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 6, 2014

(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 6, 2014, Forestar Group Inc. (the “Company”) issued a press release announcing the Company’s results for the quarter ended June 30, 2014. A copy of the press release is furnished as Exhibit 99.1 of this report.

Item 7.01. Regulation FD Disclosure

On August 6, 2014, management of Forestar Group Inc. (the “Company”) will participate in a conference call discussing the Company’s results for the quarter ended June 30, 2014. A copy of the presentation materials to be used by management is furnished as Exhibit 99.2 of this report.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit	Description
99.1	Press release issued by the Company on August 6, 2014, announcing the Company’s results for the quarter ended June 30, 2014.
99.2	Presentation materials to be used by management in a conference call on August 6, 2014, discussing the Company’s results for the quarter ended June 30, 2014.

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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 6, 2014	By:	/s/ Christopher L. Nines
			Name:	Christopher L. Nines
			Title:	Chief Financial Officer and Treasurer

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EXHIBIT INDEX

Exhibit	Description
99.1	Press release issued by the Company on August 6, 2014, announcing the Company’s results for the quarter ended June 30, 2014.
99.2	Presentation materials to be used by management in a conference call on August 6, 2014, discussing the Company’s results for the quarter ended June 30, 2014.

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EX-99.1

Exhibit 99.1

NEWS

RELEASE

FOR IMMEDIATE RELEASE

CONTACT:     Anna E. Torma

(512) 433-5312

FORESTAR GROUP INC. REPORTS

SECOND QUARTER 2014 RESULTS

AUSTIN, TEXAS, August 6, 2014—Forestar Group Inc. (NYSE: FOR) today reported second quarter2014 net income of approximately $14.8 million, or $0.34 per diluted share outstanding, compared with second quarter2013 net income of approximately $0.5 million, or $0.02 per diluted share outstanding.

“During second quarter, residential lot sales remained strong and we are developing lots commensurate with inventories and home buyer demand. Multifamily market conditions remain favorable in our target markets, and we continue to acquire sites in 'A' locations to grow our business. In addition, oil and gas working interest production grew significantly, driven principally by new wells in the Bakken/Three Forks generating strong initial production. We are on track to deliver our Growing FORward strategic initiatives, which are focused on increasing total segment earnings, return on assets and opportunistically selling non-core assets. Our balance sheet strength, improving cash flows and significant liquidity are expected to adequately fund these initiatives,” said Jim DeCosmo, president and chief executive officer of Forestar Group.

Second Quarter2014 Significant Highlights

• Sold 537 developed residential lots, up nearly 50% compared with second quarter 2013

• Converted over 10,000 acres of timber leases into ownership of 5,400 acres of undeveloped land from Ironstob venture, resulting in a $10.5 million gain

• Increased working interest oil production over 65% compared with second quarter 2013, with 31 new gross wells generating initial production

• Sold interest in 97 gross (6 net) non-core producing oil and gas wells in Oklahoma for a gain of $4.5 million and sold leasehold interests in 223 net mineral acres in North Dakota for a gain of $1.2 million

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

REAL ESTATE

Second Quarter2014 Significant Highlights (Includes Ventures)

• Sold 537 developed residential lots at almost $64,100 per lot; highest quarterly average lot price since 2009

• Sold 79 acres of residential tracts for $63,700 per acre

• Sold over 3,200 acres of undeveloped land for nearly $7.9 million

• Converted over 10,000 acres of timber leases into ownership of 5,400 acres of undeveloped land from Ironstob venture

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Segment Financial Results:

($ in millions)	2Q 2014	2Q 2013	1Q 2014
Segment Revenues	$55.2	$41.2	$65.5
Segment Earnings	$27.3	$8.1	$23.6

In second quarter 2014, residential lot sales were up almost 50% compared with second quarter 2013, with average lot prices and gross profit up 11% over that same period. Second quarter 2014 real estate segment earnings were higher compared with second quarter 2013 principally due to a $10.5 million gain associated with the exchange of over 10,000 acres of timber leases for 5,400 acres of undeveloped land from the Ironstob venture, and higher residential lot and undeveloped land sales. Real estate segment earnings increased in second quarter 2014 compared with first quarter 2014 primarily due to the $10.5 million gain associated with the exchange of timber leases for undeveloped land from Ironstob venture. First quarter 2014 real estate segment results include earnings of $13.2 million associated with the sale of approximately 8,400 acres of undeveloped land.

OIL AND GAS

Second Quarter2014 Significant Highlights (Includes Ventures)

• Increased total oil production by over 43% compared with second quarter 2013, principally due to working interest investments primarily targeting the Bakken/Three Forks and the Lansing-Kansas City formations

• Sold interest in 97 gross (6 net) non-core producing oil and gas wells in Oklahoma for a gain of $4.5 million and sold leasehold interests in 223 net mineral acres in North Dakota for a gain of $1.2 million

• Added 31 gross oil and gas wells, 5 Bakken/Three Forks gross wells waiting on completion at quarter-end

• Leased nearly 1,400 net fee mineral acres to third parties, principally in Louisiana and Texas

Segment Financial Results:

($ in millions)	2Q 2014	2Q 2013	1Q 2014
Segment Revenues	$24.4	$15.8	$17.6
Segment Earnings	$9.5	$4.2	$0.8

Oil and gas segment earnings increased in second quarter 2014 compared with second quarter 2013 and first quarter 2014 principally due to $5.7 million in earnings associated with the sale of various oil and gas properties in Oklahoma and North Dakota and higher working interest production volumes, partially offset by higher exploration, production, depletion and operating expenses, and lower production volumes and delay rental revenues from owned mineral interests. Second quarter 2014 oil and gas segment earnings includes $2.1 million of dry hole expense associated with a working interest in an exploratory well in East Texas.

OTHER NATURAL RESOURCES

Second Quarter2014 Significant Highlights (Includes Ventures)

• Signed amended groundwater reservation agreement, generating $0.7 million in earnings

• Sold nearly 107,800 tons of fiber for $16.86 per ton

Segment Financial Results:

($ in millions)	2Q 2014	2Q 2013	1Q 2014
Segment Revenues	$3.5	$3.0	$1.6
Segment Earnings	$2.1	$1.0	($0.5)

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Second quarter 2014 other natural resources segment results increased compared with second quarter 2013 and first quarter 2014 principally due to $0.7 million in earnings from a groundwater reservation agreement and a $0.7 million gain on termination of a timber lease in connection with the Ironstob venture.

