculation, an estimate of the value of non-proved reserves and other businesses that are unrelated to exploration and production of oil and gas.
      Based on a review of the multiples derived for the comparable companies, Lehman Brothers selected multiple ranges to apply to Mariner’s corresponding financial and operating statistics. The selected multiple ranges applied to Mariner’s projected 2005 and projected 2006 EBITDE statistics were 3.5x to 4.0x and 3.4x to 3.9x, respectively. The selected multiple ranges applied to Mariner’s projected 2005 and projected 2006 earnings statistics were 8.0x to 10.0x and 8.0 to 10.0x, respectively. The selected multiple ranges applied to Mariner’s projected 2005 and projected 2006 DCF statistics were 3.0x to 3.5x and 2.8 to 3.3x, respectively. The selected multiple ranges applied to Mariner’s proved reserve statistics were $15.00 to $18.00 per barrel of oil equivalent, referred to as BOE, and $2.50 to $3.00 per thousand cubic feet equivalent, referred to as Mcfe. The selected multiple ranges applied to Mariner’s daily production statistics were $48,000 to $60,000 per thousand barrels of oil equivalent produced per day, referred to as MBOE/d, and $8,000 to $10,000 per million cubic feet equivalent produced per day, referred to as Mmcfe/d. For the proved reserves and daily production multiples, an estimate of the value of Mariner’s non-proved reserves (including probable and possible reserves and Mariner’s exploration portfolio) was added to the analysis. All of these calculations were performed, and based on publicly available financial data, including independent equity research analyst estimates, and closing prices as of September 8, 2005, the last trading date prior to the delivery of Lehman Brothers’ opinion.
      With respect to the Forest Gulf of Mexico operations, Lehman Brothers reviewed the public stock market trading multiples for the following exploration and production companies, which Lehman Brothers selected because their businesses and operating profiles are reasonably similar to that of the Forest Gulf of Mexico operations:
  •  Bois d’Arc Energy, Inc.
 
  •  Energy Partners, Ltd.
 
  •  The Houston Exploration Company
 
  •  Remington Oil and Gas Corporation
 
  •  Spinnaker Exploration Company
 
  •  Stone Energy Corporation
 
  •  W&T Offshore, Inc.
      As part of its comparable company analysis, Lehman Brothers calculated and analyzed the Forest Gulf of Mexico operations’ and each comparable company’s equity and adjusted capitalization multiples of certain historical and projected financial and operating criteria (such as EBITDE, net income, DCF, proved reserves, and daily production). The adjusted capitalization of each comparable company was obtained by adding its total debt to the sum of the market value of its common equity, the book value of its preferred stock and the book value of any minority interest minus its cash balance. The ratios of each comparable company of adjusted capitalization to proved reserves and to daily production were calculated by excluding from each selected company’s adjusted capitalization calculation, an estimate of the value of non-proved reserves and other businesses that are unrelated to exploration and production of oil and gas.
      Based on a review of the multiples derived for the comparable companies, Lehman Brothers selected multiple ranges to apply to the Forest Gulf of Mexico operations’ corresponding financial and operating statistics. The selected multiple ranges applied to the Forest Gulf of Mexico operations’ projected 2005 and projected 2006 EBITDE statistics were 3.0x to 3.5x and 2.9x to 3.4x, respectively. The selected multiple ranges applied to the Forest Gulf of Mexico operations’ projected 2005 and projected 2006 earnings statistics were 8.0x to 10.0x and 8.5 to 10.5x, respectively. The selected multiple ranges applied to the Forest Gulf of

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Mexico operations’ projected 2005 and projected 2006 DCF statistics were 2.8x to 3.3x and 2.6 to 3.1x, respectively. The selected multiple ranges applied to the Forest Gulf of Mexico operations’ proved reserve statistics were $18.00 to $21.00 per BOE and $3.00 to $3.50 per Mcfe. The selected multiple ranges applied to the Forest Gulf of Mexico operations’ daily production statistics were $30,000 to $42,000 per MBOE/d and $5,000 to $7,000 per Mmcfe/d. For the proved reserves and daily production multiples, an estimate of the value of the Forest Gulf of Mexico operations’ non-proved reserves (including probable and possible reserves and the Forest Gulf of Mexico operations’ exploration portfolio) was added to the analysis. All of these calculations were performed, and based on publicly available financial data, including independent equity research analyst estimates, and closing prices as of September 8, 2005, the last trading date prior to the delivery of Lehman Brothers’ opinion.
      The comparable company methodology yielded valuations for Mariner and the Forest Gulf of Mexico operations that implied a range of exchange ratios of 0.78 to 1.14.
      Because of the inherent differences between the corporate structure, businesses, operations, commodity mix and prospects of Mariner and the Forest Gulf of Mexico operations and the corporate structure, businesses, operations, commodity mix and prospects of the selected comparable companies, Lehman Brothers believed that it was inappropriate to, and therefore did not rely solely on the quantitative results of the comparable company analysis. Accordingly, Lehman Brothers also made qualitative judgments concerning differences between the financial and operating characteristics and prospects of Mariner and the Forest Gulf of Mexico operations and the companies included in the comparable company analysis that would affect the public trading values of each in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between Mariner and the Forest Gulf of Mexico operations and the companies included in the comparable company analysis.
Comparable Transactions Analysis
      Lehman Brothers conducted a comparable transactions analysis to assess how similar transactions were valued. In the case of Mariner, Lehman Brothers reviewed certain publicly available information on selected corporate level exploration and production transactions it deemed comparable to the merger, in whole or in part, which were announced from January 2001 to September 2005. The transactions included, but were not limited to:
  •  Petrohawk Energy Corporation/Mission Resources Corporation
 
  •  Cimarex Energy Company/Magnum Hunter Resources, Inc.
 
  •  Noble Energy Inc./Patina Oil & Gas Corporation
 
  •  EnCana Corporation/Tom Brown, Inc.
 
  •  Kerr-McGee Corporation/Westport Resources Corporation
      For the corporate transactions analysis, for each comparable transaction, relevant transaction multiples were analyzed including the transaction value (equity purchase price plus assumed obligations) divided by proved reserves and daily production. The selected multiple ranges applied to Mariner’s proved reserve statistic were $13.50 to $16.50 per BOE and $2.25 to $2.75 per Mcfe. The selected multiple ranges applied to Mariner’s daily production multiple ranges were $45,000 to $57,000 per MBOE/d and $7,500 to $9,500 per Mmcfe/d. For the proved reserves and daily production multiples, an estimate of the value of Mariner’s non-proved reserves (including probable and possible reserves and Mariner’s exploration portfolio).
      In the case of the Forest Gulf of Mexico operations, Lehman Brothers reviewed certain publicly available information on selected corporate level exploration and production transactions it deemed comparable to the

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merger, in whole or in part, which were announced from January 2001 to September 2005. The transactions included, but were not limited to:
  •  Cimarex Energy Company/Magnum Hunter Resources, Inc.
 
  •  Noble Energy Inc./Patina Oil & Gas Corporation
 
  •  EnCana Corporation/Tom Brown, Inc.
 
  •  Kerr-McGee Corporation/Westport Resources Corporation
      For the corporate transactions analysis for each company, relevant transaction multiples were analyzed including the corresponding transaction values (equity purchase price plus assumed obligations) divided by proved reserves and daily production. The selected multiple ranges applied to the Forest Gulf of Mexico operations’ proved reserve statistics were $18.00 to $21.00 per BOE and $3.00 to $3.50 per Mcfe. The selected multiple ranges applied to the Forest Gulf of Mexico operations’ daily production statistic were $30,000 to $36,000 per MBOE/d and $5,000 to $6,000 per Mmcfe/d. For the proved reserves and daily production multiples, an estimate of the value of the Forest Gulf of Mexico operations’ non-proved reserves (including probable and possible reserves and the Forest Gulf of Mexico operations’ exploration portfolio).
      The comparable transactions methodology yielded valuations for Mariner and the Forest Gulf of Mexico operations that implied a range of exchange ratios of 0.80 to 1.32.
      Because the market conditions, rationale and circumstances surrounding each of the transactions analyzed were specific to each transaction and because of the inherent differences between the businesses, operations and prospects of Mariner and the Forest Gulf of Mexico operations and the acquired businesses analyzed, Lehman Brothers believed that it was inappropriate to, and therefore did not, rely solely on the quantitative results of the analysis and, accordingly, also made qualitative judgments concerning differences between the characteristics of these transactions and the merger that could affect the acquisition values of such acquired companies or companies to which they are being compared.
Contribution Analysis
      Lehman Brothers analyzed the relative income statement contribution of Mariner and the Forest Gulf of Mexico operations to the combined company based on 2005 and 2006 financial data as projected by the managements of Mariner and Forest, respectively. The contribution analysis treats all cash flow and earnings the same regardless of capitalization, expected growth rates, upside potential or risk profile.
      This analysis indicated that Mariner will contribute approximately 39.5% to 51.5% of the combined company’s net income and 35.8% to 44.6% of the combined company’s DCF for the periods analyzed. This analysis indicated that the Forest Gulf of Mexico operations will contribute approximately 48.5% to 60.5% of the combined company’s net income and 55.4% to 64.2% of the combined company’s DCF for the periods analyzed.
Pro Forma Merger Consequences Analysis
      Lehman Brothers analyzed the pro forma impact of the merger on Mariner’s projected 2005 and 2006 earnings per share and DCF per share. Lehman Brothers prepared a pro forma merger model which incorporated the financial projections of Mariner and the Forest Gulf of Mexico operations as provided by the managements of Mariner and Forest, respectively. Lehman Brothers then compared the earnings per share and DCF per share of Mariner on a standalone basis to the earnings per share and DCF per share of Mariner pro forma for the merger. Lehman Brothers noted that the merger is expected to be dilutive to earnings per share and accretive to DCF per share in 2005 and is expected to be dilutive to both earnings and DCF per share in 2006.

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General
      Lehman Brothers is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for corporate and other purposes. Mariner’s board of directors selected Lehman Brothers because of its expertise, reputation and familiarity with Mariner and the energy industry generally and because its investment banking professionals have substantial experience in transactions comparable to the merger.
      Pursuant to the terms of an engagement letter dated August 9, 2005 between Lehman Brothers and Mariner, Mariner paid Lehman Brothers a fee upon delivery of Lehman Brothers’ opinion, dated September 9, 2005. Mariner has also agreed to pay Lehman Brothers an additional fee at the time of closing. Mariner also has agreed to reimburse Lehman Brothers for its reasonable expenses incurred in connection with this engagement, and to indemnify Lehman Brothers and certain related persons against certain liabilities that may arise out of its engagement by Mariner and the rendering of the Lehman Brothers’ opinion. The estimated aggregate compensation Lehman Brothers will receive in connection with the merger is $3.0 million, of which $1.0 million was contingent on the execution of a merger agreement and an additional $1.25 million is contingent on the consummation of the merger. Lehman Brothers in the past has rendered investment banking services to Mariner and Forest and received customary fees for such services. Lehman Brothers has provided no financing advisory or other financing services to Mariner during the past two years. In July 2004 Lehman Brothers participated as an underwriter in a senior note offering of Forest. Lehman Brothers’ aggregate compensation for the transaction was $72,000.
      During the course of its engagement, representatives of Lehman Brothers participated in discussions with members of Mariner’s senior management regarding the rationale for, benefits of and risks and uncertainties relating to the merger. Among the benefits discussed with senior management were the economies of scale and the portfolio management opportunities provided by the increases to proved reserves and undeveloped acreage, the potential reduction in volatility related to deepwater projects, and increased visibility in the capital markets. Among the uncertainties discussed with senior management were those related to current high commodity prices and the possibility that probable and possible reserves of the acquired operations may never be converted to proved developed reserves.
      In the ordinary course of its business, Lehman Brothers may actively trade in the debt or equity securities of Mariner and Forest for its own account and for the accounts of its customers and, accordingly, may at any time hold a long or short position in such securities.
The Spin-Off
      On September 12, 2005, Forest announced that Forest would spin-off to its shareholders the Forest Gulf of Mexico operations, and that the Forest Gulf of Mexico operations would immediately thereafter be acquired in a merger transaction by Mariner. Forest is carrying out the spin-off to facilitate Mariner’s acquisition of the Forest Gulf of Mexico operations and the spin-off is a condition to the merger. After the spin-off and merger, Mariner will be a separately traded public company that will own and operate the combination of Mariner’s business and the Forest Gulf of Mexico operations.
      As a result of the transaction, in addition to retaining all of their shares of Forest common stock, Forest shareholders will receive approximately 0.8 shares of Mariner common stock for each share of Forest common stock owned on the record date of the transaction. Forest shareholders will receive approximately 58% of the common stock of Mariner on a pro forma basis. Mariner has applied to list its common stock on the New York Stock Exchange.
      While Forest believes the spin-off will allow Forest shareholders to benefit from the success and upside potential of Mariner, there are risks that are described under “Risks Factors” beginning on page 23 of this proxy statement/ prospectus-information statement.

