Forest Oil Corporation (FST): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report


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 performance.


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 Canada.

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 tally.

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.

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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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