Forest Oil (FST) Reports Wider-than-Expected Loss in Q2 - Analyst Blog

Denver-based Forest Oil Corporation 's ( FST ) second-quarter 2014 loss of 6 cents per share (excluding non-recurring items) lagged the Zacks Consensus Estimate of a loss of 2 cents per share. Moreover, the quarterly figure decreased 200% from the year-ago earnings of 6 cents.

Forest Oil Corporation - Earnings Surprise | FindTheBest

The lackluster performance was mainly due to a fall in net sales volume and oil sales volume. Lower oil prices also contributed to the decline.

Total revenue in the reported quarter decreased 48.3% to $60.4 million from the year-ago level of $116.8 million and missed the Zacks Consensus Estimate of $68.0 million.


Net sales volume shrunk nearly 53% year over year to 99.6 million cubic feet equivalent per day (MMcfe/d). It comprised 31% liquids compared with 41% in the prior-year quarter.

The company's net oil sales volume in the second quarter decreased nearly 52% from the year-ago period to 3.2 thousand barrels per day (MBbls/d). On the bright side, natural gas sales volume in the quarter was 68.3 million cubic feet per day (MMcf/d) and accounted for 68.6% of the total quarterly volume.

Realized Prices

The average equivalent price per million cubic feet (Mcf), including the effect of hedging, was $6.16, up 2.2% from the year-ago realization of $6.03. Natural gas was sold at $3.97 per Mcf, up 14.4% from the comparable prior-year quarter. However, natural gas liquids (NGLs) were sold at $29.97 per barrel, up nearly 8% from the year-ago quarter and average realized oil price was $87.92 per barrel, down nearly 7% from the year-ago quarter.


During the second quarter, lease operating expenses of $1.58 per Mcfe increased 11.3% year over year. Unit general and administrative expenses rose 37.3% to 70 cents per Mcfe from the year-ago level of 51 cents per Mcfe. Interest expense per unit increased nearly 14% to $1.74 per Mcfe from $1.53 per Mcfe in the second quarter of 2013.


At quarter-end, Forest Oil had $14.6 million of cash and cash equivalents with $800.2 million of long-term debt (including current portion), representing a debt-to-capitalization ratio of 106% (up from 95.8% at the end of first-quarter 2014).

Zacks Rank

At present, Forest Oil has a Zacks Rank #3 (Hold). However, other stocks in the oil and gas sector like Weatherford International plc ( WFT ), CNOOC Ltd ( CEO ) and Kosmos Energy Ltd. ( KOS ), sporting a Zacks Rank #1 (Strong Buy), are expected to perform better.

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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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