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      Forest’s board of directors has determined that the spin-off of the Gulf of Mexico operations and the combination of these operations with Mariner are advisable and in the best interests of Forest and its shareholders, and has approved the proposed transaction. Forest’s board of directors has the corporate authority under New York law to effect a spinoff of the stock of a subsidiary such as Forest Energy Resources that represents less than substantially all the assets of Forest. Under Delaware law, Forest, as the sole stockholder of Forest Energy Resources, has the authority to approve, and has approved, the merger of MEI Sub with and into Forest Energy Resources. Forest shareholders need not take any action to participate in the spin-off or the merger — no vote of Forest shareholders is required in connection with this transaction.
      As of December 1, 2005, Forest has transferred and contributed the assets and certain liabilities associated with the Forest Gulf of Mexico operations to Forest Energy Resources pursuant to the terms of the distribution agreement. The distribution agreement is attached as Annex C to this proxy statement/prospectus-information statement. See “The Distribution Agreement” beginning on page 87. Immediately prior to the merger, Forest will spin off Forest Energy Resources by distributing all of the shares of Forest Energy Resources common stock to Forest shareholders on a pro rata basis. MEI Sub will then be merged with and into Forest Energy Resources in accordance with the terms of the merger agreement, with the result being that Forest Energy Resources will become a wholly owned subsidiary of Mariner. The merger agreement is attached as Annex A to this proxy statement/ prospectus-information statement. See “The Spin-Off and Merger” beginning on page 40 and “The Merger Agreement” beginning on page 73.
      The distribution of Forest Energy Resources common stock will take the form of a special stock dividend to Forest shareholders of record on the record date for the dividend. Forest shareholders who are entitled to receive shares of Forest Energy Resources will be mailed book-entry statements evidencing their shares of Forest Energy Resources. Upon completion of the merger, the exchange of Forest Energy Resources shares and Mariner shares will be effected through book-entry (with cash paid in lieu of any fractional shares), without the exchange of physical share certificates. Forest shareholders will not be required to pay for the shares of Forest Energy Resources common stock that they receive in the spin-off or the shares of Mariner common stock that they receive in the merger. The distribution of the Forest Energy Resources shares will not alter the number of outstanding shares of Forest common stock, and Forest shareholders should not send in their stock certificates representing shares of Forest common stock.
Stock Exchange Listing
      Mariner has applied to list its common stock on the New York Stock Exchange.
Certificate of Incorporation and By-Laws
      The proposed amendment to Mariner’s certificate of incorporation is in the form attached as Annex E to this proxy statement/ prospectus-information statement. Following the merger, the certificate of incorporation and by-laws of Mariner would differ from the current certificate of incorporation and by-laws only with respect to the number of authorized shares of stock, which pursuant to the proposed amendment would be increased from 90 million to 200 million.
Material United States Federal Tax Consequences of the Spin-Off and the Merger
Scope of the Discussion
      The following discussion summarizes certain material U.S. tax consequences of the spin-off to Forest and its shareholders, and the merger to Mariner stockholders and to stockholders of Forest Energy Resources at the effective time of the merger. It is a condition to the completion of the spin-off that Forest receive an opinion from Weil, Gotshal & Manges LLP, tax counsel to Forest, to the effect that the spin-off will generally qualify as a distribution that is tax-free under Sections 355 and 368 of the Internal Revenue Code of 1986, as amended. The discussion below of the “Material U.S. Tax Consequences of the Spin-Off” represents the further opinion of Weil, Gotshal & Manges LLP of the tax consequences of the spin-off that will follow from the distribution qualifying as tax-free under Sections 355 and Section 368 of the Internal Revenue Code. It is a condition to the completion of the merger that Forest and Forest Energy Resources receive an opinion from

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Weil, Gotshal & Manges LLP, tax counsel to Forest and to Forest Energy Resources, and that Mariner receive an opinion from Baker Botts L.L.P., tax counsel to Mariner, in both cases dated as of the effective date of the merger, to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code. The discussion below of the “Material U.S. Tax Consequences of the Merger” represents the further opinions of Weil, Gotshal & Manges LLP and Baker Botts L.L.P. of the tax consequences of the merger that will follow from the merger qualifying as a reorganization under Section 368(a) of the Internal Revenue Code.
      This discussion is based upon existing U.S. tax law, including legislation, regulations, administrative rulings and court decisions, as in effect on the date of this proxy statement/ prospectus-information statement, all of which are subject to change, possibly with retroactive effect.
      For purposes of this discussion:
  •  a “U.S. holder” is a beneficial owner of Forest, Forest Energy Resources or Mariner common stock that is (1) an individual citizen or resident of the U.S., (2) a corporation or any other entity taxable as a corporation created or organized in or under the laws of the U.S. or of a state of the U.S. or the District of Columbia, (3) a trust (i) in respect of which a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantive decisions of the trust or (ii) that was in existence on August 20, 1996 and validly elected to continue to be treated as a domestic trust, or (4) an estate that is subject to U.S. tax on its worldwide income from all sources;
 
  •  a “non-U.S. holder” is any holder of Forest, Forest Energy Resources or Mariner common stock other than a U.S. holder; and
 
  •  the term “U.S. tax” means U.S. federal income tax under the Internal Revenue Code of 1986, as amended.
      The discussion assumes that holders hold their Forest, Forest Energy Resources or Mariner common stock, as applicable, as capital assets. Other tax consequences may apply to holders who are subject to special treatment under U.S. tax or U.S. federal estate tax law, such as:
  •  tax exempt organizations;
 
  •  financial institutions, insurance companies and broker-dealers;
 
  •  holders who hold their Forest, Forest Energy Resources or Mariner common stock, as applicable, as part of a hedge, straddle, wash sale, synthetic security, conversion transaction or other integrated investment comprised of Forest, Forest Energy Resources or Mariner common stock and one or more other investments;
 
  •  mutual funds;
 
  •  holders that have a functional currency other than the U.S. dollar;
 
  •  traders in securities who elect to apply a mark-to-market method of accounting;
 
  •  holders who acquired their shares in compensatory transactions;
 
  •  holders who are subject to the alternative minimum tax; or
 
  •  non-U.S. holders who are or have previously been engaged in the conduct of a trade or business in the U.S. or who have ceased to be U.S. citizens or to be taxed as resident aliens.
      In the case of a stockholder that is a partnership, determinations as to tax consequences will generally be made at the partner level, but other special considerations not described may apply. The discussion is generally limited to U.S. federal income and estate tax considerations and does not address other U.S. federal tax considerations or state, local or foreign tax considerations.

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      The opinions of counsel referred to above to be delivered at closing will be, and the opinions of counsel set forth herein are, based on present law, which is subject to change, possibly with retroactive effect. In providing their opinions at the closing of the spin-off and the merger, counsel will make customary assumptions and rely upon the accuracy of certain representations made to them by Forest, Forest Energy Resources, and Mariner, in officers’ certificates. In addition, counsel will rely upon the accuracy of the information in this proxy statement/ prospectus-information statement and in other documents filed by Mariner and by Forest with the SEC and upon other information provided to them by Mariner and Forest. Any change in present law, or the failure of factual assumptions or representations to be true, correct and complete in all respects, could affect the continuing validity of counsels’ tax opinions. The conditions to the completion of the spin-off and merger relating to the receipt of the tax opinions may not be waived by Forest or Mariner after receipt of the Mariner shareholder approval unless further shareholder approval is obtained with appropriate disclosure. If any condition relating to the receipt of a tax opinion is waived, Mariner will recirculate a proxy statement/ prospectus and will resolicit proxies of the Mariner stockholders if there is a material change in the tax consequences of the spin-off or the merger. No ruling will be requested from the Internal Revenue Service on any aspect of the proposed transactions. An opinion of counsel represents counsel’s best legal judgment and is not binding on the Internal Revenue Service or any court. Accordingly, there can be no assurance that the Internal Revenue Service will agree with the conclusions set forth herein or in the opinion letters to be delivered at closing, and it is possible that the Internal Revenue Service or another tax authority could assert a position contrary to one or all of those conclusions and that a court could sustain that contrary position.
      This summary is not a substitute for an individual analysis of the tax consequences of the proposed transaction to a Forest, Forest Energy Resources or Mariner stockholder. Each Forest, Forest Energy Resources or Mariner stockholder is urged to consult a tax adviser as to the U.S. tax consequences of the proposed transactions, including any consequences arising from the particular facts and circumstances of the Forest, Forest Energy Resources or Mariner stockholder, and as to any estate, gift, state, local or foreign tax consequences of the proposed transaction.
Material U.S. Tax Consequences of the Spin-Off
      The spin-off is conditioned upon receipt by Forest of an opinion from Weil, Gotshal & Manges LLP, to the effect that the spin-off will generally qualify as a distribution that is tax-free under Sections 355 and 368 of the Internal Revenue Code of 1986, as amended. Weil, Gotshal & Manges LLP is of the opinion that the U.S. federal income tax consequences of such treatment will be that:
  •  a Forest shareholder will not recognize any income, gain or loss as a result of the spin-off;
 
  •  a Forest shareholder’s aggregate tax basis for his or her Forest common stock on which Forest Energy Resources common stock is distributed and the Forest Energy Resources common stock received by such shareholder in the spin-off will be the same as the tax basis of Forest common stock held by such shareholder immediately prior to the spin-off. A Forest shareholder’s aggregate tax basis will be allocated between his or her Forest common stock and Forest Energy Resources common stock received in the spin-off in proportion to the relative fair market value of the Forest common stock and Forest Energy Resources common stock on the spin-off date;
 
  •  a Forest shareholder’s holding period for the Forest Energy Resources common stock received in the spin-off will include the holding period of the Forest common stock on which the distribution is made; and
 
  •  Forest will not recognize any income, gain or loss on the spin-off, other than with respect to any “excess loss account” or “intercompany transaction” required to be taken into account by Forest under the Treasury regulations relating to consolidated returns. It is also possible that Forest may recognize income with respect to certain cash received from Forest Energy Resources under the distribution agreement.
      There are numerous requirements that must be satisfied in order for the spin-off to be accorded tax-free treatment under the Internal Revenue Code. If the spin-off were not to qualify as tax-free under Sections 355

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and 368 of the Internal Revenue Code, Forest would be required to recognize gain equal to the excess of the fair market value of the Forest Energy Resources common stock distributed to its shareholders over Forest’s tax basis in the Forest Energy Resources common stock. Additionally, each Forest shareholder would be treated as if such shareholder had received a distribution in an amount equal to the fair market value of the Forest Energy Resources common stock received, taxed as a dividend to the extent of Forest’s current and accumulated earnings and profits (including earnings and profits arising from the gain to Forest described above) and then treated as a non-taxable return of capital to the extent of the holder’s tax basis in the Forest common stock and thereafter as capital gain from the sale or exchange of Forest common stock. Under current law, individual citizens or residents of the U.S. are subject to U.S. federal income tax on dividends at a maximum rate of 15% (assuming holding period and other requirements are met) and long-term capital gains (i.e., capital gains on assets held for more than one year) at a maximum rate of 15%.
      Even if the spin-off otherwise qualifies for tax-free treatment under Sections 355 and 368 of the Internal Revenue Code, the distribution of Forest Energy Resources common stock to Forest shareholders may be disqualified as tax-free to Forest under Section 355(e) of the Internal Revenue Code if 50% or more of the stock of Forest, Forest Energy Resources or Mariner is acquired as part of a plan or series of related transactions that include the spin-off. For purposes of this test, any acquisitions of Forest stock or Forest Energy Resources stock within two years before or after the spin-off, and any acquisitions of Mariner stock within two years after the spin-off, are presumed to be part of such a plan, although Forest, Forest Energy Resources or Mariner may be able to rebut that presumption. Also, for purposes of this test, the merger will already be treated as resulting in a deemed acquisition by Mariner stockholders of approximately 42% of Forest Energy Resources common stock. Under U.S. Treasury Regulations, certain safe harbors exist under which certain issuances of shares of Mariner and Forest Energy Resources will not be deemed part of the same plan as the spin-off. Among other safe harbors, safe harbors exist for transactions if specific timing conditions are met as to when agreements or substantial negotiations relating to such transactions occur, and a safe harbor exists for certain issuances pursuant to compensatory employment-related arrangements. The process for determining whether a change of ownership has occurred under the tax rules is complex, inherently factual and subject to interpretation of the facts and circumstances of a particular case. If an acquisition of Forest stock, Forest Energy Resources stock or Mariner stock results in the application of Section 355(e) of the Internal Revenue Code, Forest would recognize taxable gain as described in the preceding paragraph but the spin-off would generally be tax-free to each Forest shareholder. Pursuant to the tax sharing agreement, depending on the event, Forest may have to indemnify Mariner, or Mariner may have to indemnify Forest, for some or all of the taxes resulting from the spin-off. See “Ancillary Agreements — Tax Sharing Agreement” beginning on page 90.
      The tax sharing agreement entered into by Forest, Forest Energy Resources and Mariner imposes ongoing restrictions on Forest, Forest Energy Resources and Mariner to ensure that applicable statutory requirements under the Internal Revenue Code and applicable Treasury regulations continue to be met so that the spin-off remains tax-free to Forest and its shareholders. As a result of these restrictions, the ability of Mariner to engage in certain transactions, such as the redemption of its common stock, the issuance of equity securities and the utilization of its stock as currency in an acquisition, will be limited for a period of up to two years following the spin-off. These restrictions may reduce the ability of Mariner under certain circumstances to engage in certain business transactions that otherwise might be advantageous to Mariner and its stockholders and could have a negative impact on its business and stockholder value. If the spin-off became taxable, Forest would be expected to recognize a substantial amount of taxable income, which would result in a material amount of taxes. Depending on the circumstances, the tax sharing agreement allocates to Forest or Mariner all, or a portion of, any tax liability resulting from the spin-off being taxable. Any such taxes allocated to Mariner would be expected to be material to Mariner. This proxy statement/ prospectus-information statement summarizes certain effects of the tax sharing agreement on Mariner and Mariner stockholders. See “Ancillary Agreements — Tax Sharing Agreement” beginning on page 90. Mariner stockholders are encouraged to read the summary and the tax sharing agreement in its entirety for a more complete discussion of these tax matters.

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      Current Treasury regulations require each Forest shareholder who receives Forest Energy Resources common stock pursuant to the spin-off to attach to his or her federal income tax return for the year in which the spin-off occurs a detailed statement setting forth such data as may be appropriate in order to show the applicability of Section 355 of the Internal Revenue Code. Forest will provide the appropriate information to each shareholder of record as of the record date.
Material U.S. Tax Consequences of the Merger
      It is a condition to the consummation of the merger that:
  •  Mariner receive an opinion from Baker Botts L.L.P., dated as of the effective date of the merger, to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code; and
 
  •  Forest and Forest Energy Resources receive an opinion from Weil, Gotshal & Manges LLP, tax counsel to Forest, dated as of the effective date of the merger, to the effect that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.
      Baker Botts L.L.P. is of the opinion that the U.S. federal income tax consequences of such treatment will be that:
  •  a Mariner stockholder will not recognize gain or loss pursuant to the merger, and such holder’s tax basis and holding period in Mariner common stock will not be affected by the merger;
      Baker Botts L.L.P. and Weil, Gotshal & Manges LLP are of the opinion that the U.S. federal income tax consequences of such treatment will be that:
  •  a Forest Energy Resources stockholder who exchanges Forest Energy Resources common stock solely for Mariner common stock in the merger will not recognize gain or loss except, as described below, to the extent of any cash received in lieu of fractional shares of Mariner common stock;
 
  •  the aggregate tax basis in the Mariner common stock a Forest Energy Resources stockholder receives in the merger (including any fractional shares for which cash is received) will be the same as his or her aggregate tax basis in the Forest Energy Resources common stock surrendered in the merger;
 
  •  the holding period of the Mariner common stock received in the merger by a holder of Forest Energy Resources common stock (including any fractional shares for which cash is received) will include the holding period of Forest Energy Resources common stock that such stockholder surrendered in the merger; and
 
  •  a Forest Energy Resources stockholder who receives fractional share proceeds as a result of the sale of shares of Mariner common stock by the transfer agent will be treated as if such fractional share had been received by the shareholder as part of the merger and then sold by such stockholder. Accordingly, such stockholder will recognize capital gain or loss equal to the difference between the cash so received and the portion of the tax basis in Mariner common stock that is allocable to such fractional share. Any such capital gain or loss will be treated as a long-term or short-term capital gain or loss based on the holder’s holding period for the Mariner common stock (as determined above). Non-U.S. holders who receive fractional share proceeds may be subject to withholding tax with respect to the fractional share proceeds under special rules governing the disposition of interests in a United States real property holding corporation.
      Under the Internal Revenue Code, a holder of Forest Energy Resources common stock may be subject, under certain circumstances, to backup withholding at a current rate of 28% with respect to the amount of cash, if any, received as a result of the sale of fractional share interests unless such holder provides proof of an applicable exemption or correct taxpayer identification number, and otherwise complies with applicable requirements of the backup withholding rules. Any amounts withheld under the backup withholding rules are not additional tax and may be refunded or credited against the holder’s federal income tax liability, provided the required information is timely furnished to the Internal Revenue Service.

