10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended December 31, 2016

or

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From                 to                

Commission File Number: 001-33662

Forestar Group Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	26-1336998
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

6300 Bee Cave Road

Building Two, Suite 500

Austin, Texas 78746-5149

(Address of Principal Executive Offices, including Zip Code)

Registrant’s telephone number, including area code: (512) 433-5200

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange On Which Registered
Common Stock, par value $1.00 per share	New York Stock Exchange
Preferred Stock Purchase Rights	New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.     Yes  ¨    No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.     Yes  ¨    No  þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).     YesþNo  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.     ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer þ	Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ¨    No  þ

The aggregate market value of the Common Stock held by non-affiliates of the registrant, based on the closing sales price of the Common Stock on the New York Stock Exchange on June 30, 2016, was approximately $210 million. For purposes of this computation, all officers, directors, and ten percent beneficial owners of the registrant (as indicated in Item 12) are deemed to be affiliates. Such determination should not be deemed an admission that such directors, officers, or ten percent beneficial owners are, in fact, affiliates of the registrant.

As of February 27, 2017, there were 41,694,432 shares of Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Selected portions of the Company’s definitive proxy statement for the 2017 annual meeting of stockholders are incorporated by reference into Part III of this Form 10-K.

TABLE OF CONTENTS

		Page
PART I.
Item 1.	Business	3
Item 1A.	Risk Factors	17
Item 1B.	Unresolved Staff Comments	22
Item 2.	Properties	22
Item 3.	Legal Proceedings	22
Item 4.	Mine Safety Disclosures	22
PART II.
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	23
Item 6.	Selected Financial Data	25
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 8.	Financial Statements and Supplementary Data	49
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	93
Item 9A.	Controls and Procedures	93
Item 9B.	Other Information	93
PART III.
Item 10.	Directors, Executive Officers and Corporate Governance	94
Item 11.	Executive Compensation	94
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	94
Item 13.	Certain Relationships and Related Transactions, and Director Independence	95
Item 14.	Principal Accountant Fees and Services	95
PART IV.
Item 15.	Exhibits and Financial Statement Schedules	95
SIGNATURES		98

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PART I

Item 1. Business

Overview

Forestar Group Inc. is a residential and mixed-use real estate development company. In our core community development business we own directly or through ventures interests in 50 residential and mixed-use projects comprised of 4,600 acres of real estate located in 10 states and 14 markets. In addition, we own interests in various other assets that have been identified as non-core that the company is divesting opportunistically over time. At year-end 2016, our remaining non-core assets principally include approximately 523,000 net acres of owned mineral assets principally located in Texas, Louisiana, Georgia and Alabama, 19,000 acres of timberland and undeveloped land (including mitigation banking), four multifamily assets and approximately 20,000 acres of groundwater leases in central Texas. On February 17, 2017, we sold our owned mineral assets for $85.6 million. In 2016, we had revenues of $197.3 million and net income of $58.6 million. Unless the context otherwise requires, references to “we,” “us,” “our” and “Forestar” mean Forestar Group Inc. and its consolidated subsidiaries. Unless otherwise indicated, information is presented as of December 31, 2016, and references to acreage owned include approximate acres owned by us and ventures regardless of our ownership interest in a venture.

Key Initiatives

• Reducing costs across our entire organization;

• Reviewing entire portfolio of assets (complete non-core asset sales); and

• Reviewing capital structure (allocate capital to maximize shareholder value).    

2016 Transformation Highlights (including ventures):

Core Community Development:

• Sold 1,940 residential lots for approximately $68,200 per lot

Approximately 2,100 lots under option contracts with builders at year-end 2016

• Sold 298 commercial acres for approximately $44,600 per acre (principally non-core projects)

• Sold 1,792 residential tract acres for approximately $8,700 per acre (principally non-core projects)

Cost Reductions:

• Reduced SG&A, including discontinued operations, by over 28% compared with full year 2015

Divest Non-core Assets:

• Executed non-core asset sales generating $481.9 million in pre-tax net proceeds:

Assets	Pre-Tax Net Proceeds
	(In millions)
Timberland and Undeveloped Land (bulk and retail, ~73,000 acres)	$	138.0
Radisson Hotel & Suites	128.8
Multifamily properties (five properties)	118.7
Oil and Gas Working Interests	77.1
Non-core Community Development Projects (five projects)	19.3
	$	481.9

• Reduced outstanding debt by $277.8 million in 2016 and $323.3 million since third quarter-end 2015

Business Segments

We manage our operations through three business segments:

• Real estate,

• Mineral resources, and

• Other.

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Our real estate segment provided approximately 96% percent of our 2016 consolidated revenues. We are focused on maximizing real estate value through the entitlement and development of strategically located residential and mixed-use communities. We secure entitlements by delivering thoughtful plans and balanced solutions that meet the needs of communities where we operate. Residential development activities target lot sales to local, regional and national home builders who build quality products and have strong and effective marketing and sales programs. The lots we develop in the majority of our communities are for mid-priced homes, predominantly in the first and second move up categories. We invest in projects principally in regions across the southern half of the United States that possess key demographic and growth characteristics that we believe make them attractive for long-term real estate investment. A majority of our active real estate projects are developed on land we or our ventures acquired in the open market. In 2016, we announced that multifamily is a non-core business and are opportunistically divesting our multifamily portfolio and will no longer allocate capital to new communities in this business. At year-end 2016, a multifamily site in Austin was classified as assets held for sale.

Our mineral resources segment provided three percent of our 2016 consolidated revenues. We promote the exploration, development and production of oil and gas on our owned mineral interests. These interests include 523,000 owned net mineral acres which we determined were non-core in 2016 and we are opportunistically divesting these assets over time. At year-end 2016, we classified our non-core mineral assets as held for sale. On February 17, 2017, we sold these assets for $85.6 million.

Our other segment, all of which is non-core, provided one percent of our 2016 consolidated revenues. We sell wood fiber from our land, primarily in Georgia, and lease land for recreational uses. We have 19,000 acres of non-core timberland and undeveloped land that was classified as assets held for sale at year-end 2016. In addition, we have non-core water interests in 1.5 million acres, including a 45 percent nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes or sold from 1.4 million acres in Texas, Louisiana, Georgia and Alabama, and 20,000 acres of groundwater leases in central Texas that were classified as assets held for sale at year-end 2016.

Our results of operations, including information regarding our business segments, are discussed in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in Item 8, Financial Statements and Supplementary Data.

Real Estate

In our real estate segment, we conduct project planning and management activities related to the acquisition, entitlement, development and sale of real estate, primarily residential and mixed-use communities, which we refer to as community development. We own and manage our projects either directly or through ventures, which we use to achieve a variety of business objectives, including more effective capital deployment, risk management, and leveraging a partner’s local market contacts and expertise. Our development projects are principally located in the major markets of Texas.

We have two real estate projects representing approximately 730 acres currently in the entitlement process in California, which includes obtaining zoning and access to water, sewer and roads. In fourth quarter 2016, we classified 3,700 acres in Texas previously in the entitlement process as timberland and undeveloped land as it was determined it was unlikely this project would be entitled and developed in the future, and at year-end 2016 it was classified as assets held for sale. Additional entitlements, such as flexible land use provisions, annexation, and the creation of local financing districts generate additional value for our business and may provide us the right to reimbursement of major infrastructure costs. We use return criteria, which include return on cost, internal rate of return, cash multiples, and margin on sales when determining whether to invest initially or make additional investment in a project. When investment in development meets our return criteria, we will initiate the development process with subsequent sale of lots to home builders or for commercial tracts, internal development, sale to or venture with third parties.

We have 50 entitled, developed or under development projects in 10 states and 14 markets encompassing 4,600 acres planned for residential and commercial uses. We may sell land at any point when additional time required for entitlement or investment in development will not meet our return criteria.In 2016, we sold nearly 73,000 acres of timberland and undeveloped land at an average price of $1,925 per acre, of which 58,000 acres were bulk timberland and undeveloped land sales and 15,000 acres were retail land sales.

A summary of our real estate projects in the entitlement process ^(a) at year-end 2016 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
Total			730

 _____________________

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^(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, such as 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.

A summary of our non-core timberland and undeveloped land classified as assets held for sale at year-end 2016 follows:

	Acres
Timberland
Georgia	11,100
Texas (a)	7,900
Total	19,000

 _____________________

^(a)  Includes 3,700 acres in Houston that was previously in the entitlement process.

Products

The majority of our projects are single-family residential and mixed-use communities. In some cases, commercial land uses within a project enhance the desirability of the community by providing convenient locations for resident support services.

We develop lots for single-family homes on sites we may purchase. We sell residential lots primarily to local, regional and national home builders. We have 4,600 acres, principally in the major markets of Texas, comprised of land planned for approximately 10,200 residential lots and units. We generally focus our lot sales on the first and second move-up primary housing categories. First and second move-up segments are homes priced above entry-level products yet below the high-end and custom home segments.

Commercial tracts are developed internally or ventured with commercial developers that specialize in the construction and operation of income producing properties, such as apartments, retail centers, or office buildings. We also sell land designated for commercial use to regional and local commercial developers. We have about 770 acres of entitled land designated for commercial use.

Cibolo Canyons is a significant mixed-use project in the San Antonio market area. Cibolo Canyons includes 2,100 acres planned to include 1,791 residential lots, of which 1,142 have been sold as of year-end 2016 at an average price of $75,000 per lot. The residential component includes not only traditional single-family homes but also an active adult section, and is planned to include condominiums. The remaining 58 acres of commercial component is designated principally for multifamily and retail uses. Located at Cibolo Canyons is the JW Marriott^® San Antonio Hill Country Resort & Spa (Resort), a 1,002 room destination resort and two PGA Tour^® Tournament Players Club^® (TPC) golf courses designed by Pete Dye and Greg Norman. We have the right to receive from the Cibolo Canyons Special Improvement District (CCSID) nine percent of hotel occupancy revenues and 1.5 percent of other resort sales revenues collected as taxes by CCSID through 2034 and reimbursement of certain infrastructure costs related to the mixed-use development. The amount we receive is net of annual ad valorem tax reimbursements by CCSID to the third-party owners of the resort through 2020. In addition, these payments will be net of debt service on bonds issued in 2014 by CCSID as discussed below which are collateralized by hotel occupancy tax (HOT) and other resort sales tax through 2034.

In 2014, we received $50,550,000 from CCSID principally related to its issuance of $48,900,000 Hotel Occupancy Tax (HOT) and Sales and Use Tax Revenue Bonds, resulting in recovery of our full Resort investment. These bonds are obligations solely of CCSID and are payable from HOT and sales and use taxes levied by CCSID. To facilitate the issuance of the bonds, we provided a $6,846,000 letter of credit to the bond trustee as security for certain debt service fund obligations in the event CCSID tax collections are not sufficient to support payment of the bonds in accordance with their terms. The letter of credit must be maintained until the earlier of redemption of the bonds or scheduled bond maturity in 2034. We also entered into an agreement with the owner of the Resort to assign its senior rights to us in exchange for consideration provided by us, including a surety bond to be drawn if CCSID tax collections are not sufficient to support ad valorem tax rebates payable. The surety bond decreases as CCSID makes annual ad valorem tax rebate payments, which obligation is scheduled to be retired in full by 2020.

