8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report: August 7, 2013

(Date of earliest event reported)

FORESTAR GROUP INC.

(Exact name of registrant as specified in its charter)

Delaware	Commission File Number	26-1336998
(State or other jurisdiction of incorporation or organization)	001-33662	(I.R.S. Employer Identification No.)

6300 Bee Cave Road, Building Two, Suite 500

Austin, Texas 78746

(Address of principal executive offices) (zip code)

(512) 433-5200

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On August 7, 2013, Forestar Group Inc. (the “Company”) issued a press release announcing the Company’s results for the quarter ended June 30, 2013. A copy of the press release is furnished as Exhibit 99.1 of this report.

Item 7.01. Regulation FD Disclosure.

On August 7, 2013, management of the Company will participate in a conference call discussing the Company’s results for the quarter ended June 30, 2013. Copies of the presentation materials to be used by management are furnished as Exhibit 99.2 of this report.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1	Press release issued by the Company on August 7, 2013, announcing the Company’s results for the quarter ended June 30, 2013.
99.2	Presentation materials to be used by management in a conference call on August 7, 2013, discussing the Company’s results for the quarter ended June 30, 2013.

2

SIGNATURE

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		FORESTAR GROUP INC.
Date:	August 7, 2013	By:	/s/ Christopher L. Nines
			Name:	Christopher L. Nines
			Title:	Chief Financial Officer and Treasurer

3

EXHIBIT INDEX

Exhibit	Description
99.1	Press release issued by the Company on August 7, 2013, announcing the Company’s results for the quarter ended June 30, 2013.
99.2	Presentation materials to be used by management in a conference call on August 7, 2013, discussing the Company’s results for the quarter ended June 30, 2013.

4

EX-99.1

NEWS

RELEASE

FOR IMMEDIATE RELEASE

CONTACT:     Anna E. Torma

(512) 433-5312

FORESTAR GROUP INC. REPORTS

SECOND QUARTER 2013 RESULTS

AUSTIN, TEXAS, August 7, 2013—Forestar Group Inc. (NYSE: FOR) today reported second quarter 2013 net income of approximately $0.5 million, or $0.02 per diluted share, compared with second quarter 2012 net income of approximately $0.8 million, or $0.02 per diluted share outstanding. Second quarter 2012 results include after-tax expenses of approximately ($1.6) million, or ($0.05) per diluted share, associated with the acquisition of Credo Petroleum Corporation.

“During second quarter, we remained on track executing our Triple in FOR strategic initiatives. In real estate, residential lot demand remains favorable with option contracts with homebuilders at the strongest level since the start of the housing recovery and higher average per lot pricing compared with second quarter 2012. We continue to focus on building a solid multifamily pipeline in our target markets, which continue to exhibit favorable multifamily market conditions. During the quarter, we began construction on a new multifamily community near Dallas and started pre-leasing at Eleven in Austin. Oil and gas operations continued to gain momentum, with accelerating oil production in the Bakken and Three Forks formations in North Dakota and Lansing-Kansas City formation in Kansas and Nebraska. We are focused on accelerating value realization and capitalizing on strategic and disciplined growth opportunities,” said Jim DeCosmo, president and chief executive officer of Forestar Group.

Second Quarter 2013 Significant Highlights

• Sold 360 developed residential lots, with average pricing per lot up nearly 29% compared with second quarter 2012

• Oil production up nearly 170% compared with second quarter 2012, principally due to the acquisition of Credo Petroleum

• Acquired leasehold interests in over 17,000 net mineral acres, principally located in Nebraska and Kansas

Forestar manages its operations through three business segments: real estate, oil and gas and other natural resources.

REAL ESTATE

Second Quarter 2013 Significant Highlights

• Sold 360 developed residential lots – Over 1,900 lots under option contracts with homebuilders

• Residential lot margins up 66% compared with second quarter 2012

• Sold 1,042 acres of undeveloped land for nearly $2,580 per acre

• Sold 34 commercial acres for over $103,000 per acre

• Began construction on Midtown Cedar Hill, 354-unit multifamily community near Dallas, Texas

• Pre-leasing begins at Eleven, 257-unit multifamily community in Austin, Texas

1

Segment Financial Results:

($ in millions)	2Q 2013	2Q 2012	1Q 2013
Segment Revenues	$41.2	$26.6	$78.7
Segment Earnings	$8.1	$7.7	$19.4

Second quarter 2013 real estate segment earnings were higher compared with second quarter 2012 principally due to higher average prices for residential lots and commercial tracts sold which were somewhat offset by lower lot sales volumes and commercial acres sold. In addition, second quarter 2013 real estate segment earnings increased primarily due to the sale of the remaining 440 undeveloped residential acres from a project in Florida for $3.5 million, generating approximately $0.7 million in segment earnings. First quarter 2013 results include earnings of $10.9 million associated with the sale of Promesa, a wholly-owned multifamily community we developed in Austin. Real estate segment earnings declined in second quarter 2013 compared with first quarter 2013, excluding the earnings associated with the sale of Promesa, primarily due to lower residential lot sales.

Second quarter 2012 real estate segment earnings include a $3.4 million gain associated with the sale of 800 acres from the Light Farms venture near Dallas.

OIL AND GAS

Second Quarter 2013 Significant Highlights

• Oil production up nearly 170% compared with second quarter 2012, principally due to the acquisition of Credo Petroleum

• 18 new productive oil and gas wells drilled; 983 producing wells at quarter-end, up from 541 wells in second quarter 2012, principally due to acquisition of Credo Petroleum

• Drilling and completion capital investment of nearly $11.7 million

• Leased over 17,000 net mineral acres principally in Kansas and Nebraska

Segment Financial Results:

($ in millions)	2Q 2013	2Q 2012	1Q 2013
Segment Revenues	$15.8	$7.1	$15.5
Segment Earnings	$4.2	$5.0	$5.1

Oil and gas segment earnings decreased in second quarter 2013 compared with second quarter 2012 principally due to reduced oil volumes associated with royalties from our owned mineral interests, lower oil prices, decreased delay rental revenues and incremental personnel costs, which were partially offset by increased oil production attributable to the acquisition of Credo Petroleum. Oil and gas segment earnings decreased in second quarter 2013 compared with first quarter 2013 principally due to lower oil and gas prices and lower natural gas production, which was partially offset by higher oil production.

OTHER NATURAL RESOURCES

Second Quarter 2013 Significant Highlights

• Sold nearly 185,000 tons of fiber for $14.85 per ton

• Recreational leasing remains strong

2

Segment Financial Results:

($ in millions)	2Q 2013	2Q 2012	1Q 2013
Segment Revenues	$3.0	$1.5	$3.3
Segment Earnings (Loss)	$1.0	(0.5)	$1.3

Second quarter 2013 other natural resources segment earnings were higher compared with second quarter 2012 principally due to over 79,000 tons of additional fiber sales and a 27% increase in average pricing per ton. Other natural resources segment earnings decreased in second quarter 2013 compared with first quarter 2013 principally due to lower fiber sales and pricing.