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Material U.S. Federal Tax Consequences to U.S. Holders of Holding and Disposing of Mariner Common Stock
Distributions on Common Stock
      A distribution to a U.S. holder on a Mariner share will be (i) first, a dividend to the extent of Mariner’s current or accumulated earnings and profits, as determined under general U.S. tax principles, (ii) second, a non-taxable recovery of basis in that Mariner share, causing a reduction in the adjusted basis of the shares of Mariner common stock to the extent thereof (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by the holder on a subsequent disposition of our common stock), and (iii) finally, an amount that is received in exchange for the Mariner share. A dividend on a Mariner share that is received by a U.S. holder generally before January 1, 2009 is subject to U.S. tax at a maximum rate of 15 percent provided that the stockholder satisfies certain holding period and other requirements with respect to that Mariner share. Any amount that is deemed to have been received in exchange for a Mariner share will be taxed as a sale or disposition of a Mariner share, discussed below.
Sales or Dispositions of Common Stock
      Upon a sale or other disposition of a Mariner share, a U.S. holder generally will recognize gain or loss in an amount that is equal to the difference between (i) the sum of any cash and the fair market value of any other property received and (ii) such U.S. holder’s adjusted basis in such Mariner share. Any such gain or loss will generally be a capital gain or loss if the Mariner share that is surrendered was held as a capital asset and will be a long-term capital gain or loss if the Mariner share had been held more than one year when the sale or other disposition occurs. Deduction of capital losses is subject to certain limitations under the Internal Revenue Code.
Information Reporting and Backup Withholding
      Payments of dividends and the proceeds of a disposition of a Mariner share that are made within the U.S. or through certain U.S. related financial intermediaries may be required to be reported to the Internal Revenue Service and may be subject to backup withholding unless (i) the U.S. holder is a corporation or other exempt recipient, or (ii) such person provides a taxpayer identification number or complies with applicable certification requirements. Amounts withheld under the backup withholding rules will be allowed as a refund or credit against a person’s U.S. tax liability if the required information is timely furnished to the Internal Revenue Service.
U.S. Federal Estate Tax
      Common stock owned or treated as owned by an individual who is a U.S. holder for U.S. federal estate tax purposes at the time of death will be included in the individual’s gross estate for U.S. federal estate tax purposes, and therefore may be subject to U.S. federal estate tax.
Material U.S. Federal Tax Consequences to Non-U.S. Holders of Holding and Disposing of Mariner Common Stock
Distributions on Common Stock
      A distribution to a non-U.S. holder on a Mariner share will be (i) first, a dividend to the extent of Mariner’s current or accumulated earnings and profits, as determined under general U.S. tax principles, (ii) second, a non-taxable recovery of basis in that Mariner share, causing a reduction in the adjusted basis of the shares of common stock to the extent thereof (thereby increasing the amount of gain, or decreasing the amount of loss, to be recognized by the holder on a subsequent disposition of our common stock), and (iii) finally, an amount that is received in exchange for the Mariner share.
      Dividends paid to non-U.S. holders that are not effectively connected with the non-U.S. holder’s conduct of a U.S. trade or business will be subject to U.S. federal withholding tax at a 30% rate, or if a tax treaty applies, a lower rate specified by the treaty. Non-U.S. holders should consult their tax advisors regarding their

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entitlement to benefits under a relevant income tax treaty. Dividends that are effectively connected with a non-U.S. holder’s conduct of a trade or business in the U.S. and, if an income tax treaty applies, are attributable to a permanent establishment in the U.S., are taxed on a net income basis at the regular graduated rates and in the manner applicable to U.S. persons. In that case, Mariner will not have to withhold U.S. federal withholding tax if the non-U.S. holder complies with applicable certification and disclosure requirements. In addition, a “branch profits tax” may be imposed at a 30% rate, or a lower rate under an applicable income tax treaty, on dividends received by a foreign corporation that are effectively connected with its conduct of a trade or business in the U.S.
      A non-U.S. holder that claims the benefit of an applicable income tax treaty generally will be required to satisfy applicable certification and other requirements. However,
  •  in the case of Mariner common stock held by a foreign partnership, the certification requirement will generally be applied to the partners of the partnership and the partnership will be required to provide certain information;
 
  •  in the case of Mariner common stock held by a foreign trust, the certification requirement will generally be applied to the trust or the beneficial owners of the trust depending on whether the trust is a “foreign complex trust,” “foreign simple trust” or “foreign grantor trust” as defined in the U.S. Treasury Regulations; and
 
  •  look-through rules will apply for tiered partnerships, foreign simple trusts and foreign grantor trusts.
      A non-U.S. holder that is a foreign partnership or a foreign trust is urged to consult its own tax advisor regarding its status under these U.S. Treasury Regulations and the certification requirements applicable to it.
      A non-U.S. holder that is eligible for a reduced rate of U.S. federal withholding tax under an income tax treaty may obtain a refund or credit of any excess amounts withheld by timely filing an appropriate claim for refund with the Internal Revenue Service.
Sales or Dispositions of Common Stock
      A non-U.S. holder generally will not be subject to U.S. tax on gain recognized on a disposition of a share of Mariner common stock unless:
  •  the gain is effectively connected with the non-U.S. holder’s conduct of a trade or business in the U.S. and, if an income tax treaty applies, is attributable to a permanent establishment maintained by the non-U.S. holder in the U.S.; in these cases, the gain will be taxed on a net income basis at the rates and in the manner applicable to U.S. persons, and if the non-U.S. holder is a foreign corporation, the branch profits tax described above may also apply;
 
  •  the non-U.S. holder is an individual who is present in the U.S. for 183 days or more in the taxable year of the disposition and meets other requirements; or
 
  •  Mariner is or has been a “United States real property holding corporation” for U.S. tax purposes at any time during the shorter of the five-year period ending on the date of disposition or the period that the non-U.S. holder held such Mariner common stock.
      Generally, a corporation is a United States real property holding corporation if the fair market value of its United States real property interests equals or exceeds 50% of the sum of the fair market value of its worldwide real property interests and its other assets used or held for use in a trade or business. The tax relating to stock in a United States real property holding corporation generally will not apply to a non-U.S. holder whose holdings, direct and indirect, at all times during the applicable period, constituted 5% or less of Mariner common stock, provided that Mariner common stock was regularly traded on an established securities market. Mariner believes that it currently is, and after the merger will continue to be, a United States real property holding corporation for U.S. tax purposes. Mariner also expects its common stock to be regularly traded on an established securities market immediately after the completion of the merger.

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Information Reporting and Backup Withholding
      Dividends paid to a non-U.S. holder may be subject to information reporting and U.S. backup withholding. A non-U.S. holder will be exempt from this backup withholding tax if such non-U.S. holder properly provides a Form W-8BEN certifying that such stockholder is a non-U.S. holder or otherwise meets documentary evidence requirements for establishing that such stockholder is a non-U.S. holder or otherwise qualifies for an exemption.
      The gross proceeds from the disposition of Mariner common stock may be subject to information reporting and backup withholding. If a non-U.S. holder sells its common stock outside the U.S. through a non-U.S. office of a non-U.S. broker and the sales proceeds are paid to such stockholder outside the U.S., then the U.S. backup withholding and information reporting requirements generally will not apply to that payment. However, U.S. information reporting will generally apply to a payment of sale proceeds, even if that payment is made outside the U.S., if a non-U.S. holder sells Mariner common stock through a non-U.S. office of a broker that:
  •  is a U.S. person for U.S. tax purposes;
 
  •  derives 50% or more of its gross income in specific periods from the conduct of a trade or business in the U.S.;
 
  •  is a “controlled foreign corporation” for U.S. tax purposes; or
 
  •  is a foreign partnership, if at any time during its tax year:
  •  one or more of its partners are U.S. persons who in the aggregate hold more than 50% of the income or capital interests in the partnership; or
 
  •  the foreign partnership is engaged in a U.S. trade or business,
unless the broker has documentary evidence in its files that the non-U.S. holder is a non-U.S. person and certain other conditions are met, or the non-U.S. holder otherwise establishes an exemption. In such circumstances, backup withholding will not apply unless the broker has actual knowledge that the seller is not a non-U.S. holder.
      If a non-U.S. holder receives payments of the proceeds of a sale of Mariner common stock to or through a U.S. office of a broker, the payment is subject to both U.S. backup withholding and information reporting unless such non-U.S. holder properly provides a Form W-8BEN certifying that such stockholder is a non-U.S. person or otherwise establishes an exemption.
      A non-U.S. holder generally may obtain a refund of any amounts withheld under the backup withholding rules that exceed such stockholder’s U.S. tax liability by timely filing a properly completed claim for refund with the U.S. Internal Revenue Service.
U.S. Federal Estate Tax
      Mariner common stock owned or treated as owned by an individual who is a non-U.S. holder for U.S. federal estate tax purposes at the time of death will be included in the individual’s gross estate for U.S. federal estate tax purposes, unless an applicable estate tax or other treaty provides otherwise, and therefore may be subject to U.S. federal estate tax.
      Mariner stockholders and Forest shareholders are urged to consult their own tax advisors as to the specific tax consequences to them of the spin-off and the merger, as applicable, including tax return reporting requirements, the applicability and effect of federal, state, local, and other applicable tax laws and the effect of any proposed changes in the tax laws.
Federal Securities Laws Consequences of the Merger
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“affiliates” of Forest Energy Resources under the Securities Act may resell such stock only in transactions permitted by Rule 145 under the Securities Act, or as otherwise permitted under the Securities Act. Persons who may be affiliates of Forest Energy Resources for those purposes generally include individuals or entities that control, are controlled by, or are under common control with Forest Energy Resources, but would not include stockholders who are not officers, directors or principal stockholders of Forest Energy Resources.
      The merger agreement requires Forest Energy Resources to use all commercially reasonable efforts to cause each of its affiliates to execute a written agreement, substantially in the form attached as an exhibit to the merger agreement, to the effect that such affiliate will not sell, assign, transfer or otherwise dispose of any of the shares of Mariner common stock issued to such affiliate in exchange for Forest Energy Resources common stock in the merger except:
  •  pursuant to an effective registration statement under the Securities Act;
 
  •  in conformity with the volume and other limitations of Rule 145 promulgated under the Securities Act; or
 
  •  in a transaction which, in the opinion of independent counsel reasonably satisfactory to Mariner or as described in a “no-action” or interpretative letter from the Staff of the SEC, is not required to be registered under the Securities Act.
Accounting Treatment
      If the merger is consummated, the acquisition of Forest Energy Resources by Mariner will be accounted for under the purchase method of accounting under U.S. generally accepted accounting principles, with Mariner treated as the acquiror. As a result, the assets and liabilities of the Forest Gulf of Mexico operations will be recorded at their estimated fair values at the date of merger with any excess of the purchase price over the net amount of such fair values recorded as goodwill.
Regulatory Matters
      None of the parties is aware of any other material governmental or regulatory approval required for the completion of the merger, other than the effectiveness of the registration statement of which this proxy statement/ prospectus-information statement is a part and the effectiveness of Mariner’s registration statement on Form S-1 relating to the currently-outstanding shares of Mariner common stock, and compliance with applicable antitrust law (including the Hart-Scott-Rodino Act) and the corporate law of the State of Delaware. On November 14, 2005, the waiting period under the Hart-Scott-Rodino Act with respect to the merger expired.
Appraisal and Dissenters’ Rights
      In accordance with the Delaware General Corporation Law, there will be no appraisal rights or dissenters’ rights available to holders of Mariner common stock in connection with the merger.

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STRENGTHS AND STRATEGIES OF MARINER FOLLOWING THE MERGER
      Following the merger we expect Mariner to be an independent oil and gas exploration, development and production company focused offshore in the Gulf of Mexico and onshore in the Permian Basin of West Texas. On a pro forma basis as of December 31, 2004, the combined company had 577 Bcfe of estimated proved reserves. Approximately 64% of these reserves were developed; 36% were undeveloped. Approximately 73% of our estimated proved reserves were natural gas and natural gas liquids, and 27% were oil and condensate. The reserves are geographically distributed approximately 62% on the Gulf of Mexico shelf, 18% in the Gulf of Mexico deepwater and 20% in the Permian Basin in West Texas. As of December 31, 2004, the pro forma PV10 of the combined company was approximately $1.9 billion, and the pro forma standardized measure of discounted future net cash flows attributable to its estimated proved reserves was approximately $1.4 billion. Please see “Mariner — Estimated Proved Reserves” and “The Forest Gulf of Mexico Operations — Estimated Proved Reserves” for a definition of PV10 and reconciliations of PV10 to the standardized measure of discounted future net cash flows.
      Mariner is focused on the generation and development of new Gulf of Mexico deepwater, deep shelf and shelf projects and the development of its existing asset base in West Texas. Historically, Mariner has achieved growth through the drill bit; however, as part of our growth strategy, we also seek to acquire assets that provide acceptable risk-adjusted rates of return and have significant potential for further reserve additions through development and exploitation activities.
      We believe Mariner’s core resources and strengths include:
  •  our high-quality assets with geographic and geological diversity;
 
  •  our successful track record of finding and developing oil and gas reserves; and
 
  •  our depth of operating experience.
      The integration and further development and exploitation of the Forest Gulf of Mexico operations into our business will further diversify and, in our view, complement our existing business, provide additional resources for future growth beyond the producing assets acquired, and afford a larger scale to increase our ability to compete effectively. We expect the effectiveness of our growth strategy to be enhanced by the addition of the Forest Gulf of Mexico assets.
      High-Quality Assets. We believe our asset base has significant potential:
  •  Our deepwater projects have the potential to provide large reserves, high production volumes and substantial cash flow. Approximately 65 Bcfe of our undeveloped estimated proved reserves as of December 31, 2004, are located in our high-impact deepwater projects — Swordfish, Pluto, Rigel, Baccarat, and Daniel Boone. The Baccarat project commenced production in July 2005 (although production was shut-in due to Hurricane Rita and recommenced in January 2006), and the Swordfish project commenced production in October 2005. Notwithstanding delays caused primarily by 2005 hurricane activity, we believe Pluto and Rigel will commence production in the second quarter of 2006. Proved undeveloped reserves attributable to those projects have been recategorized as proved developed reserves. Daniel Boone is currently scheduled for production in 2008.
 
  •  The Gulf of Mexico is an area that offers substantial growth opportunities, and we expect to continue to generate shelf, deep shelf and deepwater Gulf of Mexico prospects. The Forest Gulf of Mexico assets will more than double our existing undeveloped acreage position to approximately 465,000 net acres and increase our total net leasehold acreage offshore to nearly 1 million acres, providing numerous exploration, exploitation and development opportunities. We believe the additional acreage also will provide increased exposure to farm-out opportunities from other oil and gas operators. Our team of geoscientists currently has access to seismic data from multiple, recent vintage 3-D seismic databases covering more than 6,600 blocks in the Gulf of Mexico that we intend to continue to use to develop prospects on acreage being evaluated for leasing and to develop and further refine prospects on our expanded acreage position. The combination of our undeveloped acreage position, inventory of development prospects, seismic data and technical knowledge should enhance our ability to select

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  projects with the greatest return potential for future development. We will also gain access to a significant infrastructure in the shelf that we believe will provide substantial cost efficiencies to the combined operations.
 
