By Saabira Chaudhuri
Forest Oil Corp. (FST) has launched a process to sell its oil
and gas assets in the Texas Panhandle after receiving what it said
are unsolicited proposals from third parties interested in the
assets.
Forest said it has hired J.P. Morgan Securities LLC to help with
its marketing efforts. The company intends to use any proceeds from
a potential sale to reduce debt and enhance financial
flexibility.
"Our significant acreage position, which is largely operated by
Forest and held by production, presents a large-scale, low-risk
development opportunity," Chief Executive Patrick R. McDonald
said.
Once a deal is completed, Forest said its remaining asset
portfolio will be anchored by its ongoing oil development
opportunity in the Eagle Ford Shale, where oil production is
projected to more than double during 2014.
In addition, the Forest said it has a position of 111,000 net
acres in East Texas, which is largely held by production and upon
which it plans to continue the development of its oil and natural
gas liquids properties. It also intends to maintain its exposure to
potential natural gas development through its low-decline natural
gas properties in the Ark-La-Tex region.
As natural gas prices have tumbled, Forest and other companies
that focus on natural-gas production have seen revenue decline.
Forest has been shedding some of its noncore assets, shifting its
focus toward liquids--which is more lucrative but also more
costly--in an effort to improve its balance sheet.
In April, the company struck a strategic partnership with
oil-fields services giant Schlumberger Ltd. (SLB) related to the
Eagle Ford Shale land in Gonzales County, Texas, to accelerate
production growth and improve the project's economics. In January,
Forest Oil sold properties in South Texas, excluding the Eagle Ford
shale, for about $307 million to raise cash to repay debt.
Earlier this year, Forest Oil reported its first-quarter loss
widened as the exploration-and-production company posted a handful
of one-time losses on top of weaker revenue.
Shares closed Friday at $4.58 and were inactive premarket. The
stock is down 24% in the past 12 months.
Write to Saabira Chaudhuri at saabira.chaudhuri@dowjones.com