OUTLOOK

“Housing markets continue to show solid signs of recovery, with growing demand for residential lots and increased interest in residential and commercial tracts. Our backlog remains strong and we are well positioned to accelerate real estate sales during this housing recovery. Our multifamily team continues to build a solid pipeline of multifamily development opportunities, with construction at our multifamily ventures in Austin and Denver on target to begin delivering units in 2013, and our sites in Dallas and Nashville should be under construction by year-end. We will continue to evaluate and acquire additional multifamily sites to further develop our pipeline.

“We continue to generate positive momentum through our oil and gas initiatives to increase exploration activity, production and reserves. During second quarter, we experienced a continued increase in North Dakota drilling activity, with approximately seven Bakken or Three Forks wells (5.2% average working interest) reaching total depth during the quarter. We anticipate drilling activity in the Bakken to accelerate in the second half of 2013 with a higher average working interest. In addition, exploration and drilling activity in Kansas and Nebraska also continued to accelerate during second quarter, with 17 wells reaching total depth, 11 of which have been economic, a level of success which exceeds our expectations. Given the success of our exploration activity in these basins, during second quarter 2013 we acquired leasehold interests in over 17,000 net mineral acres in new and existing prospects principally in Nebraska and Kansas.

“We continue to increase our momentum toward delivering our Triple in FOR strategic initiatives, focused on accelerating value realization, increasing transparency and disclosure, and growing our net asset value through strategic and disciplined investments. We are well positioned for 2013 and for continued momentum in 2014,” concluded Mr. DeCosmo.

The Company will host a conference call on August 7, 2013 at 10:00 am ET to discuss results of second quarter 2013. The meeting may be accessed through webcast or by conference call. The webcast may be accessed through Forestar’s Internet site at www.forestargroup.com. To access the conference call, listeners calling from North America should dial 1-866-515-2912 at least 15 minutes prior to the start of the meeting. Those wishing to access the call from outside North America should dial 1-617-399-5126. The password is Forestar. Replays of the call will be available for two weeks following the completion of the live call and can be accessed at 1-888-286-8010 in North America and at 1-617-801-6888 outside North America. The password for the replay is 42167086.

About Forestar Group

Forestar Group Inc. operates in three business segments: real estate, oil and gas and other natural resources. At the end of second quarter 2013, the real estate segment owns directly or through ventures over 133,000 acres of real estate located in ten states and 14 markets in the U.S. The real estate segment has 14 real estate projects representing approximately 26,000 acres currently in the entitlement process, and 72 entitled, developed and under development projects in eight states and 12 markets encompassing almost 13,900 acres, comprised of almost 23,200 planned residential lots and approximately 2,300 commercial acres. The oil and gas segment includes approximately 808,000 net acres of oil and gas mineral interests, with approximately 590,000 acres of fee ownership located principally in Texas, Louisiana, Alabama, and Georgia and almost 218,000 net acres of leasehold interests principally located in Nebraska, Kansas, Oklahoma, North Dakota and Texas. These leasehold interests include about 7,000 net mineral acres in the core of the prolific Bakken and Three Forks formations. The other natural resources segment includes sale of wood fiber and management of our recreational leases, and approximately 1.5 million acres of groundwater resources,

3

including a 45% nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes from approximately 1.4 million acres in Texas, Louisiana, Georgia and Alabama and about 20,000 acres of groundwater leases in central Texas. Forestar’s address on the World Wide Web is www.forestargroup.com.

Forward Looking Statements

This release contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are typically identified by words or phrases such as “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “forecast,” and other words and terms of similar meaning. These statements reflect management’s current views with respect to future events and are subject to risk and uncertainties. We note that a variety of factors and uncertainties could cause our actual results to differ significantly from the results discussed in the forward-looking statements, including our ability to achieve synergies and value creation contemplated by the merger with Credo, and our ability to promptly and effectively integrate Credo’s businesses. Other factors and uncertainties that might cause such differences include, but are not limited to: general economic, market, or business conditions; changes in commodity prices; opportunities (or lack thereof) that may be presented to us and that we may pursue; fluctuations in costs and expenses including development costs; demand for new housing, including impacts from mortgage credit availability; lengthy and uncertain entitlement processes; cyclicality of our businesses; accuracy of accounting assumptions; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond our control. Except as required by law, we expressly disclaim any obligation to publicly revise any forward-looking statements contained in this news release to reflect the occurrence of events after the date of this news release.

4

FORESTAR GROUP INC.

(UNAUDITED)

Business Segments

	Second Quarter						First Six Months
	2013			2012			2013			2012
	(In thousands)
Revenues:
Real estate	$	41,219		$	26,647		$	119,908		$	44,569
Oil and gas	15,831			7,148			31,335			16,574
Other natural resources	3,029			1,517			6,307			2,261
Total revenues	$	60,079		$	35,312		$	157,550		$	63,404
Segment earnings:
Real estate	$	8,104		$	7,666		$	27,550		$	19,243
Oil and gas	4,243			5,005			9,370			12,133
Other natural resources	991			(458		)	2,243			(1,321		)
Total segment earnings	13,338			12,213			39,163			30,055
Items not allocated to segments:
General and administrative expense	(5,329		)	(7,120		)	(10,287		)	(11,482		)
Share-based compensation expense	(1,460		)	67			(11,875		)	(5,164		)
Interest expense	(5,122		)	(3,664		)	(9,661		)	(7,555		)
Other corporate non-operating income	25			47			56			111
Income before taxes	1,452			1,543			7,396			5,965
Income tax expense	(911		)	(732		)	(2,904		)	(2,352		)
Net income attributable to Forestar Group Inc.	$	541		$	811		$	4,492		$	3,613
Net income per common share:
Basic	$	0.02		$	0.02		$	0.13		$	0.10
Diluted	$	0.02		$	0.02		$	0.13		$	0.10
Weighted average common shares outstanding (in millions):
Basic	35.4			35.2			35.3			35.2
Diluted	36.1			35.4			35.9			35.4

	Second Quarter
Supplemental Financial Information:	2013		2012
	(In thousands)
Cash and cash equivalents	$	69,138	$	45,474
Borrowings under credit facility	200,000		130,000
Convertible senior notes, net of discount 1	98,353		—
Other debt 2	33,294		71,943
Total debt	$	331,647	$	201,943

 _____________________

¹  Represents $125 million convertible senior notes issued February 2013, net of unamortized discount

²  Consists principally of consolidated venture non-recourse debt.

5

FORESTAR GROUP INC.