  •  Our West Texas assets provide stable cash flow and long-lived reserves, with significant development opportunities. In West Texas, during the three years ended December 31, 2004, we drilled 105 wells, all commercially successful, added approximately 76 Bcfe of estimated proved reserves, and increased our average daily production by more than 400%. Our 52 Bcfe of undeveloped estimated proved reserves in West Texas includes 162 locations. Our recent West Texas acquisition adds to our asset base an approximate 35% working interest in over 200 existing producing wells and, we believe, will provide future infill development opportunities, much like our Aldwell unit. This recent acquisition, in conjunction with our existing West Texas acreage, gives Mariner an inventory of multi-year development drilling opportunities.
      Successful Track Record of Finding and Developing Oil and Gas Reserves. In the three-year period ended December 31, 2004, Mariner deployed approximately $337 million of capital on acquisitions, exploration and development, while adding approximately 191 Bcfe of proved reserves and producing approximately 111 Bcfe. In addition to our successful West Texas drilling program, in the three-year period ended December 31, 2004, we have participated in the drilling of 33 exploration wells in the Gulf of Mexico, with 15 of these wells resulting in the discovery of commercial oil and gas reserves.
      Our technical professionals average more than 20 years of experience in the exploration and production business, much of it with major oil companies, including extensive experience in the Gulf of Mexico. The addition of experienced Forest personnel to Mariner’s team of geoscientists and technical and operational professionals should further enhance our ability to generate and maintain an inventory of high-quality drillable prospects and to further develop and exploit our assets.
      We seek to mitigate our risk in drilling projects by entering into arrangements with industry partners in which they agree to pay a disproportionate share of dry hole costs and compensate us for expenses incurred in prospect generation. We intend to continue our practice of sharing costs of offshore exploration and development activities by selling interests in projects to industry partners. From time to time, we may sell entire interests in offshore prospects in order to better diversify our portfolio. We also enter into trades or farm-in transactions whereby we acquire interests in third-party generated prospects. We expect more opportunities to participate in these prospects as a result of the scale and increased cash flow the merger will bring.
      Depth of Operating Experience. Our engineers have extensive experience in offshore Gulf of Mexico completion and production techniques, both in the deepwater and on the shelf. We have extensive experience and a successful track record in the use of subsea tieback technology to connect offshore wells to existing production facilities. This technology facilitates production from offshore properties without the necessity of fabrication and installation of more costly platforms and top side facilities that typically require longer lead times. We believe the use of subsea tiebacks in appropriate projects enables us to bring production online more quickly, makes target prospects more profitable, and allows us to exploit reserves that may otherwise be considered non-commercial because of the high cost of infrastructure. In the Gulf of Mexico, in the three years ended December 31, 2004, we were directly involved in thirteen projects (five of which we operated) utilizing subsea tieback systems in water depths ranging from 475 feet to more than 7,000 feet, and in five projects (three of which we operated) developed through the use of platforms.
      Mariner has proven to be an effective and efficient operator in West Texas, as evidenced by our results there in recent years. In addition to conducting a successful drilling program, increasing our production and expanding our asset base, we have improved our net operating margin by reducing our operating costs and increasing our realized share of production.

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      We expect that our acquisition of the Forest Gulf of Mexico assets and the scale it brings to our business will:
  •  reduce our concentration risk;
 
  •  provide many exploration, exploitation and development opportunities;
 
  •  enable us to increase the number of our internally-generated prospects;
 
  •  expand our sphere of influence and enhance our ability to participate in prospects generated by other operators; and
 
  •  add a significant cash flow generating resource that will improve our ability to compete effectively in the Gulf of Mexico and provide funding for acquisition projects.
      We believe we are well positioned to optimize the Forest Gulf of Mexico assets through aggressive and timely exploitation. Our diverse, high-quality assets, our ability to find and develop oil and gas reserves, and our operating experience should provide a strong platform from which to grow and create value for our shareholders.

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THE MERGER AGREEMENT
      The following is a summary of the material terms of the merger agreement. This summary is qualified in its entirety by reference to the merger agreement, a copy of which is attached as Annex A to this proxy statement/ prospectus-information statement and is incorporated by reference into this proxy statement/ prospectus-information statement. We urge you to read the merger agreement in its entirety for a more complete description of the terms and conditions of the merger.
The Merger
Structure of the Merger
      At the effective time of the merger, MEI Sub, a newly formed, wholly owned subsidiary of Mariner, will merge with and into Forest Energy Resources. Forest Energy Resources will remain as the surviving corporation and immediately after the merger will become a wholly owned subsidiary of Mariner.
Effective Time of the Merger
      The closing of the merger will occur within two business days after the fulfillment or waiver of the conditions described under “— Conditions to the Completion of the Merger” below, unless Forest Energy Resources and Mariner agree in writing upon another time or date. The merger will become effective upon the filing of a certificate of merger with the Secretary of State of the State of Delaware or at such later time as the parties to the merger agreement may agree and as is provided in the certificate of merger. The filing of the certificate of merger will take place as soon as practicable at or after the time of the closing of the merger.
Merger Consideration
      The merger agreement provides that each share of Forest Energy Resources common stock (other than certain shares described under “— Cancellation of Certain Shares” below) that is outstanding immediately prior to the effective time of the merger will, at the effective time of the merger, be converted into the right to receive one share of Mariner common stock as adjusted for any stock split, reverse stock split, stock dividend, subdivision, reclassification, combination, exchange, recapitalization or other similar transaction, except that shareholders will receive cash in lieu of any fractional share of Mariner common stock.
Cancellation of Certain Shares
      Each share of Forest Energy Resources common stock held by Forest Energy Resources as treasury stock, and each share of Forest Energy Resources common stock owned by Mariner or MEI Sub, in each case immediately prior to the effective time of the merger, will automatically be canceled and no stock or consideration will be delivered in exchange therefor. Neither Mariner nor MEI Sub currently owns any shares of Forest Energy Resources common stock.
Procedure for Surrender of Certificates
      Shares of Forest Energy Resources common stock to be issued in the spin-off will be issued in book-entry form, meaning that, although Forest shareholders will own the shares, they will not be issued physical share certificates. Prior to the effective time of the merger, an exchange agent will be appointed to handle the exchange of Forest Energy Resources stock certificates for Mariner stock certificates. As promptly as practicable after the effective time of the merger, Mariner will cause the exchange agent to effect the exchange, via book-entry procedures, of Forest Energy Resources shares for Mariner shares. Mariner will not issue physical certificates for the shares of common stock issued in the merger. After the merger becomes effective, Forest Energy Resources will not register any further transfers of shares of Forest Energy Resources common stock.

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Treatment of Certain Forest Stock Options
      At the effective time of the merger, the portion of each outstanding option to acquire Forest common stock that is unexercisable as of the effective time and which is held by a Forest Energy Resources employee who remains employed by Forest Energy Resources, Mariner or their subsidiaries after the effective time of the merger will be converted into an option to acquire from Mariner a number of shares of Mariner common stock determined by multiplying:
  •  the number of shares of Forest common stock subject to the portion of such option that is unexercisable immediately before the effective time, by
 
  •  the “option exchange ratio” described below,
and rounding to the nearest whole number. The purchase price per share of Mariner common stock under the converted option will be the exercise price per share under the original Forest stock option divided by the option exchange ratio, with the resulting price rounded to the nearest whole cent.
      The “option exchange ratio” means the quotient, rounded to the third decimal place, determined by dividing:
  •  the average of the daily closing prices per share of Forest common stock for the last five trading days immediately preceding the effective time of the merger, by
 
  •  the average of the daily closing prices per share of Mariner common stock for the first five trading days following the effective time of the merger,
subject to appropriate adjustment in the event of any stock split, stock dividend or recapitalization after the date of the merger agreement applicable to shares of Forest common stock or Mariner common stock.
      Mariner will take all actions necessary to reserve for issuance, from and after the effective time of the merger, a sufficient number of shares of Mariner common stock for delivery under the Forest stock options that are deemed to constitute options to purchase shares of Mariner common stock in accordance with the preceding paragraphs, and, on or as soon as practicable after the effective time of the merger, Mariner will file with the SEC a registration statement with respect to such Mariner common stock and cause such shares to be listed on the NYSE.
Board of Directors and Officers of Mariner
      The board of directors of Mariner immediately after the effective time of the merger will consist of seven directors, five of whom will be the directors of Mariner immediately before the effective time of the merger and two of whom will be mutually agreed upon by Mariner and Forest prior to the effective time of the merger. The board of directors of Mariner will also appoint committees as appropriate, including an audit committee, a compensation committee and a nominating committee. The officers of Mariner immediately prior to the effective time of the merger will continue as the officers of Mariner immediately after the effective time of the merger.
Representations and Warranties
      The merger agreement contains certain representations and warranties made by Forest and Forest Energy Resources jointly, and by Mariner. These representations and warranties, which are generally reciprocal unless otherwise stated below, relate to:
  •  corporate existence, qualifications to conduct business and corporate standing and power;
 
  •  corporate authorization, enforceability and actions by the board of directors;
 
  •  capitalization;
 
  •  financial statements and undisclosed liabilities;
 
  •  absence of certain material changes or events since June 30, 2005;

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  •  governmental investigations and litigation;
 
  •  licenses and compliance with laws;
 
  •  the registration statements to be filed with the SEC and this proxy statement/ prospectus-information statement;
 
  •  information supplied to governmental authorities;
 
  •  compliance with environmental laws;
 
  •  tax matters;
 
  •  benefit plans;
 
  •  labor matters;
 
  •  intellectual property matters;
 
  •  material contracts;
 
  •  financial advisor opinion (given only by Mariner);
 
  •  payment of broker’s and finder’s fees in connection with the merger agreement and other transaction agreements;
 
  •  takeover statutes (given only by Mariner);
 
  •  certain findings of the board of directors to approve the merger;
 
  •  stockholder votes necessary to complete the merger;
 
  •  absence of requirement for Forest stockholder approval (given only by Forest);
 
  •  Forest Energy Resources stockholder approval (given only by Forest Energy Resources);
 
  •  payments to certain affiliated individuals or entities;
 
  •  title to, and sufficiency of, assets;
 
  •  loans made to third parties;
 
  •  oil and gas reserves; and
 
  •  derivative transactions.
      Forest, on behalf of itself only, also makes representations and warranties to Mariner with respect to its:
  •  due organization and good standing;
 
  •  corporate power, authorization and validity of agreements;
 
  •  information supplied to governmental authorities;
 
  •  payment of broker’s and finder’s fees in connection with the merger agreement and other transaction agreements; and
 
  •  rights plan.
      The parties acknowledge that the other parties to the merger agreement do not make any express or implied representations or warranties except as set forth in the merger agreement, the distribution agreement or the ancillary agreements. The representations and warranties contained in the merger agreement do not survive the effective time of the merger.

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Covenants
      Forest Energy Resources, Forest and Mariner have each undertaken certain covenants in the merger agreement. The following summarizes the material covenants:
No Solicitation
      The merger agreement provides that Mariner will not, and will not permit its directors and officers, and will use all reasonable efforts to cause its employees, agents and representatives not to:
  •  solicit, initiate, encourage, facilitate or induce any inquiry, proposal or offer with respect to an acquisition proposal;
 
  •  participate in any discussions or negotiations regarding, provide nonpublic information with respect to, or otherwise facilitate any acquisition proposal;
 
  •  engage in discussions with respect to an acquisition proposal;
 
  •  approve, endorse or recommend an acquisition proposal, except as provided in the merger agreement; or
 
  •  enter into any agreement related to any acquisition proposal, except as provided by the merger agreement.
      When we refer to an “acquisition proposal,” we mean any inquiry, offer or proposal for a transaction or series of related transactions involving any of the following:
  •  any purchase by any person, entity or group, as defined in Section 13(d) of the Exchange Act, of more than 15% of the total outstanding voting securities of Mariner;
 
  •  any tender or exchange offer that would result in any person, entity or group, as defined in Section 13(d) of the Exchange Act, owning 15% or more of the total outstanding voting securities of Mariner;
 
  •  any merger, consolidation, business combination or similar transaction involving Mariner;
 
  •  any sale, exchange, transfer, acquisition or disposition, or any lease or license outside of the ordinary course of business, of more than 15% of Mariner’s assets; or
 
  •  any liquidation of dissolution of Mariner.
      As of the date the merger agreement was executed, Mariner agreed to immediately cease and terminate any existing discussions or negotiations with respect to any acquisition proposal.
      In the event that Mariner receives an acquisition proposal or any request for nonpublic information or inquiry that it reasonably believes could lead to an acquisition proposal, Mariner agrees to:
  •  notify Forest and Forest Energy Resources orally and in writing of the material terms of the acquisition proposal, request or inquiry;
 
  •  identify to Forest and Forest Energy Resources the person making the acquisition proposal, request or inquiry;
 
  •  furnish to Forest and Forest Energy Resources copies of all written materials provided in connection with the acquisition proposal or inquiry;
 
  •  provide to Forest and Forest Energy Resources as promptly as practicable, both orally and in writing, all information reasonably necessary to keep Forest and Forest Energy Resources informed in all material respects of the status and details of the acquisition proposal, request or inquiry, including providing copies of written materials received from and provided to the third party making the acquisition proposal, request or inquiry; and

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  •  provide Forest and Forest Energy Resources 48 hours’ prior notice (or such lesser notice as is provided to Mariner’s directors) of any meeting of Mariner’s board of directors at which it will consider an acquisition proposal, unless shorter notice is provided to the board of directors, in which case Forest and Forest Energy Resources are to be provided the same notice.
      Notwithstanding the foregoing, Mariner’s board of directors may provide nonpublic information to, and engage in negotiations with, a third party in response to an unsolicited, bona fide acquisition proposal with respect to Mariner, if:
  •  Mariner has complied with all of its non-solicitation and notification obligations in the merger agreement;
 
  •  in the good faith judgment of Mariner’s board of directors (after receiving the advice of its legal counsel and financial advisor), the acquisition proposal is a superior offer or is reasonably likely to result in a superior offer;
 
  •  concurrently with furnishing any nonpublic information, Mariner notifies Forest and Forest Energy Resources in writing of its intention to furnish nonpublic information and furnishes the same nonpublic information to Forest and Forest Energy Resources;
 
  •  concurrently with engaging in negotiations with the third party, Mariner notifies Forest and Forest Energy Resources in writing of its intent to enter into negotiations with the third party; and
 
  •  Mariner executes a customary confidentiality agreement with the third party with terms at least as restrictive as the confidentiality agreement between Forest and Mariner.
      When we refer to a “superior offer,” we mean an unsolicited bona fide written proposal made by a third party to acquire, directly or indirectly, pursuant to a tender or exchange offer, merger, consolidation or other business combination, all or substantially all of the assets of Mariner or substantially all of the total outstanding voting securities of Mariner. The superior offer must be on terms that the Mariner board of directors has in good faith concluded, after receiving the advice of its legal counsel and financial adviser and taking into account all legal, financial, regulatory and other aspects of the offer and the third party offeror, to be more favorable, from a financial point of view, to Mariner’s stockholders than the terms of the merger and to be reasonably capable of being consummated.
      If Mariner receives a superior offer and that superior offer has not been withdrawn, Mariner’s board of directors is permitted to change its recommendation that the Mariner stockholders approve the merger if:
  •  Mariner stockholders have not already approved the merger and the merger agreement;
 
