Forest Oil Beats Earnings Estimates - Analyst Blog

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Denver-based Forest Oil Corporation 's ( FST ) 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 year-earlier earnings.

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 year-ago quarter.

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.

Realized Prices

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 year-ago quarter.


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 current portion).

Zacks Rank

Forest Oil holds a Zacks Rank #3 (Hold). However, there are other stocks in the oil and gas sector - Range Resources Corporation ( RRC ), Gulfmark Offshore, Inc. ( GLF ) and Dril-Quip, Inc. ( DRQ ) - which hold a Zacks Rank #1 (Strong Buy) and are expected to perform better.

DRIL-QUIP INC (DRQ): Free Stock Analysis Report

FOREST OIL CORP (FST): Free Stock Analysis Report

GULFMARK OFFSHR (GLF): Free Stock Analysis Report

RANGE RESOURCES (RRC): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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