Forest Oil Corp. (FST, Financial) filed Quarterly Report for the period ended 2012-09-30.
Forest Oil Corp has a market cap of $965.9 million; its shares were traded at around $8.17 with a P/E ratio of 15.4 and P/S ratio of 1.4.
Our equivalent sales volumes from continuing operations increased 5% and 2% for the three and nine months ended September 30, 2012, respectively, compared to the corresponding periods in 2011. Additionally, total oil and NGL sales volumes increased to 34% and 32% of total equivalent sales volumes in the three and nine months ended September 30, 2012, respectively, as compared to 27% of total equivalent sales volumes in both the three and nine months ended September 30, 2011. The increase in the percentages is a result of drilling more oil and natural gas liquids-rich wells.
Revenues from oil, natural gas, and NGLs were $156 million in the third quarter of 2012 compared to $174 million in the third quarter of 2011. The $18 million decrease was primarily a result of a 36% decline in the market price for natural gas, with this decrease being partially offset by an increase in oil volumes and the market price for oil. Revenues from oil, natural gas, and NGLs were $451 million in the first nine months of 2012 compared to $527 million in the first nine months of 2011. The $76 million decrease between the comparable nine month periods was primarily due to a 43% decrease in natural gas market prices as well as a decrease in NGL market prices, with such decreases being partially offset by a $62 million increase in oil revenues, resulting primarily from a 34% increase in our oil sales volumes.
Lease operating expenses in the third quarter of 2012 were $27 million, or $.88 per Mcfe, compared to $23 million, or $.79 per Mcfe, in the third quarter of 2011. Lease operating expenses in the first nine months of 2012 were $82 million, or $.89 per Mcfe, compared to $71 million, or $.78 per Mcfe, in the first nine months of 2011. The increases in lease operating expenses in the 2012 periods as compared to the 2011 periods were primarily due to increases in water disposal costs and workovers as well as an increase in the number of oil wells. Based on the energy-equivalent ratio of six Mcf of natural gas to one of barrel of oil, oil wells typically have higher per-unit lease operating costs than do natural gas wells. However, because the market price of oil relative to natural gas is currently well in excess of the six-to-one ratio, the increase in lease operating expense associated with more oil production is more than offset by the additional revenues from oil sales.
Production and property taxes, consisting primarily of severance taxes paid on the value of the oil, natural gas, and NGLs sold, were 5.7% and 4.6% of oil, natural gas, and NGL sales for the three-month periods ended September 30, 2012 and 2011, respectively, and 6.0% and 6.1% for the nine-month periods ended September 30, 2012 and 2011, respectively. Normal fluctuations occur in this percentage between periods based upon the timing of approval of incentive tax credits in Texas, changes in tax rates, and changes in the assessed values of oil and gas properties and equipment for purposes of ad valorem taxes.
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Forest Oil Corp has a market cap of $965.9 million; its shares were traded at around $8.17 with a P/E ratio of 15.4 and P/S ratio of 1.4.
Highlight of Business Operations:
Forest recognized a net loss from continuing operations of $459 million and $1.0 billion for the three and nine months ended September 30, 2012, respectively, compared to net earnings from continuing operations of $60 million and $79 million in the corresponding periods in 2011. The decreases in each period were primarily due to non-cash ceiling test write-downs incurred during the three and nine months ended September 30, 2012 as well as valuation allowances placed against our deferred tax assets in each period in 2012. See Note 5 to the Condensed Consolidated Financial Statements for more details on ceiling test write-downs, which apply to companies that follow the full cost method of accounting for oil and gas activities. See Critical Accounting Policies for more details on the valuation allowances on deferred tax assets.Our equivalent sales volumes from continuing operations increased 5% and 2% for the three and nine months ended September 30, 2012, respectively, compared to the corresponding periods in 2011. Additionally, total oil and NGL sales volumes increased to 34% and 32% of total equivalent sales volumes in the three and nine months ended September 30, 2012, respectively, as compared to 27% of total equivalent sales volumes in both the three and nine months ended September 30, 2011. The increase in the percentages is a result of drilling more oil and natural gas liquids-rich wells.
Revenues from oil, natural gas, and NGLs were $156 million in the third quarter of 2012 compared to $174 million in the third quarter of 2011. The $18 million decrease was primarily a result of a 36% decline in the market price for natural gas, with this decrease being partially offset by an increase in oil volumes and the market price for oil. Revenues from oil, natural gas, and NGLs were $451 million in the first nine months of 2012 compared to $527 million in the first nine months of 2011. The $76 million decrease between the comparable nine month periods was primarily due to a 43% decrease in natural gas market prices as well as a decrease in NGL market prices, with such decreases being partially offset by a $62 million increase in oil revenues, resulting primarily from a 34% increase in our oil sales volumes.
Lease operating expenses in the third quarter of 2012 were $27 million, or $.88 per Mcfe, compared to $23 million, or $.79 per Mcfe, in the third quarter of 2011. Lease operating expenses in the first nine months of 2012 were $82 million, or $.89 per Mcfe, compared to $71 million, or $.78 per Mcfe, in the first nine months of 2011. The increases in lease operating expenses in the 2012 periods as compared to the 2011 periods were primarily due to increases in water disposal costs and workovers as well as an increase in the number of oil wells. Based on the energy-equivalent ratio of six Mcf of natural gas to one of barrel of oil, oil wells typically have higher per-unit lease operating costs than do natural gas wells. However, because the market price of oil relative to natural gas is currently well in excess of the six-to-one ratio, the increase in lease operating expense associated with more oil production is more than offset by the additional revenues from oil sales.
Production and property taxes, consisting primarily of severance taxes paid on the value of the oil, natural gas, and NGLs sold, were 5.7% and 4.6% of oil, natural gas, and NGL sales for the three-month periods ended September 30, 2012 and 2011, respectively, and 6.0% and 6.1% for the nine-month periods ended September 30, 2012 and 2011, respectively. Normal fluctuations occur in this percentage between periods based upon the timing of approval of incentive tax credits in Texas, changes in tax rates, and changes in the assessed values of oil and gas properties and equipment for purposes of ad valorem taxes.
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