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Forest Oil posts quarterly profit as productions volumes drop
Allen Baker, PNA contributing writer
Forest Oil Corp. earned $9.2 million in the fourth quarter as higher prices made up for a continuing slide in production of both oil and gas.
The Denver-based independent lost $29.7 million in the fourth quarter of 2001 as a result of Enron-related charges and impairments on foreign properties. Forest showed a $2.9 million profit in the third quarter.
For 2002 as a whole, earnings were $24.5 million, just a quarter of what the company made in 2001.
This year’s fourth quarter did mark the start of production from Forest’s Redoubt Shoal field in Cook Inlet, a project that has taken a major part of Forest’s capital spending.
The company said the reduced fourth-quarter production total resulted from the hurricane in the Gulf of Mexico, property sales, and the normal declines caused by reduced capital spending. Those were the same reasons cited for a similar decline last quarter, but production has dropped even further since then.
For the fourth quarter, gas flows averaged 246.8 million cubic feet a day, down 9 percent from the same period in 2001 and down 4 percent from the third-quarter number. Annual production took a bigger drop from the 2001 figure, 15 percent, to 252.2 million cubic feet daily.
But Forest was rescued by a higher average sale price, at least for the fourth quarter. Forest’s natural gas sold for an average of $3.58 for each thousand cubic feet, 28 percent higher than fourth-quarter 2001, when the average price was $2.79.
Liquids down despite Redoubt Liquids production was 22,500 barrels daily in the recent quarter, down 26 percent from 30,600 barrels in the final quarter of 2001 and down from 24,400 barrels daily in the third quarter. The company did say that lack of tanker shipments in Alaska led to higher inventories at the end of the year than expected, so that may have cut the daily figure a bit.
Average sale price for the liquids rose 14 percent compared with the 2001 fourth period, to $21.87 a barrel in the last quarter of 2002.
Capital spending for 2002 was $354.2 million. Of that, 30 percent went to exploration and 70 percent to development, with a substantial part of the development budget going to Redoubt Shoal.
Over the year, Forest drilled 69 wells, with an overall success rate of 75 percent. The company expects to put $300 million to $350 million into capital projects this year.
Revenues for the quarter were $127.6 million, up 2 percent from a period a year ago and up by the same percentage from the third quarter number. Annual revenues for 2002 were $471.7 million. That’s down by a third compared with 2001.
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