OUTLOOK

Capitalizing on Low Lot Inventory and Solid Demand

"Our real estate markets remain favorable and we are well positioned to continue to capitalize on the housing recovery by growing residential lot sales and commercial and residential tract sales. We anticipate residential lot sales in 2014 to be in the range of 2,200 - 2,300 lots, up over 20% compared with 2013. Our multifamily team continues to build a solid pipeline of development sites, with our Eleven project in Austin now substantially complete, over 85% leased and on target for sale in 2014. In second quarter 2014, we acquired an additional multifamily site in Austin, Texas and began construction on a community near Denver. We will continue to evaluate and acquire additional residential and multifamily sites to further develop our real estate pipeline.

Working Interest Production Expected to Increase 30% in Second Half of 2014

“During second quarter, we continued to invest in exploration and drilling activity, growing production, reserves and value. Drilling and completion activity increased in second quarter, with 17 gross Bakken/Three Forks wells (7% average working interest) generating initial production and 5 gross Bakken/Three Forks wells waiting on completion at quarter end. Operators in the Bakken/Three Forks formations continue to shift to pad drilling and are generating improved well results with increased production and lower drilling costs. In addition, exploration and drilling activity in Kansas and Nebraska continued to see favorable success rates and our addition of approximately 77,000 leasehold mineral acres in the Lansing-Kansas City formation during second quarter should further develop a solid pipeline of drilling prospects. As a result, working interest production is expected to increase 30% in the second half of 2014 compared with the first six months of 2014. In addition, we anticipate 2014 total oil and gas production will exceed 1.2 million BOE (barrel of oil equivalent), a 15% increase compared with 2013 levels.

Balance Sheet, Cash Flow and Liquidity Expected to Adequately Fund Growing FORward Initiatives

“We continue to see significant opportunities for growth through disciplined investments in our real estate and oil and gas businesses. Our strong balance sheet, improving cash flows and significant liquidity are expected to adequately fund our Growing FORward strategic initiatives,” concluded Mr. DeCosmo.

The Company will host a conference call on August 6, 2014 at 10:00 am ET to discuss results of second quarter 2014. 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 1-866-543-6403 at least 15 minutes prior to the start of the meeting. Those wishing to access the call from outside North America should dial 1-617-213-8896. 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 13170686.

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 2014, the real estate segment owns directly or through ventures almost 121,000 acres of real estate located in ten states and 13 markets in the U.S. The real estate segment has 11 real estate projects representing approximately 24,400 acres currently in the entitlement process, and 73 entitled, developed and under development projects in eight states and 13 markets encompassing over 11,500 acres, comprised of almost 18,100 planned residential lots and approximately 2,000 commercial acres. The oil and gas segment includes approximately 935,000 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 approximately 345,000 net acres of leasehold interests principally located in Nebraska, Kansas, Oklahoma, North Dakota and Texas. These leasehold interests include about 8,000 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, 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.

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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 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 rates or availability; lengthy and uncertain entitlement processes; cyclically 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.

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FORESTAR GROUP INC.

(UNAUDITED)

Business Segments

	Second Quarter						First Six Months
	2014			2013			2014			2013
	(In thousands)
Revenues:
Real estate (a)	$	55,173		$	41,219		$	120,653		$	119,908
Oil and gas	24,377			15,831			41,931			31,335
Other natural resources	3,463			3,029			5,034			6,307
Total revenues	$	83,013		$	60,079		$	167,618		$	157,550
Segment earnings:
Real estate	$	27,297		$	8,104		$	50,872		$	27,550
Oil and gas	9,522			4,243			10,329			9,370
Other natural resources	2,079			991			1,551			2,243
Total segment earnings	38,898			13,338			62,752			39,163
Items not allocated to segments:
General and administrative expense	(5,566		)	(5,329		)	(10,734		)	(10,287		)
Share-based compensation expense (b)	(3,219		)	(1,460		)	(3,532		)	(11,875		)
Interest expense	(7,370		)	(5,122		)	(12,873		)	(9,661		)
Other corporate non-operating income	130			25			252			56
Income before taxes	22,873			1,452			35,865			7,396
Income tax expense	(8,051		)	(911		)	(12,709		)	(2,904		)
Net income attributable to Forestar Group Inc.	$	14,822		$	541		$	23,156		$	4,492
Net income per common share:
Diluted	$	0.34		$	0.02		$	0.53		$	0.13
Weighted average common shares outstanding (in millions):
Diluted (c)	43.7			36.1			43.7			35.9

	Second Quarter
Supplemental Financial Information:	2014		2013
	(In thousands)
Cash and cash equivalents	$	184,168	$	69,138
Borrowings under credit facility	—		200,000
Secured senior notes	250,000		—
Convertible senior notes, net of discount	101,542		98,353
Tangible equity unit notes, net of discount	21,208		—
Other debt (d)	27,578		33,294
Total debt	$	400,328	$	331,647
Net debt	$	216,160	$	262,509

 _____________________

^(a)  First six months 2013 real estate revenues include $41 million from the first quarter 2013 sale of Promesa, a wholly-owned multifamily community we developed in Austin.

^(b)  First six months 2014 share-based compensation expense decreased principally as result of a decrease in our stock price since year-end 2013, compared with an increase in our stock price in first six months 2013 since year-end 2012, which impacted the value of vested cash-settled awards.

^(c)  Second quarter and first six months 2014 weighted average diluted shares outstanding includes 7.9 million associated with our tangible equity units issued during fourth quarter 2013.

^(d)  Consists principally of consolidated venture non-recourse debt. Excludes approximately $100.1 million of unconsolidated venture debt and approximately $8.2 million of outstanding letters of credit.

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FORESTAR GROUP INC.

