Forest Oil Announces Record Quarter in Sales Volumes
Posted on: Monday, 5 November 2007, 18:00 CST
Forest Oil Corporation (NYSE: FST) (Forest or the Company) today announced financial and operational results for the third quarter of 2007.
The Company reported the following highlights excluding all operational results relating to Alaska for the quarter ended September 30, 2007:
Record sales volumes of 508 MMcfe/d, an increase of 62% compared to the third quarter of 2006
Production expense of $1.28 per Mcfe, a decrease of 25% compared to the third quarter of 2006
Record adjusted net earnings of $73.0 million, or $.84 per share, an increase of 146% compared to the third quarter of 2006
Record adjusted EBITDA of $256.3 million, an increase of 93% compared to the third quarter of 2006
Record adjusted discretionary cash flow of $226.9 million, an increase of 103% compared to the third quarter of 2006
Completed the sale of all Alaska assets and entered into a sale-leaseback transaction for its drilling rigs, accomplishing the previously stated asset rationalization sales target of $500 to $600 million faster than anticipated
Decreased net debt by $463 million to $1.67 billion
H. Craig Clark, President and CEO, stated, "The third quarter was the first full quarter of operations of the Houston Exploration assets in the portfolio and reflected the disposition of Forest's Alaska assets. This completes the transformation of Forest to a cost efficient development company focused primarily on production optimization and cost control in North American onshore plays. During the quarter Forest was able to increase sales volumes to record levels while allocating capital to projects with attractive economic returns and focusing on margin capture. Forest is significantly ahead of schedule in reducing total cash costs related to its acquisition of Houston Exploration. We have reduced production expense to $1.28 per Mcfe and general and administrative expense per-unit back to levels that existed prior to the acquisition. The future of the Company will remain focused on tight-gas sand and oil development as well as optimizing value from existing legacy assets."
THIRD QUARTER 2007 RESULTS
For the quarter ended September 30, 2007, Forest reported net earnings of $58.0 million or $.67 per basic share. The net earnings for the quarter ended September 30, 2007 were affected by the following items:
The non-cash effect of net unrealized losses relating to the mark to market valuation on derivative instruments and investments, and foreign currency exchange totaling $8.8 million ($4.7 million net of tax)
Write-off of unamortized debt costs and prepayment premiums of $9.0 million ($5.8 million net of tax) related to Forest's repayment of the Forest Alaska term loan facilities
The pro forma loss from the Alaska operations for the period from July 1, 2007 to August 27, 2007 of $7.2 million ($4.6 million net of tax) that was included in Forest's reported net earnings for the quarter ended September 30, 2007
Without the effects of these items, the Company's adjusted net earnings were $73.0 million or $.84 per basic share. This amount is an increase of 146% over Forest's adjusted net earnings of $29.7 million or $.48 per basic share in the corresponding 2006 period.
In order to provide data comparable to Forest's ongoing operations and most recent published guidance, the following discussion relates solely to Forest's results excluding all operational results relating to Alaska for the three months ended September 30, 2007 as compared to reported results for the quarter ended September 30, 2006. (Please refer to the pro forma statement and non-GAAP disclosures below.)
Forest's adjusted EBITDA increased 93% during the third quarter of 2007 to $256.3 million compared to adjusted EBITDA of $132.5 million in the third quarter of 2006. Forest's adjusted discretionary cash flow increased 103% during the third quarter of 2007 to $226.9 million in 2007 compared to adjusted discretionary cash flow of $111.5 million in the third quarter of 2006. The increases are a result of the acquisition of The Houston Exploration Company (Houston Exploration) on June 7, 2007.
Forest's oil and gas sales volumes increased 62% during the third quarter of 2007 to 508 MMcfe/d compared to sales volumes of 313 MMcfe/d in the third quarter of 2006. The following table sets forth Forest's average net sales volumes for the quarters ended September 30, 2007 and 2006:
Three Months EndedSeptember 30, 2007
Three Months EndedSeptember 30, 2006
DAILY VOLUMES
Daily natural gas sales volumes (MMcf):
United States
312.5
117.9
Canada
70.5
66.0
Total
383.0
183.9
Daily oil and condensate sales volumes (MBbls):
United States
10.2
13.7
Canada
2.1
2.0
Total
12.3
15.7
Daily natural gas liquids sales volumes (MBbls):
United States
7.8
4.7
Canada
0.7
1.1
Total
8.5
5.8
Daily equivalent sales volumes (MMcfe):
United States
420.5
228.3
Canada
87.2
84.6
Total
507.7
312.9
Forest's differential to NYMEX prices for natural gas decreased 42% in the third quarter of 2007 to $.81 per Mcf compared to $1.39 per Mcf in the third quarter of 2006. The improved differential for natural gas was due to the acquisition of Houston Exploration and lower NYMEX prices.
