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Forest Oil Earnings Fall as Volume Shrinks - Analyst Blog

Posted: 11/5/2013 10:05:00 AM
Referenced Stocks: FST;MTDR;NOG;TAT

Denver-based Forest Oil Corporation 's ( FST ) third-quarter 2013 earnings of 6 cents per share (excluding non-recurring items) missed the Zacks Consensus Estimate of 8 cents per share. The figure also decreased from the year-earlier earnings of 10 cents.

Total revenue in the reported quarter decreased 24.3% to $118.2 million from the year-ago level of $156.1 million and missed the Zacks Consensus Estimate of $131.0 million.

The lackluster performance was mainly due to lower net sales and natural gas sales volumes as the company postponed capital investment in its natural gas properties to concentrate on higher-margin oil prospects. Lower oil and gas prices also contributed to the decline.


Net sales volume shrunk nearly 38.4% year over year to 209.0 million cubic feet equivalent per day (MMcfe/d) in the reported quarter. It comprised 40% liquids compared with 44% in the year-ago quarter.

The company's oil net sales volume in the third quarter was 6.8 thousand barrels per day (MBbls/d) versus 8.9 MBbls/d in the year-earlier quarter. Natural gas sales volume was 125.7 MMcf/d versus 224.9 MMcf/d in the year-earlier quarter and comprised 60% of the total volume.

Realized Prices

The average equivalent price per Mcf (including the effect of hedging) was $6.20, up 6.2% from the year-ago realization of $5.84. Natural gas was sold at $3.55 per Mcf, down 0.6% from the comparable prior-year quarter. However, NGLs were sold at $29.22 per barrel, down 6.0% year over year and average realized oil price was $95.03 per barrel, down 1.9%.


Third quarter production expenses of $1.39 per Mcfe increased 13% year over year. Unit general and administrative expenses increased 31.3% year over year to 42 cents per Mcfe from the year-ago level of 32 cents per Mcfe.


At quarter end, Forest had $2,121 million of cash and cash equivalents with $1,615.3 million of long-term debt (including current portion).

Zacks Rank

Forest Oil holds a Zacks Rank #3 (Hold). However, there are other stocks in the oil and gas sector - TransAtlantic Petroleum Ltd ( TAT ), Matador Resources Company ( MTDR ) and Northern Oil and Gas, Inc. ( NOG ) - which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.

FOREST OIL CORP (FST): Free Stock Analysis Report

MATADOR RESOURC (MTDR): Free Stock Analysis Report

NORTHRN OIL&GAS (NOG): Free Stock Analysis Report

TRANSATL PETROL (TAT): Free Stock Analysis Report

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