  •  Mariner notifies Forest and Forest Energy Resources in writing:
  •  that it has received a superior offer;
 
  •  of the terms and conditions of the superior offer;
 
  •  of the identity of the third party making the superior offer; and
 
  •  that it intends to change its recommendation that Mariner stockholders approve the merger and the manner in which it intends to do so;
  •  Mariner provides Forest and Forest Energy Resources with copies of all written materials delivered by Mariner to the third party making the superior offer that have not previously been provided to Forest and Forest Energy Resources, and Mariner has otherwise made available to Forest and Forest Energy Resources all materials and information made available to the third party; and
 
  •  Mariner has not breached any of the provisions of the merger agreement relating to acquisition proposals and superior offers.
      Subject to complying with its fiduciary duties under applicable law, Mariner’s obligation to call, give notice of, convene and hold its stockholders’ meeting regarding approval of the merger agreement will not be

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limited or otherwise affected by the commencement, disclosure, announcement or submission to it of any acquisition proposal unless the merger agreement is terminated. Prior to termination of the merger agreement, Mariner will not submit to the vote of its stockholders any acquisition proposal other than the merger or enter into any agreement, agreement in principle or letter of intent with respect to, or accept any acquisition proposal other than, the merger.
      In addition, notwithstanding the foregoing, Mariner and its board of directors may take a position, and disclose to its stockholders that position, with respect to a tender or exchange offer by a third party in compliance with Rule 14d-9 or Rule 14e-2(a) of the Exchange Act to the extent required by applicable law. The content of any document disclosing the position of the Mariner board of directors to Mariner stockholders will be governed by the provisions of the merger agreement. The Mariner board of directors may not recommend that Mariner stockholders tender or exchange their Mariner common stock unless the Mariner board of directors determines in good faith, after receiving advice of its legal counsel and financial adviser, that the acquisition proposal is a superior offer.
Board of Directors Covenant to Call Stockholders’ Meeting and to Recommend the Merger
      As promptly as practicable following the date of the merger agreement and the effectiveness of the registration statements, Mariner has agreed to call a meeting of its stockholders to be held as promptly as practicable for the purpose of voting upon the adoption of the merger agreement and any related matters, and to submit the merger agreement for adoption to the stockholders of Mariner at such Mariner meeting. The meeting to which this proxy statement/ prospectus-information statement relates is intended to fulfill this requirement. Mariner has agreed to cause the Mariner meeting to be held and the vote taken within 60 days following the effectiveness of Mariner’s registration statement of which this proxy statement/ prospectus-information statement is a part. Mariner will deliver to its stockholders the proxy statement/ prospectus-information statement in definitive form in connection with the Mariner meeting, at the time and in the manner provided by, and will conduct the Mariner meeting and the solicitation of proxies in connection with the Mariner meeting in accordance with, the applicable provisions of the law of the State of Delaware, the Exchange Act and Mariner’s certificate of incorporation and by-laws. Subject to the provisions described in “— No Solicitation” above, Mariner’s board of directors has agreed to recommend that the stockholders of Mariner adopt the merger agreement.
Operations of Forest (in respect of the Forest Gulf of Mexico operations), Forest Energy Resources and Mariner Pending Closing
      Forest (in respect of the Forest Gulf of Mexico operations), Forest Energy Resources and Mariner have each undertaken that, until the earlier of the effective time of the merger and the termination of the merger agreement, each will conduct its business in the ordinary course consistent with past practice and use all commercially reasonable efforts to preserve intact its business organization, maintain its material rights and franchises, keep available the services of its current officers and key employees and preserve its relationships with material third parties. Each has further agreed that it will not, except as permitted by the distribution agreement or any ancillary agreement or with the prior written consent of the other parties (such consent not to be unreasonably withheld or delayed), do any of the following:
  •  declare or pay any dividends on or make other distributions in respect of its capital stock;
 
  •  split, combine or reclassify any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of, or in substitution for, shares of its capital stock;
 
  •  redeem, repurchase or otherwise acquire (or permit any subsidiary to redeem, repurchase or otherwise acquire) any shares of its capital stock;
 
  •  issue, deliver or sell any shares of, or securities convertible into, its capital stock of any class, except, in the case of Mariner, the issuance of stock options with three-year vesting or restricted stock for up to 300,000 shares of Mariner common stock;
 
  •  amend its governing documents;

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  •  other than purchases from vendors or suppliers in the ordinary course of business consistent with past practice, exercises of preferential rights and, in the case of Mariner, certain specified transactions, engage in acquisitions valued at more than $25 million in the aggregate;
 
  •  other than product sales and other dispositions in connection with normal equipment maintenance or salvage in the ordinary course of business and consistent with past practice and permitted liens, dispose of assets valued at more than $10 million in the aggregate, except, in the case of Mariner, transactions permitted as described under “— No Solicitation” above;
 
  •  incur or guarantee indebtedness, other than, in the case of Forest Energy Resources, indebtedness incurred or guaranteed in connection with the spin-off, or, in the case of Mariner, up to $185 million pursuant to a new or amended credit agreement;
 
  •  fail to continue its capital expenditure program for exploration and development or fail to perform, to the extent reasonably practicable, all capital expenditures at an aggregate cost not exceeding 120% of the aggregate costs set forth in the capital expenditure program;
 
  •  make material changes to employment arrangements;
 
  •  fail to comply with any laws, ordinances or regulations or permit to expire or terminate without renewal any license that is necessary to the operation of the business, to the extent the same would result in a material adverse effect;
 
  •  adopt a plan of complete or partial liquidation or dissolution;
 
  •  change its fiscal year or make any material change in its methods of accounting except as required by the Financial Accounting Standards Board or changes in generally accepted accounting principles, or in response to comments made by the SEC with respect to any registration statement;
 
  •  amend any agreement or arrangement with any affiliates (including employees of Mariner and Forest Energy Resources) on terms materially less favorable than could be reasonably expected to have been obtained with an unaffiliated third party on an arm’s-length basis;
 
  •  except in the ordinary course of business consistent with past practice, modify, amend, terminate or renew any material contract or waive, release or assign any material rights or claims, in each case if the action would have a material adverse effect or impair in any material respect the party’s ability to perform its obligations under the merger agreement and other transaction agreements;
 
  •  waive any preferential rights;
 
  •  enter into any contract not in the ordinary course of business involving total consideration of $2 million or more with a term longer than one year, unless it can be terminated by it without penalty upon no more than 30 days’ prior notice;
 
  •  fail to maintain insurance in amounts and against risks and losses as are customary for companies engaged in their respective businesses, except, in the case of Mariner, self-insurance with respect to operators’ extra expense insurance, physical damage to wellsite real and personal property insurance and business interruption insurance;
 
  •  make or rescind any material express or deemed election relating to taxes unless the action will not materially and adversely affect that party on a going-forward basis;
 
  •  settle or compromise any material claim or controversy relating to taxes, except where the settlement or compromise will not result in a material adverse effect on that party;
 
  •  amend any material tax returns;
 
  •  change in any material respect any of its methods of reporting income or deductions for federal income tax purposes, except as may be required by applicable law or except for changes that are reasonably expected not to result in a material adverse effect on that party;

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  •  pay, discharge or satisfy any material claims, liabilities or obligations, other than the payment, discharge or satisfaction, in the ordinary course of business or, in the case of Mariner, in accordance with their terms, of liabilities reflected or reserved against in, or contemplated by, the most recent consolidated financial statements or incurred in the ordinary course of business;
 
  •  take or cause or permit to be taken any action that would disqualify the spin-off under the distribution agreement from constituting a tax-free spin-off or that would disqualify either the merger or the contribution of assets from Forest to Forest Energy Resources from constituting a tax-free reorganization;
 
  •  intentionally take or agree or commit to take any action that would result in any of the conditions set forth in the merger agreement not being satisfied at the effective time of the merger;
 
  •  enter into any derivative transaction or any fixed price commodity sales agreement with a term of more than 60 days; and
 
  •  agree or otherwise take any action inconsistent with the foregoing.
      Mariner has also undertaken that it will cause MEI Sub not to conduct any business operations, enter into any contract, acquire any assets or incur any liabilities, and will use reasonable commercial efforts to obtain the lender consent and to enter into a new credit facility. Forest and Forest Energy Resources have also undertaken not to form or propose to form a new subsidiary of Forest Energy Resources.
      Also, the parties agree to promptly advise the other parties orally and in writing of any change or event having, or that, insofar as can reasonably be foreseen, could have, either individually or together with other changes or events, a material adverse effect.
Commercially Reasonable Efforts, Further Assurances
      Forest, Forest Energy Resources, Mariner and MEI Sub have agreed to use all commercially reasonable efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary under applicable laws and regulations to consummate the transactions contemplated by the merger agreement and the other transaction agreements. These actions include providing information and obtaining all necessary exemptions, rulings, consents, authorizations, approvals and waivers to effect all necessary registrations and filings and to lift any injunction or other legal bar to the merger and the other transactions contemplated by the merger agreement and the other transaction agreements as promptly as practicable, and taking all other actions necessary to consummate the transactions contemplated by the merger agreement and the other transaction agreements in a manner consistent with applicable law. Forest, Forest Energy Resources, Mariner and MEI Sub also agreed to cooperate and to use their respective commercially reasonable efforts to obtain any government clearances required to consummate the merger and to respond to any government requests for information.
Employee Benefit Plans
      Forest Energy Resources and Mariner agreed in the merger agreement that Forest Energy Resources employees who remain employed by Forest Energy Resources, Mariner or their subsidiaries from and after the effective time of the merger:
  •  will participate in Mariner benefit plans as of the effective time of the merger on a basis no less favorable than that applicable to similarly situated Mariner employees, and be granted full credit for all purposes under such plans for prior service with Forest and Forest Energy Resources and their affiliates before the effective time of the merger (except to the extent necessary to avoid duplication of benefits);
 
  •  will, if the effective time of the merger occurs in 2006, receive vacation benefits for 2006 that are equal to the employee’s accrued and unused vacation under Forest’s vacation policy as of the effective time of the merger plus any additional vacation entitlement the employee would have earned under the terms of Mariner’s vacation policy; and

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  •  will receive specified relocation benefits if, from the effective time of the merger to the later of June 30, 2006 or six months after the effective time of the merger, Mariner or a subsidiary of Mariner relocates the principal place of employment of the employee by 50 miles or more from the location of his or her principal place of employment immediately prior to the effective time of the merger.
      In addition, Forest Energy Resources employees will, in lieu of the payment of any annual bonuses for 2005 under annual incentive and bonus plans maintained by Forest, be eligible to receive potential retention benefits, paid in installments commencing in October 2005 and ending in June 2006, in an aggregate amount equal to 250% of the employee’s target annual bonus for 2005 under the annual incentive or bonus plan maintained by Forest and applicable to the employee.
      If, during the period beginning on the effective time of the merger and ending on the later of June 30, 2006, or the date that is six months after the effective time of the merger, a Forest Energy Resources employee (a) voluntarily terminates his employment within 30 days after a reduction in his base salary or base wages from that in effect immediately prior to the effective time of the merger, (b) voluntarily terminates his employment after being notified that the principal place of his employment is changing to a location 50 miles or more from the location of his principal place of employment immediately prior to the effective time of the merger, or (c) is involuntarily terminated from employment other than for cause, then Mariner shall pay specified severance benefits to such employee, reduced, however, by the amount of any retention benefits previously paid to such employee, and provided that such employee executes a release and is not subsequently re-hired by Forest or any subsidiary of Forest during the six-month period after the effective time of the merger.
      Mariner will reimburse Forest for severance amounts paid to employees of the Forest Gulf of Mexico operations who are terminated by Forest with Mariner’s consent prior to the effective time of the merger, provided that any such employee is not subsequently rehired by Forest or any Forest subsidiary during the six month period following the effective time of the merger.
      After the effective time of the merger, Forest will transfer the aggregate account balances of the Forest Gulf of Mexico operations employees under Forest’s retirement savings plan to Mariner’s comparable plan. Any loans under the plan will be transferred as part of the balance transfers. All savings plan investments in shares of Forest or Mariner common stock will be converted to cash prior to transfer.
Directors’ and Officers’ Indemnification
      From and after the effective time of the merger, Forest Energy Resources will indemnify any persons who are or were officers or directors of Mariner prior to the effective time of the merger for losses in connection with any action arising out of or pertaining to acts or omissions, or alleged acts or omissions, by them in their capacities as such, whether commenced, asserted or claimed before or after the effective time of the merger. Forest Energy Resources will maintain existing, or provide comparable, directors’ and officers’ liability insurance policies for a period of six years following the effective time of the merger.
Additional Covenants
Litigation Defense
      Each of Forest, Forest Energy Resources, Mariner and MEI Sub will use all commercially reasonable efforts to defend against all actions in which such party is named as a defendant that challenge or otherwise seek to enjoin, restrain or prohibit the transactions contemplated by the merger agreement or seek damages with respect to such transactions.
Accounting Matters
      Each party to the merger agreement will use its commercially reasonable efforts to ensure that, following the effective time of the merger, Mariner will establish a fiscal year ending on December 31.

