Forest Oil shares continue to rise on sale plans

NEW YORK (AP) -- Shares of Forest Oil continued to climb Tuesday on the company's plans to sell more of its oil and gas assets in Texas.

THE SPARK: Forest announced before Monday's opening bell that it had received several unsolicited offers for the Texas Panhandle acreage and had hired J.P. Morgan Securities LLC to help with a possible sale.

THE BIG PICTURE: Shares of Forest Oil have been dropping since the start of the year, falling more than 30 percent to date.

In January the company said that it would sell most of its south Texas properties and receive after-tax proceeds of $325 million, which it will use to pay down debt.

Proceeds from any sale stemming from Monday's announcement would also be used to lower debt, while giving Forest more flexibility to develop other assets, the company said.

THE ANALYSIS: Stifel Nicolaus analyst Amir Arif, who backed his "Buy" rating on the stock, said if completed the sale could raise between $1 billion and $1.2 billion.

"Bottom line, we continue to like this name as a turnaround and this anticipated transaction helps the turnaround happen at a faster pace, but at the expense of reducing some of the net asset value upside," Arif wrote in a note to investors.

Raymond James analyst Andrew Coleman said Forest's stock could get a boost if a deal gets done "in a timely manner." He backed his "Market Perform" rating for the stock.

THE SHARES: Up 52 cents, or 10.8 percent, to $5.32 in heavy afternoon trading. That followed Monday's gain of 5 percent.

Over the past 52 weeks, the shares have traded between $3.77 and $9.32.