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A summary of activity within our projects in the development process, which includes entitled, developed and under development single-family and mixed-use projects, at year-end 2016 follows:

				Residential Lots/Units		Commercial Acres
Project	County	Interest Owned (a)		Lots/Units Sold Since Inception	Lots/Units Remaining	Acres Sold Since Inception	Acres    Remaining
Projects with lots/units in inventory, under development or future planned development, projects with remaining commercial acres only and projects sold out in 2016
Texas
Austin
Arrowhead Ranch	Hays	100	%	6	378	—	19
The Colony	Bastrop	100	%	566	—	27	—
Double Horn Creek	Burnet	100	%	167	—	—	—
Hunter's Crossing	Bastrop	100	%	510	—	54	51
La Conterra	Williamson	100	%	202	—	3	—
Westside at Buttercup Creek	Williamson	100	%	1,497	—	66	—
				2,948	378	150	70
Corpus Christi
Caracol	Calhoun	75	%	65	—	14	—
Padre Island (b)	Nueces	50	%	—	—	—	15
Tortuga Dunes	Nueces	75	%	95	—	4	—
				160	—	18	15
Dallas-Ft. Worth
Bar C Ranch	Tarrant	100	%	467	654	—	—
Keller	Tarrant	100	%	—	—	1	—
Lakes of Prosper	Collin	100	%	187	100	4	—
Lantana	Denton	100	%	3,670	432	44	—
Maxwell Creek	Collin	100	%	1,001	—	10	—
Parkside	Collin	100	%	138	62	—	—
The Preserve at Pecan Creek	Denton	100	%	631	151	—	7
River's Edge	Denton	100	%	—	202	—	—
Stoney Creek	Dallas	100	%	320	376	—	—
Summer Creek Ranch	Tarrant	100	%	983	245	35	44
Timber Creek	Collin	88	%	80	521	—	—
Village Park	Collin	100	%	567	—	3	2
				8,044	2,743	97	53
Houston
Barrington Kingwood	Harris	100	%	176	4	—	—
City Park	Harris	75	%	1,468	—	58	104
Harper's Preserve (b)	Montgomery	50	%	588	1,094	30	49
Imperial Forest	Harris	100	%	84	347	—	—
Long Meadow Farms (b)	Fort Bend	38	%	1,648	149	194	99
Southern Trails (b)	Brazoria	80	%	954	41	1	—
Spring Lakes	Harris	100	%	348	—	25	4
Summer Lakes	Fort Bend	100	%	780	294	56	—
Summer Park	Fort Bend	100	%	125	74	34	67
Willow Creek Farms II	Waller / Fort Bend	90	%	154	111	—	—
				6,325	2,114	398	323
San Antonio
Cibolo Canyons	Bexar	100	%	1,142	649	97	58
Oak Creek Estates	Comal	100	%	326	227	13	—
Olympia Hills	Bexar	100	%	747	7	10	—
Stonewall Estates (b)	Bexar	50	%	378	8	—	—
				2,593	891	120	58
Total Texas				20,070	6,126	783	519

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				Residential Lots/Units		Commercial Acres
Project	County	Interest Owned (a)		Lots/Units Sold Since Inception	Lots/Units Remaining	Acres Sold Since Inception	Acres    Remaining
Colorado
Denver
Buffalo Highlands	Weld	100	%	—	164	—	—
Cielo	Douglas	100	%	—	343	—	—
Johnstown Farms	Weld	100	%	281	317	2	—
Pinery West	Douglas	100	%	86	—	20	104
Stonebraker	Weld	100	%	—	603	—	—
				367	1,427	22	104
Georgia
Atlanta
Harris Place	Paulding	100	%	22	5	—	—
Montebello (b)	Forsyth	90	%	—	224	—	—
Seven Hills	Paulding	100	%	912	341	26	113
West Oaks	Cobb	100	%	6	50	—	—
				940	620	26	113
North & South Carolina
Charlotte
Ansley Park	Lancaster	100	%	—	307	—	—
Habersham	York	100	%	91	96	—	6
Moss Creek	Cabarrus	100	%	—	84	—	—
Walden	Mecklenburg	100	%	—	384	—	—
				91	871	—	6
Raleigh
Beaver Creek (b)	Wake	90	%	31	162	—	—
				31	162	—	—
				122	1,033	—	6
Tennessee
Nashville
Beckwith Crossing	Wilson	100	%	32	67	—	—
Morgan Farms	Williamson	100	%	132	41	—	—
Scales Farmstead	Williamson	100	%	26	171	—	—
Weatherford Estates	Williamson	100	%	8	9	—	—
				198	288	—	—
Wisconsin
Madison
Juniper Ridge/Hawks Woods (b) (d)	Dane	90	%	18	196	—	—
Meadow Crossing II (b) (c)	Dane	90	%	7	165	—	—
				25	361	—	—
Arizona, California, Missouri, Utah
Tucson
Boulder Pass (b) (d)	Pima	50	%	29	59	—	—
Dove Mountain	Pima	100	%	—	98	—	—
Oakland
San Joaquin River	Contra Costa/Sacramento	100	%	—	—	264	25
Kansas City
Somerbrook	Clay	100	%	185	—	—	—
Salt Lake City
Suncrest (b) (c)	Salt Lake	90	%	—	171	—	—
				214	328	264	25
Total				21,936	10,183	1,095	767

___________________

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^(a)  Interest owned reflects our total interest in the project, whether directly or indirectly, which may be different than our economic interest in the project.

^(b)  Projects in ventures that we account for using equity method.

^(c) Venture project that develops and sells homes.

^(d) Venture project that develops and sells lots and homes.

A summary of our non-core multifamily properties, excluding one multifamily site in Austin classified as held for sale, at year-end 2016 follows:

Project	Market	Interest Owned (a)		Type	Acres	Description
Elan 99	Houston	90	%	Multifamily	17	360-unit luxury apartment
Acklen	Nashville	30	%	Multifamily	4	320-unit luxury apartment
HiLine	Denver	25	%	Multifamily	18	385-unit luxury apartment

_____________________

^(a)  Interest owned reflects our total interest in the project, whether owned directly or indirectly, which may be different than our economic interest in the project.

Our net investment in owned and consolidated real estate projects by geographic location at year-end 2016 follows:

State	Entitled, Developed, and Under Development Projects		Undeveloped Land and Land in Entitlement		Total
	(In thousands)
Texas	$	167,772	$	2,639	$	170,411
Georgia	7,504		409		7,913
North and South Carolina	27,915		117		28,032
California	1,667		25,957		27,624
Tennessee	23,624		22		23,646
Colorado	29,514		—		29,514
Other	5,863		—		5,863
Total	$	263,859	$	29,144	$	293,003

Approximately 58 percent of our net investment in real estate is in the major markets of Texas.

Markets

Sales of new U.S. single-family homes according to U.S Census Bureau Department of Commerce declined 0.4% on a year over year basis as of December 31, 2016 and 10.4% below prior month's rate in December 2016, suggesting that the 40 basis point rise in mortgage rates and the return of winter weather affected December 2016 sales. Consumer confidence as measured by The Conference Board increased in December 2016 to its highest level since August 2001, registering 113.7 up from 109.4 in November 2016. The elevated monthly reading was attributed in part to increases in consumers' outlook for business conditions over the next six-months and more positive outlooks for the labor market and rising incomes. Builder confidence as measured by the NAHB/Wells Fargo Housing Market Index ended 2016 on a high note, jumping seven points to its highest reading since July 2005, largely attributable to a post-election bounce. On a monthly basis, housing starts increased significantly in December 2016 due to volatile multifamily activity, while housing permit activity, viewed as a precursor to starts increased 1.9% year over year basis ending December 2016. Home prices as measured by S&P Corelogic Case-Shiller Home Price index hit a new high in November 2016 after rising at approximately a 5.5% annual rate over the last two-and-a half years. As of the November 2016 reading, average home prices for the metropolitan statistical areas (MSAs) within the two composite indices were back to their winter 2007 levels. As of year-end 2016, finished vacant supply of new homes and vacant developed lot supply in MSAs in which Forestar's single family activity is located remained extremely tight, registering below the two month and 24 month equilibrium levels.

Competition

We face significant competition for the acquisition, entitlement, development and sale of real estate in our markets. Our major competitors include other landowners who market and sell undeveloped land and numerous national, regional and local developers, including home builders. In addition, our projects compete with other development projects offering similar

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amenities, products and/or locations. Competition also exists for investment opportunities, financing, available land, raw materials and labor, with entities that may possess greater financial, marketing and other resources than us. The presence of competition may increase the bargaining power of property owners seeking to sell. These competitive market pressures sometimes make it difficult to acquire, entitle, develop or sell land at prices that meet our return criteria. Some of our real estate competitors are well established and financially strong, may have greater financial resources than we do, or may be larger than us and/or have lower cost of capital and operating costs than we have and expect to have.

The land acquisition and development business is highly fragmented, and we are unaware of any meaningful concentration of market share by any one competitor. Enterprises of varying sizes, from individuals or small companies to large corporations, actively engage in the real estate development business. Many competitors are local, privately-owned companies. We have a few regional competitors and virtually no national competitors other than national home builders that, depending on business cycles and market conditions, may enter or exit the real estate development business in some locations to develop lots on which they construct and sell homes. During periods when access to capital is restricted, participants with weaker financial conditions tend to be less active.

 Discontinued Operations

In 2016, we have divested substantially all of our oil and gas working interest properties. As a result of this significant change in our operations, we have reported the results of operations and financial position of these assets as discontinued operations within our consolidated statements of income (loss) and comprehensive income (loss) and consolidated balance sheets for all periods presented. In addition, in second quarter 2016, we changed the name of the oil and gas segment to mineral resources to reflect the strategic shift from oil and gas working interests to owned mineral interests.

Mineral Resources

Our mineral resources segment is focused on maximizing the value from our owned oil and gas mineral interests through promoting exploration, development and production activities by increasing acreage leased, lease rates, and royalty interests. Our revenue from our owned mineral interests is primarily from oil and gas royalty interests, lease bonus payments and delay rentals received and other related activities. We typically lease our owned mineral interests to third parties for exploration and production of oil and gas.

At year-end 2016, we had approximately 523,000 net acres of owned mineral acres that are classified as assets held for sale. On February 17, 2017, we sold substantially all of our remaining oil and gas assets for a total purchase price of $85,600,000. Please read Note 21  — Subsequent Events for additional information about these items. At year-end 2016, we had about 57,000 net acres leased for oil and gas exploration activities, of which about 44,000 net acres were held by production from over 473 gross oil and gas wells that were operated by others, in which we had royalty interests. In addition, we had working interest ownership in 31 of these wells. Many of these wells are part of an oil and gas unit, however; we count each well regardless of the unitization.

A summary of our non-core owned mineral acres ^(a) at year-end 2016 follows:

State	Unleased	Leased (b)	Held By Production (c)	Total (d)
Texas (e)	210,000	8,000	34,000	252,000
Louisiana (e) (f)	129,000	5,000	10,000	144,000
Georgia	84,000	—	—	84,000
Alabama	41,000	—	—	41,000
California	1,000	—	—	1,000
Indiana	1,000	—	—	1,000
	466,000	13,000	44,000	523,000

 _____________________

^(a) Includes ventures.

^(b) Includes leases in primary lease term or for which a delayed rental payment has been received. In the ordinary course of business, leases covering a significant portion of leased net mineral acres may expire from time to time in a single reporting period.

^(c) Acres being held by production are producing oil or gas in paying quantities.

^(d) Texas, Louisiana, California and Indiana net acres are calculated as the gross number of surface acres multiplied by our percentage ownership of the mineral interest. Alabama and Georgia net acres are calculated as the gross number of surface acres multiplied by our estimated percentage ownership of the mineral interest based on county sampling. In fourth quarter

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2016, we sold approximately 58,300 acres of timberland and undeveloped land in Georgia and Alabama which included selling any owned minerals rights associated with these acres.

^(e)  These owned mineral acre interests contain numerous oil and gas producing formations consisting of conventional, unconventional, and tight sand reservoirs. Of these reservoirs, we have mineral interests in and around production trends in the Wilcox, Frio, Cockfield, James Lime, Petet, Travis Peak, Cotton Valley, Austin Chalk, Haynesville Shale, Barnett Shale and Bossier formations.

