Forest Oil Updates Second Half 2012 Guidance and Hedge Position
Forest Oil Corporation (NYSE:FST) (Forest or the Company) today
announced updated second half 2012 net sales volumes and capital
expenditures guidance and provided its current hedge position.
Updated Second Half 2012 Guidance
For the second half of 2012, Forest expects net sales volumes to average
approximately 330 ? 340 MMcfe/d (66% natural gas and 34% oil and natural
gas liquids). This represents an increase of 3% compared to the previous
guidance of 320 ? 330 MMcfe/d (67% natural gas and 33% oil and natural
gas liquids) provided on July 9, 2012.
For the second half of 2012, Forest intends to invest between $240
million and $260 million for capital expenditures (excluding capitalized
interest, capitalized stock-based compensation, and asset retirement
obligations incurred). This represents an increase of $50 million from
previous guidance and is primarily related to increased drilling
efficiencies and a higher level of non-operated drilling activity than
previously expected. Forest entered the third quarter of 2012 operating
nine drilling rigs and is currently operating five rigs within its core
Texas Panhandle, Eagle Ford and East Texas programs.
Forest′s updated guidance for net sales volumes and capital expenditures
for the second half of 2012 remains subject to the cautionary statements
and limitations contained in Forest′s December 12, 2011 press release
under the caption '2012 Guidance? as well as those stated below under
the caption 'Forward-Looking Statements.? Except as indicated above,
guidance detailed in Forest′s press releases dated December 12, 2011,
April 30, 2012, and July 9, 2012 remains unchanged.
Hedge Position
Forest has added 4 MBbls/d of Calendar 2013 oil swaps at $95.53 per
barrel since July 30, 2012, the date of its last earnings release.
As of September 12, 2012, the Company had natural gas, natural gas
liquids, and oil derivatives in place for 2012 and 2013 covering the
aggregate average daily volumes and weighted average prices as follows:
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Jul - Dec | ||||||||||||||||||
2012 | 2013 | |||||||||||||||||
Natural gas swaps: | ||||||||||||||||||
Contract volumes (Bbtu/d) | 155.0 | (1) | 160.0 | |||||||||||||||
Weighted average price (per MMBtu) | $ | 4.63 | $ | 3.98 | ||||||||||||||
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Natural gas liquids swaps: | ||||||||||||||||||
Contract volumes (MBbls/d) | 2.0 | - | ||||||||||||||||
Weighted average price (per Bbl) | $ | 45.22 | $ | - | ||||||||||||||
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Oil swaps: | ||||||||||||||||||
Contract volumes (MBbls/d) | 4.5 | 4.0 | ||||||||||||||||
Weighted average price (per Bbl) | $ | 97.26 | $ | 95.53 | ||||||||||||||
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(1) | ? | ? | ? | 50 Bbtu/d of 2012 gas swaps (with a weighted average hedged price per MMBtu of $5.30) are layered with a written put of $3.53 and a call spread of $4.00-to-$4.50. Together with the put and call spread, Forest will receive the swap price of $5.30 on the 50 Bbtu/d except as follows: Forest will receive (i) NYMEX Henry Hub (HH) plus $1.77 when NYMEX HH is below $3.53; (ii) $5.30 plus the value of the call spread when NYMEX HH is between $4.00 and $4.50; and (iii) $5.80 when NYMEX HH is $4.50 or above. |
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In connection with entering into certain 2012 gas swaps with premium hedged prices, Forest granted oil puts to the counterparties, giving the counterparties the option to put 5 MBbls/d to Forest at $75.00 per Bbl on a monthly basis during the period July 2012 through December 2012. | ||||
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In connection with several swaps shown in the table above, Forest
granted swaption instruments to counterparties in exchange for Forest
receiving premium hedged prices on the swaps. The table below sets forth
the outstanding swaptions as of September 12, 2012:
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2013 | 2014 | 2015 | |||||||||||||||||
Natural gas swaptions: | |||||||||||||||||||
Contract volumes (Bbtu/d) | 40.0 | - | - | ||||||||||||||||
Weighted average price (per MMBtu) | $ | 4.02 | $ | - | $ | - | |||||||||||||
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Oil swaptions: | |||||||||||||||||||
Contract volumes (MBbls/d) | 2.0 | 5.0 | 3.0 | ||||||||||||||||
Weighted average price (per Bbl) | $ | 95.00 | $ | 105.80 | $ | 100.00 | |||||||||||||
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FORWARD-LOOKING STATEMENTS
This news release includes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. All statements, other than statements
of historical facts, that address activities that Forest assumes, plans,
expects, believes, projects, estimates or anticipates (and other similar
expressions) will, should, or may occur in the future are
forward-looking statements. The forward-looking statements provided in
this press release are based on management's current belief, based on
currently available information, as to the outcome and timing of future
events. Forest cautions that future natural gas and liquids production,
revenues, cash flows, liquidity, plans for future operations, expenses,
outlook for oil and natural gas prices, timing of capital expenditures,
and other forward-looking statements relating to Forest are subject to
all of the risks and uncertainties normally incident to their
exploration for and development and production and sale of liquids and
natural gas.
These risks relating to Forest include, but are not limited to, oil and
natural gas price volatility, its level of indebtedness, its ability to
replace production, its ability to compete with larger producers,
environmental risks, drilling and other operating risks, regulatory
changes, credit risk of financial counterparties, risks of using
third-party transportation and processing facilities and other risks as
described in reports that Forest files with the SEC, including its
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current
Reports on Form 8-K. Any of these factors could cause Forest's actual
results and plans to differ materially from those in the forward-looking
statements.
Forest Oil Corporation is engaged in the acquisition, exploration,
development, and production of natural gas and liquids in the United
States and selected international locations. Forest's principal reserves
and producing properties are located in the United States in Arkansas,
Louisiana, Oklahoma, Texas, Utah, and Wyoming. Forest's common stock
trades on the New York Stock Exchange under the symbol FST. For more
information about Forest, please visit its website at www.forestoil.com.
Forest Oil Corporation
Larry C. Busnardo
Director -
Investor Relations
303.812.1441