REAL ESTATE SEGMENT

PERFORMANCE METRICS

	Second Quarter				First Six Months
	2013		2012		2013		2012
REAL ESTATE
Owned, Consolidated & Equity Method Ventures:
Residential Lots Sold	360		427		806		712
Revenue per Lot Sold	$	57,588	$	44,694	$	54,432	$	48,003
Commercial Acres Sold	34		38		37		38
Revenue per Commercial Acre Sold	$	103,102	$	47,040	$	125,706	$	47,040
Undeveloped Acres Sold	1,042		933		1,961		1,388
Revenue per Acre Sold	$	2,579	$	2,765	$	2,753	$	2,640
Owned & Consolidated Ventures:
Residential Lots Sold	259		345		614		482
Revenue per Lot Sold	$	57,154	$	42,725	$	54,440	$	48,210
Commercial Acres Sold	32		38		35		38
Revenue per Commercial Acre Sold	$	74,166	$	47,040	$	100,311	$	47,040
Undeveloped Acres Sold	1,000		933		1,919		1,253
Revenue per Acre Sold	$	2,576	$	2,765	$	2,755	$	2,645
Ventures Accounted For Using the Equity Method:
Residential Lots Sold	101		82		192		230
Revenue per Lot Sold	$	58,700	$	52,979	$	54,407	$	47,568
Commercial Acres Sold	2		—		2		—
Revenue per Commercial Acre Sold	$	652,886	$	—	$	652,886	$	—
Undeveloped Acres Sold	42		—		42		135
Revenue per Acre Sold	$	2,650	$	—	$	2,650	$	2,600

3

SECOND QUARTER 2013

REAL ESTATE PIPELINE

Real Estate	Undeveloped	In Entitlement Process	Entitled	Developed & Under Development	Total Acres*
Undeveloped Land
Owned	86,468
Ventures	6,859				93,327
Residential
Owned		23,272	8,464	850
Ventures			1,948	285	34,819
Commercial
Owned		2,708	1,187	585
Ventures			371	182	5,033
Total Acres	93,327	25,980	11,970	1,902	133,179
Estimated Residential Lots			19,972	3,204	23,176

 _____________________

* In addition, Forestar owns a 58% interest in a venture which controls approximately 16,000 acres of undeveloped land in Georgia with minimal investment. Excludes acres associated with fully developed commercial and income producing properties.

6

FORESTAR GROUP INC.

OIL AND GAS SEGMENT

PERFORMANCE METRICS

	Second Quarter				First Six Months
	2013		2012		2013		2012
Leasing Activity from Owned Mineral Interests
Acres Leased	515		—		825		805
Average Bonus / Acre		$343	—			$333		$357
Delay Rentals Received		$6,000		$447,000		$464,000		$1,562,000
Oil & Gas Production
Royalty Interests1
Gross Wells	543		541		543		541
Oil Production (Barrels)	40,600		53,200		88,900		120,900
Average Oil Price ($ / Barrel)		$83.60		$92.73		$83.56		$95.74
Natural Gas Production (MMcf)	322.2		402.5		699.4		830.4
Average Natural Gas Price ($ / Mcf)		$3.24		$2.30		$3.11		$2.76
BOE Production2	94,400		120,300		205,400		259,300
Average Price ($ / BOE)		$47.10		$48.70		$46.73		$53.48
Working Interests
Gross Wells	449		9		449		9
Oil Production (Barrels)	125,200		8,400		224,800		9,800
Average Oil Price ($ / Barrel)		$86.18		$106.84		$88.73		$101.79
Natural Gas Production (MMcf)	183.1		17.9		399.7		42.3
Average Natural Gas Price ($ / Mcf)		$3.25		$2.71		$3.53		$3.31
BOE Production2	155,700		11,300		291,500		16,900
Average Price ($ / BOE)		$73.12		$82.93		$73.29		$67.61
Total Oil & Gas Interests
Gross Wells3	983		541		983		541
Oil Production (Barrels)	165,800		61,600		313,700		130,700
Average Oil Price ($ / Barrel)		$85.55		$94.64		$87.26		$96.19
Natural Gas Production (MMcf)	505.3		420.4		1,099.1		872.7
Average Natural Gas Price ($ / Mcf)		$3.25		$2.31		$3.26		$2.79
BOE Production2	250,100		131,600		496,900		276,200
Average Price ($ / BOE)		$63.30		$51.65		$62.31		$54.34
Well Activity
Mineral Interests Owned3
Net Acres Held By Production	36,000		35,000		36,000		35,000
Gross Wells Drilled	—		7		—		11
Productive Gross Wells	543		541		543		541
Mineral Interests Leased
Net Acres Held By Production4	33,000		—		33,000		—
Gross Wells Drilled	18		—		39		—
Productive Gross Wells4	449		—		449		—
Total Well Activity
Net Acres Held By Production	69,000		35,000		69,000		35,000
Gross Wells Drilled	18		7		39		11
Productive Gross Wells	983		541		983		541

_____________________________________________

¹ Includes our share of venture activity in which we own a 50% interest. Our share of natural gas production is 57.8 MMcf and 128.0 MMcf in second quarter and first six months2013, and 82.1 MMcf and 172.2 MMcf in second quarter and first six months2012.

²  BOE – Barrels of oil equivalent (converting natural gas to oil at 6 Mcfe / Bbl)

³  Includes wells operated by third-party lessees/operators. Represent wells in which we own a royalty or working interest in a producing well. Excludes nine working interest wells as we also own a royalty interest in these wells.

⁴  Excludes 8,000 net acres and 1,181 wells in which we have an overriding royalty interest

7

FORESTAR GROUP INC.

OIL AND GAS SEGMENT

MINERAL INTERESTS

MINERAL INTERESTS OWNED¹ 

Forestar’s oil and gas segment includes approximately 590,000 owned net mineral acres principally located in Texas, Louisiana, Georgia and Alabama.

State	Unleased	Leased	Held By Production	Total 2
		(Net acres)
Texas	213,000	12,000	27,000	252,000
Louisiana	117,000	18,000	9,000	144,000
Georgia	152,000	—	—	152,000
Alabama	40,000	—	—	40,000
California	1,000	—	—	1,000
Indiana	1,000	—	—	1,000
	524,000	30,000	36,000	590,000

_____________________________________________

¹ Represents net acres and includes ventures

² Excludes 477 net mineral acres located in Colorado

MINERAL INTERESTS LEASED

Forestar’s oil and gas segment includes approximately 218,000 net mineral acres of leasehold interests principally located in Nebraska, Kansas, Oklahoma, North Dakota and Texas, predominantly as result of our September 28, 2012 acquisition of Credo Petroleum.

State	Undeveloped	Held By Production 1	Total
Nebraska	123,000	2,000	125,000
Kansas	34,000	5,000	39,000
Oklahoma	—	17,000	17,000
Alabama	10,000	—	10,000
Texas	9,000	2,000	11,000
North Dakota	4,000	3,000	7,000
Other	5,000	4,000	9,000
	185,000	33,000	218,000

_____________________________________________

¹  Excludes approximately 8,000 net acres of overriding royalty interests.