^(f)  A significant portion of our Louisiana net acres was severed from the surface estate shortly before our 2007 spin-off. Under Louisiana law, a mineral servitude that is not producing minerals or which has not been the subject of good-faith drilling operations will cease to burden the property upon the tenth anniversary of the date of its creation. The total number of net acres subject to prescription can fluctuate based on oil and gas development and production activities. Some or all of approximately 70,000 of our Louisiana net acres may revert to the surface owner unless drilling operations or production commences prior to October 2017.

We engage in leasing certain portions of our owned mineral interests to third parties for the exploration and production of oil and gas. The significant terms of these arrangements include granting the exploration company the rights to oil or gas it may find and requiring that drilling be commenced within a specified period. In return, we may receive an initial lease payment (bonus), subsequent payments if drilling has not started within the specified period (delay rentals), and a percentage interest in the value of any oil or gas produced (royalties). If no oil or gas is produced during the required period, all rights are returned to us. Historically, our capital requirements for our owned mineral acres have been minimal.

Our royalty revenues are contractually defined and based on a percentage of production and are received in cash. Our royalty revenues fluctuate based on changes in the market prices for oil and gas, the decline in production in existing wells, and other factors affecting the third-party oil and gas exploration and production companies that operate wells on our minerals including the cost of development and production.

Most leases are for a three to five year term although a portion or all of a lease may be extended by the lessee as long as actual production is occurring. Financial terms vary based on a number of market factors including the location of the mineral interest, the number of acres subject to the agreement, proximity to transportation facilities such as pipelines, depth of formations to be drilled and risk.

Estimated Proved Reserves (Including Discontinued Operations)    

Our net estimated proved oil and gas reserves, all of which are located in the United States, as of year-end 2016, 2015 and 2014 are set forth in the table below. We engaged independent petroleum engineers, Netherland, Sewell & Associates, Inc. (NSAI), to assist us in preparing estimates of our proved oil and gas reserves in accordance with the definitions and guidelines of the Securities and Exchange Commission (SEC).

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Net quantities of proved oil and gas reserves related to our working and royalty interests follow, including oil and gas working interest assets classified as discontinued operations in 2016:

	Reserves
	Oil (a) (Barrels)	Gas (Mcf)
	(In thousands)
Consolidated entities:
Proved developed	446	3,836
Proved undeveloped	—	—
Total proved reserves 2016	446	3,836
Proved developed	5,179	7,957
Proved undeveloped	—	—
Total proved reserves 2015	5,179	7,957
Proved developed	5,269	10,848
Proved undeveloped	2,403	1,801
Total proved reserves 2014	7,672	12,649
Our share of ventures accounted for using the equity method:
Proved developed	—	1,199
Proved undeveloped	—	—
Total proved reserves 2016	—	1,199
Proved developed	—	1,263
Proved undeveloped	—	—
Total proved reserves 2015	—	1,263
Proved developed	—	1,751
Proved undeveloped	—	—
Total proved reserves 2014	—	1,751
Total consolidated and our share of equity method ventures:
Proved developed	446	5,035
Proved undeveloped	—	—
Total proved reserves 2016	446	5,035
Proved developed	5,179	9,220
Proved undeveloped	—	—
Total proved reserves 2015	5,179	9,220
Proved developed	5,269	12,599
Proved undeveloped	2,403	1,801
Total proved reserves 2014	7,672	14,400

 _____________________

^(a)  Includes natural gas liquids.

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The following summarizes the changes in proved reserves for 2016:

	Reserves
	Oil (Barrels)		Gas (Mcf)
	(In thousands)
Consolidated entities:
Year-end 2015	5,179		7,957
Revisions of previous estimates	(11	)	631
Extensions and discoveries	29		—
Acquisitions	—		—
Sales	(4,460	)	(3,756	)
Production	(291	)	(996	)
Year-end 2016	446		3,836
Our share of ventures accounted for using the equity method:
Year-end 2015	—		1,263
Revisions of previous estimates	—		79
Extensions and discoveries	—		—
Production	—		(143	)
Year-end 2016	—		1,199
Total consolidated and our share of equity method ventures:
Year-end 2016	446		5,035

We do not have any estimated reserves of synthetic oil, synthetic gas or products of other non-renewable natural resources that are intended to be upgraded into synthetic oil and gas.

At year-end 2016, we have no barrels of oil equivalent (BOE) of proved undeveloped (PUD) reserves because we have substantially divested all our non-core oil and gas working interest assets. At year-end 2015, we had no BOE of PUD reserves due to our planned divestiture of oil and gas working interest assets and not allocating capital to this non-core business. At year-end 2014, we had 2,703,000 BOE of PUD reserves.

We did not participate in any drilling activity in 2016. In 2015, we invested approximately $9,205,000 to convert 610,000 BOE of PUD reserves into proved developed reserves.

Reserve estimates were based on the economic and operating conditions existing at year-end 2016, 2015 and 2014. Oil and gas prices were based on the twelve month unweighted arithmetic average of the first-day-of-the-month price for each month in the period January through December. For 2016, 2015 and 2014, prices used for reserve estimates were $42.75, $50.28 and $94.99 per barrel of West Texas Intermediate and gas prices of $2.48, $2.59 and $4.35 per MMBTU per the Henry Hub spot. All prices were then adjusted for quality, transportation fees and differentials. Since the determination and valuation of proved reserves is a function of the interpretation of engineering and geologic data and prices for oil and gas and the cost to produce these reserves, the reserves presented should be expected to change as future information becomes available. For an estimate of the standardized measure of discounted future net cash flows from proved oil and gas reserves, please read Note 19  — Supplemental Oil and Gas Disclosures (Unaudited) to our consolidated financial statements included in Part II, Item 8 of this Annual Report on Form 10-K.

The process of estimating oil and gas reserves is complex, involving decisions and assumptions in evaluating the available geological, geophysical, engineering and economic data. Accordingly, these estimates are imprecise. Actual future production, oil and gas prices, capital costs, operating costs, revenues, taxes and quantities of recoverable oil and gas reserves might vary from those estimated. Any variance could materially affect the estimated quantities and present value of proved reserves. In addition, estimates of proved reserves may be adjusted to reflect production history, development, prevailing oil and gas prices and other factors, many of which are beyond our control.

The primary internal technical person in charge of overseeing our reserves estimates has a Bachelor of Science in Physics and Mathematics and a Master's of Science in Civil Engineering. He has over 40 years of domestic and international experience in the exploration and production business including 40 years of reserve evaluations. He has been a registered Professional Engineer for over 25 years.

As part of our internal control over financial reporting, we have a process for reviewing well production data and division of interest percentages prior to submitting well level data to NSAI to assist us in preparing reserve estimates. Our primary internal technical person and other members of management review the reserve estimates prepared by NSAI, including the underlying assumptions and estimates upon which they are based, for accuracy and reasonableness.

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Production

In 2016, 2015 and 2014, oil and gas produced was approximately 291,000, 1,158,500 and 931,100 barrels of oil at an average realized price of $27.58, $40.08 and $80.63 per barrel and 1,139.5, 2,134.8 and 2,060.2 MMcf of gas at an average realized price of $2.04, $2.60 and $4.19 per Mcf. Natural gas liquids (NGLs) are aggregated with oil volumes and prices.

In 2016, 2015 and 2014, production lifting costs, which exclude ad valorem and severance taxes, were $12.33, $12.95 and $13.40 per BOE.

Drilling and Other Exploratory and Development Activities

The following tables set forth the number of gross and net oil and gas wells in which we participated:

Gross Wells
		Exploratory			Development
Year	Total	Oil	Gas	Dry	Oil	Gas	Dry
2016	—	—	—	—	—	—	—
2015 (a)	38	2	—	1	34	—	1
2014 (b)	119	21	—	32	46	1	19

 _____________________

^(a)  Of the gross wells drilled in 2015, we operated 3 wells or 8 percent. The remaining wells represent our participations in wells operated by others. The exploratory dry hole was located in Oklahoma.

^(b)  Of the gross wells drilled in 2014, we operated 72 wells or 61 percent. The remaining wells represent our participations in wells operated by others. Dry holes were principally located in Nebraska, Kansas and Oklahoma.

Net Wells
		Exploratory			Development
Year	Total	Oil	Gas	Dry	Oil	Gas	Dry
2016	—	—	—	—	—	—	—
2015	6.3	0.7	—	0.8	4.3	—	0.5
2014	57.3	11.9	—	20.1	13.6	0.1	11.6

Present Activities

None.

Delivery Commitments

We have no oil or gas delivery commitments.

Wells and Acreage

The number of productive wells as of year-end 2016 follows:

	Productive Wells
	Gross	Net
Consolidated entities:
Oil	274	40.8
Gas	177	12.2
Total	451	53.0
Ventures accounted for using the equity method:
Oil	—	—
Gas	23	1.8
Total	23	1.8
Total consolidated and equity method ventures:
Oil	274	40.8
Gas	200	14.0
Total	474	54.8

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At year-end 2016, 2015 and 2014, we had royalty interests in 473, 534 and 551 gross wells. In addition, at year-end 2016, 2015 and 2014, we had working interests in 32, 400 and 426 gross wells. At year-end 2016, we had 78 working interest wells in Wyoming, of which 77 of them are shut in wells, and not included in our productive well count, in which we have 10 percent working interest and have associated plugging liabilities accrued on the balance sheet based on the present value of our estimated future obligation.

We did not have any wells with production of synthetic oil, synthetic gas or products of other non-renewable natural resources that are intended to be upgraded into synthetic oil and gas as of year-end 2016, 2015 or 2014.

At year-end 2016, our remaining working interests represent approximately 4,300 gross developed acres and 890 net developed acres leased from others that are held by production. At year-end 2016, we had approximately 8,100 gross undeveloped acres and 5,900 net undeveloped acres leased from others.

Markets

Oil and gas revenues are influenced by prices of, and global and domestic supply and demand for, oil and gas. These commodities as determined by both regional and global markets depend on numerous factors beyond our control, including seasonality, the condition of the domestic and global economies, political conditions in other oil and gas producing countries, the extent of domestic production and imports of oil and gas, the proximity and capacity of gas pipelines and other transportation facilities, supply and demand for oil and gas and the effects of federal, state and local regulation. The oil and gas industry also competes with other industries in supplying the energy and fuel requirements of industrial, commercial and individual consumers. The price of crude oil decreased during the first half of 2016 as compared with the first half of 2015. Prices increased during the second half of 2016 as compared to the first half of 2016 as the number of U.S. crude oil rigs and inventories declined in the last half of 2015 and into early 2016. Natural gas prices decreased in 2016 compared with 2015, primarily due to domestic oversupply driven by lack of a normal winter withdrawal cycle in the winter of 2015-2016. West Texas Intermediate (WTI) oil prices averaged $43.33 per Bbl in 2016, nearly 11% lower than in 2015, and $48.66 per Bbl in 2015, nearly 48% lower than in 2014.

Mineral leasing activity is influenced by changes in commodity prices, the location of our owned mineral interests relative to existing or projected oil and gas reserves, the proximity of successful production efforts to our mineral interests and the evolution of new plays and improvements in drilling and extraction technology.

Competition

The oil and gas industry is highly competitive, and we compete with a substantial number of other companies that may have greater resources than us. Many of these companies explore for, produce and market oil and gas, carry on refining operations and market the end products on a worldwide basis. The primary areas in which we face competition are from alternative fuel sources, including coal, heating oil, imported LNG, nuclear and other nonrenewable fuel sources, and renewable fuel sources such as wind, solar, geothermal, hydropower and biomass. Competitive conditions may also be substantially affected by various forms of energy legislation and/or regulation considered from time to time by the United States government. It is not possible to predict whether such legislation or regulation may ultimately be adopted or its precise effects upon our future operations. Such laws and regulations may, however, substantially increase the costs of exploring for, developing or producing oil and gas.

