Forest Oil Corporation (NYSE:FST) Missing The Woods For The Trees


Dallas, Texas 03/17/2014 (FINANCIALSTRENDS) – Forest Oil Corporation (NYSE:FST)is the Denver-based natural gas liquids and natural gas explorer and producer, which, experts believe is failing to achieve a strategic goal-post in the recent weeks.

Cause of missing the woods for the trees

As one of the companies engaged in exploration and development as well as acquisition of oil, natural gas in North America, FST has been busy with some restructuring and bringing in higher financial mobility, besides reducing outstanding debts. The last of these was a strategic goal, with which FST hoped to lower its exposure to debt. This followed a series of asset sales and consolidation of operational assets.

Unfortunately, the sale of assets misfired.

Forest Oil Corporation (NYSE:FST) had expected the assets which it retained, namely Eagle Ford  and Ark-La-Tex, located off East Texas, North Louisiana and Arkoma Basin to show good results. However, Eagle Ford posted results which have now put the whole strategy of debt-layoff versus assets sales into jeopardy for FST.

Eagle Ford in its last quarter drilling results for 2013, reported such aggressively-low results that it may soon cease to be a region where FST will venture to drill anywhere in the near future.

Did FST overshoot its Eagle Ford expectations?

Analysts familiar with oil and gas explorations especially of Eagle Ford legacy of posting poor results, feel Forest Oil Corporation (NYSE:FST) may have chewed-off more than needed on its asset front, by choosing Eagle Ford assets during the sale-off. Previous owner of Eagle Ford, Swift Energy had found itself under tremendous pressure when the wells in the region failedto produce estimated yields of the liquid.

The back-lash for Forest Oil at this juncture is that it continues to be yoked to over $800 million in debt, and non-performing expensive assets like Eagle Ford. Fortunately, it has time to quickly revamp its strategy, while the soft cushion it currently holds- $66 million from its 2013 –lies in its coffers.