8

FORESTAR GROUP INC.

OTHER NATURAL RESOURCES SEGMENT

PERFORMANCE METRICS

	Second Quarter				First Six Months
Other Natural Resources	2013		2012		2013		2012
Fiber Sales*
Pulpwood tons sold	128,100		80,800		248,700		105,200
Average pulpwood price per ton	$	10.84	$	9.24	$	11.26	$	9.46
Sawtimber tons sold	56,900		24,900		127,800		29,300
Average sawtimber price per ton	$	23.87	$	19.46	$	23.04	$	19.47
Total tons sold	185,000		105,700		376,500		134,500
Average price per ton	$	14.85	$	11.66	$	15.26	$	11.64
Recreational Activity
Average recreational acres leased	121,800		131,800		122,200		131,400
Average price per leased acre	$	9.29	$	8.84	$	9.29	$	8.82

_____________________________________________

*The majority of our fiber sales were to International Paper at market prices.

9

FORESTAR GROUP INC.

PROJECTS IN ENTITLEMENT

A summary of our real estate projects in the entitlement process ^(a) at second quarter-end 2013 follows:

Project	County	Market	Project Acres (b)
California
Hidden Creek Estates	Los Angeles	Los Angeles	700
Terrace at Hidden Hills	Los Angeles	Los Angeles	30
Georgia
Ball Ground	Cherokee	Atlanta	500
Crossing	Coweta	Atlanta	230
Fincher Road	Cherokee	Atlanta	3,890
Fox Hall	Coweta	Atlanta	960
Garland Mountain	Cherokee/Bartow	Atlanta	350
Martin’s Bridge	Banks	Atlanta	970
Mill Creek	Coweta	Atlanta	770
Serenity	Carroll	Atlanta	440
Wolf Creek	Carroll/Douglas	Atlanta	12,230
Yellow Creek	Cherokee	Atlanta	1,060
Texas
Lake Houston	Harris/Liberty	Houston	3,700
San Jacinto	Montgomery	Houston	150
Total			25,980

_____________________________________________

^(a) A project is deemed to be in the entitlement process when customary steps necessary for the preparation of an application for governmental land-use approvals, like conducting pre-application meetings or similar discussions with governmental officials, have commenced, or an application has been filed. Projects listed may have significant steps remaining, and there is no assurance that entitlements ultimately will be received.

^(b) Project acres, which are the total for the project regardless of our ownership interest, are approximate. The actual number of acres entitled may vary.

10

FORESTAR GROUP INC.

REAL ESTATE PROJECTS

A summary of activity within our projects in the development process, which includes entitled ^(a), developed and under development real estate projects, at second quarter-end 2013 follows:

				Residential Lots (c)		Commercial Acres (d)
Project	County	Interest Owned  (b)		Lots Sold Since Inception	Lots Remaining	Acres Sold Since Inception	Acres Remaining  (f)
Projects we own
California
San Joaquin River	Contra Costa/Sacramento	100	%	—	—	—	288
Colorado
Buffalo Highlands	Weld	100	%	—	164	—	—
Johnstown Farms	Weld	100	%	170	436	2	7
Pinery West	Douglas	100	%	—	—	20	91
Stonebraker	Weld	100	%	—	603	—	—
Tennessee
Azalea Park	Hays	100	%	—	173	—	—
Texas
Arrowhead Ranch	Hays	100	%	—	387	—	6
Bar C Ranch	Tarrant	100	%	292	813	—	—
Barrington Kingwood	Harris	100	%	75	105	—	—
Cibolo Canyons	Bexar	100	%	766	709	96	54
Harbor Lakes	Hood	100	%	208	241	2	19
Hunter’s Crossing	Bastrop	100	%	423	67	38	71
La Conterra	Williamson	100	%	132	369	—	58
Lakes of Prosper	Collin	100	%	5	280	—	—
Maxwell Creek	Collin	100	%	839	160	10	—
Oak Creek Estates	Comal	100	%	142	505	13	—
Stoney Creek	Dallas	100	%	149	605	—	—
Summer Creek Ranch	Tarrant	100	%	842	432	35	44
Summer Lakes	Fort Bend	100	%	491	639	56	—
Summer Park	Fort Bend	100	%	—	198	28	62
The Colony	Bastrop	100	%	445	704	22	31
The Preserve at Pecan Creek	Denton	100	%	429	365	—	7
Village Park	Collin	100	%	536	220	3	2
Westside at Buttercup Creek	Williamson	100	%	1,435	61	66	—
Other projects (10)	Various	100	%	2,100	156	218	36

11

				Residential Lots (c)		Commercial Acres (d)
Project	County	Interest Owned  (b)		Lots Sold Since Inception	Lots Remaining	Acres Sold Since Inception	Acres Remaining  (f)
Georgia
Seven Hills	Paulding	100	%	682	408	26	113
The Villages at Burt Creek	Dawson	100	%	—	1,715	—	57
Towne West	Bartow	100	%	—	2,674	—	121
Other projects (17)	Various	100	%	76	3,017	—	705
Florida
Other projects (2)	Various	100	%	301	—	—	—
Missouri and Utah
Other projects (2)	Various	100	%	500	54	—	—
				11,038	16,260	635	1,772

Projects in entities we consolidate
Texas
City Park	Harris	75	%	1,239	72	50	115
Lantana (e)	Denton	55	%	812	1,314	9	3
Timber Creek	Collin	88	%	—	614	—	—
Willow Creek Farms II	Waller/Fort Bend	90	%	62	169	—	—
Other projects (2)	Various	Various		7	200	—	129
Georgia
The Georgian	Paulding	75	%	289	1,052	—	—
				2,409	3,421	59	247
Total owned and consolidated				13,447	19,681	694	2,019
Projects in ventures that we account for using the equity method
Texas
Entrada	Travis	50	%	—	821	—	—
Fannin Farms West	Tarrant	50	%	324	24	—	12
Harper’s Preserve	Montgomery	50	%	281	1,412	—	59
Lantana (e)	Denton	Various		1,163	62	16	42
Long Meadow Farms	Fort Bend	37	%	1,057	745	121	178
Southern Trails	Brazoria	80	%	629	362	—	—
Stonewall Estates	Bexar	50	%	317	69	—	—
Other projects (1)	Nueces	50	%	—	—	—	15
Total in ventures				3,771	3,495	137	306
Combined total				17,218	23,176	831	2,325

_____________________________________________

^(a) A project is deemed entitled when all major discretionary governmental land-use approvals have been received. Some projects may require additional permits and/or non-governmental authorizations for development.