In locations where our owned mineral interests are close to producing wells and proven reserves, we may have multiple parties interested in leasing our minerals. Conversely, where our mineral interests are in or near areas where reserves have not been discovered, we may receive nominal interest in leasing our minerals. Portions of our Texas and Louisiana minerals are in close proximity to producing wells and proven reserves. Interest in leasing our minerals is correlated with the economics of production which are substantially influenced by current oil and gas prices and improvements in drilling and extraction technologies.

Other

We sell wood fiber from portions of our land, primarily in Georgia, and lease land for recreational uses. We have 19,000 acres of non-core timberland and undeveloped land we own directly that was classified as assets held for sale at year-end 2016. We have water interests in 1.5 million acres which includes a 45 percent nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes or sold from 1.4 million acres in Texas, Louisiana, Georgia and Alabama, and 20,000 acres of groundwater leases in central Texas which was classified as assets held for sale at year-end 2016. We have not received significant revenues or earnings from these interests.

Competition

We face competition from other landowners for the sale of wood fiber. Some of these competitors own similar timber assets that are located in the same or nearby markets. However, due to its weight, the cost for transporting wood fiber long

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distances is significant, resulting in a competitive advantage for timber that is located reasonably close to paper and building products manufacturing facilities.

Employees

At year-end 2016, we had 59 employees. None of our employees participate in collective bargaining arrangements. We believe we have a good relationship with our employees.

Environmental Regulations

Our operations are subject to federal, state and local laws, regulations and ordinances relating to protection of public health and the environment. Changes to laws and regulations may adversely affect our ability to develop real estate, develop minerals, harvest and sell timber, or withdraw groundwater, or may require us to investigate and remediate contaminated properties. These laws and regulations may relate to, among other things, water quality, endangered species, protection and restoration of natural resources, timber harvesting practices, and remedial standards for contaminated property and groundwater. Additionally, these laws may impose liability on property owners or operators for the costs of removal or remediation of hazardous or toxic substances on real property, without regard to whether the owner or operator knew, or was responsible for, the presence of the hazardous or toxic substances. The presence of, or the failure to properly remediate, such substances may adversely affect the value of a property, as well as our ability to sell the property or to borrow funds using that property as collateral or the ability to produce oil and gas from that property. Environmental claims generally would not be covered by our insurance programs.

The particular environmental laws that apply to any given site vary according to the site’s location, its environmental condition, and the present and former uses of the site and adjoining properties. Environmental laws and conditions may result in delays, may cause us to incur substantial compliance or other costs and can prohibit or severely restrict development activity or mineral production in environmentally sensitive regions or areas, which could negatively affect our results of operations.

In 2016, we sold all but 25 of our 289 acres near Antioch, California, approximately 80 acres of which had not yet received a certificate of completion under the voluntary remediation program in which we were participating. The buyer of the former paper manufacturing sites assumed responsibility for environmental, remediation and monitoring activities, subject to limited exclusions, and obtained a $20,000,000, ten year pollution legal liability insurance policy naming us as an additional insured.

Oil and gas operations are subject to numerous federal, state and local laws and regulations controlling the generation, use, processing, storage, transportation, disposal and discharge of materials into the environment or otherwise relating to the protection of the environment. These laws and regulations affect our operations and costs as a result of their impact on oil and gas production operations. Failure to comply with these laws and regulations may result in the assessment of administrative, civil and criminal penalties, including the assessment of monetary penalties, the imposition of investigatory and remedial obligations, the suspension or revocation of necessary permits, licenses and authorizations, the requirement that additional pollution controls be installed and the issuance of orders enjoining future operations or imposing additional compliance requirements.

Compliance with environmental laws and regulations increases our overall cost of business, but has not had, to date, a material adverse effect on our operations, financial condition or results of operations. It is not anticipated, based on current laws and regulations, that we will be required in the near future to expend amounts (whether for environmental control equipment, modification of facilities or otherwise) that are material in relation to our total development expenditure program in order to comply with such laws and regulations. However, given that such laws and regulations are subject to change, we are unable to predict the ultimate cost of compliance or the ultimate effect on our operations, financial condition and results of operations.

Available Information

Forestar Group Inc. is a Delaware corporation. Our principal executive offices are located at 6300 Bee Cave Road, Building Two, Suite 500, Austin, Texas 78746-5149. Our telephone number is (512) 433-5200.

From our Internet website, http://www.forestargroup.com, you may obtain additional information about us including:

• our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents as soon as reasonably practicable after we file them with SEC;

• beneficial ownership reports filed by officers, directors, and principal security holders under Section 16(a) of the Securities Exchange Act of 1934, as amended (or the “Exchange Act”); and

• corporate governance information that includes our:

• corporate governance guidelines,

• audit committee charter

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• management development and executive compensation committee charter,

• nominating and governance committee charter,

• standards of business conduct and ethics,

• code of ethics for senior financial officers, and

• information on how to communicate directly with our board of directors.

We will also provide printed copies of any of these documents to any stockholder free of charge upon request. In addition, the materials we file with the SEC may be read and copied at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information about the operation of the Public Reference Room is available by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information that is filed electronically with the SEC.

Executive Officers

The names, ages and titles of our executive officers are:

Name	Age	Position
Phillip J. Weber	56	Chief Executive Officer
Charles D. Jehl	48	Chief Financial Officer and Treasurer
David M. Grimm	56	Chief Administrative Officer, Executive Vice President, General Counsel and Secretary
Michael J. Quinley	55	President - Community Development

Phillip J. Weber has served as our Chief Executive Officer since September 2015. He has served as Chairman of the Real Estate Investment Committee since May 2013 and previously served as Executive Vice President - Water Resources from May 2013 to September 2015 and as Executive Vice President - Real Estate from 2009 to May 2013. Prior to joining Forestar, he served the Federal National Mortgage Association (Fannie Mae) as Senior Vice President - Multifamily from 2006 to October 2009, as Chief of Staff to the CEO from 2004 to 2006, as Chief of Staff to non-Executive Chairman of the Board and Corporate Secretary from 2005 to 2006, and as Senior Vice President, Corporate Development in 2005.

Charles D. Jehl has served as our Chief Financial Officer and Treasurer since September 2015. He previously served as our Executive Vice President - Oil and Gas from February 2015 to September 2015, as Executive Vice President - Oil and Gas Business Administration from 2013 to February 2015, and as Chief Accounting Officer from 2006 to 2013. Mr. Jehl served as Chief Operations Officer and Chief Financial Officer of Guaranty Insurance Services, Inc. from 2005 to 2006, and as Senior Vice President and Controller from 2000 to 2005. From 1989 to 1999, Mr. Jehl held various financial management positions within Temple-Inland’s financial services segment. Mr. Jehl is also a Certified Public Accountant.

David M. Grimm has served as our Chief Administrative Officer since 2007, in addition to holding the offices of General Counsel and Secretary since 2006. Mr. Grimm served Temple-Inland Inc. as Group General Counsel from 2005 to 2006, Associate General Counsel from 2003 to 2005, and held various other legal positions from 1992 to 2003. Prior to joining Temple-Inland Inc., he was an attorney in private practice in Dallas, Texas. Mr. Grimm is also a Certified Public Accountant. Mr. Grimm will retire from the Company effective March 31, 2017.

Michael J. Quinley has served as our President - Community Development since September 2015. He previously served as our Executive Vice President - Real Estate, East Region from 2011 to September 2015, as Executive Vice President - Eastern Region Real Estate Investments & Development from 2010 to 2011, and as Executive Vice President - Eastern Region Developments & Investments from 2008 to 2010. He has more than 30 years of prior real estate experience, including as CEO of Patrick Malloy Communities, as Senior Executive Vice President of Cousins Properties Incorporated and as Senior Vice President and CFO of Peachtree Corners Inc., all based in Atlanta.

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Item 1A. Risk Factors.

General Risks Related to our Operations

Both our real estate and mineral resources businesses are cyclical in nature.

The operating results of our business segments reflect the general cyclical pattern of each segment. While the cycles of each industry do not necessarily coincide, demand and prices in each may drop substantially during the same period. Real estate development of residential lots is further influenced by new home construction activity, which can be volatile. Mineral resources may be further influenced by national and international commodity prices, principally for oil and gas. Cyclical downturns may materially and adversely affect our business, liquidity, financial condition and results of operations. All of our operations are impacted by both national and global economic conditions.

The real estate and mineral resources industries are highly competitive and a number of entities with which we compete are larger and have greater resources, and competitive conditions may adversely affect our results of operations.

The real estate and mineral resources industries in which we operate are highly competitive and are affected to varying degrees by supply and demand factors and economic conditions, including changes in interest rates, new housing starts, home repair and remodeling activities, credit availability, consumer confidence, unemployment, housing affordability, changes in commodity prices, and federal energy policies.

Competitive conditions in the real estate industry may result in difficulties acquiring suitable land at acceptable prices, lower sales volumes and prices, increased development or construction costs and delays in construction and leasing. We compete with numerous regional and local developers for the acquisition, entitlement, and development of land suitable for development. We also compete with national, regional and local home builders who develop real estate for their own use in homebuilding operations, many of which are larger and have greater resources, including greater marketing budgets. Any improvement in the cost structure or service of our competitors will increase the competition we face.

Our business, financial condition and results of operations may be negatively affected by any of these factors.

We may be unable to successfully divest our non-core assets at favorable prices or on our target schedule, which could adversely affect our results of operations or cash flows.

We have announced that we are focused on our core community development business, and that we intend to exit non-core, non-residential housing assets. The sale of non-core real estate assets may be impacted by market conditions outside of our control, such as capitalization rates, anticipated market demand and job growth, property location and other existing or anticipated competitive properties, interest rates, availability of financing, and other factors that we do not control. Our ability to divest non-core assets, the timing for such divestments, and the prices we may ultimately receive may be impacted by the foregoing or other factors.

We may have continuing liabilities relating to non-core assets that have been sold, which could adversely impact our results of operations.

In the course of selling our non-core assets we are typically required to make contractual representations and warranties and to provide contractual indemnities to the buyers. These contractual obligations typically survive the closing of the transactions for some period of time. If a buyer is successful in sustaining a claim against us we may incur additional expenses pertaining to an asset we no longer own, and we may also be obligated to defend and/or indemnify the buyer from certain third party claims. Such obligations could be material and they could adversely impact our results of operations.

Any significant reduction in our borrowing base under our senior secured credit facility as a result of the sale of non-core assets may reduce the credit that is available to us under the facility and impact our ability to fund our operations.

Our senior secured credit facility is secured by some of our assets, and the borrowing base available to us thereunder is derived substantially from valuations associated with the assets pledged. Historically, a substantial portion of the borrowing base was derived from valuations associated with non-core assets, many of which were sold in 2015 and 2016. A portion of the existing borrowing base is also supported by non-core assets that we may market for sale or sell in the near future. Although we have additional assets that have not been but could be pledged to support additional borrowing capacity under our senior secured credit facility, until such time as additional assets are pledged, the reduction of the borrowing base could negatively impact our ability to fund our operations and, as a result may have a material adverse effect on our financial position, results of operation and cash flow.

Restrictive covenants under our senior secured credit facility and indentures governing our 3.75% convertible senior notes may limit the manner in which we operate.

Our senior secured credit facility and indentures covering our 3.75% convertible senior notes contain various covenants and conditions that limit our ability to, among other things:

• incur or guarantee additional debt;

• pay dividends or make distributions to our stockholders;

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• repurchase or redeem capital stock or subordinated indebtedness;

• make loans, investments or acquisitions;

• incur restrictions on the ability of certain of our subsidiaries to pay dividends or to make other payments to us;

• enter into transactions with affiliates;

• create liens;

• merge or consolidate with other companies or transfer all or substantially all of our assets; and

• transfer or sell assets, including capital stock of subsidiaries.