Forest's differential to NYMEX prices for oil and condensate and natural gas liquids was $4.35 per Bbl and $35.97 per Bbl (approximately 48% of NYMEX), respectively, in the third quarter of 2007 compared to $4.39 per Bbl and $33.88 per Bbl (approximately 48% of NYMEX), respectively, in the third quarter of 2006.
Forest's per-unit oil and gas production expense decreased 25% during the third quarter of 2007 to $1.28 per Mcfe compared to $1.71 per Mcfe in the third quarter of 2006. The improved results were due to cost reduction measures being ahead of schedule on the Houston Exploration acquired assets, the inclusion of the lower cost Houston Exploration assets, and the divestiture of the Alaska assets.
Forest's per-unit general and administrative expense, excluding stock compensation expense, decreased 6% during the third quarter of 2007 to $.29 per Mcfe compared to $.31 per Mcfe in the third quarter of 2006. The third quarter 2007 results reflect the faster than expected integration of the Houston Exploration assets and associated synergies.
Forest's per-unit depreciation and depletion expense increased 15% during the third quarter of 2007 to $2.50 per Mcfe compared to $2.17 per Mcfe in the third quarter of 2006. The increase of $.33 per Mcfe was due to increased depletable costs due to purchase accounting for the Houston Exploration acquisition.
Forest's interest expense increased 47% during the third quarter of 2007 to $28.1 million compared to $19.1 million in the third quarter of 2006. The increase resulted from higher average debt levels and increased average interest rates. Debt levels increased to fund the Houston Exploration acquisition.
For the quarter ended September 30, 2007, Forest invested $230.2 million in exploration and development activities.
Forest reduced its net debt by 22% to $1.67 billion at September 30, 2007, from $2.14 billion at June 30, 2007, which results in a reduction in its net debt to book capitalization ratio from 48% to 41%. Forest accomplished this significant debt reduction primarily through asset sales, including the sale of the Alaska assets and the drilling rig sale-leaseback transaction.
NATURAL GAS AND OIL DERIVATIVES
Forest currently has natural gas and oil derivatives in place for 2007 and 2008 covering the aggregate average daily volumes and weighted average prices shown below. The following is a summary for the remainder of 2007 and 2008 as of November 5, 2007:
Remainder2007
2008
Natural gas swaps:
Contract volumes (Bbtu/d)
60.0
50.01
Weighted average price (per MMBtu)
$ 7.88
8.38
Natural gas collars:
Contract volumes (Bbtu/d)
145.0
116.61
Weighted average ceiling price (per MMBtu)
$ 9.27
9.15
Weighted average floor price (per MMBtu)
$ 7.42
7.50
Oil swaps:
Contract volumes (MBbls/d)
7.0
6.5
Weighted average price (per Bbl)
$ 70.03
69.72
Oil collars:
Contract volumes (MBbls/d)
4.0
Weighted average ceiling price (per Bbl)
$ 87.18
Weighted average floor price (per Bbl)
$ 65.81
1 10.0 of the 50.0 Bbtu/d of natural gas swaps and 28.4 of the 116.6 Bbtu/d of natural gas collars are subject to a put of $6.00 per MMBtu.
OPERATIONAL PROJECT UPDATE
BUSINESS DEVELOPMENT
Forest has previously stated a goal of maintaining financial leverage at 30-40% of book capitalization. In order to reduce leverage resulting from the purchase of Houston Exploration, Forest completed two asset sales in the third quarter bringing the total asset sales closed in 2007 to approximately $550 million:
In August 2007, Forest closed its previously announced transaction to sell its Alaska assets. Under the terms of the agreement, Forest received the following consideration:
Cash of $400 million, of which $269 million was used to repay the full balance of the associated term loans
10 million shares of Pacific Energy Resources Ltd. common stock, and
A $60.75 million zero coupon senior subordinated note from Pacific due 2014
Forest also entered into a sale-leaseback transaction whereby Forest sold its drilling rigs for cash proceeds of approximately $63 million and simultaneously entered into a seven-year operating lease under which Forest will maintain full utilization of the drilling rigs.