REAL ESTATE SEGMENT

PERFORMANCE METRICS

	Second Quarter				First Six Months
	2014		2013		2014		2013
REAL ESTATE
Owned, Consolidated & Equity Method Ventures:
Residential Lots Sold	537		360		1,511		806
Revenue per Lot Sold	$	64,056	$	57,588	$	50,228	$	54,432
Commercial Acres Sold	3		34		3		37
Revenue per Commercial Acre Sold	$	96,774	$	103,102	$	96,774	$	125,706
Undeveloped Acres Sold	3,208		1,042		12,537		1,961
Revenue per Acre Sold	$	2,460	$	2,579	$	2,202	$	2,753
Owned & Consolidated Ventures:
Residential Lots Sold	481		259		1,317		614
Revenue per Lot Sold	$	60,651	$	57,154	$	47,644	$	54,440
Commercial Acres Sold	3		32		3		35
Revenue per Commercial Acre Sold	$	96,774	$	74,166	$	96,774	$	100,311
Undeveloped Acres Sold	2,950		1,000		12,279		1,919
Revenue per Acre Sold	$	2,473	$	2,576	$	2,200	$	2,755
Ventures Accounted For Using the Equity Method:
Residential Lots Sold	56		101		194		192
Revenue per Lot Sold	$	93,306	$	58,700	$	67,772	$	54,407
Commercial Acres Sold	—		2		—		2
Revenue per Commercial Acre Sold	$	—	$	652,886	$	—	$	652,886
Undeveloped Acres Sold	258		42		258		42
Revenue per Acre Sold	$	2,306	$	2,650	$	2,306	$	2,650

SECOND QUARTER 2014

REAL ESTATE PIPELINE

Real Estate	Undeveloped	In Entitlement Process	Entitled	Developed & Under Development	Total Acres (a)
Undeveloped Land
Owned	79,563
Ventures	5,073				84,636
Residential
Owned		21,762	7,794	535
Ventures			1,105	131	31,327
Commercial
Owned		2,668	1,062	523
Ventures			250	123	4,626
Total Acres	84,636	24,430	10,211	1,312	120,589
Estimated Residential Lots			16,100	1,998	18,098

 _____________________

^(a)  In addition, at second quarter-end 2014, Forestar owns a 58% interest in a venture which controls approximately 2,000 acres of

undeveloped land in Georgia with minimal investment. Excludes acres associated with fully developed commercial and income producing properties.

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FORESTAR GROUP INC.

OIL AND GAS SEGMENT

PERFORMANCE METRICS

	Second Quarter				First Six Months
	2014		2013		2014		2013
Leasing Activity from Owned Mineral Interests
Acres Leased	1,380		515		3,121		825
Average Bonus / Acre	$	352	$	343	$	347	$	333
Delay Rentals Received	$	14,000	$	6,000	$	14,000	$	464,000
Oil & Gas Production
Royalty Interests(a)
Gross Wells	547		543		547		543
Oil Production (Barrels)	30,400		40,600		63,100		88,900
Average Oil Price ($ / Barrel)	$	91.75	$	80.75	$	88.44	$	83.56
Gas Production (MMcf)	232.4		322.2		518.5		699.4
Average Gas Price ($ / Mcf)	$	4.61	$	3.18	$	4.10	$	3.11
BOE Production (b)	69,100		94,400		149,500		205,400
Average Price ($ / BOE)	$	55.83	$	45.66	$	51.55	$	46.73
Working Interests
Gross Wells	410		449		410		449
Oil Production (Barrels)	206,900		125,200		346,200		224,800
Average Oil Price ($ / Barrel)	$	92.90	$	87.11	$	90.77	$	88.73
Gas Production (MMcf)	227.5		183.1		427.9		399.7
Average Gas Price ($ / Mcf)	$	4.39	$	3.36	$	4.84	$	3.53
BOE Production (b)	244,800		155,700		417,500		291,500
Average Price ($ / BOE)	$	82.59	$	73.99	$	80.22	$	73.29
Total Oil & Gas Interests
Gross Wells (c)	948		983		948		983
Oil Production (Barrels)	225,300		152,700		382,300		286,100
Average Oil Price ($ / Barrel)	$	95.38	$	90.64	$	93.75	$	92.86
NGL Production (Barrels)	12,000		13,100		27,000		27,600
Average NGL Price ($ / Barrel)	$	43.24	$	26.49	$	43.17	$	29.37
Total Oil Production (Barrels)	237,300		165,800		409,300		313,700
Average Total Oil Price ($ / Barrel)	$	92.75	$	85.55	$	90.41	$	87.26
Gas Production (MMcf)	459.9		505.3		946.4		1,099.1
Average Gas Price ($ / Mcf)	$	4.50	$	3.25	$	4.43	$	3.26
BOE Production (b)	313,900		250,100		567,000		496,900
Average Price ($ / BOE)	$	76.70	$	63.30	$	72.66	$	62.31
Average Daily Production
BOE per Day
Royalty Interests	760		1,037		828		1,136
Working Interests	2,690		1,711		2,305		1,610
Total	3,450		2,748		3,133		2,746
Working Interests BOE per Day
North Dakota	1,566		814		1,188		669
Kansas/Nebraska	586		351		562		339
Texas, Louisiana and Other	538		546		555		602
Total	2,690		1,711		2,305		1,610

 _____________________

^(a)  Includes our share of venture activity in which we own a 50% interest. Our share of natural gas production is 50.5 MMcf and 103.2 MMcf in second quarter and first six months2014, and 57.8 MMcf and 128.0 MMcf in second quarter and first six months2013.

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

^(c)  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 in second quarter 2014 and 2013 as we also own a royalty interest in these wells.

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FORESTAR GROUP INC.

OIL AND GAS SEGMENT

	Second Quarter		First Six Months
	2014	2013	2014	2013
Well Activity
Mineral Interests Owned(a)
Net Acres Held By Production	36,000	36,000	36,000	36,000
Gross Wells Drilled	—	—	—	—
Productive Gross Wells	547	543	547	543
Mineral Interests Leased
Net Acres Held By Production (b)	41,000	33,000	41,000	33,000
Gross Wells Drilled	45	18	66	39
Productive Gross Wells (c)	401	440	401	440
Total Well Activity
Net Acres Held By Production	77,000	69,000	77,000	69,000
Gross Wells Drilled	45	18	66	39
Productive Gross Wells	948	983	948	983

 _____________________

^(a)  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 at second quarter-end 2014 and 2013 as we also own a royalty interest in these wells.