As a result of these covenants, we are limited in the manner in which we conduct our business and we may be unable to engage in favorable business activities or finance future operations or capital needs.

Despite current indebtedness levels, we and our subsidiaries may be able to incur substantially more debt.

We and our subsidiaries may be able to incur substantial additional indebtedness in the future. If new debt is added to our and our subsidiaries’ current debt levels, the related risks that we and they now face could intensify.

We may be unable to fully realize the benefits of our tax attributes if we experience an ownership change.

We have significant deferred tax assets that are generally available to offset future taxable income or income tax. If we experienced an “ownership change” under Section 382 of the Internal Revenue Code (“Section 382”), Section 382 would impose an annual limit on the amount of our future taxable income that may be reduced by our tax attributes, such as built in losses and other tax attributes (“Tax Benefits”), existing prior to the ownership change. In general, an ownership change would occur if our “5-percent shareholders” (as defined in Section 382) collectively increase their ownership in the Company by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. For these purposes, a 5-percent shareholder is generally any person or group of persons that at any time during the relevant three-year period has owned 5 percent or more of our outstanding common stock. Under Section 382, stock ownership is determined under complex attribution rules and generally includes shares held directly, indirectly (though intervening entities), and constructively (by certain related parties and certain unrelated parties acting as a group). On January 5, 2017, we adopted a Tax Benefits Preservation Plan in order to help protect our tax attributes, such as built-in losses and other tax attributes. Our Tax Benefits Preservation Plan is intended to provide a meaningful deterrent effect against acquisitions of our common stock that could cause the Company to experience an ownership change; however, the Tax Benefits Preservation Plan does not guarantee that the Company will not experience an ownership change. If an ownership change were to occur, our ability to use our Tax Benefits in the future would be limited, which would have a significant negative impact on our financial position and results of operations. The ratification of the extension of the Tax Benefits Preservation Plan to January 5, 2020 is subject to shareholder approval at the Company’s 2017 Annual Meeting. If our shareholders do not approve such extension, the Tax Benefits Preservation Plan will expire on January 5, 2018. Please read Note 21  — Subsequent Events for additional information about the Tax Benefits Preservation Plan.

The market price of and trading volume of our shares of common stock may be volatile.

The market price of our shares of common stock has fluctuated substantially and may continue to fluctuate in response to many factors which are beyond our control, including:

• fluctuations in our operating results, including results that vary from expectations of management, analysts and investors;

• announcements of strategic developments, acquisitions, financings and other material events by us or our competitors;

• the sale of a substantial number of shares of our common stock held by existing security holders in the public market; and

• general conditions in the real estate and mineral resources industries.

The stock markets in general may experience extreme volatility that may be unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock, make it difficult to predict the market price of our common stock in the future and cause the value of our common stock to decline.

Provisions of Delaware law, our charter documents, the Tax Benefits Preservation Plan and the indentures governing the 3.75% convertible senior notes may impede or discourage a takeover, which could cause the market price of our common stock to decline.

We are a Delaware corporation, and the anti-takeover provisions of Delaware law impose various impediments to the ability of a third party to acquire control of us, even if a change in control would be beneficial to our existing stockholders. In

18

addition, our Tax Benefits Preservation Plan could be deemed to have an “anti-takeover” effect because, among other things, an Acquiring Person (as defined under the Tax Benefits Preservation Plan) may be diluted upon the occurrence of a triggering event. Our board of directors also has the power, without stockholder approval, to designate the terms of one or more series of preferred stock and issue shares of preferred stock. These and other impediments to third party acquisition or change of control could limit the price investors are willing to pay for shares of our common stock, which could in turn reduce the market price of our common stock. In addition, upon the occurrence of a fundamental change under the terms of the convertible senior notes, certain repurchase rights and early settlement rights would be triggered under the indentures governing the convertible senior notes. In such event, the increase of the conversion or early settlement rate, as applicable, in connection with certain make-whole fundamental change transactions under the terms of the convertible senior notes could discourage a potential acquirer.

Our activities are subject to environmental regulations and liabilities that could have a negative effect on our operating results.

Our operations are subject to federal, state and local laws and regulations related to the protection of the environment. Compliance with these provisions or the promulgation of new environmental laws and regulations may result in delays, may cause us to invest substantial funds to ensure compliance with applicable environmental regulations and can prohibit or severely restrict timber harvesting, real estate development or mineral production activity in environmentally sensitive regions or areas.

Our business may suffer if we lose key personnel.

We depend to a large extent on the services of certain key management personnel. These individuals have extensive experience and expertise in our business segments in which they work. The loss of any of these individuals could have a material adverse effect on our operations. We do not maintain key-man life insurance with respect to any of our employees. Our success will be dependent on our ability to continue to employ and retain skilled personnel in each of our business segments.

Risks Related to our Real Estate Operations

Reduced demand for new housing or commercial tracts in the markets where we operate could adversely impact our profitability.

The residential development industry is cyclical and is significantly affected by changes in general and local economic conditions, such as employment levels, availability of financing for home buyers, interest rates, consumer confidence and housing demand. Adverse changes in these conditions generally, or in the markets where we operate, could decrease demand for lots for new homes in these areas. Decline in housing demand could negatively affect our real estate development activities, which could result in a decrease in our revenues and earnings.

Furthermore, the market value of undeveloped land and lots held by us, including commercial tracts, can fluctuate significantly as a result of changing economic and real estate market conditions. If there are significant adverse changes in economic or real estate market conditions, we may have to hold land in inventory longer than planned. Inventory carrying costs can be significant and can result in losses or lower returns and adversely affect our liquidity.

Development of real estate entails a lengthy, uncertain and costly entitlement process.

Approval to develop real property entails an extensive entitlement process involving multiple and overlapping regulatory jurisdictions and often requiring discretionary action by local governments. This process is often political, uncertain and may require significant exactions in order to secure approvals. Real estate projects must generally comply with local land development regulations and may need to comply with state and federal regulations. The process to comply with these regulations is usually lengthy and costly, may not result in the approvals we seek, and can be expected to materially affect our real estate development activities, which may adversely affect our business, liquidity, financial condition and results of operations.

Our real estate development operations are currently concentrated in the major markets of Texas, and as a result, our financial results may be significantly influenced by the Texas economy.

The economic growth and strength of Texas, where the majority of our real estate development activity is located, are important factors in sustaining demand for our real estate development activities. The decline in oil prices over the past several years may impact near-term job growth and housing demand in Texas, particularly in Houston, where the energy industry has traditionally generated significant job growth. As a result, any adverse impact to the economic growth and health, or infrastructure development, of Texas could materially adversely affect our business, liquidity, financial condition and results of operations.

Our real estate development operations are highly dependent upon national, regional and local home builders.

We are highly dependent upon our relationships with national, regional, and local home builders to purchase lots in our residential developments. If home builders do not view our developments as desirable locations for homebuilding operations, or if home builders are limited in their ability to conduct operations due to economic conditions, our business, liquidity,

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financial condition and results of operations will be adversely affected.

In addition, we enter into contracts to sell lots to home builders. A home builder could decide to delay purchases of lots in one or more of our developments due to adverse real estate conditions wholly unrelated to our areas of operations, such as the corporate decisions regarding allocation of limited capital or human resources. As a result, we may sell fewer lots and may have lower sales revenues, which could have an adverse effect on our business, liquidity, financial condition and results of operations.

Our strategic partners may have interests that differ from ours and may take actions that adversely affect us.

We enter into strategic alliances or venture relationships as part of our overall strategy for particular developments or regions. While these partners may bring development experience, industry expertise, financing capabilities, local credibility or other competitive attributes, they may also have economic or business interests or goals that are inconsistent with ours or that are influenced by factors unrelated to our business. We may also be subject to adverse business consequences if the market reputation or financial condition of a partner deteriorates, or if a partner takes actions inconsistent with our interest.

When we enter into a venture, we may rely on our venture partner to fund its share of capital commitments to the venture and to otherwise fulfill its operating and financial obligations. Failure of a venture partner to timely satisfy its funding or other obligations to the venture could require us to elect whether to increase our financial or other operating support of the venture in order to preserve our investment, which may reduce our returns or cause us to incur losses, or to not fund such obligations, which may subject the venture and us to adverse consequences or increase our financial exposure in the project.

Debt within some of our ventures may not be renewed or may be difficult or more expensive to replace.

As of December 31, 2016, our unconsolidated ventures had approximately $128.3 million of debt, of which $78.6 million was non-recourse to us. When debt within our ventures matures, some of our ventures may be unable to renew existing loans or secure replacement financing, or replacement financing may be more expensive. If our ventures are unable to renew existing loans or secure replacement financing, we may be required to contribute additional equity or elect to loan or contribute funds to our ventures, which could increase our risk or increase our borrowings under our senior secured credit facility, or both. If our ventures secure replacement financing that is more expensive, our profits may be reduced.

Delays or failures by governmental authorities to take expected actions could reduce our returns or cause us to incur losses on certain real estate development projects.

For certain projects, we rely on governmental utility and special improvement districts to issue bonds to reimburse us for qualified expenses, such as road and utility infrastructure costs. Bonds must be supported by district tax revenues, usually from ad valorem taxes. Slowing new home sales, decreasing real estate prices or difficult credit markets for bond sales can reduce or delay district bond sale revenues, causing such districts to delay reimbursement of our qualified expenses. Failure to receive timely reimbursement for qualified expenses could adversely affect our cash flows and reduce our returns or cause us to incur losses on certain real estate development projects.

Failure to succeed in new markets may limit our growth.

We may from time to time commence development activity or make acquisitions outside of our existing market areas if appropriate opportunities arise. Our historical experience in existing markets does not ensure that we will be able to operate successfully in new markets. We may be exposed to a variety of risks if we choose to enter new markets, including, among others:

• an inability to accurately evaluate local housing market conditions and local economies;

• an inability to obtain land for development or to identify appropriate acquisition opportunities;

• an inability to hire and retain key personnel;

• an inability to successfully integrate operations; and lack of familiarity with local governmental and permitting procedures.

Risks Related to our Mineral Resources Operations

We do not operate any properties, and have limited control over the activities on properties we do not operate.

The properties in which we have an interest are operated by other companies and involve third-party working interest owners. As a result, we have limited ability to influence or control the operation or future development of such properties, including compliance with environmental, safety and other regulations, or the amount of capital expenditures that we will be required to fund with respect to such properties. Decisions by other parties may significantly influence the revenues we receive from our mineral resources.

Volatile oil and natural gas prices could adversely affect our cash flows and results of operations.

Our cash flows and results of operations are dependent in part on oil and natural gas prices, which can be volatile. Any substantial or extended decline in the price of oil and natural gas could have a negative impact on our business operations and future revenues. Moreover, oil and natural gas prices depend on factors we cannot control, such as: changes in foreign and

20

domestic supply and demand for oil and natural gas; actions by the Organization of Petroleum Exporting Countries; weather; political conditions in other oil-producing countries, including the possibility of insurgency or war in such areas; prices of foreign exports; domestic and international drilling activity; price and availability of alternate fuel sources; the value of the U.S. dollar relative to other major currencies; the level and effect of trading in commodity markets, the effect of worldwide energy conservation measures, and governmental regulations.

The ability to sell and deliver oil and natural gas produced from wells on our mineral interests could be materially and adversely affected if adequate gathering, processing, compression and transportation services are not obtained.

 The sale of oil and natural gas produced from wells on our mineral interests depends on a number of factors beyond our control, including the availability, proximity and capacity of, and costs associated with, gathering, processing, compression and transportation facilities owned by third parties. These facilities may be temporarily unavailable due to market conditions, mechanical reasons or other factors or conditions, and may not be available to us in the future on terms we consider acceptable, if at all. Any significant change in market or other conditions affecting these facilities or the availability of these facilities, including due to our failure or inability to obtain access to these facilities on terms acceptable to us or at all, could materially and adversely affect our business and, in turn, our financial condition and results of operations.