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Reorganization Treatment
      Forest, Forest Energy Resources, Mariner and MEI Sub intend that the merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code and the parties have agreed to take the position for all tax purposes that the merger so qualifies unless a contrary position is required by a final determination within the meaning of Section 1313 of the Internal Revenue Code. Forest, Forest Energy Resources, Mariner and MEI Sub will each use their respective commercially reasonable efforts to cause the merger to qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code, and will not take actions, cause actions to be taken or fail to take actions that are reasonably likely to prevent such result.
Letter of Credit
      Mariner will obtain and maintain a letter of credit in favor of Forest with an aggregate principal amount of $40.0 million to secure Mariner’s performance of its obligations under an existing drill-to-earn program. The principal amount of the letter of credit will decrease over time as Mariner drills more wells under the program.
Conditions to the Completion of the Merger
      The respective obligations of Forest, Mariner, MEI Sub and Forest Energy Resources to complete the merger are subject to the fulfillment, or the waiver by Forest and Mariner, of various conditions which include, in addition other customary closing conditions, the following:
  •  completion of the spin-off in accordance with the distribution agreement;
 
  •  obtaining all material consents, approvals and authorizations of any governmental authority legally required for the consummation of the transactions contemplated by the merger agreement and the other transaction agreements;
 
  •  the expiration or termination of any applicable waiting period under the Hart-Scott-Rodino Act;
 
  •  the SEC having declared effective the registration statements of Mariner relating to the shares of Mariner common stock to be issued in connection with the merger;
 
  •  the approval for listing on the New York Stock Exchange or Nasdaq of the shares of Mariner common stock and such other shares required to be reserved for issuance in connection with the merger, subject to official notice of issuance;
 
  •  adoption of the merger agreement by the Mariner stockholders at the meeting;
 
  •  the absence of a final and non-appealable injunction or other prohibition issued by a court or other governmental entity that restrains, enjoins or prohibits the spin-off or the merger;
 
  •  there being no action by a governmental authority pending to restrain, enjoin, prohibit or delay consummation of the transactions contemplated by the merger agreement, or to impose any material restrictions or requirements on the transactions contemplated by the merger agreement or on Forest Energy Resources or Mariner with respect to the transactions;
 
  •  there being no action taken and no statute, rule, regulation or executive order enacted, entered, promulgated or enforced by any governmental authority with respect to the merger that, individually or in the aggregate, would restrain, prohibit or delay the consummation of the merger or impose material restrictions or requirements on consummation of the merger or on Forest Energy Resources or Mariner with respect to the transactions;
 
  •  the performance by Forest, Forest Energy Resources and Mariner in all material respects of their respective covenants and agreements contained in the merger agreement and the truthfulness and correctness of the representations and warranties in the merger agreement in all respects, except in each case where the failure to be true and correct, individually or in the aggregate, would not have a

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  material adverse effect or to the extent specifically contemplated or permitted by the merger agreement; and
 
  •  Forest, Forest Energy Resources and Mariner having received an opinion from their respective counsel to the effect that the merger will be treated for federal income tax purposes as a reorganization.
      Additionally, the obligation of Forest and Forest Energy Resources to complete the merger is subject to the fulfillment or waiver by Forest of the following additional conditions:
  •  Forest having received any consents required from its bondholders; and
 
  •  Forest having received the consents required pursuant to its credit facility.
      Additionally, the obligation of Mariner and MEI Sub to complete the merger is subject to the fulfillment or waiver by Mariner of the following additional conditions:
  •  Mariner having received the consents required pursuant to its credit facility; and
 
  •  Forest Energy Resources and/or Mariner having entered into a new or amended credit facility with available borrowing capacity sufficient to operate the Forest Gulf of Mexico operations and Mariner’s business after the closing of the merger transaction consistent with past practice.
      None of Forest, Forest Energy Resources or Mariner may rely on the failure of any condition set forth in the merger agreement to be satisfied if such failure was caused by such party’s failure to act in good faith or to use its commercially reasonable efforts to consummate the merger and the other transactions contemplated by the merger agreement and the other transaction agreements.
      A “material adverse effect” is, with respect to any person, any circumstance, change or effect that is or is reasonably likely to be materially adverse to (i) the business, operations, assets, liabilities, results of operations or condition (financial or otherwise) of such person and its subsidiaries, taken as a whole (which may include damage attributable, both directly and indirectly, to Hurricane Katrina), except for such effects on or changes in general economic or capital market conditions and effects and changes that generally affect the U.S. domestic oil and gas exploration and production business, or (ii) the ability of such person to perform its obligations under the merger agreement or under the other transaction agreements, in each case other than any such circumstance, change or effect that relates to or results primarily from (x) the announcement, pendency or consummation of the transactions contemplated by the merger agreement or the other transaction agreements or (y) acts of war, insurrection, sabotage or terrorism. Damages attributable to Hurricane Katrina disclosed in the damage reports of Mariner and Forest will not be taken into account in determining whether a material adverse effect exists or has occurred.
      On November 14, 2005, the waiting period under the Hart-Scott-Rodino Act expired. On October 19, 2005, Forest received the consent required pursuant to its credit facility. As of January 20, 2006, no other conditions to closing have been satisfied. On December 16, 2005, Mariner received clearance from the New York Stock Exchange to file a listing application for its common stock, and on December 22, 2005 Mariner filed a listing application and other ancillary documents with the New York Stock Exchange. Mariner is currently negotiating the definitive documents for its new credit facility, which documents also will grant the consent required pursuant to its existing facility. Mariner and Forest are actively working to obtain necessary consents, approvals and authorizations from governmental authorities, including the Minerals Management Service.

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      Based on its current valuation of the Forest Gulf of Mexico operations and the current amount of distributions permitted by the covenants contained in the indentures governing Forest’s outstanding bonds, Forest believes that no consents of its bondholders will be required for the spin-off and the merger. If Forest’s belief that bondholder consents are not necessary remains unchanged as the merger closing approaches, it intends to waive conditions in the merger agreement and distribution agreement related to such consents.
      Neither Mariner nor Forest currently believes that any other condition to closing is likely to be waived. Mariner and Forest will recirculate revised proxy materials and resolicit proxies if there are any material changes in the terms of the merger, including those that result from waivers of conditions to closing.
Termination of the Merger Agreement
Right to Terminate
      The merger agreement may be terminated and the transactions contemplated by the merger agreement may be abandoned at any time prior to the effective time of the merger as follows:
  •  by mutual written consent of the parties;
 
  •  by any party:
  •  if the effective time of the merger has not occurred on or before March 31, 2006, except that a party may not terminate the merger agreement if the cause of the merger not being completed on or before such date resulted from the party’s failure to fulfill its obligations;
 
  •  if a court or other governmental entity issues a final and non-appealable injunction or otherwise prohibits the merger and the terminating party has used all commercially reasonable efforts to remove such injunction or prohibition; or
 
  •  if the adoption of the merger agreement and the approval of the transactions contemplated by the merger agreement by the Mariner stockholders is not obtained, except that Mariner may not terminate the merger agreement if the cause of the approval not being obtained resulted from the action or failure to act of Mariner and such action or failure to act constitutes a breach by Mariner of the provisions of the merger agreement relating to non-solicitation in any respect or a material breach by Mariner of any of the other covenants or agreements contained in the merger agreement;
  •  by Mariner:
  •  if either Forest or Forest Energy Resources fails to perform in any material respect any of its respective covenants or agreements contained in the merger agreement required to be performed at or prior to the effective time of the merger, or the respective representations and warranties of Forest or Forest Energy Resources in the merger agreement are or will become untrue in any respect at any time prior to the effective time of the merger and the failure to be true and correct, individually or in the aggregate, would have a material adverse effect on the Forest Gulf of Mexico operations, Forest Energy Resources or Mariner and has not been cured within 30 days after written notice was given to Forest and Forest Energy Resources of such failure or untruth; or
 
  •  if the board of directors of Mariner changes its recommendation that Mariner stockholders approve the merger in order to accept a superior offer, provided that:
  •  Mariner is not in breach of the provisions of the merger agreement relating to non-solicitation or in material breach of any other covenant or agreement contained in the merger agreement, and has not breached any of its representations and warranties contained in the merger agreement in any material respect;
 
  •  Forest has not made an offer that is at least favorable as the superior offer within three business days after Forest receives written notice of the superior offer;

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  •  the Mariner board of directors authorizes Mariner to enter into a binding written agreement with respect to the superior offer and notifies Forest and Forest Energy Resources of its intent to do so and provides a copy of the most current version of the agreement; and
 
  •  Mariner pays the termination fee and expense reimbursement;
  •  by Forest:
  •  if Mariner fails to perform in any material respect any of its covenants or agreements contained in the merger agreement required to be performed at or prior to the effective time of the merger, or the representations and warranties of Mariner in the merger agreement are or will become untrue in any respect at any time prior to the effective time of the merger and the failure to be true and correct, individually or in the aggregate, would have a material adverse effect on Mariner, the Forest Gulf of Mexico operations or Forest Energy Resources and has not been cured within 30 days after written notice was given to Mariner of such failure or untruth; or
 
  •  if the board of directors of Mariner (i) fails to reaffirm publicly its approval of the merger, as soon as reasonably practicable, and in no event within three business days after Forest’s request, or resolves not to reaffirm the merger, (ii) fails to include in this proxy statement/ prospectus-information statement its recommendation, without modification or qualification, that Mariner stockholders approve the merger, (iii) withholds, withdraws, amends or modifies its recommendation that Mariner stockholders approve the merger, (iv) changes its recommendation that Mariner stockholders approve the merger or (v) within ten business days after commencement, fails to recommend against acceptance of any tender or exchange offer for shares of Mariner common stock or takes no position with respect to any tender or exchange offer.
Termination Fees and Expenses
      If either Forest or Mariner terminates the merger agreement as a result of:
  •  the other party’s failure to perform in any material respect any of its covenants or agreements contained in the merger agreement; or
 
  •  the representations and warranties of such other party in the merger agreement being or becoming untrue; and
 
  •  the failure to be true and correct, individually or in the aggregate, would have a material adverse effect on Forest Energy Resources, the Mariner business or Mariner and has not been cured within 30 days after written notice was given to such party of such failure or untruth,
the terminating party will be entitled to reimbursement of all of its documented out-of-pocket expenses and fees incurred by such terminating party up to $5 million in the aggregate.
      In addition to the reimbursement of out-of-pocket expenses and fees, Mariner has agreed to pay Forest a termination fee of $25 million, together with the expense reimbursement described above, if:
  •  (i) either Forest or Mariner terminates the merger agreement as a result of the failure to obtain the requisite stockholder approval from Mariner stockholders, (ii) either Forest or Mariner terminates the merger agreement as a result of the effective time of the merger not occurring on or before March 31, 2006 or (iii) Forest terminates the merger agreement as a result of the failure of Mariner to perform in any material respect any of its covenants and agreements contained in the merger agreement, plus an acquisition proposal had been publicly announced prior to the termination and, within twelve months of the date of termination, Mariner either completes an acquisition proposal with a third party or enters into an agreement or recommends approval of any acquisition proposal that is subsequently completed (whether or not within the twelve-month period);
 
  •  Forest terminates the merger agreement as a result of the board of directors of Mariner (i) having failed to reaffirm publicly its approval of the merger, as soon as reasonably practicable, and in no event later than three business days, after request by Forest, or having resolved not to reaffirm the merger,

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  (ii) having failed to include in this proxy statement/ prospectus-information statement its recommendation, without modification or qualification, that Mariner stockholders approve the merger, (iii) having withheld, withdrawn, amended or modified its recommendation that Mariner stockholders approve the merger, (iv) having changed its recommendation that Mariner stockholders approve the merger or (v) within ten business days after commencement, having failed to recommend against acceptance of any tender or exchange offer for shares of Mariner common stock or takes no position with respect to any such tender or exchange offer; or
 
  •  Mariner terminates the merger agreement as a result of the board of directors of Mariner changing its recommendation that Mariner stockholders approve the merger in order to permit Mariner to accept a superior offer.
Amendments and Waiver
      Any provision of the merger agreement may, to the extent legally allowed, be amended or waived at any time prior to the effective time of the merger. However, if a provision of the merger agreement is amended or waived after the Mariner stockholders adopt the merger agreement, such amendment or waiver will be subject to any necessary stockholder approval. Forest, Forest Energy Resources, Mariner and MEI Sub must sign any amendments. Any waiver must be signed by the party against whom the waiver is to be effective. Mariner and Forest will recirculate revised proxy materials and resolicit proxies if there are any material changes in the terms of the merger, including those that result from amendments or waivers.

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THE DISTRIBUTION AGREEMENT
      The following is a summary of the material terms of the distribution agreement. This summary is qualified in its entirety by reference to the distribution agreement, a copy of which is attached as Annex C to this proxy statement/ prospectus-information statement and is incorporated by reference into this proxy statement/ prospectus-information statement. We urge you to read the distribution agreement in its entirety for a more complete description of the terms and conditions of the spin-off.
Summary of the Transactions
      In connection with the merger, Forest has contributed the Forest Gulf of Mexico operations to Forest Energy Resources pursuant to the terms and conditions of the distribution agreement summarized below. Prior to the merger, Forest will spin-off Forest Energy Resources by distributing all of the shares of Forest Energy Resources common stock to Forest shareholders on a pro rata basis.
Contribution of the Forest Gulf of Mexico Assets and Assumption of Liabilities
      Under the distribution agreement, Forest has taken or caused to be taken all actions necessary to cause the transfer to Forest Energy Resources of all of the ownership interest of Forest and its subsidiaries in:
  •  all real property interests, overriding royalty interests, reversionary interests, real or immovable property (including use and occupation rights, rights to pooled, communitized or unitized acreage, and platforms, pipelines and improvements), easements, inventory, hydrocarbons, equipment, personal or movable property, spare parts, contracts, books and records, proceeds, refunds, settlements, claims and current assets to the extent comprising a part of the Forest Gulf of Mexico operations;
 
  •  other assets of Forest and the subsidiaries of Forest to the extent specifically assigned by Forest or any subsidiaries pursuant to the distribution agreement; and
 
  •  all rights of Forest Energy Resources under the distribution agreement and the other agreements entered into in connection with the merger and the spin-off.
      Forest Energy Resources has assumed certain liabilities, including:
  •  all of the liabilities of the Forest Gulf of Mexico operations to the extent arising after June 30, 2005 and attributable to the conduct of the business after that date;
 
  •  legal obligations to plug, abandon, remove or retire platforms, pipelines, improvements, equipment, personal or movable property, fixtures and improvements comprising part of the Forest Gulf of Mexico assets, to the extent the obligation was previously disclosed to Mariner, arose after June 30, 2005 or was not known to Forest after due inquiry on the date of the distribution agreement;
 
  •  environmental liabilities arising from the conduct of the Forest Gulf of Mexico operations (subject to a monetary cap with respect to specified conditions), unless such liability was required to have been disclosed to Mariner prior to the execution of the merger agreement and was not so disclosed; and
 
  •  liabilities under specified derivatives contracts with an estimated fair value of $50.8 million as of June 30, 2005.
      In connection with the spin-off, Forest Energy Resources will also transfer a cash amount to Forest, which Forest will use to reduce its indebtedness. The cash amount will equal $200 million, plus or minus the following amounts:
  •  minus revenue derived from the Forest Gulf of Mexico operations from June 30, 2005 through the date of the spin-off (which period is referred to as the “measurement period”);
 
  •  minus cash consideration from any sale of property, plant and equipment related to the Forest Gulf of Mexico assets during the measurement period;
 
  •  plus certain net assets and liabilities specified on the date of the distribution agreement;

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  •  plus or minus the net gas balancing assets or liabilities of the Forest Gulf of Mexico operations as of June 30, 2005;
 
  •  plus or minus the net settlement amounts in respect of settlements of gas imbalances effected during the measurement period;
 
  •  plus capital and operating expenditures attributable to the Forest Gulf of Mexico operations during the measurement period;
 
  •  plus an amount equal to hypothetical income taxes attributable to the Forest Gulf of Mexico operations during the measurement period;
 
  •  plus interest expense attributable to the Forest Gulf of Mexico operations during the measurement period;
 
  •  plus $1.6 million per month during the measurement period in respect of general and administrative expenses;
 
  •  plus an amount, not to exceed $7 million, in respect of the fees and expenses of Forest and Forest Energy Resources in connection with the merger and related transactions;
 
  •  plus or minus an amount equal to the change in working capital accounts (other than cash) of the Forest Gulf of Mexico operations during the measurement period;
 