^(b)  Excludes 8,000 net acres in which we have an overriding royalty interest.

^(c)  Exclude 1,181 wells in which we have an overriding royalty and nine working interest wells as we also own a royalty interest in these wells.

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FORESTAR GROUP INC.

OIL AND GAS SEGMENT

MINERAL INTERESTS

MINERAL INTERESTS OWNED ^(a) 

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
		(Net acres)
Texas	208,000	17,000	27,000	252,000
Louisiana	132,000	3,000	9,000	144,000
Georgia	152,000	—	—	152,000
Alabama	40,000	—	—	40,000
California	1,000	—	—	1,000
Indiana	1,000	—	—	1,000
	534,000	20,000	36,000	590,000

 _____________________

^(a)  Represents net acres and includes ventures.

MINERAL INTERESTS LEASED

Forestar’s oil and gas segment includes approximately 345,000 net mineral acres of leasehold interests principally located in Nebraska, Kansas, Oklahoma, Texas and North Dakota.

State	Undeveloped	Held By Production (a)	Total
Nebraska	223,000	7,000	230,000
Kansas	25,000	6,000	31,000
Oklahoma	23,000	17,000	40,000
Alabama	8,000	—	8,000
Texas	10,000	3,000	13,000
North Dakota	4,000	4,000	8,000
Other	11,000	4,000	15,000
	304,000	41,000	345,000

 _____________________

^(a)  Excludes approximately 8,000 net acres of overriding royalty interests.

9

FORESTAR GROUP INC.

OTHER NATURAL RESOURCES SEGMENT

PERFORMANCE METRICS

	Second Quarter				First Six Months
	2014		2013		2014		2013
Fiber Sales
Pulpwood tons sold	58,200		128,100		86,400		248,700
Average pulpwood price per ton	$	11.42	$	8.66	$	10.85	$	9.19
Sawtimber tons sold	49,600		56,900		78,500		127,800
Average sawtimber price per ton	$	23.23	$	23.87	$	22.67	$	23.04
Total tons sold	107,800		185,000		164,900		376,500
Average stumpage price per ton (a)	$	16.86	$	13.34	$	16.48	$	13.89
Recreational Activity
Average recreational acres leased	110,000		121,800		113,200		122,200
Average price per leased acre	$	9.69	$	9.29	$	9.41	$	9.29

 _____________________

^(a)  Average stumpage price per ton is based on gross revenues less cut and haul costs.

10

FORESTAR GROUP INC.

PROJECTS IN ENTITLEMENT

A summary of our real estate projects in the entitlement process ^(a) at second quarter-end2014 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
Garland Mountain	Cherokee/Bartow	Atlanta	350
Martin’s Bridge	Banks	Atlanta	970
Mill Creek	Coweta	Atlanta	770
Wolf Creek	Carroll/Douglas	Atlanta	12,230
Yellow Creek	Cherokee	Atlanta	1,060
Texas
Lake Houston	Harris/Liberty	Houston	3,700
Total			24,430

 _____________________

^(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.

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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-end2014 follows:

				Residential Lots (c)		Commercial Acres (d)
Project	County	Interest     Owned (b)		Lots Sold Since Inception	Lots Remaining	Acres Sold Since Inception	Acres Remaining (e)
Projects we own
California
San Joaquin River	Contra Costa/Sacramento	100	%	—	—	—	288
Colorado
Buffalo Highlands	Weld	100	%	—	164	—	—
Johnstown Farms	Weld	100	%	269	343	2	7
Pinery West	Douglas	100	%	45	41	20	94
Stonebraker	Weld	100	%	—	603	—	—
Tennessee
Morgan Farms	Williamson	100	%	40	133	—	—
Weatherford Estates	Williamson	100	%	—	17	—	—
Texas
Arrowhead Ranch	Hays	100	%	—	387	—	6
Bar C Ranch	Tarrant	100	%	292	813	—	—
Barrington Kingwood	Harris	100	%	120	60	—	—
Cibolo Canyons	Bexar	100	%	831	819	130	20
Harbor Lakes	Hood	100	%	215	234	2	19
Hunter’s Crossing	Bastrop	100	%	471	39	41	62
La Conterra	Williamson	100	%	197	133	—	58
Lakes of Prosper	Collin	100	%	65	220	—	—
Lantana	Denton	100	%	1,013	749	9	3
Maxwell Creek	Collin	100	%	897	102	10	—
Oak Creek Estates	Comal	100	%	188	459	13	—
Parkside	Collin	100	%	—	200	—	—
Stoney Creek	Dallas	100	%	221	533	—	—
Summer Creek Ranch	Tarrant	100	%	942	332	35	44
Summer Lakes	Fort Bend	100	%	610	520	56	—
Summer Park	Fort Bend	100	%	69	129	28	62
The Colony	Bastrop	100	%	448	701	22	31
The Preserve at Pecan Creek	Denton	100	%	506	288	—	7
Village Park	Collin	100	%	749	7	3	2
Westside at Buttercup Creek	Williamson	100	%	1,491	6	66	—
Other projects (9)	Various	100	%	1,727	277	133	7
Georgia
Seven Hills	Paulding	100	%	750	340	26	113
The Villages at Burt Creek	Dawson	100	%	—	1,715	—	57
Other projects (18)	Various	100	%	242	2,851	—	705
Other
Other projects (3)	Various	100	%	522	431	—	—
				12,920	13,646	596	1,585

12

				Residential Lots (c)		Commercial Acres (d)
Project	County	Interest Owned (b)		Lots Sold Since Inception	Lots Remaining	Acres Sold Since Inception	Acres Remaining  (e)
Projects in entities we consolidate
Texas
City Park	Harris	75	%	1,311	458	50	115
Timber Creek	Collin	88	%	—	614	—	—
Willow Creek Farms II	Waller/Fort Bend	90	%	90	160	—	—
Other projects (2)	Various	Various		9	199	—	18
Georgia
The Georgian	Paulding	75	%	535	—	—	—
				1,945	1,431	50	133
Total owned and consolidated				14,865	15,077	646	1,718
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	%	314	1,379	8	51
Lantana - Rayzor Ranch	Denton	25	%	1,163	—	16	42
Long Meadow Farms	Fort Bend	38	%	1,307	495	183	120
Southern Trails	Brazoria	80	%	739	252	—	—
Stonewall Estates	Bexar	50	%	340	50	—	—
Other projects (2)	Various	Various		—	—	—	15
Total in ventures				4,187	3,021	207	240
Combined total				19,052	18,098	853	1,958

 _____________________

^(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.

