Forest Oil Corp Earnings: Increase in Profit Year-Over-Year

Wall St. Cheat Sheet

Falling revenue did not prevent Forest Oil Corporation from reporting a profit boost in the fourth quarter. Forest Oil is an independent oil and gas company engaged in the acquisition, exploration, development, and production of natural gas and liquids mainly North America.

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Forest Oil Earnings Cheat Sheet for the Fourth Quarter

Results: Net income for Forest Oil Corporation rose to $19.5 million (17 cents per share) vs. $16.2 million (14 cents per share) in the same quarter a year earlier. This marks a rise of 20.2% from the year-earlier quarter.

Revenue: Fell 1.4% to $176.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Forest Oil Corporation reported adjusted net income of 18 cents per share. By that measure, the company fell short of mean estimate of 26 cents per share. It fell short of the average revenue estimate of $192.1 million.

Quoting Management: H. Craig Clark, President and CEO, stated, “2011 was a transitional year for Forest through the advancement of numerous oil drilling opportunities in our U.S. asset portfolio following the Lone Pine transaction. We tested new shallow oil zones in the Texas Panhandle during 2011, including the Missourian Wash and the Cleveland formations which have attractive economics. Additionally, we are currently testing two other oil zones in the Panhandle area that, given early results and offset activity, show promise. Our advancement of oil development in the Texas Panhandle is complementary to our legacy horizontal drilling results in the Granite Wash where we have expanded the liquids-rich productive intervals to include the Granite Wash “A” and “C”, and have now tested 11 intervals in the Texas Panhandle. While we have always recognized the enormous potential associated with the multitude of pay zones in the Texas Panhandle, the number of zones added during the year, and the quality of those zones, exceeded our initial expectations.”

Key Stats:

The company has fallen short of estimates for two consecutive quarters. In the third quarter, it missed expectations by 4 cents with net income of 22 cents versus a mean estimate of net income of 26 cents per share.

Looking Forward: Expectations for the company’s next-quarter results are lower than they have been. Over the past sixty days, the average estimate for first quarter of the next fiscal year has fallen from 25 cents per share to 22 cents. For the fiscal year, the average estimate has moved up from $1.06 a share to $1.09 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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