Denver-based independent oil and gas company,
Forest Oil Corporation
) has come out with its 2014 budget as well as average net sales
volumes and cost guidance.
The board of Forest Oil has approved a total capital budget of
$290 million to $310 million, of which $260 million to $270
million (excluding capitalized interest, capitalized stock-based
compensation, and asset retirement obligations incurred) is
allotted for drilling and completion.
The major portion of the capital will be targeted toward
liquids-rich drilling prospects - with around 77% allocated to
the Eagle Ford and the balance 23% to the Ark-La-Tex.
Net sales volumes are estimated in the range of 120 MMcfe/d to
130 MMcfe/d for 2014, up around 11% from 113 MMcfe/d estimated
production volumes for 2013. Production growth will likely be
driven by a 90% to 100% boost in oil volumes to around 6,800
barrels a day. The liquids component in the total forecasted
production is anticipated to rise to around 42% from around 30%
expected in 2013.
In 2014, the company's yield from the Eagle Ford is forecasted to
double from 2013 levels to touch around 6,250 Boe/d. The growing
yield from the Eagle Ford will augment the liquids component in
the total production and correspondingly improve EBITDA. The
increase in total volumes will be partially offset by normal
declines in natural gas volumes
Subsequent to the sale of the Texas Panhandle, the cash costs are
expected to reduce significantly. General and administrative
expenses are expected within $28 million to $30 million, down
around 30% from 2013 estimated levels. As the majority of the net
proceeds received from the Texas Panhandle sale were used to
reduce outstanding debt, the interest expense in 2014 is expected
to be 50% lower than 2013. Further, the effective income tax rate
in 2014 is projected at 0% due to the valuation allowance placed
against its net deferred tax assets.
Forest Oil holds a Zacks Rank #3 (Hold). Some better-ranked
stocks in the oil and gas sector include
SM Energy Company
Abraxas Petroleum Corp.
Western Gas Partners LP
). All these stocks hold a Zacks Rank #1 (Strong Buy).
ABRAXAS PETE/NV (AXAS): Free Stock Analysis
FOREST OIL CORP (FST): Free Stock Analysis
SM ENERGY CO (SM): Free Stock Analysis Report
WESTERN GAS PTR (WES): Free Stock Analysis
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