Forest Oil Executive Insights: Panhandle Update, Liquids Production
On Tuesday, Forest Oil Corp (NYSE:FST) reported its first quarter earnings and discussed the following topics in its earnings conference call. Take a look.
Scott Hanold – RBC Capital Markets: Can you talk about in the Panhandle, Texas, are you all seeing any kind of ethane rejection and I know you guys brought your guidance down for NGL pricing, can you give us a sense of what’s going on there?
H. Craig Clark – President and CEO: We’ve not had any NGL rejection ever in terms of the ethane. The biggest issue is the prices were depressed, and we tried to guide for that because our product as a company is split between Conway and Mont Belvieu and it was the Conway prices that were depressed.
Scott Hanold – RBC Capital Markets: You mentioned, I think you said you’ve got a rig active in the Uteland Play, is that right.
H. Craig Clark – President and CEO: No, we did not mention that, but we do have some OBO interest in the Uteland Play where a rig is running and it is a non-operated rig, Scott.
Scott Hanold – RBC Capital Markets: Okay, it is a non-operated, how much acres do you have in that play?
H. Craig Clark – President and CEO: That’s the old Houston Exploration acreage we had in and around Natural Buttes. I think it’s around 80,000 acres.
Scott Hanold – RBC Capital Markets: So can you operate any of that or is that mostly non-op stuff?
H. Craig Clark – President and CEO: It’s both, it is a stuff that Houston Exploration had in their Natural Buttes.
J.C. Ridens – EVP and COO: It’s primarily a non-operated position.
Scott Hanold – RBC Capital Markets: I’m sorry, say that again.
H. Craig Clark – President and CEO: It’s primarily a non-operated position.
Scott Hanold – RBC Capital Markets: One last question, in the Eagle Ford it sounds like you’re well performance in the upper portion looks much better and I have got sense, you’ve kind of hinted to the fact that you could look to increase activity. Can you give us a sense of what you are thinking at this point in time, what would it take for you guys to put a second or even third rig out there, because I think you have got some acreage expiration you need to work?
Michael N. Kennedy – EVP and CFO: Right now, what it would take for us to increase that rig count is to see what the determination towards the joint venture process is going to be and then make that determination as to what the rig schedule needs to be for the remainder of the year Scott.
Scott Hanold – RBC Capital Markets: Can you give us an update on where that is, that JV process?
Michael N. Kennedy – EVP and CFO: I can’t. That room is still open because of late comers as I mentioned, and we are still targeting. Obviously, we’ve had some new comers, but targeting late second quarter.
Pearce Hammond – Simmons & Company International: I was just curious, how should we think about production and production mix specifically from Q1 to Q2, got very good liquids production, better than you guidance. Do you think that should continue for this quarter?
H. Craig Clark – President and CEO: Yes, Chris we do, because basically the reason that we have gotten off to such a hot start on our liquids production and because of the extremely results that we posted out of new zones in the Panhandle, primarily the Missourian Wash and the Tonkawa. As those results hold up and we continue to look for further exploitation of that then we would expect to see that the liquids mix would continue to grow.
Pearce Hammond – Simmons & Company International: Obviously, you have taken that rig from the Haynesville to the Cotton Valley given your two rigs there. Was there any consideration to potentially move that rig to the Permian, is there some advantages maybe in trying to derisk that acreage faster in the Permian?
H. Craig Clark – President and CEO: The attraction to that particular rig is that’s the rig that we own the rig apparatus for pad drilling, which would be applicable more so in the Eagle Ford I must say than it would be in the undelineated Permian base we have got. Our Permian plan was as follows; to do the horizontals and the verticals and the monitor wells in Wolfbone and stand back and be able to elevated them. So, we’ll still stick to that plan, that rig would be a candidate for the Eagle Ford because of the pad drilling apparatus.
Pearce Hammond – Simmons & Company International: Just lastly and I guess this touches on your last comment as a candidate for the Eagle Ford. Do you have a contingency plan in Eagle Ford to hold the acreage if the JV processes maybe not to your satisfaction?
H. Craig Clark – President and CEO: We’ll have to do some relocation and get some Board approvals, but the answer is yes. What we have done is positioned rig accordingly whether or not we get the JV or not, obviously the JV partner would like to know that we have rigs available as opposed to getting in line for one. So, we have used the 1,000 and 1,500 horse rigs. The candidates for those types of rigs would be what we have finished in the Permian and the Haynesville rig and the rest of them that we’ve laid on the ground just anticipating that.