Primarily as a result of these asset sales, Forest reduced its net debt by $463 million and its financial leverage to 41% in the third quarter of 2007.
FOREST'S "BIG FIVE" ASSETS
The following assets constituted 62% of Forest's production and approximately 60% of capital expenditures for the third quarter of 2007. These assets are all tight-gas sand development projects in low-risk onshore North American plays. Forest will continue to devote a substantial portion of its capital to these assets that have over 2,100 identified non-proved drilling locations. Production in these assets in the third quarter of 2007 reached a record 315 MMcfe/d.
Buffalo Wallow Area -- Texas Panhandle (66 -- 100% WI) -- A total of 44 wells have been drilled year-to-date with a 100% success rate. A five rig program is currently being employed with two of the rigs operating in the deeper offset areas. Four of the wells completed in this quarter were in the offset areas and tested at rates ranging from 2.7 MMcfe/d to 8.0 MMcfe/d. In addition, subsequent to the quarter end, the Frye Ranch area south of the main Buffalo Wallow Field was approved by the Texas Railroad Commission for 40-acre spacing. Forest's gross acreage has increased to approximately 51,000 acres.
East Texas Cotton Valley Area - Rusk, Harrison & Panola Counties, Texas (52-100% WI) -- A total of 44 wells have been drilled year-to-date with a 100% success rate. Forest is currently utilizing a five rig program in East Texas with one rig devoted to horizontal activity. Initial rates on these shallow gas wells ranged from 1.2 to 4.1 MMcfe/d during the third quarter of 2007. The second horizontal Cotton Valley well is currently being drilled. Forest's gross acreage position has increased to approximately 90,000 acres.
Arkoma Basin Area, Arkansas (50-100% WI) -- A total of 57 wells have been drilled year-to-date with a 98% success rate. Forest currently has a four rig program including one horizontal project in progress. Compression and gathering facility upgrades are expected to be completed in the fourth quarter of 2007. Forest's gross acreage position has increased to approximately 71,000 gross acres.
South Texas Wilcox/Vicksburg Program, Ft. Bend, Harris, Hildago, Starr, Waller, Webb and Zapata Counties (54-100% WI) -- A total of 44 wells have been drilled year-to-date with an 86% success rate. Of the wells completed in this quarter, initial rates ranged from 2.0 MMcfe/d to 8.0 MMcfe/d. Rig activity was reduced from four to three rigs in this program as 3-D seismic is currently being interpreted targeting the Perdido and Lobo Wilcox zones. Increased activity is planned in late 2007 or early 2008 in the McAllen Ranch and Rincon Fields targeting Vicksburg objectives. At Katy, a deeping program was initiated in the third quarter as part of an existing wellbore reactivation program. A drilling rig has been moved back into that field following approval of six wells by Forest's partner.
Deep Basin Area, Wild River, Sundance/Ansell and Hinton (25-100% WI) -- A total of 36 wells have been drilled year-to-date with a 100% success rate. A three rig program is currently being used with another rig evaluating previously untested uphole intervals behind pipe in the Wild River Area where the first zone tested 1.1 MMcfe/d. This successful test could indicate significant uphole potential in existing wellbores. Forest will continue to assess this for an expanded program in 2008 and 2009.
2007 GUIDANCE
Forest last updated its second half 2007 guidance on August 7, 2007. The following is made subject to all of the cautionary statements and limitations contained in Forest's August 7, 2007 press release. The guidance below represents Forest's updated guidance for the six months ended December 31, 2007 and does not reflect the operations of Forest's Alaska assets. Given those statements and limitations as well as the limitations discussed under the caption "Forward-Looking Statements" below, the second half 2007 guidance components are updated in the following respects:
Guidance Update
Production Expense: Forest has lowered its expected production expense (which includes lease operating expense, ad valorem taxes, production taxes and product processing, gathering and transportation) to $120 to $130 million or $1.30 to $1.40 per Mcfe.
Depreciation, Depletion and Amortization (DD&A) Expense: Forest has lowered its expected DD&A rate to $2.40 - $2.60 per Mcfe.
PRO FORMA
The following unaudited pro forma statements of operations present the operating results of Forest's operations for the three months ended September 30, 2007 giving pro forma effect to the sale of the Alaska assets at the beginning of the period presented. These pro forma results are presented in order to provide information which is comparable to Forest's ongoing operations and previously issued guidance on August 7, 2007 and is reconciled to Forest's GAAP financial statements.
