Second Quarter 2012 Net Sales Volumes of 335 MMcfe/d; Unchanged from Second Quarter 2011
Second Quarter 2012 Oil Net Sales Volumes of 8.3 MBbls/d; Organically Increased 27% from Second Quarter 2011
Continued Success in the Panhandle Area Oil Zones; Completed One Hogshooter Well with a 24-Hour Maximum Production Rate of 2,800 Boe/d (54% Oil) and Two Cleveland Wells with an Average 24-Hour Maximum Production Rate of 1,000 Boe/d (71% Oil)
Completed Four Eagle Ford Wells with an Average 24-Hour Maximum Production Rate of 817 Boe/d
DENVER–(BUSINESS WIRE)–Jul. 30, 2012– Forest Oil Corporation (NYSE:FST) (Forest or the Company) today announced financial and operational results for the second quarter of 2012.
The comparative second quarter of 2011 information contained in this press release, unless otherwise indicated, relates only to the retained operations of Forest and excludes the operations of Lone Pine Resources Inc. (NYSE:LPR) (TSX:LPR), which was spun-off to Forest shareholders on September 30, 2011.
Forest noted the following results for the three months ended June 30, 2012:
Net sales volumes of 335 MMcfe/d were unchanged from the second quarter of 2011 and decreased 1% from the first quarter of 2012 due to 8 MMcfe/d of production downtime associated primarily with third-party plant curtailments in the Panhandle Area
Oil net sales volumes of 8.3 MBbls/d organically increased 27% from the second quarter of 2011 and decreased 1% from the first quarter of 2012
Adjusted net earnings of $7 million decreased 76% from the corresponding 2011 period
Adjusted EBITDA of $122 million decreased 14% from the corresponding 2011 period
Adjusted discretionary cash flow of $89 million decreased 15% from the corresponding 2011 period
Due to a non-cash ceiling test write-down of $349 million and a related non-cash increase in the valuation allowance on deferred tax assets of $290 million, Forest reported a net loss of $511 million, or $(4.44) per share, for the three months ended June 30, 2012.
Patrick R. McDonald, Interim CEO, stated, “The second quarter represented an operational and strategic realignment of priorities at Forest. We have increased focus on our oil projects, and we saw good results during the quarter from the Hogshooter and Cleveland oil plays in the Panhandle Area and from our Eagle Ford program. These high-quality assets form the foundation of our core oil portfolio.
“Strategically we are committed and have taken the first step to improve our financial strength by adjusting our second half capital program to be near projected cash flow. With our remaining 2012 capital budget mainly targeting higher-margin oil opportunities, we expect to deliver second half oil volume growth that is 10-15% higher than the first half of the year. We have reduced spending in, and will have lower production from, lower-return liquids and natural gas projects.
“Operational execution is critical in bringing forward the value of our assets as their quality has not been adequately reflected in our recent results. The entire Forest team is focused on and committed to delivering this value to our shareholders.”