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

A summary of our significant commercial and income producing properties at second quarter-end2014 follows:

Project	Market	Interest     Owned (a)		Type	Acres	Description
Radisson Hotel	Austin	100	%	Hotel	2	413 guest rooms and suites
Eleven (b)	Austin	25	%	Multifamily	3	257-unit luxury apartment
360° (c)	Denver	20	%	Multifamily	4	304-unit luxury apartment
Midtown Cedar Hill (c)	Dallas	100	%	Multifamily	13	354-unit luxury apartment
Acklen (c)	Nashville	30	%	Multifamily	4	320-unit luxury apartment

 _____________________

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

^(b)  Construction substantially complete.

^(c)  Construction in progress.

13

EX-99.2

Second Quarter 2014 Financial Results August 6, 2014 Growing Forward Through Strategic and Disciplined Investment and Increasing Returns

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 but 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 rates or 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

On Track to Deliver Growing FORward Strategic Initiatives 3 Initiatives Q2 2014 Results Accelerating total segment EBITDA and return on assets Total segment EBITDA of $47 million up 150% vs. Q2 2013 Growing through strategic and disciplined investments in existing markets and communities, and proven resource plays Invested $63 million in “A” locations and resource plays Repositioning non-core assets Sold $8 million in non-core assets Funding Growing FORward initiatives through balance sheet strength, cash flows and existing liquidity Available liquidity up $121 million vs. Q4 2013

Accelerating Real Estate and Oil and Gas Segment Earnings Total Segment Earnings Up Almost 200% in Q2 2014 vs. Q2 2013 4 • 2nd quarter 2014 real estate segment results include a $10.5 million gain, pre-tax, associated with the exchange of over 10,000 acres of timber leases for 5,400 acres of undeveloped land from Ironstob venture. • 2nd quarter 2014 oil and gas segment results include a $4.5 million gain, pre-tax, associated with the sale of our interest in 97 gross (6 net) non-core producing wells in Oklahoma, a $1.2 million gain, pre-tax, from the sale of leasehold interests in 223 net mineral acres in North Dakota and $2.1 million dry hole expense, pre-tax, associated with a working interest investment in an exploratory well in East Texas. Note: Second Quarter 2014 weighted average diluted shares outstanding were 43.7 million ($ in Millions, except per share data) 2nd Quarter 2014 2nd Quarter 2013 Net Income $14.8 $0.5 Earnings Per Share $0.34 $0.02 Segment Earnings: Real Estate $27.3 $8.1 Oil and Gas 9.5 4.2 Other Natural Resources 2.1 1.0 Total Segment Earnings $38.9 $13.3

Improving Financial Strength and Liquidity While Executing Growth Strategy Execution of Strategic Initiatives Positions Forestar with Strong Balance Sheet, Ample Liquidity and Assets Well Positioned to Generate Earnings and Cash Flow Going Forward 1 Fair value of convertible notes as of Q2 2014 is $102 million and YE 2013 is $100 million; principal amount of notes is $125 million which is due and payable at maturity in 2020 2 Represents amortizing note portion of $150 million tangible equity unit offering 3 Consolidated debt principally non-recourse to Forestar 4 Includes unrestricted cash plus available revolver 5 1 ($ in Millions) Q2 2014 Actual YE 2013 Actual Credit Facility Borrowings --- $200 8.50% Senior Secured Notes $250 --- Convertible Debt 1 102 100 Amortizing Notes 2 21 26 Other Consolidated Debt 3 27 31 Total Debt $400 $357 Shareholder’s Equity $738 $715 Total Debt / Total Capital 35% 33% Available Liquidity 4 $474 $353 Q2 2014 Debt Maturity Schedule $20 $10 $17 $1 $125 $250 2014 2015 2016 2017 2018 2019 2020 2021 2022

Real Estate Second Quarter 2014 Highlights Building Momentum By Accelerating Real Estate Sales and Building a Solid Multifamily Pipeline 6

($1.6) ($0.1) $8.1 $10.5 $7.4 $3.0 $27.3 $0 $10 $20 $30 $40 Q2 2013 Gain on Ironstob Exchange Residential & Commercial Sales Undeveloped Land Sales Opex Income Producing Properties Q2 2014 Q2 2014 Highlights • Residential Lots – 537 lots • Up almost 50% vs Q2 2013 • Average $64,100 per lot, 11% higher vs Q2 2013 • Residential Tracts – 79 acres • Average $63,700 per acre • Undeveloped Land – 3,208 acres • Average $2,500 per acre • Ironstob exchange • >10,000 acres timber lease • 5,400 acres undeveloped land • Real Estate segment EBITDA*: • Q2 2014 - $28.0 million Segment Earnings Reconciliation Q2 2013 vs. Q2 2014 ($ in millions) 7 Note: includes ventures Real Estate – Results Reflect Stable Demand and Forestar’s Ability to Deliver * EBITDA = segment earnings before interest and taxes plus depreciation and amortization. EBITDA is a non-GAAP financial measure. The reconciliation between GAAP and Non-GAAP financial measures is included in the appendix to this presentation.

