We have reiterated our Neutral recommendation on Forest Oil. The
company's effort to expand its liquid production in order to
maximize its margin is gaining traction. Forest Oil has a growing
upstream presence in the emerging basins of Texas, Canada and
Mexico. Eagle Ford's core acreage position in the play's Gonzales
and Wilson Counties has produced some of the most proven
inexhaustible wells to date. Going forward, we believe that
attractive economics in the new shallow oil zones in the Texas
Panhandle, including the Missourian Wash and the Cleveland
formations, will help it gain momentum. However, the company's
highly leveraged balance sheet and higher spending level remain
concerns. Moreover, Forest Oil is highly exposed to volatile
natural gas fundamentals, which might impact the company's
Denver-based Forest Oil Corporation (FST) is an independent oil
and gas company engaged in the acquisition, exploration, production
and development of oil and gas properties in North America. The
company operates five distinct geographic business units - Canada,
Eastern, Southern, Western and International. Its principal
reserves and producing properties are located in Arkansas,
Louisiana, New Mexico, Oklahoma, Texas, Utah, Wyoming and in
Forest Oil has been in a restructuring mode in the recent past,
being actively engaged in asset acquisition as well as divestiture.
In this respect, the latest is the sale of its Permian Basin
properties in West Texas and New Mexico. In Sep 2008, Forest
acquired Buffalo Wallow and East Texas/North Louisiana producing
assets, which boosted its proved reserves by 350 billion cubic feet
equivalent (Bcfe). In 2007, the company acquired The Houston
Exploration Company, which added 44% to its proved reserves
As of year-end 2013, Forest Oil's proved reserves stood at 625
billion cubic feet equivalent/Bcfe, of which approximately 66% was
oil and natural gas liquids and 34% natural gas. Of the total
reserve, 66% was in the proved developed category.
Forest Oil Corporation (FST): Read the Full
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
FOREST OIL CORP (FST): Free Stock Analysis
To read this article on Zacks.com click here.