Our reserves and production will decline from their current levels.

The rate of production from oil and natural gas properties generally declines as reserves are produced. Our reserves will decline as they are produced which could materially and adversely affect our future cash flow and results of operations.

A portion of our oil and natural gas production may be subject to interruptions that could have a material and adverse effect on us.

A portion of oil and natural gas production from our minerals may be interrupted, or shut in, from time to time for various reasons, including as a result of accidents, weather conditions, loss of gathering, processing, compression or transportation facility access or field labor issues, or intentionally as a result of market conditions such as oil and natural gas prices that we deem uneconomic. If a substantial amount of production is interrupted, our cash flow and, in turn, our results of operations could be materially and adversely affected.

Weather and climate may have a significant and adverse impact on us.

Demand for natural gas is, to a significant degree, dependent on weather and climate, which impacts, among other things, the price we receive for the commodities produced from wells on our mineral interests and, in turn, our cash flow and results of operations. For example, relatively warm temperatures during a winter season generally result in relatively lower demand for natural gas (as less natural gas is used to heat residences and businesses) and, as a result, relatively lower prices for natural gas production.

Our estimated proved reserves are based on many assumptions that may prove to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.

The process of estimating oil and natural gas reserves is complex involving decisions and assumptions in evaluating the available geological, geophysical, engineering and economic data. Accordingly, these estimates are imprecise. Actual future production, oil and natural gas prices, revenues, taxes and quantities of recoverable oil and natural gas reserves might vary from those estimated. Any variance could materially affect the estimated quantities and present value of proved developed reserves. In addition, we may adjust estimates of proved reserves to reflect production history, development, prevailing oil and natural gas prices and other factors, many of which are beyond our control.

The standardized measure of future net cash flows from our proved reserves is not necessarily the same as the current market value of our estimated reserves. Any material inaccuracies in reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.

As required by SEC regulations, we base the estimated discounted future net cash flows from our proved reserves on prices and costs in effect at the time of the estimate. However, actual future net cash flows from our properties will be affected by numerous factors not subject to our control.

The timing of production will affect the timing of actual future net cash flows from proved reserves, and thus their actual present value. In addition, the 10% discount factor we use when calculating discounted future net cash flow, which is required by the SEC, may not be the most appropriate discount factor based on interest rates in effect from time to time and risks associated with us or the oil and natural gas industry in general. Any material inaccuracies in our reserve estimates or underlying assumptions will materially affect the quantities and present value of our reserves.

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A significant portion of our Louisiana owned net mineral acres are subject to prescription of non-use under Louisiana law.

A significant portion of our Louisiana owned net mineral acres were severed from surface ownership and retained by creation of one or more mineral servitudes shortly before our 2007 spin-off. Under Louisiana law, a mineral servitude that is not producing minerals or which has not been the subject of good-faith drilling operations will cease to burden the property upon the tenth anniversary of the date of its creation. Upon such event, the mineral rights effectively will revert to the surface owner and we will no longer own the right to lease, explore for or produce minerals from such acreage. The total number of net acres subject to prescription can fluctuate based on oil and gas development and production activities. Some or all of approximately 70,000 of our Louisiana net acres may revert to the surface owner unless drilling operations or production activities commences prior to October 2017.

Risks Related to our Other Operations

Our water interests may require governmental permits, the consent of third parties and/or completion of significant transportation infrastructure prior to commercialization, all of which are dependent on the actions of others.

Many jurisdictions require governmental permits to withdraw and transport water for commercial uses, the granting of which may be subject to discretionary determinations by such jurisdictions regarding necessity. In addition, we do not own the executory rights related to our non-participating royalty interest, and as a result, third-party consent from the executor rights owner(s) would be required prior to production. The process to obtain permits can be lengthy, and governmental jurisdictions or third parties from whom we seek permits or consent may not provide the approvals we seek. We may be unable to secure buyers at commercially economic prices for water that we have a right to extract and transport, and transportation infrastructure across property not owned or controlled by us is required for transport of water prior to commercial use. Such infrastructure can require significant capital and may also require the consent of third parties. We may not have cost effective means to transport water from property we own, lease or manage to buyers. As a result, we may lose some or all of our investment in water assets, or our returns may be diminished.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our principal executive offices are located in Austin, Texas, where we lease approximately 22,000 square feet. We also lease office space in Atlanta, Georgia; Dallas, Texas; Denver, Colorado; and Houston, Texas. We believe these offices are suitable for conducting our business.

For a description of our properties in our real estate, mineral resources and other segments, see “Business — Real Estate”, “Business — Mineral Resources” and “Business — Other”, respectively, in Part I, Item 1 of this Annual Report on Form 10-K.

Item 3. Legal Proceedings.

We are involved directly or through ventures in various legal proceedings that arise from time to time in the ordinary course of doing business. We believe we have established adequate reserves for any probable losses and that the outcome of any of the proceedings should not have a material adverse effect on our financial position or long-term results of operations or cash flows. It is possible, however, that charges related to these matters could be significant to results of operations or cash flow in any single accounting period.

Item 4. Mine Safety Disclosures.

Not Applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Market Information

Our common stock is traded on the New York Stock Exchange. The high and low sales prices in each quarter in 2016 and 2015 were:

	2016				2015
	Price Range				Price Range
	High		Low		High		Low
First Quarter	$	13.04	$	8.40	$	15.91	$	13.27
Second Quarter	$	13.74	$	11.23	$	16.29	$	13.16
Third Quarter	$	12.80	$	11.33	$	13.67	$	11.98
Fourth Quarter	$	13.65	$	10.75	$	14.59	$	10.58
For the Year	$	13.74	$	8.40	$	16.29	$	10.58

Shareholders

Our stock transfer records indicated that as of February 27, 2017, there were approximately 3,144 holders of record of our common stock.

Dividend Policy

We currently intend to retain any future earnings to support our business. The declaration and payment of any future dividends will be at the discretion of our Board of Directors after taking into account various factors, including without limitation, our financial condition, earnings, capital requirements of our business, the terms of any credit agreements or indentures to which we may be a party at the time, legal requirements, industry practice, and other factors that our Board of Directors deems relevant.

Issuer Purchases of Equity Securities ^(a) 

Period	Total Number of Shares Purchased (b)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan or Programs	Maximum Number of Shares That May Yet be Purchased Under the Plans or Programs
Month 10 (10/1/2016 — 10/31/2016)	—	$	—	—	3,222,692
Month 11 (11/1/2016 — 11/30/2016)	56	$	11.10	—	3,222,692
Month 12 (12/1/2016 — 12/31/2016)	—	$	—	—	3,222,692
Total	56	$	11.10	—

 _____________________

^(a)  On February 11, 2009, we announced that our Board of Directors authorized the repurchase of up to 7,000,000 shares of our common stock. We have purchased 3,777,308 shares under this authorization, which has no expiration date. We have no repurchase plans or programs that expired during the period covered by the table above and no repurchase plans or programs that we intend to terminate prior to expiration or under which we no longer intend to make further purchases.

^(b)  Includes shares withheld to pay taxes in connection with vesting of restricted stock awards and exercises of stock options.

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Performance Graph

Our 2016 peer group consists of the following real estate and oil and gas companies: Alexander & Baldwin, Inc., AV Homes Inc., Approach Resources, Inc., Cousins Properties Incorporated, Contango Oil and Gas Co., Goodrich Petroleum Corp., Matador Resources Co., Petroquest Energy Inc., Post Properties, Inc., Potlatch Corporation, PS Business Parks, Inc., Resolute Energy Corp., The St. Joe Company, and Tejon Ranch Co. Magnum Hunter Resources Corp. and Penn Virginia Corp are omitted from our peer group because they have ceased trading.

Pursuant to SEC rules, returns of each of the companies in the Peer Index are weighted according to the respective company’s stock market capitalization at the beginning of each period for which a return is indicated.

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Item 6. Selected Financial Data.

	For the Year
	2016			2015			2014			2013			2012
	(In thousands, except per share amount)
Revenues:
Real estate	$	190,273		$	202,830		$	213,112		$	248,011		$	120,115
Mineral resources	5,076			9,094			15,690			21,419			34,086
Other	1,965			6,652			9,362			10,721			8,256
Total revenues	$	197,314		$	218,576		$	238,164		$	280,151		$	162,457
Segment earnings (loss):
Real estate (a)	$	121,420		$	67,678		$	96,906		$	68,454		$	53,582
Mineral resources	3,327			4,230			9,116			14,815			29,190
Other	(4,625		)	(608		)	5,499			6,507			29
Total segment earnings	120,122			71,300			111,521			89,776			82,801
Items not allocated to segments:
General and administrative expense (b)	(18,274		)	(24,802		)	(21,229		)	(20,597		)	(25,176		)
Share-based compensation expense	(4,425		)	(4,474		)	(3,417		)	(16,809		)	(14,929		)
Gain on sale of assets (c)	48,891			—			—			—			16
Interest expense	(19,985		)	(34,066		)	(30,286		)	(20,004		)	(19,363		)
Loss on extinguishment of debt, net (d)	(35,864		)	—			—			—			—
Other corporate non-operating income	350			256			453			119			191
Income from continuing operations before taxes attributable to Forestar Group, Inc.	90,815			8,214			57,042			32,485			23,540
Income tax expense (e)	(15,302		)	(35,131		)	(20,850		)	(5,780		)	(9,016		)
Net income (loss) from continuing operations attributable to Forestar Group Inc.	75,513			(26,917		)	36,192			26,705			14,524
Income (loss) from discontinued operations, net of taxes (f)	(16,865		)	(186,130		)	(19,609		)	2,616			(1,582		)
Net income (loss) attributable to Forestar Group Inc.	$	58,648		$	(213,047	)	$	16,583		$	29,321		$	12,942
Net income (loss) per diluted share:
Continuing operations	$	1.78		$	(0.79	)	$	0.83		$	0.73		$	0.41
Discontinued operations	$	(0.40	)	$	(5.43	)	$	(0.45	)	$	0.07		$	(0.05	)
Net income (loss) per diluted share	$	1.38		$	(6.22	)	$	0.38		$	0.80		$	0.36
Average diluted shares outstanding (g)	42,334			34,266			43,596			36,813			35,482
At year-end:
Assets	$	733,208		$	972,246		$	1,247,606		$	1,168,027		$	917,869
Debt	110,358			381,515			422,151			353,282			293,498
Noncontrolling interest	1,467			2,515			2,540			5,552			4,059
Forestar Group Inc. shareholders’ equity	560,651			501,600			707,202			709,845			529,488
Ratio of total debt to total capitalization	16		%	43		%	37		%	33		%	35		%

 _____________________

^(a)  Real estate segment earnings (loss) includes gain on sale of assets of $117,856,000 in 2016, $1,585,000 in 2015, $25,981,000 in 2014 and $25,273,000 in 2012. Segment earnings also includes non-cash impairments of $56,453,000 in 2016, $1,044,000 in 2015, $399,000 in 2014 and $1,790,000 in 2013. Real estate segment earnings (loss) also include the effects of net (income) loss attributable to noncontrolling interests.

^(b)  General administrative expense includes severance-related charges of $3,314,000 in 2015 and $6,323,000 in costs associated with our acquisition of Credo in 2012.

^(c)  Gain on sale of assets in 2016 represents gains in accordance with our key initiatives to divest non-core timberland and undeveloped land.

^(d)  Loss on extinguishment of debt, net is related to retirement of $225,245,000 of our 8.5% Senior Secured Notes due 2022 and $5,000,000 of our 3.75% of Convertible Senior Notes due 2020 in 2016.