  •  plus or minus an amount to adjust for the above items to the extent they are settled through intercompany accounts prior to the closing.
      To the extent that any transfers are not completed before the spin-off, the parties will use their commercially reasonable efforts to effect any remaining transfers as promptly as practicable following the spin-off.
Spin-off
      Before the merger, Forest will distribute 50,637,010 shares, which will represent all of the then-outstanding shares of Forest Energy Resources common stock, to Forest’s shareholders. As a result of the spin-off, Forest Energy Resources will be a separate company that will own and operate the Forest Gulf of Mexico operations.
Representations and Warranties
      In the distribution agreement Forest represents to Mariner and Forest Energy Resources that, at the time of the spin-off and on June 30, 2005, the Forest Gulf of Mexico assets to be contributed to Forest Energy Resources in connection with the spin-off constitute all of Forest’s business and assets in the offshore Gulf of Mexico, and that all such assets are owned free and clear of all liens other than liens permitted under the agreement.
Indemnification
      Forest Energy Resources has agreed to indemnify, defend and hold Forest and each of its affiliates and their representatives harmless from and against all losses or liabilities arising out of or related to any liabilities assumed by Forest Energy Resources or from Forest Energy Resources’ failure to perform its obligations under the distribution agreement.
      Forest has agreed to indemnify, defend and hold Forest Energy Resources and each of its affiliates and their representatives harmless from and against all losses or liabilities arising out of or related to the failure of Forest or any of its subsidiaries:
  •  to pay, among other things, any losses or liabilities of Forest or its subsidiaries (including liabilities under the agreements entered into in connection with the merger and the spin-off);

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  •  to transfer to Forest Energy Resources or any of its subsidiaries all of the assets to be transferred to Forest Energy Resources; and
 
  •  to perform any of its obligations under the distribution agreement.
      Forest has agreed that it will use commercially reasonable efforts to assist Forest Energy Resources in asserting claims relating to the assets transferred to Forest Energy Resources or liabilities assumed by Forest Energy Resources under Forest’s insurance policies, to the extent such claims are based on events prior to the spin-off date or were commenced prior to the spin-off date.
Conditions to the Spin-off
      The obligations of Forest under the distribution agreement are subject to the fulfillment (or waiver by Forest) at or prior to the spin-off of a number of conditions, including the following:
  •  obtaining all material consents, approvals and authorizations of any governmental authority that are legally required for the spin-off and other transactions contemplated by the other agreements entered into in connection with the spin-off and the merger;
 
  •  the absence of an injunction or other prohibition issued by a court or other governmental entity that restrains, enjoins or prohibits or otherwise imposes material restrictions on the spin-off or the merger;
 
  •  the SEC having declared effective the registration statement of Mariner relating to the shares of Mariner common stock to be issued into which shares of Forest Energy Resources common stock will be converted pursuant to the merger, of which this proxy statement/ prospectus-information statement forms a part;
 
  •  the approval for listing on the New York Stock Exchange or Nasdaq of the Mariner common stock and the other shares required to be reserved for issuance in connection with the merger, subject to official notice of issuance;
 
  •  the adoption of the merger agreement by the Mariner stockholders at the meeting;
 
  •  Forest having received an opinion from its tax counsel to the effect that the contribution will constitute a reorganization under Section 368(a) of the Internal Revenue Code and the distribution will qualify under Section 355 of the Internal Revenue Code;
 
  •  Forest having received the consents required from its bondholders;
 
  •  the performance by Mariner in all material respects of its covenants and agreements contained in the merger agreement required to be performed at or prior to the date of the spin-off; and
 
  •  the truthfulness and correctness of the representations and warranties of Mariner in the merger agreement in all respects, except as permitted by the merger agreement or where the failure to be true and correct would not have a material adverse effect.
      Based on its current valuation of the Forest Gulf of Mexico operations and the current amount of distributions permitted by the covenants contained in the indentures governing Forest’s outstanding bonds, Forest believes that no consents of bondholders will be required for the spin-off and the merger. If Forest’s belief that bondholder consents are not necessary remains unchanged as the merger closing approaches, it intends to waive conditions in the merger agreement and distribution agreement related to such consents.

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ANCILLARY AGREEMENTS
      Forest and Forest Energy Resources have entered into agreements that will govern the ongoing relationships among Mariner, Forest Energy Resources and Forest and provide for an orderly transition after the spin-off and the merger. These agreements are summarized below.
Tax Sharing Agreement
      In order to allocate the responsibilities for payment of taxes and certain other tax matters, Forest, Mariner and Forest Energy Resources have entered into a tax sharing agreement. The following is a summary of the material terms of the tax sharing agreement. This summary is qualified in its entirety by reference to the tax sharing agreement, a copy of which is attached as Annex D to this proxy statement/ prospectus-information statement and which is filed as an exhibit to this registration statement of which this proxy statement/ prospectus-information statement is a part. We urge you to read the tax sharing agreement in its entirety for a more complete discussion of the tax matters.
Preparation and Filing of Tax Returns
      Forest will prepare and file all tax returns (including any tax returns reporting the results of Forest Energy Resources) for periods ending on or prior to the date of the distribution of Forest Energy Resources to the shareholders of Forest, as well as any consolidated or combined returns of Forest that include Forest Energy Resources or the Forest Gulf of Mexico operations. Mariner and Forest Energy Resources will be responsible for filing all tax returns with respect to Forest Energy Resources’ operations for all other periods.
Liability for Taxes
      Each party has agreed to indemnify the other in respect of all taxes for which it is responsible under the tax sharing agreement. Forest is responsible for all taxes for all periods arising from the Forest Gulf of Mexico operations prior to the time that the common stock of Forest Energy Resources is distributed to the Forest shareholders and agrees to hold Forest Energy Resources and Mariner harmless in respect of those taxes. Forest is entitled to receive all refunds of previously paid taxes arising from the Forest Gulf of Mexico operations during such time. Forest remains responsible for all taxes related to the businesses of Forest other than the Forest Gulf of Mexico operations and has agreed to indemnify Forest Energy Resources and Mariner in respect of any liability for any of such taxes.
      Forest Energy Resources and Mariner are responsible for all taxes for all periods arising from the Forest Gulf of Mexico operations subsequent to the time that Forest Energy Resources is distributed to the Forest shareholders and agree to hold Forest harmless in respect of those taxes.
Transaction Taxes
      If the spin-off fails to qualify as a tax-free transaction because of an action by Mariner (or one of its affiliates) that was not contemplated or permitted by the transaction agreements, Mariner and Forest Energy Resources agree to indemnify and hold Forest harmless for any resulting tax liability (or for the utilization of any tax attributes used to absorb any resulting taxable gain). In all other circumstances, Forest is liable for and agrees to indemnify and hold Forest Energy Resources and Mariner harmless for any tax liability if the spin-off fails to qualify as a tax-free transaction.
Continuing Covenants
      Forest, Mariner and Forest Energy Resources each agrees not to take (and each agrees to cause its respective affiliates to refrain from taking) any position on a tax return that will be inconsistent with the treatment of the spin-off and the merger as tax-free transactions under the applicable provisions of the Internal Revenue Code. In addition, Forest, Forest Energy Resources and Mariner each agrees that, during the two-year period following the spin-off, it will not take or fail to take (or permit any affiliate to take or fail to take) any action which would cause the spin-off to fail to qualify as a tax-free spin-off.

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      Moreover, Forest and Mariner each agrees that, during the two-year period following the spin-off, prior to entering into any agreement, or failing to take any action, that would result in a more than immaterial possibility that the spin-off would be treated as part of a plan pursuant to which one or more persons acquire directly or indirectly Forest Energy Resources stock or Forest stock representing a “50-percent or greater interest” within the meaning of Section 355(e)(4) of the Internal Revenue Code, it will obtain:
  •  a ruling from the Internal Revenue Service to the effect that the action contemplated would not affect the tax-free status of the spin-off,
 
  •  an opinion from a nationally recognized law firm both reasonably acceptable to Forest and Mariner to the effect that the action contemplated would not affect the tax-free status of the spin-off, or
 
  •  the agreement of both Forest and Mariner that such contemplated action would not affect the tax-free status of the spin-off.
      Actions which may be restricted by these requirements include an issuance of shares of Mariner (or any instrument that is convertible or exchangeable into Mariner shares) in an acquisition or public or private offering. Under U.S. Treasury Regulations, certain safe harbors exist under which certain issuances of shares of Mariner will not be deemed part of the same plan as the spin-off and thus not restricted. Among other safe harbors, safe harbors exist for transactions if specific timing conditions are met as to when agreements or substantial negotiations relating to such transactions occur and a safe harbor exists for certain issuances pursuant to compensatory employment-related arrangements.
Miscellaneous
      The tax sharing agreement also provides that Forest and Forest Energy Resources will cooperate with each other and exchange necessary information in connection with tax audits and examinations and the tax sharing agreement contains provisions entitling the appropriate party to control particular tax audits and controversies.
Employee Benefits Agreement
      Forest and Forest Energy Resources have entered into an employee benefits agreement that provides for the transfer of the employees of the Forest Gulf of Mexico operations to Forest Energy Resources, effective upon completion of the spin-off. The employee benefits agreement is filed as an exhibit to this registration statement of which this proxy statement/ prospectus-information statement is a part.
      The employee benefits agreement also allocates the assets and liabilities under certain existing Forest employee benefit plans and other employment-related liabilities to Forest and Forest Energy Resources, respectively. In general, at the time of the spin-off, Forest Energy Resources will assume the liabilities relating to the former employees of the Forest Gulf of Mexico operations arising after the date of the spin-off and other specified liabilities, and Forest will retain the pre-spin-off liabilities relating to the Forest Gulf of Mexico operations employees and all liabilities relating to its continuing employees. The employee benefits agreement also:
  •  sets forth the rights of the Forest Gulf of Mexico operations employees under certain of the Forest plans in which they previously participated, including with respect to the portion of their stock options that are exercisable at the effective time of the merger; and

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  •  provides for the assumption by Forest Energy Resources of certain liabilities of Forest relating to employees who are transferred to Forest Energy Resources, including the assumption of liabilities under Forest’s educational assistance plan and accrued vacation liabilities.
      Pursuant to the employee benefits agreement, each of Forest Energy Resources and Forest has agreed that, without the prior consent of the other, it will not solicit employees of the other party for two years following the spin-off date.
Transition Services Agreement
      Forest and Forest Energy Resources have entered into a transition services agreement under which Forest will provide services to Forest Energy Resources on an as-needed basis for a limited period of time after the merger.

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FINANCING ARRANGEMENTS RELATING TO THE SPIN-OFF AND THE MERGER
      At the closing of the merger, Mariner and Mariner Energy Resources expect to enter into a new $500 million senior secured revolving credit facility, and Mariner also will obtain a $40 million senior secured letter of credit facility. The revolving credit facility will mature on the fourth anniversary of the closing, and the letter of credit facility will mature on the third anniversary of the closing. We may use the borrowings under the revolving credit facility to retire existing debt, to facilitate the merger and for general corporate purposes. The letter of credit facility will be used to obtain a letter of credit in favor of Forest to secure our performance of our obligations under an existing drill-to-earn program.
      The outstanding principal balance of loans under the revolving credit facility may not exceed the borrowing base, which initially will be set at $400 million. The borrowing base will be redetermined semi-annually by the lenders, subject to reduction by Mariner. In addition, the agent and Mariner may request one additional redetermination during the interval between each scheduled redetermination, and the agent may require redeterminations in connection with certain material dispositions. If the borrowing base falls below the outstanding balance under the revolving credit facility, we will be required to prepay the deficit, pledge additional unencumbered collateral or some combination of such prepayment and pledge.
      Interest under the revolving credit facility will be determined by reference to the following grid:
                         
    Applicable Margin    
         
Usage as a %   LIBOR   Reference   Unused
Borrowing Base   Loans   Rate Loans   Fee
             
Less than 50%
    1.25%       0.00%       0.375%  
51% to 75%
    1.50%       0.00%       0.375%  
76% to 90%
    1.75%       0.25%       0.250%  
Greater than 90%
    2.00%       0.50%       0.250%  
Interest will be payable quarterly for Union Bank of California Reference Rate loans and at the applicable maturity date for LIBOR (London interbank offered rate) loans. The fee for letters of credit issued under the revolving credit facility will be the LIBOR margin indicated in the grid, per annum. The fee for letters of credit under the letter of credit facility will be 1.50% due quarterly in advance.
      The obligations under the credit facilities will be secured by first priority liens on substantially all of our real and personal property, including our existing and after-acquired oil and gas properties and related real property interests. Additionally, the obligations under the credit facilities will be guaranteed by us and each of our subsidiaries.
      The credit facilities will contain various covenants that limit our ability to do the following, among other things:
  •  incur certain indebtedness;
 
  •  grant certain liens;
 
  •  merge or consolidate with another entity;
 
  •  sell unmortgaged property or other assets which generate proceeds in excess of 10% of the borrowing base;
 
  •  sell assets comprising collateral pledged to the lenders;
 
  •  make certain loans and investments;
 
  •  enter new lines of business; and
 
  •  permit certain trade payables to exceed 90 days.

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      The credit facilities also will contain covenants, which, among other things, require us to maintain specified ratios or conditions as follows:
  •  consolidated current assets plus the unused borrowing base to consolidated current liabilities of not less than 1.0 to 1.0; and
 
  •  total debt to EBITDA of not more than 2.5 to 1.0.
      If an event of default exists under the credit facilities, the lenders will be able to accelerate the maturity of the credit facilities and exercise other rights and remedies. Events of default will include defaults in payment or performance under the credit facilities, misrepresentations, cross-defaults to other debt or material obligations, and insolvency, material adverse judgments, change of control (including certain changes in ownership and in the event Mr. Scott D. Josey ceases to be involved in Mariner’s management, the failure to timely replace him with someone with comparable qualifications) and any material adverse change.

