Forest Oil Corporation
) second-quarter 2013 earnings of 6 cents per share (excluding
non-recurring items) beat the Zacks Consensus Estimate of a
penny. However, the quarterly figure remained unchanged from the
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Total revenue in the reported quarter decreased 13.9% to $116.8
million from the year-ago level of $135.7 million and missed the
Zacks Consensus Estimate of $125.0 million.
The lackluster performance was mainly due to lower net sales
volume and lower natural gas sales volumes as the company
postponed capital investment on its natural gas properties to
concentrate on higher-margin oil prospects. Lower natural gas
liquids (NGLs) and oil prices also contributed to the decline.
Net sales volume shrunk nearly 37.2% year over year to 210.7
million cubic feet equivalent per day (MMcfe/d) in the reported
quarter. It comprised 41% liquids compared with 32% in the
The company's oil net sales volume in the second quarter was 6.6
thousand barrels per day (MBbls/d) versus 8.3 MBbls/d in the
year-earlier quarter. Natural gas sales volume was 125.3 MMcf/d
versus 229.4 MMcf/d in the year-earlier quarter and comprised 59%
of the total quarterly volume.
The average equivalent price per Mcf (including the effect of
hedging) was $6.03, up 10.4% from the year-ago realization of
$5.46. Natural gas was sold at $3.47 per Mcf, up 8.4% from the
comparable prior-year quarter. However, NGLs were sold at $27.82
per barrel, down 7.5% from the year-ago quarter and average
realized oil price was $94.49 per barrel, down 3.8% from the
The second-quarter production expenses of $1.42 per Mcfe
increased 15.4% year over year. Unit general and administrative
expenses increased 45.7% year over year to 51 cents per Mcfe from
the year-ago level of 35 cents per Mcfe. Importantly,
depreciation and depletion expenses per unit decreased 4.6% to
$2.28 per Mcfe from $2.39 per Mcfe in the second quarter of 2012.
At quarter end, Forest had $421 million of cash and cash
equivalents with $1,630.3 million of long-term debt (including
Forest Oil holds a Zacks Rank #3 (Hold). However, there are other
stocks in the oil and gas sector -
Range Resources Corporation
Gulfmark Offshore, Inc.
) - which hold a Zacks Rank #1 (Strong Buy) and are
expected to perform better.