The unaudited pro forma statements of operations presented do not purport to represent what the results of operations or financial position of Forest's continuing operations would actually have been had the transaction occurred at the beginning of each period presented, or to project the results of operations or financial position of Forest for any future periods. The adjustments to present the pro forma results of Forest's operations, giving pro forma effect to the sale of Forest's Alaska assets, are based on available information and certain assumptions that management believes are reasonable.
FOREST OIL CORPORATION
Pro Forma Statements of Operations
(Unaudited)
For the Three Months Ended September 30, 20071
As Reported
Alaska Operations
Pro Forma
(In thousands, except average net sales volumes and per share amounts)
Average net sales volumes (MMcfe/d)
522
14
508
Revenue:
Oil and gas sales
$ 313,017
(a)
13,664
299,353
Marketing, processing, and other
8
-
8
Total revenue
313,025
13,664
299,361
Operating expenses:
Production expense
70,145
(a)
10,497
59,648
General and administrative (including stock-based compensation of $2,763, $55 and $2,708, respectively)
16,716
(b)
256
16,460
Depreciation and depletion
122,005
(c)
5,371
116,634
Accretion of asset retirement obligations
1,980
(d)
248
1,732
Total operating expenses
210,846
16,372
194,474
Earnings from operations
102,179
(2,708
)
104,887
Other income and expense:
Interest expense
32,567
(e)
4,513
28,054
Unrealized losses on derivative instruments, net
12,415
-
12,415
Realized gains on derivative instruments, net
(30,387
)
-
(30,387
)
Other expense, net
549
-
549
Total other income and expense
15,144
4,513
10,631
Earnings before income taxes
87,035
(7,221
)
94,256
Income tax expense
29,048
(f)
(2,630
)
31,678
Net earnings
$ 57,987
(4,591
)
62,578
Weighted average number of common shares outstanding:
Basic
86,802
86,802
Diluted
88,613
88,613
Basic earnings per common share
$ 0.67
0.72
Diluted earnings per common share
$ 0.65
0.71
1 Forest's Alaska assets were sold on August 27, 2007.
(a) To allocate revenue and production expense directly attributable to the oil and gas operations of Forest's continuing operations and Forest's Alaska assets.
(b) To allocate salaries and other direct general and administrative expenses attributable to Forest's Alaska assets. Forest's Alaska assets allocation includes only general and administrative costs directly related to Forest's Alaska assets. Accordingly, no reductions were assumed for general corporate overhead costs, such as indirect personnel costs, professional services, cost of public ownership, insurance and accounting, which may occur subsequent to the sale of Forest's Alaska assets.
(c) To allocate depreciation and depletion to give effect to the reduction in Forest's Alaska assets full cost pool and a reduction in production volumes.
(d) To allocate accretion expense attributable to asset retirement obligations associated with assets specifically related to Forest's Alaska assets.
(e) To allocate interest expense associated with the Alaska Term Loans.
(f) To allocate income tax expense to Forest's Alaska assets based on Forest's effective deferred federal and state tax rates.
NON-GAAP FINANCIAL MEASURES
In addition to net income determined in accordance with generally accepted accounting principles (GAAP), Forest has provided net earnings adjusted for certain items, a non-GAAP financial measure, which facilitates comparisons to earnings forecasts prepared by stock analysts and other third parties. Such forecasts generally exclude the effects of items that are difficult to predict or to measure in advance and are not directly related to Forest's ongoing operations. A reconciliation between GAAP net earnings and net earnings adjusted for certain items are provided in the paragraphs on page two of this release in which the non-GAAP measure is presented. Net earnings excluding the effects of certain items should not be considered a substitute for net earnings as reported in accordance with GAAP.