^(b) Interest owned reflects our net equity interest in the project, whether owned directly or indirectly. There are some projects that have multiple ownership structures within them. Accordingly, portions of these projects may appear as owned, consolidated or accounted for using the equity method.

^(c) Lots are for the total project, regardless of our ownership interest. Lots remaining represent vacant developed lots, lots under development and future planned lots and are subject to change based on business plan revisions.

12

^(d) Commercial acres are for the total project, regardless of our ownership interest, and are net developable acres, which may be fewer than the gross acres available in the project.

^(e) The Lantana project consists of a series of 23 partnerships in which our voting interests range from 25 percent to 55 percent. We account for two of these partnerships using the equity method and we consolidate the remaining partnerships.

^(f) Excludes acres associated with commercial and income producing properties.

A summary of our significant commercial and income producing properties at second quarter-end 2013 follows:

Project	County	Market	Interest Owned  (a)		Type	Acres	Description
Radisson Hotel	Travis	Austin	100	%	Hotel	2	413 guest rooms and suites
Eleven (b)	Travis	Austin	25	%	Multifamily	3	257-unit luxury apartment
360° (b)	Arapahoe	Denver	20	%	Multifamily	4	304-unit luxury apartment
Midtown Cedar Hill (b)	Dallas	Dallas	100	%	Multifamily	13	354-unit luxury apartment

_____________________________________________

^(a) Interest owned reflects our total interest in the project, whether owned directly or indirectly.

^(b) Construction in progress.

13

EX-99.2

Second Quarter 2013 Financial Results August 7, 2013 Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value

Notice To Investors This presentation contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are typically identified by words or phrases such as “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,” “forecast,” and other words and terms of similar meaning. These statements reflect management’s current views with respect to future events and are subject to risk and uncertainties. We note that a variety of factors and uncertainties could cause our actual results to differ significantly from the results discussed in the forward-looking statements, including our ability to achieve synergies and value creation contemplated by the merger with Credo. Other factors and uncertainties that might cause such differences include, but are not limited to: general economic, market, or business conditions; changes in commodity prices; opportunities (or lack thereof) that may be presented to us and that we may pursue; fluctuations in costs and expenses including development costs; demand for new housing, including impacts from mortgage credit availability; lengthy and uncertain entitlement processes; cyclicality of our businesses; accuracy of accounting assumptions; competitive actions by other companies; changes in laws or regulations; and other factors, many of which are beyond our control. Except as required by law, we expressly disclaim any obligation to publicly revise any forward-looking statements contained in this presentation to reflect the occurrence of events after the date of this presentation. This presentation includes Non-GAAP financial measures. The required reconciliation to GAAP financial measures can be found as an exhibit to this presentation and on our website at www.forestargroup.com. 2

Second Quarter 2013 Earnings Reconciliation $0.8 $0.5 $0.9 $1.1 $0.3 ($1.1) ($1.0) ($0.5) $0.0 $1.0 $2.0 $3.0 $4.0 Q2 2012 G&A Other Natural Resources Real Estate Interest, Taxes & Other Expenses Share Based Comp Oil & Gas Q2 2013 ($ in millions) 3 $0.02 $0.03 $0.03 $0.01 ($0.03) ($0.03) ($0.01) $0.02 $0.00 $0.02 $0.04 $0.06 $0.08 $0.10 Q2 2012 G&A Other Natural Resources Real Estate Interest, Taxes & Other Expenses Share Based Comp Oil & Gas Q2 2013 Net Income Per Share Reconciliation Q2 2012 vs. Q2 2013 Net Income Reconciliation Q2 2012 vs. Q2 2013 • 2nd Qtr. 2012 results include after-tax expenses of approximately ($1.6) million, or ($0.05) per diluted share, associated with the acquisition of CREDO Petroleum Corporation Note: 2nd Qtr. 2013 weighted average diluted shares outstanding were 36.1 million

Broadening Real Estate Demand Drives Improved Segment Operating Results ($ in Millions) 2nd Qtr. 2013 2nd Qtr. 2012 Segment Earnings (Loss): Real Estate $8.1 $7.7 Oil and Gas 4.2 5.0 Other Natural Resources 1.0 (0.5) Total Segment Earnings $13.3 $12.2 4 • 2nd Qtr. 2013 real estate segment results include segment earnings of approximately $0.7 million from the sale of the remaining 440 undeveloped residential acres from a project in Florida for $3.5 million • 2nd Qtr. 2012 real estate segment results include a gain of approximately $3.4 million from the sale by a consolidated venture of approximately 800 acres from Light Farms project near Dallas, Texas

Second Quarter 2013 Operating Highlights Invested $36 million in strategic and disciplined growth opportunities Pre-leasing at Eleven; began construction at Midtown Cedar Hill Sold 360 developed residential lots, average pricing up 29% vs. Q2 2012 Over 1,900 lots under option contracts Sold nearly 185,000 tons of fiber, up over 79,000 tons vs. Q2 2012 OIL & GAS SINGLE-FAMILY FORESTAR TIMBERLAND MULTIFAMILY Oil production up nearly 170% vs. Q2 2012, due to Credo acquisition Leased over 17,000 net mineral acres principally in Nebraska and Kansas 5

Real Estate Second Quarter 2013 Highlights Building Momentum By Accelerating Lot Sales and Building a Solid Multifamily Pipeline 6

- 0.50 1.00 1.50 2.00 2.50 3.00 3.50 - 5,000 10,000 15,000 20,000 25,000 30,000 4 Q 0 0 3 Q 0 1 2 Q 0 2 1 Q 0 3 4 Q 0 3 3 Q 0 4 2 Q 0 5 1 Q 0 6 4 Q 0 6 3 Q 0 7 2 Q 0 8 1 Q 0 9 4 Q 0 9 3 Q 1 0 2 Q 1 1 1 Q 1 2 4 Q 1 2 M o n th s o f Su p p ly Fini sh e d V ac an t U n it s FinVacant (FV) FVMos Equilibrium Texas Housing Inventories Bolstering Recovery FOR Well Positioned With Lot Inventory in Texas Markets Source: Metrostudy 7 Texas Finished Vacant Inventory and MoS* Market Active Residential Projects Q2 13 Lot Sales Vacant Dev. Lots Lots Under Dev. Remaining Lots to be Developed Austin 12 28 99 111 2,216 DFW 14 118 640 475 4,125 Houston 9 157 324 248 3,130 San Antonio 3 37 154 191 967 Gulf Coast 3 - 153 - 47 Total Texas 41 340 1,370 1,025 10,485 Forestar Texas Lot Sales and Inventory (Q2 2013) 1 Q 1 3 MoS Equilibrium * Texas Markets represent Dallas, Houston, San Antonio and Austin • Texas finished vacant inventories remain well below equilibrium • Housing affordability still at attractive levels in major markets of Texas • Texas added 303,000 jobs in last 12 months and accounted for 12% of overall U.S. job growth in June