^(e)  In 2015, income tax expense includes an expense of $97,068,000 for valuation allowance on a portion of our deferred tax asset that was determined to be more likely than not to be unrealizable. In 2013, income tax expense includes a benefit

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from recognition of $6,326,000 of previously unrecognized tax benefits upon lapse of the statute of limitations for a previously reserved tax position.

^(f)  Income (loss) from discontinued operations includes non-cash impairment charges of $612,000 in 2016, $163,029,000 in 2015, $32,665,000 in 2014 and $473,000 in 2013 related to proved properties and unproved leasehold interests related to our non-core oil and gas working interests. Income (loss) from discontinued operations also includes losses of $13,664,000 in 2016 and $706,000 in 2015 and gains of $8,526,000 in 2014 associated with sale of working interest oil and gas properties.

^(g)  Our 2015 weighted average diluted shares outstanding excludes dilutive effect of equity awards and 7,857,000 shares issuable upon settlement of the prepaid stock purchase contract component of our 6.00% tangible equity units, due to our net loss attributable to Forestar Group Inc.

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Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Caution Concerning Forward-Looking Statements

This Annual Report on Form 10-K and other materials we have filed or may file with the Securities and Exchange Commission contain “forward-looking statements” within the meaning of the federal securities laws. These forward-looking statements are identified by their use of terms and phrases such as “believe,” “anticipate,” “could,” “estimate,” “likely,” “intend,” “may,” “plan,” “expect,” and similar expressions, including references to assumptions. These statements reflect our 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. Factors and uncertainties that might cause such differences include, but are not limited to:

• general economic, market or business conditions in Texas or Georgia, where our real estate activities are concentrated, or on a national or global scale;

• our ability to achieve some or all of our key initiatives;

• the opportunities (or lack thereof) that may be presented to us and that we may pursue;

• our ability to hire and retain key personnel;

• future residential or commercial entitlements, development approvals and the ability to obtain such approvals;

• obtaining approvals of reimbursements and other payments from special improvement districts and timing of such payments;

• accuracy of estimates and other assumptions related to investment in and development of real estate, the expected timing and pricing of land and lot sales and related cost of real estate sales, impairment of long-lived assets, income taxes, share-based compensation;

• the levels of resale housing inventory in our mixed-use development projects and the regions in which they are located;

• fluctuations in costs and expenses, including impacts from shortages in materials or labor;

• demand for new housing, which can be affected by a number of factors including the availability of mortgage credit, job growth, fluctuations in commodity prices;

• demand for multifamily communities, which can be affected by a number of factors including local markets and economic conditions;

• competitive actions by other companies;

• changes in governmental policies, laws or regulations and actions or restrictions of regulatory agencies;

• fluctuations in oil and gas commodity prices;

• demand by oil and gas operators to lease our minerals, which may be influenced by government regulation of exploration and production activities including hydraulic fracturing;

• our ability to make interest and principal payments on our debt and satisfy the other covenants contained in our senior secured credit facility, indentures and other debt agreements;

• our partners’ ability to fund their capital commitments and otherwise fulfill their operating and financial obligations;

• inability to obtain permits for, or changes in laws, governmental policies or regulations affecting, water withdrawal or usage; and

• the final resolutions or outcomes with respect to our contingent and other liabilities related to our business.

Other factors, including the risk factors described in Item 1A of this Annual Report on Form 10-K, may also cause actual results to differ materially from those projected by our forward-looking statements. New factors emerge from time to time and it is not possible for us to predict all such factors, nor can we assess the impact of any such factor on our business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement.

Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

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Key Initiatives

• Reducing costs across our entire organization,

• Reviewing entire portfolio of assets (complete non-core asset sales); and

• Reviewing capital structure (allocate capital to maximize shareholder value).

Discontinued Operations / Segment Name Changes

At year-end 2016 we have divested substantially all of our oil and gas working interest properties. As a result of this significant change in our operations, we have reported the results of operations and financial position of these assets as discontinued operations for all periods presented. In addition, we changed the name of the oil and gas segment to mineral resources to reflect the strategic shift from oil and gas working interest investments to owned mineral interests. We also changed the name of the other natural resources segment to other. The discussion of our results of operations is based on the results from our continuing operations unless otherwise indicated.

Results of Operations for the Years Ended 2016, 2015 and 2014

A summary of our consolidated results by business segment follows:

	For the Year
	2016			2015			2014
	(In thousands)
Revenues:
Real estate	$	190,273		$	202,830		$	213,112
Mineral resources	5,076			9,094			15,690
Other	1,965			6,652			9,362
Total revenues	$	197,314		$	218,576		$	238,164
Segment earnings (loss):
Real estate	$	121,420		$	67,678		$	96,906
Mineral resources	3,327			4,230			9,116
Other	(4,625		)	(608		)	5,499
Total segment earnings (loss)	120,122			71,300			111,521
Items not allocated to segments:
General and administrative expense	(18,274		)	(24,802		)	(21,229		)
Share-based and long-term incentive compensation expense	(4,425		)	(4,474		)	(3,417		)
Gain on sale of assets	48,891			—			—
Interest expense	(19,985		)	(34,066		)	(30,286		)
Loss on extinguishment of debt, net	(35,864		)	—			—
Other corporate non-operating income	350			256			453
Income from continuing operations before taxes attributable to Forestar Group Inc.	90,815			8,214			57,042
Income tax expense	(15,302		)	(35,131		)	(20,850		)
Net income (loss) from continuing operations attributable to Forestar Group Inc.	$	75,513		$	(26,917	)	$	36,192

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Significant aspects of our results of operations follow:

2016

• Real estate segment earnings benefited from combined gains of $117,856,000 which generated combined net proceeds before debt repayment of $247,506,000 as a result of executing our key initiative to opportunistically divest non-core assets. These gains were partially offset by non-cash impairment charges of $56,453,000 related to six non-core community development projects and two multifamily sites. These impairments were a result of our key initiative to review our entire portfolio of assets which resulted in business plan changes, inclusive of cash tax savings consideration, to market these properties for sale. In addition, earnings benefited from increased residential lot sales activity and higher undeveloped land sales from our retail sales program.

• Mineral resources segment earnings decreased due to lower oil and gas prices and production volumes associated with royalty interests and reduced lease bonus and delay rental payments received from our owned mineral interests.

• Other segment earnings was negatively impacted due to a $3,874,000 non-cash impairment charge of goodwill related to our central Texas water assets as a result of entering into an agreement to sell these assets.

• General and administrative expense decreased as result of our key initiative to reduce costs across our entire organization.

• Gain on sale of assets of $48,891,000 represents the sale of over 58,300 acres of timberland and undeveloped land in Georgia and Alabama in three separate transactions for $104,172,000 in accordance with our key initiative to divest non-core assets.

• Interest expense decreased primarily due to reducing our debt outstanding by $277,790,000 in 2016 and $323,303,000 since third quarter 2015.

• Loss on extinguishment of debt of $35,864,000 is related to debt retirement of portions of our 8.50% Senior Secured Notes due 2022 and 3.75% Convertible Senior Notes due 2020, which includes write-off of unamortized debt issuance costs of $5,489,000 and $1,301,000 in other costs related to tender offer advisory services.

2015

• Real estate segment earnings declined principally due to gain on sale of assets of $25,981,000 in 2014 compared with $1,585,000 in 2015, lower undeveloped land sales and decreased residential lot sales activity. Segment earnings were positively impacted by higher commercial and residential tract sales and sale of Midtown Cedar Hill, a 354-unit multifamily property near Dallas for $42,880,000, which generated segment earnings of $9,265,000.

• Mineral resources segment earnings decreased principally due to lower oil prices, as well as lower oil and gas production volumes associated with royalty interests and reduced lease bonus and delay rental payments received from our owned mineral interests.

• Other segment earnings declined principally due to gains of $3,531,000 in 2014 related to partial terminations of a timber lease related to land sold from a consolidated venture near Atlanta, Georgia and due to lower fiber volumes.

• General and administrative expense increased principally as a result of severance-related charges of $3,314,000 related to departures of our former Chief Executive Officer (CEO) and Chief Financial Officer (CFO).

• Interest expense increased primarily due to higher average borrowing rates and increased average debt outstanding.

2014

• Real estate segment earnings benefited from increased undeveloped land sales generating earnings of $29,895,000, a $10,476,000 gain associated with a non-monetary exchange of leasehold timber rights for 5,400 acres of undeveloped land with a partner in a consolidated venture, a $7,610,000 gain associated with the acquisition of our partner's interest in the Eleven multifamily venture, higher residential lot sales activity and a $6,577,000 gain associated with $46,500,000 of bond proceeds we received from the Cibolo Canyons Special Improvement District.

• Mineral resources segment earnings decreased principally due to lower oil and gas production volumes associated with royalty interests and reduced lease bonus and delay rental payments received from our owned mineral interests.

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• Other segment earnings declined principally due to lower fiber volumes, which were partially offset by gains of $3,531,000 primarily related to partial terminations of a timber lease related to land sold from a consolidated venture near Atlanta, Georgia.

• Share-based compensation decreased principally as result of a 28% decrease in our stock price since year-end 2013 and its impact on cash-settled awards.

• Interest expense increased primarily due to higher average borrowing rates and increased debt outstanding.

Current Market Conditions

Sales of new U.S. single-family homes according to U.S Census Bureau Department of Commerce declined 0.4% on a year over year basis as of December 31, 2016 and 10.4% below prior month's rate in December 2016, suggesting that the 40 basis point rise in mortgage rates and the return of winter weather affected December 2016 sales. Consumer confidence as measured by The Conference Board increased in December 2016 to its highest level since August 2001, registering 113.7 up from 109.4 in November 2016. The elevated monthly reading was attributed in part to increases in consumers' outlook for business conditions over the next six-months and more positive outlooks for the labor market and rising incomes. Builder confidence as measured by the NAHB/Wells Fargo Housing Market Index ended 2016 on a high note, jumping seven points to its highest reading since July 2005, largely attributable to a post-election bounce. On a monthly basis, housing starts increased significantly in December 2016 due to volatile multifamily activity, while housing permit activity, viewed as a precursor to starts increased 1.9% year over year basis ending December 2016. Home prices as measured by S&P Corelogic Case-Shiller Home Price index hit a new high in November 2016 after rising at approximately a 5.5% annual rate over the last two-and-a half years. As of the November 2016 reading, average home prices for the metropolitan statistical areas (MSAs) within the two composite indices were back to their winter 2007 levels. As of year-end 2016, finished vacant supply of new homes and vacant developed lot supply in MSAs in which Forestar's single family activity is located remained extremely tight, registering below the two month and 24 month equilibrium levels.

Oil and gas revenues are influenced by prices of, and global and domestic supply and demand for, oil and gas. These commodities as determined by both regional and global markets depend on numerous factors beyond our control, including seasonality, the condition of the domestic and global economies, political conditions in other oil and gas producing countries, the extent of domestic production and imports of oil and gas, the proximity and capacity of gas pipelines and other transportation facilities, supply and demand for oil and gas and the effects of federal, state and local regulation. The oil and gas industry also competes with other industries in supplying the energy and fuel requirements of industrial, commercial and individual consumers. The price of crude oil decreased during the first half of 2016 as compared with the first half in 2015. Prices increased during the second half of 2016 as compared to the first half of 2016 as the number of U.S. crude oil rigs and inventories declined in the last half of 2015 and into early 2016. Natural gas prices decreased in 2016 compared with 2015, primarily due to domestic oversupply driven by lack of a normal winter withdrawal cycle in the winter of 2015-2016. West Texas Intermediate (WTI) oil prices averaged $43.33 per Bbl in 2016, nearly 11% lower than in 2015 and $48.66 per Bbl in 2015, nearly 48% lower than in 2014.