In addition to reporting net earnings as defined under GAAP, Forest also presents adjusted EBITDA, which consists of net earnings plus income tax expense, unrealized losses (gains) on derivative instruments, net, unrealized foreign currency exchange (gains) losses, unrealized gains on other investments, realized foreign currency exchange gains, interest expense, write-off of unamortized debt costs and prepayment premiums, accretion of asset retirement obligations, depreciation and depletion, and stock-based compensation. Forest further presents adjusted discretionary cash flow, which consists of adjusted EBITDA minus interest expense, write-off of unamortized debt costs and prepayment premiums, current income tax expense, and other non-cash items. Management uses adjusted EBITDA and adjusted discretionary cash flow as measures of operational performance. Adjusted EBITDA and adjusted discretionary cash flow should not be considered as alternatives to net earnings as reported under GAAP. The following is a reconciliation of net earnings to adjusted EBITDA to adjusted discretionary cash flow (in thousands):
Three Months EndedSeptember 30, 2007
Three Months EndedSeptember 30, 2006
As Reported
Pro Forma1
As Reported
Net earnings
$ 57,987
62,578
76,934
Income tax expense
29,048
31,678
48,288
Unrealized losses (gains) on derivative instruments, net
12,415
12,415
(77,914
)
Unrealized foreign currency exchange (gains) losses
(1,075
)
(1,075
)
766
Unrealized gains on other investments
(2,521
)
(2,521
)
-
Realized foreign currency exchange gains
(4,895
)
(4,895
)
-
Interest expense
32,567
28,054
19,122
Write-off of unamortized debt costs and prepayment premiums
9,010
9,010
-
Accretion of asset retirement obligations
1,980
1,732
1,226
Depreciation and depletion
122,005
116,634
62,505
Stock-based compensation
2,763
2,708
1,573
Adjusted EBITDA
259,284
256,318
132,500
Interest expense
(32,567
)
(28,054
)
(19,122
)
Write-off of unamortized debt costs and prepayment premiums
(9,010
)
(9,010
)
-
Current income tax expense
(3,320
)
(1,106
)
743
Other non-cash items
8,960
8,726
(2,613
)
Adjusted discretionary cash flow
$ 223,347
226,874
111,508
1 Pro forma for sale of our Alaska assets.
In addition to total debt, Forest also presents net debt, which consists of principal amount of debt less cash and cash equivalents on hand at the end of the period. Management uses this measure to assess Forest's indebtedness, based on actual principal amounts owed and cash on hand which has not been applied to reduce amounts drawn on the credit facilities. The following table sets forth the components of net debt as of September 30, 2007 and December 31, 2006 (in millions):
September 30, 2007
December 31, 2006
Principal
Book1
Principal
Book1
Credit facilities
$ 226
226
107
107
Term loan facilities
-
-
375
375
8% Senior notes due 2008
265
267
265
268
8% Senior notes due 2011
285
294
285
296
7% Senior subordinated notes due 2013
6
6
-
-
7 3/4% Senior notes due 2014
150
160
150
161
7 1/4% Senior notes due 2019
750
750
-
-
Total debt
1,682
1,703
1,182
1,207
Cash and cash equivalents
9
9
33
33
Net debt
$ 1,673
1,694
1,149
1,174
1 Book amounts include the principal amount of debt adjusted for unamortized gains on interest rate swaps of $16.9 million and $20.6 million at September 30, 2007 and December 31, 2006, respectively, and unamortized net premiums on the issuance of certain Senior Notes of $3.7 million and $4.6 million at September 30, 2007 and December 31, 2006, respectively.
TELECONFERENCE CALL
Forest's management will hold a teleconference call on Tuesday, November 6, 2007, at 12:00 p.m. MT to discuss the items described in this press release. If you would like to participate please call 800-399-6298 (for U.S./Canada) and 706-634-0924 (for International) and request the Forest Oil teleconference (ID # 21928790). A Q&A period will follow.
A replay will be available from Tuesday, November 6 through November 13, 2007. You may access the replay by dialing toll-free 800-642-1687 (for U.S./Canada) and 706-645-9291 (for International), conference ID # 21928790.
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 its future natural gas and liquids production, revenues and expenses and other forward-looking statements are subject to all of the risks and uncertainties normally incident to the exploration for and development and production and sale of oil and gas.
