Symbol List Views
FlashQuotes InfoQuotes
Stock Details
Summary Quote Real-Time Quote After Hours Quote Pre-market Quote Historical Quote Option Chain
Basic Chart Interactive Chart
Company Headlines Press Releases Market Stream
Analyst Research Guru Analysis Stock Report Competitors Stock Consultant Stock Comparison
Call Transcripts Annual Report Income Statement Revenue/EPS SEC Filings Short Interest Dividend History
Ownership Summary Institutional Holdings Insiders
(SEC Form 4)
 Save Stocks

Forest Oil (FST)

Q4 2013 Earnings Call

February 26, 2014 9:00 am ET


Larry C. Busnardo - Vice President of Investor Relations

Patrick R. McDonald - Chief Executive Officer, President, Director and Member of Executive Committee

Victor A. Wind - Chief Financial Officer and Executive Vice President


Jason Gilbert - Goldman Sachs Group Inc., Research Division

Sean Sneeden

David Deckelbaum - KeyBanc Capital Markets Inc., Research Division

Paul Grigel - Macquarie Research



Good day, ladies and gentlemen, and welcome to the Q4 2013 Forest Oil Corporation Earnings Conference Call. [Operator Instructions] I'd like to advise all parties that this conference is being recorded for replay purposes.

And now I'd like to hand the call over to Larry Busnardo, Vice President, Investor Relations. Please proceed, sir.

Larry C. Busnardo

Good morning, and thank you for joining us today for Forest Oil's Fourth Quarter and Year-End 2013 Earnings Conference Call. Joining me for the call today is Patrick McDonald, Forest Chief Executive Officer; and Victor Wind, our Chief Financial Officer.

If you have not already done so, please go to our website at to obtain a copy of our earnings release. A replay of this call will be available through March 5, as described in our press release issued yesterday afternoon.

Before we begin, some of the presenters today will reference certain non-GAAP financial measures regularly used by Forest in measuring its financial performance. Reconciliations of such non-GAAP financial measures with the most comparable financial measure calculated in accordance with GAAP will be available on our website and can be viewed by clicking on the Investor Relations tab, then Non-GAAP.

Forest's comments today will include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are subject to a number of risks and uncertainties that may cause the actual results in future periods to differ materially from the forward-looking statements. These risks and uncertainties are described in Forest's earnings release and in Forest's public filings made with the Securities and Exchange Commission.

With that, I will turn the call over to Pat McDonald.

Patrick R. McDonald

Thanks, Larry, and thanks, everyone, for joining us this morning. I'm pleased to announce that we were able to accomplish a number of the strategic goals we set forth for 2013. Our objectives were to accelerate the development of our oil assets, principally the Eagle Ford; improve our operational focus by directing our efforts to the assets where we had the confidence and resources to develop them; and importantly, to reduce the debt level of the company. I'd like to thank everyone at Forest for their hard work and dedication toward the achievement of these objectives.

We announced in April of 2013 a joint development agreement for our Eagle Ford assets, which benefited us by providing the capital required to increase the drilling activity, as well as access to impressive technology, which will pay benefits now and in the future. We were able to significantly reduce the debt of the company through the sale of our Texas Panhandle and South Texas assets, which generated cash proceeds of approximately $1.3 billion. These transactions have laid the foundation for our future growth.

Oil and liquids volume increased over the year as net oil sales volumes grew by 55%. Net liquid sales volume grew 41% compared to 2012, pro forma for divestitures. Our oil reserves grew by 30%, and we believe this trend will continue in 2014. We made major progress in lowering our drilling and completion costs in the Eagle Ford as we implemented more efficient well drilling and completion designs and overall increasing operational efficiencies. We reduced well cost by 15% over 2012, and we see the potential for further significant and sustained improvement in cost and performance -- well performance in 2014.

Our Eagle Ford delineation plan, which we activated in 2013, focused on the holding of our acreage position, the gathering of geological, geophysical and reservoir data and the optimization of drilling and completion techniques as we advance toward the development stage of the program. During the delineation phase, not unexpectedly, drilling results vary depending on the area of the field in which our drilling took place.

The drilling activity that we conducted in 2013 allowed us to gather significant geological, geophysical information, prioritize the future development areas and determine the optimal well drilling completion and fracture stimulation design and techniques. We believe it is important and prudent to conduct early science work to provide us with a better understanding of the reservoir characteristics so that we could determine the most optimal and economic development program. The information we gathered in 2013 will allow us to move forward with confidence in 2014 as we begin the development phase of our Eagle Ford program.

In 2013, we drilled 44 gross, 22 net wells, which had average 30-day rates of 408 barrels of oil per day and include 17 gross, 8.5 net wells that were completed since our last operational update, which had 30-day average gross production rates of 304 barrels a day. Of those, 7 or 3.5 net were drilled as part of 2 separate well spacing and artificial lift pilot projects. And in addition to that, 3 net wells -- 3 gross, 1.5 net wells were drilled in areas where flow rates were affected by increased faulting.

We conducted 2 separate spacing tests to gain a better understanding of the producing reservoir so that we could determine the optimal spacing pattern for the field during the development phase. Based on the initial drilling and production data, we believe the average spacing of 500 feet to 1,000 feet between laterals will be the development configuration for the majority of the field as we go forward.

Read the rest of this transcript for free on