$7.7 $0.8 $0.5 ($0.7) ($0.2) $8.1 $0.0 $5.0 $10.0 $15.0 Q2 2012 Residential & Commercial Sales Operating Expenses Commercial & Income Producing Properties Undeveloped Land Sales Q2 2013 Real Estate – Results On-Track Q2 2013 Highlights • Sold 360 residential lots at average price of $57,600 per lot • Sold 34 commercial acres for approximately $103,000 per acre • Sold over 1,000 acres of undeveloped land for nearly $2,600 per acre • Momentum in multifamily pipeline with Eleven pre-leasing • Initiated construction of Midtown Cedar Hill multifamily community Segment Earnings Reconciliation Q2 2012 vs. Q2 2013 ($ in millions) 8 Note: Includes ventures

9 Note: Includes ventures 2013 average lot margin reflects YTD Q2 2013 A n n u al Lo t Sal e s 500 1,000 1,500 2,000 Q 4 1 0 Q1 1 1 Q2 1 1 Q3 1 1 Q4 1 1 Q1 1 2 Q2 1 2 Q3 1 2 Q4 1 2 Q1 1 3 Q2 1 3 R esi d en tial Lo ts Developed Lots Lots Under Development 2006 Peak Sales = 3,600 lots Residential Lots Under Option Contracts Q4 2010 – Q2 2013 Annual Lot Sales & Avg. Lot Margin 9 Residential Lot Demand Tracking Housing Recovery $0 $5,000 $10,000 $15,000 $20,000 $25,000 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2008 2009 2010 2011 2012 2013E Lot Sales Average Lot Margin 1,365 804 642 A ve ra ge Lo t M ar gi n YTD Q2 2013 Highest level since recovery 806 1,060 1,117

Multifamily Developments On Track Site Vanderbilt University 10 Eleven (Austin) Now Pre-Leasing 360° (Denver) Pre-Leasing in August Key Metrics ($ in millions) Units 257 FOR Equity Commitment $4 Total Est. Project Costs $40 % Complete 65% Est. Proforma Stabilized NOI $3.3 Eleven – Austin, TX 360° – Denver, CO Key Metrics ($ in millions) Units 304 FOR Equity Commitment $4 Total Est. Project Costs $49 % Complete 35% Est. Proforma Stabilized NOI $3.8 Forestar has a 25% venture interest in Eleven with Canyon Johnson Urban Funds Forestar has a 20% venture interest in 360° with Guggenheim Real Estate

Note: Includes consolidated ventures Forestar Real Estate Revenues (Excluding Timberland & Multifamily Property Sales) Core Real Estate Business Strengthening 11 Growing lot sales and margin Repositioning lower-earning assets Executing higher-return multifamily business Accelerating Value Realization $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $0.0 $10.0 $20.0 $30.0 $40.0 Q2 2010 Q2 2011 Q2 2012 Q2 2013 A ve ra ge Lo t M ar gi n ( $ in 000’ s) To tal R e ve n u e s ($ in m ill io n s) Residential Lots Residential Tracts Commercial Tracts Multifamily Income Producing Avg. Lot Margin

Oil and Gas Second Quarter 2013 Highlights Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 12

Accelerating Value Realization Through Increased Oil Production $5.0 $0.6 ($1.4) $4.2 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 Q2 2012 Oil & Gas Profit Operating Expenses Q2 2013 Se gme n t Ea rn ing s Q2 2013 Highlights • Oil production up nearly 170% or 104,200 barrels from Q2 2012, principally due to Credo acquisition • Oil production up over 12% or 17,900 barrels from Q1 2013 • 18 wells drilled (4 operated, 14 non- operated) • Leased over 17,300 net mineral acres; nearly 55,400 net mineral acres leased YTD Q2 2013, principally in Nebraska ($ in millions) 13 Segment Earnings Reconciliation Q2 2012 vs. Q2 2013 $5.2 $6.6 ($0.8) $11.0 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 Q2 2012 DD&A Oil & Gas Profit & Opex Q2 2013 Se gme n t EBIT D A X Segment EBITDAX Reconciliation Q2 2012 vs. Q2 2013 ($ in millions) Note: EBITDAX = segment earnings before interest and taxes, plus depreciation, depletion, amortization, geological, geophysical, seismic and dry hole costs Wells are gross EBITDAX is a Non-GAAP financial measure. The reconciliation between GAAP and Non-GAAP financial measures is included in the appendix to this presentation and provided on the company’s investor relations website.

Bakken / Three Forks Drilling Activity Accelerating Production and Reserve Growth Bakken / Three Forks Leasehold Interests Net Mineral Acres ~7,000 Average Working Interest 8.0% Potential Units 50 Total Potential Gross Wells 400 2013 Activity Gross Wells Producing at End Q2 53 Wells Added in Q2 7 Drilling & Awaiting Frac * 7 Wells Added YTD Q2 2013 18 Wells Planned for 2013 54 Average Working Interest Percent Q1 2013 Wells Drilled 4.84% Q2 2013 Wells Drilled 5.22% Committed Wells 6.44% 14 14 14 Bakken / Three Forks Proved Developed Producing Wells +4 +7 +24 +43 Actual Wells Planned Wells 0 10 20 30 40 50 60 70 80 Fe b -1 0 A p r- 1 0 J u n -1 0 A u g -1 0 O c t- 1 0 D e c -1 0 Fe b -1 1 A p r- 1 1 J u n -1 1 A u g -1 1 O c t- 1 1 D e c -1 1 Fe b -1 2 A p r- 1 2 J u n -1 2 A u g -1 2 O c t- 1 2 D e c -1 2 Fe b -1 3 A p r- 1 3 J u n -1 3 A u g -1 3 O c t- 1 3 D e c -1 3 P roduc ing W e ll s * One well from earlier quarter awaiting frac

North Dakota Bakken / Three Forks Play Area Second Quarter Wells Reaching Total Depth: Principally with Lower Working Interests Bakken / Three Forks Legend Forestar Bakken Well Forestar Three Forks Well Drilling or Completing Well For Berthold Reservation Boundary Forestar HBP Leases Forestar Undeveloped Leases Forestar Spacing Unit Ft. Berthold 30A-31-3H HALCON : 18.88% George Evans 14-23HZ WPX : 1.12% Good Bird 36-25HB WPX : 1.52% George Evans 14-23HC WPX : 1.12% Spotted Rabbit 14-23HW WPX :1.12% Ft. Berthold 13A-24-3H HALCON : 12.26% Spotted Rabbit 14-23HY WPX : 1.12% 15 Note: wells are non-operated Q2 Wells Drilled Working Interest (%) Bakken Three Forks Operator Wells WI % Wells WI% WPX 2 1.32% 3 1.12% Halcon 1 12.26% 1 18.88% Total 3 4.97% 4 5.56%