These risks include, but are not limited to, price volatility, inflation or lack of availability of goods and services, environmental risks, drilling and other operating risks, regulatory changes, the uncertainty inherent in estimating future oil and gas production or reserves, and other risks as described in reports that Forest files with the Securities and Exchange Commission (SEC), including its 2006 Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. Also, the financial results of Forest's foreign operations are subject to currency exchange rate risks. 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 North America and selected international locations. Forest's principal reserves and producing properties are located in the United States in Arkansas, Colorado, Louisiana, New Mexico, Oklahoma, Texas, Utah, and Wyoming, and in Canada. 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
Condensed Consolidated Balance Sheets
(Unaudited)
September 30,2007
December 31,2006
ASSETS
(In thousands)
Current assets:
Cash and cash equivalents
$ 8,814
33,164
Accounts receivable
162,761
125,446
Derivative instruments
36,142
53,205
Other investments
41,408
-
Other current assets
76,170
49,185
Total current assets
325,295
261,000
Net property and equipment
4,846,717
2,789,926
Derivative instruments
3,447
15,019
Goodwill
290,182
86,246
Other assets
50,789
36,881
$ 5,516,430
3,189,072
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
$ 348,027
224,933
Accrued interest
36,370
6,235
Derivative instruments
33,325
1,294
Asset retirement obligations
1,151
2,694
Current portion of long-term debt
266,556
2,500
Deferred income taxes
-
14,907
Other current liabilities
17,420
11,378
Total current liabilities
702,849
263,941
Long-term debt
1,436,378
1,204,709
Asset retirement obligations
95,531
61,408
Derivative instruments
15,159
811
Deferred income taxes
813,291
191,957
Other liabilities
79,946
32,240
Total liabilities
3,143,154
1,755,066
Shareholders' equity:
Common stock
8,805
6,300
Capital surplus
1,958,060
1,215,660
Retained earnings
278,433
137,796
Accumulated other comprehensive income
127,978
74,250
Total shareholders' equity
2,373,276
1,434,006
$ 5,516,430
3,189,072
FOREST OIL CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended September 30,
2007
2006
(In thousands, except pershare amounts)
Revenue:
Oil and gas sales:
Natural gas
$ 189,985
90,296
Oil, condensate, and natural gas liquids
123,032
110,624
Total oil and gas sales
313,017
200,920
Marketing, processing, and other
8
1,919
Total revenue
313,025
202,839
Operating expenses:
Lease operating expenses
48,269
34,963
Production and property taxes
16,112
8,974
Transportation and processing costs
5,764
5,494
General and administrative (including stock-based compensation of $2,763 and $1,573, respectively)
16,716
10,548
Depreciation and depletion
122,005
62,505
Accretion of asset retirement obligations
1,980
1,226
Total operating expenses
210,846
123,710
Earnings from operations
102,179
79,129
Other income and expense:
Interest expense
32,567
19,122
Unrealized losses (gains) on derivative instruments, net
12,415
(77,914
)
Realized (gains) losses on derivative instruments, net
(30,387
)
12,883
Other expense (income), net
549
(184
)
Total other income and expense
15,144
(46,093
)
Earnings before income taxes
87,035
125,222
Income tax expense:
Current
3,320
(743
)
Deferred
25,728
49,031
Total income tax expense
29,048
48,288
Net earnings
$ 57,987
76,934
Weighted average number of common shares outstanding:
Basic
86,802
62,250
Diluted
88,613
63,484
Basic earnings per common share
$ 0.67
1.24
Diluted earnings per common share
$ 0.65
1.21
FOREST OIL CORPORATION
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended September 30,
2007
2006
(In thousands)
Cash flows from operating activities:
Net earnings
$ 57,987
76,934
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and depletion
122,005
62,505
Accretion of asset retirement obligations
1,980
1,226
Unrealized losses (gains) on derivative instruments, net
12,415
(77,914)
Unrealized gains on other investments
(2,521)
-
Unrealized foreign currency exchange (gains) losses
(1,075)
766
Realized foreign currency exchange gains
(4,895)
-
Deferred income tax expense
25,728
49,031
Stock-based compensation
2,763
1,573
Other, net
8,960
(2,613)
Changes in operating assets and liabilities, net of effects of acquisitions and divestitures:
Accounts receivable
3,324
14,904
Other current assets
(3,291)
(4,133)
Accounts payable
(14,221)
18,101
Accrued interest and other current liabilities
17,959
9,084
Net cash provided by operating activities
227,118
149,464
Cash flows from investing activities:
Capital expenditures
(211,577)
(135,732)
Proceeds from sales of assets
463,121
12
Other, net
-
155
Net cash provided (used) by invesing activities
251,544
(135,565)
Cash flows from financing activities:
Proceeds from bank borrowings, net of repayments
(212,041)
10,710
Repayments of term loans
(263,750)
-
Bank overdrafts
(7,438)
(20,105)
Proceeds from the exercise of options and from employee stock purchase plan
1,069
1,471
Other, net
(3,904)
(22)
Net cash used by financing activities
(486,064)
(7,946)
Effect of exchange rate changes on cash
486
(7)
Net (decrease) increase in cash and cash equivalents
(6,916)
5,946
Cash and cash equivalents at beginning of period
15,730
5,456
Cash and cash equivalents at end of period
$ 8,814
11,402
Source: Business Wire
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