* Actual results may vary A n n u al Lo t Sal e s 2006 Peak Sales = 3,600 lots Annual Lot Sales & Avg. Lot Margin 8 Real Estate Capitalizing on Well Located Communities, Low Inventories and Solid Job Growth $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 0 500 1,000 1,500 2,000 2,500 2008 2009 2010 2011 2012 2013 2014E* Lot Sales Average Lot Margin 1,365 804 642 A ve ra ge Lo t M ar gi n 1,883 1,060 1,117 Note: Includes ventures Q1 974 Planned Lot Sales Q2 537 ** Texas Markets represent Dallas, Houston, San Antonio and Austin Source: Metrostudy Texas Finished Vacant Inventory and MoS** Rank MSA Job Gains Percent Change (YOY) 1 Dallas-Fort Worth-Arlington, TX 113,100 3.7% 4 Houston-The Woodlands-Sugar Land, TX 93,300 3.3% 12 Austin-Round Rock, TX 31,000 3.6% 21 San Antonio-New Braunfels, TX 23,700 2.6% Texas Major Markets 261,100 3.4% US Average 2,408,000 1.8% Top Job Growth MSAs - May 2014 - 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 4Q 0 0 3Q 0 1 2Q 0 2 1Q 0 3 4Q 0 3 3Q 0 4 2Q 0 5 1Q 0 6 4Q 0 6 3Q 0 7 2Q 0 8 1Q 0 9 4Q 0 9 3Q 1 0 2Q 1 1 1Q 1 2 4Q 1 2 3Q 1 3 2Q 1 4 FinVacant (FV) FVMos Equilibrium

• Joint venture formed (Forestar 58% interest) with partial sale of 6,900 acres as conservation land • Converted over 10,000 acres of timber rights for ownership of 5,400 acres of undeveloped land from Ironstob venture • Monetize acres through retail program • ~2,000 acres of undeveloped land remain in venture for future conservation sales Ironstob Conversion – Value Creation Ironstob 2014 Forestar HBU timberland In Entitlement Entitled TEMCO 50 mile Atlanta Radius 9 Q2 2014 2007 2014 Forward

Building Solid Pipeline of Multifamily Development Opportunities (Proforma) Proforma Project Cash Flows Expected Forestar Cash Flows Project Market % Complete Units FOR Ownership Total Development Cost Expected Project NOI FOR Equity FOR Total Cash Cash Multiple* Eleven Austin 100% 257 25% $40 – 45 $3.4 $4 $12 3.0x 360° Denver 66% 304 20% 50 – 55 3.8 4 11 2.8x Midtown Dallas 56% 354 100% 35 – 40 2.8 10 20 2.0x Acklen Nashville 18% 320 30% 55 – 60 4.1 6 14 2.3x Littleton Denver 1% 385 25% 70 – 75 5.1 6 16 2.6x 1,620 40% $250 – 275 $19.2 $30 $73 2.4x * Cash multiples include fees 10 Site Pipeline Expected Ownership Proforma Units Charlotte, NC Venture 379 Austin, TX – Pressler Venture 280 Austin, TX – Westlake Venture 218 ($ in millions)

Note: Includes consolidated ventures, but excludes mitigation. Forestar Real Estate Revenues (Excluding Timberland & Multifamily Revenues) Capitalizing on Well Located Communities, Low Inventories and Forestar’s Ability to Deliver 11 • Driving residential lot and tract sales in good locations and healthy markets • Opportunistically monetizing undeveloped land • Acquiring community development and multifamily sites in “A” locations Accelerating Value Realization $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $0 $10 $20 $30 $40 $50 Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 A ve ra ge Lo t M ar gi n ($ in t h o u sa n d s) To tal R e ve n u e s ($ in m ill io n s) Residential Lots Residential Tracts Commercial Tracts Income Producing Avg. Lot Margin

Other Natural Resources Second Quarter 2014 Highlights Building Momentum Through Sustainable Harvests and Delivering Economic Water Solutions 12

Other Natural Resources Segment Results $1.0 $0.3 ($0.6) $2.1 $0.7 $0.7 $0.0 $1.0 $2.0 $3.0 Q2 2013 Water Reservation Gain on Termination of Timber Lease Operating Expenses Fiber Sales Q2 2014 Se gm en t Ea rn in gs Q2 2014 Highlights • Signed amended groundwater reservation agreement, generating $0.7 million in earnings • $0.7 million gain on termination of timber lease in connection with Ironstob venture • Sold 107,800 tons of fiber • Average fiber pricing $16.86 per ton, up over 26% vs. Q2 2013 Segment Earnings Reconciliation Q2 2013 vs. Q2 2014 ($ in millions) 13

Oil and Gas Second Quarter 2014 Highlights Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 14

Investments and Asset Sales Drive Higher EBITDAX Q2 2014 Highlights • Working interest volume up 56% vs. Q2 2013 • Mineral royalties volume down 28% vs. Q2 2013 • Sold leasehold interest in 223 net mineral acres in the Bakken/Three Forks generating $1.2 million gain • Sold working interest in 97 gross (6 net) non-core producing wells in Oklahoma for $7.5 million, generating $4.5 million gain • 1,380 fee mineral acres leased to third parties for $352/acre • Acquired leasehold interest in over 77,000 net mineral acres, primarily in Nebraska, for $9.1 million ($ in millions) 15 ($ in millions) Note: EBITDAX = segment earnings before interest and taxes, plus depreciation, depletion, amortization, geological, geophysical, seismic and dry hole costs. 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. $4.2 ($3.5) $4.0 $5.7 ($0.9) $9.5 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 $14.0 Q2 2013 Gain on Sale Working Interest Dry Hole Expense Operating Expenses Q2 2014 Se gme n t Ea rning s $11.0 $5.8 $5.7 ($0.9) ($3.5) $4.0 $22.1 $0.0 $5.0 $10.0 $15.0 $20.0 $25.0 Q2 2013 DD&A and Exploration Gain on Sale Working Interest Dry Hole Expense Operating Expenses Q2 2014 Se gme n t EBIT D A X Segment Earnings Reconciliation Q2 2013 vs. Q2 2014 Segment EBITDAX Reconciliation Q2 2013 vs. Q2 2014 2nd quarter 2014 oil and gas segment results include a $4.5 million gain associated with the sale of our interest in 97 gross (6 net) non-core producing wells in Oklahoma and a $1.2 million gain from the sale of leasehold interests in 223 net mineral acres in North Dakota. 2nd Qtr. 2014 oil and gas segment results include 4.0 million in dry hole expenses, including $2.1 million associated with our working interest in an exploratory well in East Texas, and $1.9 million in Kansas and Nebraska.

