Forest Oil Earnings: Here’s Why Investors are Not Excited Now

Forest Oil Corp. (NYSE:FST) delivered a profit and beat Wall Street’s expectations, BUT came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 0.67%.

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Forest Oil Corp. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 72.73% to $0.03 in the quarter versus EPS of $0.11 in the year-earlier quarter.

Revenue: Decreased 25.65% to $118.17 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Forest Oil Corp. reported adjusted EPS income of $0.03 per share. By that measure, the company beat the mean analyst estimate of $0.02. It missed the average revenue estimate of $131.75 million.

Quoting Management: Patrick R. McDonald, President and CEO, stated, “We made progress during the first quarter in achieving our strategic goal of accelerating the development of our oil inventory by announcing an Eagle Ford Shale development agreement. This is an important transaction for our shareholders and our company as we believe it will accelerate development and production growth, bring forward significant economic value and generate notably more lease level income compared to our previous plan. Establishing a partnership with an industry leading service and technology company should allow us to optimize all facets of our drilling and completion operations, so that we can deliver the best possible results from this important oil asset. We also believe we are carrying momentum into this partnership, as our gross production from the Eagle Ford Shale in April reached a record high of 4,700 Boe/d.
“We see significant opportunities and attractive rates of return within the oil bearing zones of the Texas Panhandle Area in both Texas and Oklahoma. We currently have an inventory of over 500 identified locations within the Hogshooter, Tonkawa, Douglas and other proven oil horizons. The Texas Panhandle will remain an area of emphasis for Forest as we expect to maintain a two rig development program throughout 2013 to capture the significant value in this core asset. Additionally, we remain encouraged by the consistent drilling results within our East Texas oil and liquids-rich properties and plan to continue our efforts to develop these assets this year.”

Key Stats (on next page)…

Revenue decreased 23.73% from $154.93 million in the previous quarter. EPS decreased 78.57% from $0.14 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.08 to a profit $0.04. For the current year, the average estimate has moved down from a profit of $0.38 to a profit of $0.21 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at]