Disappointed Investors Sell Shares Of Forest Oil Corporation (NYSE:FST)
Forest Oil Corporation (NYSE:FST) saw quick drop in share prices by over 11.9%, closing at $4.41 at the end of trading on Tuesday.
Apparent reason for decline in share price was FST’s failure to meet third quarter expectations. The company failed to meet its third quarter EPS by $0.03 accruing only $0.06. It missed on the revenue earnings front as well, with the company falling short by $14.23million, and earning only $118.19million.
The company has ascribed the fall in fortunes to failure of some of its assets. On the one hand Eagle Ford well production saw a major shortfall, while another asset it sold Texas Panhandle did not make the cut. FST has been struggling with a drop in the net sales as well as natural gas volumes. The reasons for the short fall in sales are the recent attempts by the company to follow oil prospects and seek higher profit margins. Besides, the drop in oil as well as gas prices led to further decline in sales.
The net sales volume saw a dramatic fall of 38.4% for year on year comparison. Additionally, there was an increase in the expenditure on the production front as well.
Earlier in October, analysts had foreseen drop in production at the Eagle Ford Shale unit. With the disposal of Texas Panhandle, the $1 billion sale did not see rise in share prices. Interestingly, FST lost by nearly 25-45% during the period. Analysts believed that with just Eagle Ford, spread over approximately 28K acres, there was not much in the pipeline to bolster FST production. Schlumberger Limited (NYSE:SLB), on the other hand is believed to have acquired greater acreage at Texas’ Eagle Ford shale.
Currently, investors are awaiting FST next move. If the independent oil and gas explorer and developer were to offer more assets and expand its portfolio, there would be hope for those who yet see FST as a good long term proposition.