Bakken / Three Forks Legend Forestar Bakken Well Forestar Three Forks Well Drilling or Completing Well For Berthold Reservation Boundary Forestar HBP Leases Forestar Undeveloped Leases Forestar Spacing Unit HALCON Ft. Berthold 30A-31-3H FOR : 18.88% IP : 2,396 BOEPD WPX Good Bird 36-25HA FOR : 1.52% IP : 1,355 BOEPD WPX State of ND 10-3HC FOR : 3.04% IP : 1,928 BOEPD WPX State of ND 10-3HZ FOR : 3.04% IP : 1,346 BOEPD WPX Good Bird 36-25HW FOR : 1.52% IP : 1,614 BOEPD QEP MHA 6-04-33H-150-92 FOR : 0.78% IP : 2,641 BOEPD QEP MHA 8-04-33H-150-92 FOR : 0.78% IP : 2,342 BOEPD North Dakota Bakken / Three Forks Play Area Second Quarter Wells with Initial Production: Showing Strong IP Rates 16 * Represents initial production rates on a barrel of oil equivalent per day Note: wells are non-operated Bakken Wells IP* (BOEPD) in Q2 Bakken Three Forks Operator Wells I.P. Wells I.P. WPX 2 1,641 2 1,480 Halcon - - 1 2,396 QEP 1 2,641 1 2,342 Total 3 1,975 4 1,924

17 0 50 100 150 200 250 300 350 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 C umula ti v e M B O P rod u ce d Months on Production Forestar Bakken/Three Forks Cumulative Production from 53 Proved Developed Producing Wells Average Type Curve (53 Wells) 2013 Well Completions (18 Wells) Credo acquisition underwriting and returns based on 500 Mbo per well EUR (Mbo) IRR 600 500 400 57% 40% 24% Note: Chart represents actual production curves for initial 53 proved developing producing wells in Bakken / Three Forks formation in North Dakota, including the average production for these wells over the first 36 months compared to the estimated ultimate recoveries (EUR’s) type curves for a 400 Mbo, 500 Mbo and 600 Mbo well. No assurance can be provided regarding actual EUR’s of the 53 wells illustrated above over the lives of the wells. Bakken / Three Forks Production and Type Curves Well Level

Kansas and Nebraska Exploration Model – Scalable Investment Opportunity with Solid Returns Kansas / Nebraska Leasehold Interests Net Mineral Acres ~164,000 Net Mineral Acres Leased in Q2 ~16,500 Net Mineral Acres Leased YTD 2013 ~54,300 Identified Well Locations 86 Working Interest Range 30 - 100% 2013 Success Rate* >50% 18 18 18 Kansas / Nebraska Proved Developed Producing Wells 30 40 50 60 70 80 90 100 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 P roduc ing W e ll s +5 +10 +11 +10 +8 Actual Wells Planned Wells Single-Well Economics (Illustrative) Risked Completed Well Cost** $0.8 Well Production (BOE) 40,000 - 50,000 Total Well Revenues*** $3.1 Net Well Cash Flow $1.6 PV-10 $1.1 Returns (IRR) (Based on 40% success rate) > 100% 2013 KS & NE Well Activity Producing End of Q2 79 Added in Q2 11 Added YTD 2013 21 * Represents a well which produces commercial quantities of oil and/or natural gas ** Represents 1.5 dry hole costs @ $200,000 + 1.0 completed well cost at $500,000 for a 40% success rate *** Revenues assume $88 average oil price over life of the well Note: Actual results may vary from illustrations Gross Wells

2013 Capital Investment - Drilling Program Est. FY 2013 Q1 2013 Q2 2013 State Formation Capital Capital Capital North Dakota Bakken / Three Forks $43.7 $7.1 $5.5 Kansas & Nebraska Lansing – Kansas City 14.5 3.7 2.9 Texas, Louisiana & Other Cleveland / Rodessa / Glenrose / James Lime 12.9 1.2 2.7 Oklahoma Deese Sand 1.4 -- 0.6 Total Drilling & Completion* $72.5 $12.0 $11.7 Total Commitments $19.0 Generating Production and Reserve Growth By Accelerating Investment in Bakken Wells 19 Note: Exploration and production investment excludes lease acquisition and geological and geophysical expenses ($ in millions) *Represents total drilling and completion costs incurred or paid in Q1 2013 and Q2 2013.

Accelerating Value Realization and Growing Net Asset Value Building Momentum By Accelerating Value Realization and Growing Net Asset Value Capitalizing on investments to accelerate earnings and cash flow Increasing oil production and proven reserves Focused on integration and execution of Credo acquisition Profitable production growth 20 - 400 800 1,200 2010 2011 2012 2013 Estimate MBO E Total Annual Production* (MBOE) YTD Q2 2013 497 *BOE = Barrels of oil equivalent (converting natural gas to oil at 6 Mcfe / Bbl) 2013 Q2 YTD Revenue $65/BOE Cost $46/BOE Margin $19/BOE

Other Natural Resources Second Quarter 2013 Highlights Building Momentum Through Sustainable Harvests and Maximizing Recreational Lease Activity 21

Increased Harvest Activity Driving Improved Financial Results ($0.5) ($0.1) $1.0 $1.6 -$1.0 -$0.5 $0.0 $0.5 $1.0 $1.5 Q2 2012 Fiber Sales Operating Expenses Q2 2013 S e gm e n t E a rning s Q2 2013 Highlights • Sold nearly 185,000 tons of fiber, up over 79,200 tons vs. Q2 2012 • Average fiber pricing $14.85 per ton, up over 27% vs. Q2 2012 • Average pricing for recreation leases up 5.1% v. Q2 2012 • Over 99% of available land leased for recreation ($ in millions) 22 Segment Earnings (Loss) Reconciliation Q2 2012 vs. Q2 2013 Note: Segment results include costs of $0.9 million in Q2 2013 and $1.1 million in Q2 2012 associated with the development of our water initiatives

Second Quarter 2013 Triple in FOR Initiatives Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 23

Triple in FOR Initiatives Focus on Accelerating Value Realization Optimize Transparency & Disclosure Raise NAV Through Strategic and Disciplined Investments 24 Triple Residential Lot Sales Triple Oil and Gas Production 0 500 1,000 1,500 2,000 2,500 2008-2011 Average 2012 2013 Lo ts S o ld Triple in FOR 2015 Goal 2,200 lots 0 200 400 600 800 1,000 1,200 1,400 2008-2011 Average 2012 2013 Triple in FOR Goal 1,100 MBOE 0 20 40 60 80 100 120 140 160 2008-2011 Average 2012 2013 2014 2015 Triple in FOR Goal Total Segment EBITDA Average = $120 million Triple Total Segment EBITDA YTD Q2 2013 Note: EBITDA = Total segment earnings (loss) + depreciation + depletion and amortization Total Segment EBITDA is a Non-GAAP financial measure. The reconciliation between GAAP and Non-GAAP financial measures is included in the appendix to this presentation and provided on the company’s investor relations website. Execution of Triple in FOR Initiatives Putting EBITDA Points on the Board To ta l S eg m en t EB IT D A ( $mi lli o n s) MB O E Pr o d u ct io n 806 497 $50 YTD Q2 2013 YTD Q2 2013