16 Drilling and Completion Investments Driving Production Growth and Improved EBITDAX 50,000 100,000 150,000 200,000 250,000 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 B O E Working Interest Legacy Minerals Quarterly Oil & Gas Production Quarterly Oil & Gas EBITDAX $0 $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 $ in thou sand s Working Interest Legacy Minerals * *Excludes $5.7 million gain on sale of oil and gas properties

HALCON Ft. Berthold 3B-10-4H FOR : 18.75% IP : 2,301 BOEPD HALCON Ft. Berthold 3B-10-5H FOR : 18.75% IP : 1,856 BOEPD Initial Production Rates and Well Performance Improving 17 * Represents highest initial production rates on a barrel of oil equivalent per day Note: wells are non-operated Bakken Wells IP* (BOEPD) in Q2 2014 Bakken Three Forks Leasehold Interest By Operator Wells I.P. Wells I.P. Halcon 40% 4 1,794 5 1,949 WPX 6% 4 986 0 n/a Continental 16% 1 1,483 1 1,015 Enerplus 3% 1 3,171 1 2,230 Total 10 1,577 7 1,855 Bakken / Three Forks Legend Forestar Bakken Well Forestar Three Forks Well Drilling or Completing Well Fort Berthold Reservation Boundary Forestar HBP Leases Forestar Undeveloped Leases Forestar Spacing Unit HALCON Ft. Berthold 22C-15-5H FOR : 11.93% IP : 1,263 BOEPD HALCON Ft. Berthold 3B-10-3H FOR : 18.75% IP : 1,895 BOEPD HALCON Ft. Berthold 3B-10-7TFH FOR : 18.75% IP : 1,730 BOEPD HALCON Ft. Berthold 22C-15-4H FOR : 11.93% IP : 1,853 BOEPD HALCON Ft. Berthold 22C-15-9H FOR : 11.93% IP : 2,164 BOEPD HALCON Ft. Berthold 3B-10-4H FOR : 18.75% IP : 2,301 BOEPD Bakken / Three Forks Play Area – Fort Berthold

18 18 Bakken / Three Forks Leasehold Interests 2014 Producers Added During Q1 2014 3 Producers Added During Q2 2014 17 Average WI Q2 2014 ~7% Drilling & Awaiting Frac at End Q2 2014 12 Total Wells Drilled 2014 Est* 50 Expected WI Average - Wells Drilled in 2014 ~10% Bakken / Three Forks Drilling Activity Investment and Value Realization * Based on current plans from operators, subject to change 0 20 40 60 80 100 120 140 2010 2011 2012 2013 2014E P ro d u ci n g W e lls Producing Wells** Actual Wells Planned Wells +44 +25 +7 +4 +46 ** Gross wells EUR Sensitivity *** EUR (MBOE) IRR 700 56% 600 38% 500 25% ***Estimated Ultimate Recoveries (EUR’s)assuming $90 oil and $3 natural gas average price over life of well. Total costs includes land, drilling and completion, LOE and production severance taxes. Note: Actual results may vary from illustrations

Accelerating Value Realization and Growing Net Asset Value Focused on investments that accelerate earnings and cash flow Increasing oil production and proven reserves Expected working interest investment returns above cost of capital 19 0 50 100 150 200 250 300 350 $0 $5 $10 $15 $20 $25 $30 Q2 2010 Q2 2011 Q2 2012 Q2 2013 Q2 2014 P ro d u ctio n ( M b o e ) To tal R e ve n u e s Forestar Oil and Gas Revenues ($ in millions) Lease Bonus / Delay Rentals Royalties Working Interests Production (MBoe) *BOE = Barrels of oil equivalent (converting natural gas to oil at 6 Mcfe / Bbl) 1st Half 2014 2nd Half 2014E Royalty Interest Gain on Sale Working Interest $10.3 Forestar Oil & Gas Segment Earnings ($ in millions)

Strategic Initiatives Update Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 20

Growing FORward Initiatives on Track Growing Long-Term Shareholder Value Growing Through Strategic and Disciplined Investment Increasing Returns 21 • Development of Existing Locations • Acquisitions and Extensions 2016 Targets: • Total Segment EBITDA of $200 million • Return on Assets of 10.0% • Reposition $100 Million of Non-Core Assets Delivering Value Through Execution of Strategic Initiatives YTD Q2 2014 Results • Total segment EBITDA of $77 million up 54% vs. YTD Q2 2013 • Sold $28 million in non-core assets • Invested $136 million in “A” locations and resource plays • Available liquidity up $121 million vs Q4 2013 • Cash flows and liquidity expected to adequately fund Growing FORward initiatives

Second Quarter 2014 Financial Results For questions, please contact: 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 22

Second Quarter 2014 Financial Results Second Quarter 2014 Appendix - Segment KPI’s - Earnings Reconciliations - Reconciliation of Non-GAAP Financial Measures 23

Q2 2014 Q2 2013 YTD Q2 2014 YTD Q2 2013 Residential Lot Sales Lots Sold 537 360 1,511 806 Average Price / Lot $64,100 $57,600 $50,200 $54,400 Gross Profit / Lot $27,400 $24,600 $20,200 $22,700 Commercial Tract Sales Acres Sold 3 34 3 37 Average Price / Acre $96,800 $103,100 $96,800 $125,700 Land Sales Acres Sold 3,208 1,042 12,537 1,961 Average Price / Acre $2,500 $2,600 $2,200 $2,800 Segment Revenues ($ in Millions) $55.2 $41.2 $120.7 $119.9 Segment Earnings ($ in Millions) $27.3 $8.1 $50.9 $27.6 *2nd quarter 2014 real estate segment results include a $10.5 million gain associated with the exchange of timber leases for 5,400 acres of undeveloped land. YTD 2014 real estate segment results also includes $2.3 million in charges associated with additional costs at two multifamily venture projects. **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. . Note: Includes ventures 24 24 24 Real Estate Segment KPI’s ** ** * * * *