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UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
      The following unaudited pro forma combined financial information and explanatory notes present how the combined financial statements of Mariner and the Forest Gulf of Mexico operations may have appeared had the businesses actually been combined as of September 30, 2005 (with respect to the balance sheet information using currently available fair value information) or as of January 1, 2004 (with respect to statements of operations information). The unaudited pro forma combined financial information shows the impact of the merger on the historical financial position and results of operations under the purchase method of accounting with Mariner treated as the acquirer. Under this method of accounting, the assets and liabilities of the Forest Gulf of Mexico operations are recorded by Mariner at their estimated fair values as of the date the merger is completed.
      The unaudited pro forma combined balance sheet as of September 30, 2005 assumes the merger was completed on that date. The unaudited pro forma combined statements of operations gives effect to the merger as if it had been completed on January 1, 2004. The merger agreement was executed on September 9, 2005 and provides for Mariner to issue approximately 50.6 million shares of common stock as consideration to Forest Energy Resources common stockholders.
      The unaudited pro forma combined financial information has been derived from and should be read together with the historical consolidated financial statements of Mariner and the statements of revenues and direct operating expenses of the Forest Gulf of Mexico operations, which are included herein. The statements of revenues and direct operating expenses of the Forest Gulf of Mexico operations do not include all of the costs of doing business.
      The Unaudited Pro Forma Combined Condensed Financial Information is for illustrative purposes only. The financial results may have been different had the Forest Gulf of Mexico operations been an independent company and had the companies always been combined. You should not rely on the Unaudited Pro Forma Combined Condensed Financial Information as being indicative of the historical results that would have been achieved had the merger occurred in the past or the future financial results that Mariner will achieve after the merger.
      In addition, the purchase price allocation is preliminary and will be finalized following the closing of the merger. The final purchase price allocation will be determined after closing based on the actual fair value of current assets, current liabilities, indebtedness, long-term liabilities, proven and unproven oil and gas properties, identifiable intangible assets and the final number of shares of Mariner common stock issued in the merger and for unvested stock options that are outstanding at closing. We are continuing to evaluate all of these items; accordingly, the final purchase price may differ in material respects from that presented in the Unaudited Pro Forma Combined Condensed Balance Sheet.
      The combination of the Forest Gulf of Mexico operations with Mariner’s is expected to cause the average reserve life of Mariner’s oil and gas properties to decrease from current levels and to result in a higher rate of depreciation, depletion, and amortization for the combined operations. For example, the estimated proved reserves of the Forest Gulf of Mexico properties as of June 30, 2005 were 328 Bcfe and production for the six months ended June 30, 2005 (prior to hurricane related disruptions) was approximately 40.8 Bcfe, a reserve life on an annualized basis of 4.0. This ratio is indicative of the relatively higher productive rates of offshore oil and gas properties when compared to most onshore fields. While the higher productive rates generally result in a faster return on investment than onshore fields, they also result in a faster depletion of the underlying proved reserves and a resulting higher rate of depreciation, depletion, and amortization. As of June 30, 2005, Mariner’s proved reserves totaled 328 Bcfe and production for the six months ended June 30, 2005 (prior to hurricane disruptions) was approximately 16.5 Bcfe, a reserve life on an annualized basis of 9.9. For the combined operations, as of June 30, 2005, proved reserves would have totaled approximately 599 Bcfe and production for the six months ended June 30, 2005 would have totaled 57.3 Bcfe, a reserve life on an annualized basis of 5.7. Mariner will also write-up the Forest Gulf of Mexico operations to estimated fair value as of the merger date, which is also expected to cause the underlying DD&A rate to increase for the combined operations.

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      In connection with the merger, Mariner and Mariner Energy Resources expect to enter into a $500 million senior secured revolving credit facility, and Mariner also expects to obtain a $40 million senior secured letter of credit facility. The initial borrowing base of the revolving credit facility will be $400 million. The revolving credit facility will mature on the fourth anniversary of the closing and may be used for general corporate purposes. The letter of credit facility will mature on the third anniversary of the closing.
      In connection with the spin-off and the payment of the cash amount by Forest Energy Resources to Forest pursuant to the distribution agreement, Forest Energy Resources intends to enter into a new senior term loan facility with Union Bank of California, or UBOC, as lender, in an amount equal to the lesser of the cash amount, plus the amount of the arrangement and upfront fees and expenses associated with the facility, and $200 million, plus the amount of the arrangement and upfront fees and expenses associated with the facility. At Forest Energy Resources’ election, interest will be determined by reference to (1) the UBOC Reference Rate or (2) the London interbank offered rate, or LIBOR, plus 1.50% per annum. In the event that any portion of the facility is outstanding after 30 days, the interest rate will increase, at Forest Energy Resources’ election, to (1) the UBOC Reference Rate, plus 5% per annum or (2) LIBOR plus 6.50% per annum. Interest will be payable at the applicable maturity date for LIBOR-loans and quarterly for UBOC Reference Rate loans.
      The Forest Energy Resources facility is expected to be repaid with borrowings under Mariner’s and Mariner Energy Resources’ $500 million revolving credit facility. The facility will mature 90 days from closing of the spin-off and merger and the principal will be due at maturity. Prepayments will be permitted at any time without premium or penalty (except for breakage and related costs associated with prepayments of Eurodollar loans), subject to minimum amount requirements. The facility will be unsecured with a negative pledge on Forest Energy Resources’ existing oil and gas properties and all other assets of Forest Energy Resources.
      The facility will contain various covenants that limit Forest Energy Resources’ ability to do the following, among other things, except as contemplated by the distribution agreement and the merger agreement:
  •  incur indebtedness;
 
  •  grant certain liens;
 
  •  merge or consolidate with another entity;
 
  •  sell assets except in the ordinary course of business;
 
  •  make certain loans and investments; and
 
  •  permit trade payables to exceed 90 days.
      If an event of default exists under the facility, the lender will be able to accelerate the maturity of the facility and exercise other rights and remedies. Events of default include defaults in payment or performance under the facility, misrepresentations, cross-defaults to other debt or material obligations of Forest Energy Resources, and insolvency, material judgments, certain changes of ownership, and any material adverse change affecting Forest Energy Resources.

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MARINER ENERGY, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET
As of September 30, 2005
                             
            Mariner
    Mariner   Merger   Pro Forma
    Historical   Adjustments(1)   Combined
             
    (In thousands)
ASSETS
Current Assets:
                       
 
Cash and cash equivalents
  $ 4,564     $     $ 4,564  
 
Receivables
    50,259             50,259  
 
Deferred tax asset
    30,480             30,480  
 
Prepaid expenses and other
    18,732       2,874 (2)     21,606  
                   
   
Total current assets
    104,035       2,874       106,909  
Property and Equipment, net
    393,258       1,463,846 (3)     1,857,104  
Goodwill
          142,000 (3)     142,000  
Other Assets, net of amortization
    4,916       7,597 (2)     12,513  
                   
   
TOTAL ASSETS
  $ 502,209     $ 1,616,317     $ 2,118,526  
                   
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
                       
 
Accounts payable
  $ 14,573     $     $ 14,573  
 
Accrued liabilities
    88,993       32,491 (2)     121,484  
 
Accrued interest
    141             141  
 
Derivative liability
    76,902       108,031 (2)     184,933  
                   
   
Total current liabilities
    180,609       140,522       321,131  
Long-Term Liabilities:
                       
 
Abandonment liability
    26,314       116,203 (2)     142,517  
 
Deferred income tax
    6,468       168,852 (4)     175,320  
 
Derivative liability
    28,221       17,203 (2)     45,424  
 
Bank debt
    75,000       200,000 (5)     275,000  
 
Note payable
    4,000             4,000  
 
New debt
                 
 
Other long-term liabilities
    3,000             3,000  
                   
   
Total long-term liabilities
    143,003       502,258       645,261  
Stockholders’ Equity:
                       
 
Common stock
    4       5 (6)     9  
 
Additional paid-in capital
    171,667       973,532 (3)     1,145,199  
 
Unearned compensation
    (14,548 )           (14,548 )
 
Accumulated other comprehensive (loss)
    (67,708 )           (67,708 )
 
Accumulated retained earnings
    89,182             89,182  
                   
   
Total stockholders’ equity
    178,597       973,537       1,152,134  
                   
   
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
  $ 502,209     $ 1,616,317     $ 2,118,526  
                   

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MARINER ENERGY, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2005
                                     
        Forest Energy       Mariner
    Mariner   Resources, Inc.   Merger   Pro Forma
    Historical   Historical(7)   Adjustments(1)   Combined
                 
    (In thousands)
Revenues:
                               
 
Oil & gas sales
  $ 148,492     $ 326,722     $     $ 475,214  
 
Other revenues
    2,753                   2,753  
                         
   
Total revenues
    151,245       326,722             477,967  
Costs and Expenses:
                               
 
Lease operating expenses
    20,170       59,379             79,549  
 
Transportation expenses
    1,697       2,484             4,181  
 
General and administrative expenses
    26,726                   26,726  
 
Depreciation, depletion and amortization
    43,457             201,255 (8)     244,712  
 
Impairment of production equipment held for use
    498                   498  
                         
   
Total costs and expenses
    92,548       61,863       201,255       355,666  
                         
OPERATING INCOME
    58,697       264,859       (201,255 )     122,301  
Interest:
                               
 
Income
    696                     696  
 
Expense, net of amounts capitalized
    (5,416 )             (8,010 )(9)     (13,426 )
                         
Income before taxes
    53,977               (209,265 )     109,571  
Provision for income taxes
    (18,414 )             (19,936 )(10)     (38,350 )
                         
NET INCOME
    35,563               (229,201 )     71,221  
                         
Earnings per share:
                               
Net Income per share — basic
    1.10                       0.86  
                         
Net Income per share — diluted
    1.07                       0.85  
                         
Weighted average shares outstanding — basic
    32,438,240               50,637,010       83,075,250  
Weighted average shares outstanding — diluted
    33,312,831               50,637,010       83,949,841  

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MARINER ENERGY, INC.
UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2004
                                     
        Forest Energy       Mariner
    Mariner   Resources, Inc.   Merger   Pro Forma
    Historical   Historical(7)   Adjustments(1)   Combined
                 
    (In thousands)
Revenues:
                               
 
Oil & gas sales
  $ 214,187     $ 453,139     $     $ 667,326  
 
Other revenues
                       
                         
   
Total revenues
    214,187       453,139             667,326  
Costs and Expenses:
                               
 
Lease operating expenses
    25,484       81,627             107,111  
 
Transportation expenses
    3,029       2,175             5,204  
 
General and administrative expenses
    8,772                   8,772  
 
Depreciation, depletion and amortization
    64,911             303,261 (8)     368,172  
 
Impairment of production equipment held for use
    957                   957  
                         
   
Total costs and expenses
    103,153       83,802       303,261       490,216  
                         
OPERATING INCOME
    111,034       369,337       (303,261 )     177,110  
Interest:
                               
 
Income
    316                     316  
 
Expense, net of amounts capitalized
    (6,050 )             (7,840 )(9)     (13,890 )
                         
Income before taxes
    105,300               (311,101 )     163,536  
Provision for income taxes
    (36,855 )             (20,383 )(10)     (57,238 )
                         
NET INCOME
    68,445               (331,484 )     106,298  
                         
Earnings per share:
                               
Net Income per share — basic
    2.30                       1.32  
                         
Net Income per share — diluted
    2.30                       1.32  
                         
Weighted average shares outstanding — basic
    29,748,130               50,637,010       80,385,140  
Weighted average shares outstanding — diluted
    29,748,130               50,637,010       80,385,140  

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Notes to Unaudited Pro Forma Combined Condensed Financial Data
      The unaudited “Mariner Pro Forma Combined” financial data have been prepared to give effect to Mariner’s acquisition of the Forest Gulf of Mexico operations, which will be spun off to Forest shareholders. Information under the heading “Merger Adjustments” gives effect to the adjustments related to the acquisition of the Forest Gulf of Mexico operations. The unaudited pro forma combined condensed statements are not necessarily indicative of the results of Mariner’s future operations.
      The unaudited pro forma combined financial information has been derived from and should be read together with the historical consolidated financial statements of Mariner and the statements of revenues and direct operating expenses of the Forest Gulf of Mexico operations. The statements of revenues and direct operating expenses of the Forest Gulf of Mexico operations do not include all of the costs of doing business.
 
(1) Transaction costs consisting of accounting, consulting and legal fees are anticipated to be approximately $12 million. These costs are directly attributable to the transaction and have been excluded from the pro forma financial statements as they represent material nonrecurring charges.
 
(2) To record other current and long-term assets that we will receive in the spin-off and liabilities that we will assume as a result of the spin-off reflected at their estimated fair market values, including inventory of $2.1 million, abandonment escrows of $0.7 million, gas imbalances of $7.6 million, asset retirement obligations of $146.6 million and derivative liabilities of $125.2 million.
 
(3) To record the preliminary purchase price allocation to the fair value of assets acquired, including oil and gas properties and goodwill. These adjustments also adjust depreciation, depletion and amortization expense to give effect to the acquisition of the Forest Gulf of Mexico operations and their step-up in value using the unit of production method under the full cost method of accounting.
 
(4) To record the deferred tax position of the combined company, inclusive of the deferred tax gross-up in connection with the acquisition.
 
(5) To record $200.0 million of debt that Forest Energy Resources, Inc. will incur under the terms of the distribution agreement. The actual amount of debt to be incurred will be adjusted to reflect the net cash proceeds generated by the Forest Gulf of Mexico operations since June 30, 2005 pursuant to the terms of the distribution agreement. Mariner plans to refinance the debt, which will mature 90 days after the closing, with a revolving credit facility that matures on the fourth anniversary of the closing. Forest Energy Resources, Inc. will be primarily liable for all indebtedness incurred in connection with the spin-off or any refinancing thereof.
 
(6) To record issuance of 50,637,010 shares of common stock at par value of $.0001 per share.
 
(7) The Forest Gulf of Mexico operations historically have been operated as part of Forest’s total oil and gas operations. No historical GAAP-basis financial statements exist for the Forest Gulf of Mexico operations on a stand-alone basis; however, statements of revenues and direct operating expenses are presented for the year ended December 31, 2004 (audited) and for the nine months ended September 30, 2005 (unaudited).
 
(8) To adjust depreciation, depletion and amortization expense to give effect to the acquisition of the Forest Gulf of Mexico operations and their step-up in value using the unit of production method under the full cost method of accounting.
 
(9) To adjust interest expense to give effect to the financing activities in connection with the organization of Forest Energy Resources, Inc. assuming an interest rate of 5.34% for the nine months ended September 30, 2005 and 3.92% for the year ended December 31, 2004 based on the terms of the senior term loan facility to be obtained by Forest Energy Resources. The interest rates used reflect 30-day LIBOR plus 1.50%, or 5.34% as of September 30, 2005 and 3.92% as of December 31, 2004. A change in interest rates of 1/8 percent would result in a change in interest expense of approximately $0.1 million and $0.2 million for the nine months ended September 30, 2005, and the year ended December 31, 2004, respectively.
(10)  To record income tax expense on the combined company results of operations based on a statutory combined federal and state tax rate of 35%.

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Supplemental Pro Forma Combined Oil and Gas Reserve and Standardized Measure Information (Unaudited)
      The following unaudited supplemental pro forma oil and natural gas reserve tables present how the combined oil and gas reserve and standardized measure information of Mariner and the Forest Gulf of Mexico operations may have appeared had the businesses actually been combined as of December 31, 2004. The Supplemental Pro Forma Combined Oil and Gas Reserve and Standardized Measure Information is for illustrative purposes only. You should refer to footnote 10 in Mariner’s Notes to the Financial Statements beginning on page F-30 and footnote 3 in Forest’s Gulf of Mexico Operations Notes to Statements of Revenues and Direct Operating Expenses beginning on page F-37 for additional information presented in accordance with the requirements of Statement of Financial Accounting Standards No. 69, Disclosures About Oil and Gas Producing Activities.
ESTIMATED PRO FORMA COMBINED QUANTITIES OF PROVED RESERVES
                                                                         
        ?Forest Energy Resources, Inc.    
    Mariner Historical   Historical?   Mariner Pro Forma Combined
             
        Natural Gas       Natural Gas       Natural Gas
    Oil   Natural Gas   Equivalent   Liquids   Natural Gas   Equivalent   Liquids   Natural Gas   Equivalent
    (Mbbl)   (MMcf)   (Mmcfe)   (Mbbl)   (MMcf)   (Mmcfe)   (Mbbl)   (MMcf)   (Mmcfe)
                                     
December 31, 2003
    13,079       127,584       206,060       11,357       295,347       363,489       24,436       422,931       569,549  
                                                       
Revisions of previous estimates
    1,249       19,797       27,291       1,693       (2,860 )     7,298       2,942       16,937       34,589  
Extensions, discoveries and other additions
    2,2