For questions, please contact: Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 25 Anna Torma SVP Corporate Affairs Forestar Group Inc. 6300 Bee Cave Road Building Two, Suite 500 Austin, TX 78746 512-433-5312 annatorma@forestargroup.com

Second Quarter 2013 Appendix - Segment KPI’s - Reconciliation of Non-GAAP Financial Measures Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 26

Q2 2013 Q2 2012 YTD Q2 2013 YTD Q2 2012 Residential Lot Sales Lots Sold 360 427 806 712 Average Price / Lot $57,600 $44,700 $54,400 $48,000 Gross Profit / Lot $24,600 $14,800 $22,700 $17,200 Commercial Tract Sales Acres Sold 34 38 37 38 Average Price / Acre $103,100 $47,000 $125,700 $47,000 Land Sales Acres Sold 1,042 933 1,961 1,388 Average Price / Acre $2,600 $2,800 $2,800 $2,600 Segment Revenues ($ in Millions) $41.2 $26.6 $119.9 $44.6 Segment Earnings ($ in Millions) $8.1 $7.7 $27.5 $19.2 * Q2 2013 real estate segment results include revenues of $3.5 million and earnings of $0.7 million associated with the sale of 440 remaining undeveloped residential acres from a project in Florida. YTD 2013 real estate segment results include revenues of $41 million and earnings of $10.9 million associated with the sale of Promesa multifamily community we developed in Austin **Q2 2012 real estate segment results include gain of $3.4 million associated with the sale of 800 acres from the Light Farms venture near Dallas. YTD 2012 real estate segment results include a gain of $11.7 million associated with the sale of our 25% partnership interest in a commercial office project in Austin Note: Includes ventures 27 27 27 Real Estate Segment KPI’s ** * * ** * * ** **

Q2 2013 Q2 2012 YTD Q2 2013 YTD Q2 2012 Leasing Activity Net Fee Acres Leased 515 -- 825 805 Avg. Bonus / Acre $343 -- $333 $357 Total Oil and Gas Interests* Oil Produced (Barrels) 165,800 61,600 313,700 130,700 Average Price / Barrel $85.55 $94.64 $87.26 $96.19 Natural Gas Produced (MMCF) 505.3 420.4 1,099.1 872.7 Average Price / MCF $3.25 $2.31 $3.26 $2.79 Total BOE 250,100 131,600 496,900 276,200 Average Price / BOE $63.30 $51.65 $62.31 $54.34 Segment Revenues ($ in Millions) $15.8 $7.1 $31.3 $16.6 Segment Earnings ($ in Millions) $4.2 $5.0 $9.4 $12.1 Producing Wells* (end of period) 983 541 983 541 * Includes our share of venture production: 58MMCf in Q2 2013, 128MMCf YTD Q2 2013, 82MMCf in Q2 2012 and 172MMCf YTD Q2 2012 28 28 Oil & Gas Segment KPI’s

29 Q2 2013 Q2 2012 YTD Q2 2013 YTD Q2 2012 Fiber Sales Pulpwood Tons Sold 128,100 80,800 248,700 105,200 Average Pulpwood Price / Ton $10.84 $9.24 $11.26 $9.46 Sawtimber Tons Sold 56,900 24,900 127,800 29,300 Average Sawtimber Price / Ton $23.87 $19.46 $23.04 $19.47 Total Tons Sold 185,000 105,700 376,500 134,500 Average Price / Ton $14.85 $11.66 $15.26 $11.64 Recreational Leases Average Acres Leased 121,800 131,800 122,200 131,400 Average Lease Rate / Acre $9.29 $8.84 $9.29 $8.82 Segment Revenues ($ in Millions) $3.0 $1.5 $6.3 $2.3 Segment Earnings (Loss) ($ in Millions) * $1.0 ($0.5) $2.3 ($1.3) 29 29 Other Natural Resources Segment KPI’s * Note: Segment results include costs of $0.9 million in Q2 2013 , $1.9 million YTD Q2 2013, $1.1 million in Q2 2012 and $2.3 million YTD Q2 2012 associated with the development of our water initiatives

30 Forestar’s Total Segment EBITDA for the quarters ended June 30, 2013 and March 31, 2013 and for the years ended December 31, 2012, 2011, 2010, 2009 and 2008 are non-GAAP financial measures within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally Accepted Accounting Principles (GAAP). The company believes presenting non-GAAP Total Segment EBITDA is helpful to analyze financial performance without the impact of items that may obscure trends in the company’s underlying performance. A detailed reconciliation is provided below outlining the differences between these non-GAAP measures and the directly related GAAP measures. Quarter Full Year ($ in millions, except per share amounts) Q2 2013 Q1 2013 2012 2011 2010 2009 2008 Total Segment Earnings (loss), in accordance with GAAP $13.3 $25.8 $80.2 ($7.8) $23.2 $45.2 $62.0 Non-cash items, pre-tax Depreciation, Depletion & Amortization 5.6 5.0 10.6 7.1 5.0 5.5 5.1 Total Segment EBITDA $18.9 $30.8 $90.8 ($0.7) $28.2 $50.7 $67.1 Reconciliation of Non-GAAP Financial Measures (Unaudited)

31 Forestar’s Oil and Gas Segment EBITDAX for the quarters ended June 30, 2013 and June 30, 2012 are non-GAAP financial measures within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally Accepted Accounting Principles (GAAP). The company believes presenting non-GAAP Oil and Gas Segment EBITDAX is helpful to analyze financial performance without the impact of items that may obscure trends in the company’s underlying performance. A detailed reconciliation is provided below outlining the differences between these non-GAAP measures and the directly related GAAP measures. Quarter ($ in millions, except per share amounts) Q2 2013 Q2 2012 Oil and Gas Segment Earnings, in accordance with GAAP $4.2 $5.0 EBITDAX adjustments, pre-tax Depreciation, Depletion & Amortization 4.7 0.2 Geological, Geophysical, Seismic and Dry Hole Costs 2.1 0.0 Total Oil and Gas Segment EBITDAX $11.0 $5.2 Reconciliation of Non-GAAP Financial Measures (Unaudited)

For questions, please contact: Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value Anna Torma SVP Corporate Affairs Forestar Group Inc. 6300 Bee Cave Road Building Two, Suite 500 Austin, TX 78746 512-433-5312 annatorma@forestargroup.com 32