Aided by the combination of higher average oil and natural gas sales prices, higher sales volumes and lower oil and gas production expenses, Forest Oil Corp. posted 2003 net earnings from continuing operations of $90.2 million or $1.82 per basic share and net earnings of $88.4 million or $1.79 per basic share, an increase of over 300% compared to net earnings of $21.3 million or $0.45 per share in 2002.
However, due to a downward revision of proved reserves and other factors, Forest reported 4Q2003 net earnings from continuing operations of $6.1 million or $0.11 per basic share and a net loss of $0.3 million or $0.01 per basic share compared to net earnings of $9.2 million or $0.20 per basic share in the fourth quarter of 2002.
In addition to the revision during the fourth quarter, Forest also recorded a $16.9 million impairment of the carrying value of certain international exploration assets (estimated after-tax effect of $10.5 million), and recorded a loss of $7.7 million (net of tax) on discontinued operations due to the decision to sell Forest’s Canadian marketing subsidiary.
The company noted that increased price realizations for both oil and gas, combined with higher sales volumes, generated oil and gas revenue increases of 36% in the quarter and 39% for the year, compared to corresponding periods in 2002. The company’s U.S. and Canada combined sales volume for 2003 was 265.7 MMcf/d, compared to 232.2 MMcf/d during 2002. During 2003, Forest drilled a total of 104 wells with an overall success rate of 82%.
Looking into the 2004 crystal ball, the company said it expects its daily production will be in the range of 440-470 MMcfe/d for the full year of 2004. Forest said it expects production during the year to be between 280 and 310 MMcf/d of gas and between 26,000 and 27,000 b/d of oil and gas liquids. The company noted that it expects its 2004 production expense to be between $180-$200 million.
In total, Forest said that it estimates that capital expenditures (excluding acquisitions) will be between $275-325 million in 2004.
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