Q2 2014 Q2 2013 YTD Q2 2014 YTD Q2 2013 Fee Leasing Activity Net Fee Acres Leased 1,380 515 3,121 825 Avg. Bonus / Acre $352 $343 $347 $333 Total Oil and Gas Interests* Oil Produced (Barrels) 225,300 152,700 382,300 286,100 Average Price / Barrel $95.38 $90.64 $93.75 $92.86 NGL Produced (Barrels) 12,000 13,100 27,000 27,600 Average Price / Barrel $43.24 $26.49 $43.17 $29.37 Natural Gas Produced (MMCF) 459.9 505.3 946.4 1,099.1 Average Price / MCF $4.50 $3.25 $4.43 $3.26 Total BOE 313,900 250,100 567,000 496,900 Average Price / BOE $76.70 $63.30 $72.66 $62.31 Segment Revenues ($ in Millions) $24.4 $15.8 $41.9 $31.3 Segment Earnings ($ in Millions) $9.5 $4.2 $10.3 $9.4 Producing Wells (end of period) 948 983 948 983 25 25 Oil and Gas Segment KPI’s * Includes our share of venture production: 51MMCf in Q2 2014, 103MMCf YTD Q2 2014, 58MMCf in Q2 2013, and 128MMCf YTD Q2 2013 ** 2nd quarter 2014 oil and gas segment results include a $4.5 million gain, pre-tax, associated with the sale of our interest in 97 gross (6 net) non-core producing wells in Oklahoma, a $1.2 million gain, pre-tax, from the sale of leasehold interests in 223 net mineral acres in North Dakota and $4.0 million in dry hole expenses, including $2.1 million associated with our working interest in an exploratory well in East Texas, and $1.9 million in Kansas and Nebraska. ** ** ** **

26 Q2 2014 Q2 2013 YTD Q2 2014 YTD Q2 2013 Fiber Sales Pulpwood Tons Sold 58,200 128,100 86,400 248,700 Average Pulpwood Price / Ton $11.42 $8.66 $10.85 $9.19 Sawtimber Tons Sold 49,600 56,900 78,500 127,800 Average Sawtimber Price / Ton $23.23 $23.87 $22.67 $23.04 Total Tons Sold 107,800 185,000 164,900 376,500 Average Price / Ton $16.86 $13.34 $16.48 $13.89 Recreational Leases Average Acres Leased 110,000 121,800 113,200 122,200 Average Lease Rate / Acre $9.69 $9.29 $9.41 $9.29 Segment Revenues ($ in Millions) $3.5 $3.0 $5.0 $6.3 Segment Earnings ($ in Millions) * $2.1 $1.0 $1.6 $2.3 26 26 Other Natural Resources Segment KPI’s * Segment earnings include losses associated with the development of our water initiatives of $0.1 million in Q2 2014, $1.3 million YTD Q2 2014 , $0.9 million in Q2 2013 and $1.9 million YTD Q2 2013

Second Quarter 2014 Earnings Reconciliation $0.5 $14.8 $3.4 $12.5 $0.7 ($1.1) ($1.0) ($0.2) $0.0 $5.0 $10.0 $15.0 $20.0 Q2 2013 Real Estate Oil & Gas Other Natural Resources Share Based Comp Interest, Taxes & Other Expenses G&A Q2 2014 ($ in millions) 27 $0.02 $0.29 $0.08 $0.02 ($0.03) ($0.03) ($0.01) $0.34 $0.00 $0.10 $0.20 $0.30 $0.40 $0.50 Q2 2013 Real Estate Oil & Gas Other Natural Resources Share Based Comp Interest, Taxes & Other Expenses G&A Q2 2014 Net Income Per Share Reconciliation Q2 2013 vs. Q2 2014 Net Income Reconciliation Q2 2013 vs. Q2 2014 Note: 2nd quarter 2014 weighted average diluted shares outstanding were 43.7 million • 2nd quarter 2014 real estate segment results include a $10.5 million gain associated with the exchange of a timberland lease for 5,400 acres of undeveloped land from Ironstob venture. • 2nd quarter 2014 oil and gas segment results include a $4.5 million gain associated the sale of our interest in 97 gross (6 net) non-core producing wells in Oklahoma, $1.2 million gain from the sale of leasehold interests in 223 net mineral acres in North Dakota and $2.1 million dry hole expense associated with a working interest investment in a well in East Texas.

28 Forestar’s Segment EBITDA is a non-GAAP financial measure 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 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. Reconciliation of Non-GAAP Financial Measures (Unaudited) Quarter YTD ($ in millions, except per share amounts) Q2 2014 Q2 2013 YTD Q2 2014 YTD Q2 2013 Real Estate Segment Earnings in accordance with GAAP $27.3 $8.1 $50.9 $27.6 Depreciation, Depletion & Amortization 0.7 0.7 1.3 1.7 EBITDA $28.0 $8.8 $52.2 $29.3 Oil & Gas Segment Earnings in accordance with GAAP $9.5 $4.2 $10.3 $9.4 Depreciation, Depletion & Amortization 7.5 4.7 12.3 8.4 EBITDA $17.0 $8.9 $22.6 $17.8 Other Natural Resources Segment Earnings in accordance with GAAP $2.1 $1.0 $1.6 $2.2 Depreciation, Depletion & Amortization 0.1 0.2 0.2 0.4 EBITDA $2.2 $1.2 $1.8 $2.6 Total Segment Total Segment Earnings in accordance with GAAP $38.9 $13.3 $62.8 $39.2 Depreciation, Depletion & Amortization 8.3 5.6 13.8 10.5 EBITDA $47.2 $18.9 $76.6 $49.7

29 Forestar’s Oil and Gas Segment EBITDAX is a non-GAAP financial measure 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 YTD ($ in millions, except per share amounts) Q2 2014 Q2 2013 YTD Q2 2014 YTD Q2 2013 Oil and Gas Segment Earnings, in accordance with GAAP $9.5 $4.2 $10.3 $9.4 EBITDAX adjustments, pre-tax Depreciation, Depletion & Amortization 7.5 4.7 12.3 8.4 Geological, Geophysical, Seismic and Dry Hole Costs 5.1 2.1 9.3 3.4 Total Oil and Gas Segment EBITDAX $22.1 $11.0 $31.9 $21.2 Reconciliation of Non-GAAP Financial Measures (Unaudited)

Second Quarter 2014 Financial Results For questions, please contact: 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 30