Forest Oil squeezes more profits out of less production in third quarter

Allen Baker, PNA contributing writer

Forest Oil Corp. earned $2.9 million in the third quarter of this year, nearly double the profit figure for the same quarter a year ago. But it was way down from $11 million in profits the company collected in the second quarter.

The Denver company reports a 19 percent decline in lease operating expense in the third quarter to $42.3 million, compared with $52.4 million a year ago. The depreciation and depletion allowance slid to $48 million from $60 million due to lower production volumes. Those made up for declines in production and prices.

Daily gas production slipped 12 percent to 257 million cubic feet, while the average price for the gas dropped 4 percent to $2.94 from $3.06. Liquids flow was 24,400 barrels a day, down 18 percent from 29,600 barrels in the same quarter of 2001. Average liquids sale price was $22.19 a barrel, down 5 percent from $23.34.

The company says the lower production numbers resulted from hurricane problems in the Gulf of Mexico and the sale of some properties, along with normal declines caused by reduced capital spending there.

That cut third-quarter revenues by 15 percent to $125 million compared with the third quarter of 2001. The company collected $198 million selling its oil and gas in the second quarter of this year.