Business Segments

We manage our operations through three business segments:

• Real estate,

• Mineral resources, and

• Other.

We evaluate performance based on segment earnings (loss) before unallocated items and income taxes. Segment earnings (loss) consist of operating income (loss), equity in earnings of unconsolidated ventures’, gain on sale of assets, interest income on loans secured by real estate and net (income) loss attributable to noncontrolling interests. Items not allocated to our business segments consist of general and administrative expenses, share-based and long-term compensation, gain on sale of strategic timberland and undeveloped land, interest expense, loss on extinguishment of debt and other corporate non-operating income and expense. The accounting policies of the segments are the same as those described in the accounting policy note to the consolidated financial statements.

We operate in cyclical industries. Our operations are affected to varying degrees by supply and demand factors and economic conditions including changes in interest rates, availability of mortgage credit, consumer and home builder sentiment, new housing starts, real estate values, employment levels, changes in the market prices for oil, gas and timber, and the overall strength or weakness of the U.S. economy.

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Real Estate

We own directly or through ventures interests in 50 residential and mixed-use projects comprised of approximately 4,600 acres of real estate located in 10 states and 14 markets. Our real estate segment secures entitlements and develops infrastructure on our lands, primarily for single-family residential and mixed-use communities. We own approximately 11,000 acres of non-core timberland and undeveloped land in Georgia and approximately 8,000 acres in Texas. We own and manage our projects either directly or through ventures. Our real estate segment revenues are principally derived from the sales of residential single-family lots and tracts, undeveloped land and commercial real estate, and in 2014 and 2015 from the operation of several income producing properties, primarily a hotel and multifamily properties.

A summary of our real estate results follows:

	For the Year
	2016			2015			2014
	(In thousands)
Revenues	$	190,273		$	202,830		$	213,112
Cost of sales	(163,095		)	(113,891		)	(123,764		)
Operating expenses	(29,229		)	(40,502		)	(34,121		)
	(2,051		)	48,437			55,227
Interest income on loan secured by real estate	1,368			2,750			8,135
Gain on sale of assets	117,856			1,585			25,981
Equity in earnings of unconsolidated ventures	5,778			15,582			8,068
Less: Net income attributable to noncontrolling interests	(1,531		)	(676		)	(505		)
Segment earnings	$	121,420		$	67,678		$	96,906

Revenues in our owned and consolidated ventures consist of:

	For the Year
	2016		2015		2014
	(In thousands)
Residential real estate	$	121,196	$	87,771	$	119,308
Commercial real estate	11,151		5,390		2,717
Undeveloped land	35,873		22,851		46,554
Commercial and income producing properties	13,738		82,808		41,440
Other	8,315		4,010		3,093
	$	190,273	$	202,830	$	213,112

Residential real estate revenues principally consist of the sale of single-family lots to local, regional and national home builders. In 2016, residential real estate revenues increased primarily due to higher lot sales activity but were partially offset by lower average sale prices per lot as a result of selling 235 bulk lots from four non-core community development projects. Excluding these non-core sales, we sold 1,427 lots from our owned and consolidated projects at an average price of $71,300 per lot. In addition, in 2016, we sold 1,539 residential tract acres for $8,728,000 generating earnings of $847,000. In 2015, residential real estate revenues decreased primarily due to lower lot sales activity due to construction and inspection delays associated with abnormally wet weather conditions. Also, in 2015, we sold 1,062 residential tract acres for $11,223,000 generating earnings of $5,489,000, compared with 936 acres of residential tracts for $7,996,000 generating earnings of $2,988,000 in 2014.

The timing of commercial real estate revenues can vary depending on the demand, mix, project life-cycle, size and location of the project. In 2016, the increase in commercial real estate revenues is primarily due to selling 286 commercial acres from four non-core community development projects, of which 264 acres were sold from our San Joaquin River project in Antioch, California for $7,330,000 which provided approximately $37,400,000 in income tax losses to offset tax gains from other sales. In 2015, our commercial tract sales revenue increased principally due to higher average sales price of tracts sold. In 2015, we sold 31 commercial acres for $5,542,000 from our owned and consolidated projects, generating earnings of $3,345,000, compared with 21 commercial acres for $1,889,000, generating earnings of $444,000 in 2014.

Undeveloped land revenues represent land sold from our retail sales program. In 2016, we sold 14,438 acres of undeveloped land for $2,485 per acre, generating approximately $28,098,000 in earnings. In 2015, we sold 9,645 acres of undeveloped land for $2,369 per acre, generating approximately $16,542,000 in earnings, compared with 21,345 acres sold for $2,181 per acre, generating earnings of $29,895,000 in 2014.

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Commercial and income producing properties revenues include revenues from sale of multifamily properties which we developed as a merchant builder and operate until sold, from hotel room sales and other guest services, rental revenues from our operating multifamily properties and reimbursement for costs paid to subcontractors plus development and construction fees from certain multifamily projects. In 2016, commercial and income producing properties revenues decreased as result of selling the Radisson Hotel & Suites, a 413 guest room hotel located in Austin, in second quarter 2016 and Eleven, a multifamily property in Austin, in first quarter 2016, and the impact of selling Midtown Cedar Hill, a multifamily property near Dallas in fourth quarter 2015 for $42,880,000. Commercial and income producing properties revenue in 2015 includes $6,238,000 in construction revenues associated with one multifamily fixed fee contract as general contractor which was substantially completed at year-end 2015, compared with $12,282,000 in 2014. The decrease in construction revenues in 2015 is primarily due to the completion of the Eleven project in second quarter 2014. In 2015, rental revenues from our multifamily operating properties were $8,380,000 compared with $1,550,000 in 2014, primarily due to the substantial completion of the Eleven multifamily project at the end of second quarter 2014 and acquiring our partner's interest in the multifamily venture in third quarter 2014.

Other revenues primarily result from sale of stream and impervious cover credits. In 2016, we sold 24 acres of impervious cover credits to home builders for $3,232,000, generating earnings of $2,787,000 and 138,000 mitigation banking credits for $3,265,000, generating earnings of $2,137,000.

Units sold consist of:

	For the Year
	2016		2015		2014
Owned and consolidated ventures:
Residential lots sold	1,662		972		1,999
Revenue per lot sold	$	66,694	$	76,594	$	55,597
Commercial acres sold	294		31		21
Revenue per commercial acre sold	$	37,312	$	182,184	$	89,681
Undeveloped acres sold	14,438		9,645		21,345
Revenue per acre sold	$	2,485	$	2,369	$	2,181
Ventures accounted for using the equity method:
Residential lots sold	278		500		344
Revenue per lot sold	$	76,866	$	78,288	$	72,906
Commercial acres sold	4		32		11
Revenue per commercial acre sold	$	527,152	$	309,224	$	589,574
Undeveloped acres sold	476		4,217		792
Revenue per acre sold	$	1,567	$	2,129	$	2,391

Cost of sales in 2016 included non-cash impairment charges of $56,453,000 associated with six non-core community development projects and two multifamily sites, of which four non-core community development projects and one multifamily site were sold in 2016 and one multifamily site was under contract to be sold at year-end 2016 and is expected to close in 2017. The non-cash impairments were a result of our key initiative to review our entire portfolio of assets which resulted in business plan changes, inclusive of cash tax savings considerations, to market these properties for sale. In 2015, cost of sales includes $7,781,000 related to multifamily construction contracts we incurred as general contractor and paid to subcontractors associated with our development of a multifamily venture property near Denver compared to $17,393,000 in 2014, associated with two multifamily venture properties. Included in multifamily construction contract costs are charges of $1,531,000 in 2015 reflecting estimated cost increases associated with our fixed fee contracts as general contractor for these two multifamily venture properties compared to $5,107,000 in 2014. Cost of sales in 2015 includes $33,375,000 in carrying value related to Midtown Cedar Hill multifamily property we developed as a merchant builder and sold. In addition, cost of sales includes non-cash impairment charges of $1,044,000 in 2015 and $399,000 in 2014.

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Operating expenses consist of:

	For the Year
	2016		2015		2014
	(In thousands)
Employee compensation and benefits	$	8,384	$	8,989	$	10,327
Property taxes	5,996		9,031		6,919
Professional services	5,134		5,749		5,749
Depreciation and amortization	976		7,605		3,741
Other	8,739		9,128		7,385
	$	29,229	$	40,502	$	34,121

The decrease in operating expenses for 2016 is principally related to decrease in depreciation and amortization and property taxes associated with first quarter 2016 sale of Eleven multifamily project and fourth quarter 2015 sale of Midtown Cedar Hill multifamily project. The increase in operating expenses for 2015 when compared with 2014 was primarily due to increase in depreciation and amortization associated with the acquisition of Eleven multifamily project in which we previously held a 25 percent equity interest and completion of Midtown Cedar Hill multifamily project in 2015.

Interest income principally represents interest received on reimbursements from utility and improvement districts. Interest income in year 2014 principally represents earnings from a loan secured by a mixed-use real estate community in Houston that was paid in full in first quarter 2015.

In 2016, gain on sale of assets includes a gain of $95,336,000 related to sale of Radisson Hotel & Suites, a gain of $9,116,000 related to sale of Eleven, a gain of $1,223,000 associated with sale of Dillon, a gain of $10,363,000 related to sale of our interest in 360^0,, a gain of $3,968,000 associated with sale of Music Row, a loss of $3,870,000 related to selling the Downtown Edge multifamily site, a gain of $1,219,000 associated with the reduction of a surety bond supporting the 2014 Cibolo Canyons Special Improvement District (CCSID) bond offering and $501,000 of excess hotel occupancy and sales and use tax revenues from CCSID. The surety bond has a balance of $6,631,000 at year-end 2016. The surety bond will decrease as CCSID makes annual ad valorem tax rebate payments to San Antonio Real Estate (SARE) owner of the Resort, which obligation is scheduled to be retired in full by 2020.

In 2015, gain on sale of assets includes a gain of $1,160,000 associated with the reduction of a surety bond in connection with the CCSID bond offering in 2014 and $425,000 of excess hotel occupancy and sales and use tax pledged revenues from CCSID after their payments to the debt service fund.

In 2014, gain on sale of assets principally includes a gain of $10,476,000 associated with a non-monetary exchange of leasehold timber rights on approximately 10,300 acres for 5,400 acres of undeveloped land with a partner in a consolidated venture, a gain of $7,610,000 related to acquiring our partner's interest in the Eleven multifamily venture, a gain of $6,577,000 related to bond proceeds received from Cibolo Canyons Special Improvement District (CCSID) at our Cibolo Canyons project near San Antonio, and a gain of $1,318,000 associated with the sale of a land purchase option contract.

Decreases in equity earnings from our unconsolidated ventures in 2016 compared with 2015 is primarily due to lower residential, commercial and undeveloped sales activity. Increase in equity earnings from our unconsolidated ventures in 2015 compared with 2014 is primarily due to increased lot sales activity associated with two projects in Houston and increased undeveloped land sales from a venture in Atlanta.

We underwrite real estate development projects based on a variety of assumptions incorporated into our development plans, including the timing and pricing of sales and leasing and costs to complete development. Our development plans are periodically reviewed in comparison to our return projections and expectations, and we may revise our plans as business conditions warrant. If as a result of changes to our development plans the anticipated future net cash flows are reduced such that our basis in a project is not fully recoverable, we may be required to recognize a non-cash impairment charge for such project. See Part I, Item 1. Business for information about our net investment in owned and consolidated real estate by geographic location at year-end 2016.

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Mineral resources

In 2016, we determined that our owned mineral assets were non-core and that we would explore opportunistically divesting these assets.

At year-end 2016, we classified our non-core mineral assets as held for sale. On February 17, 2017, we sold substantially all of our remaining oil and gas assets for a total purchase price of $85,600,000, of which $75,000,000 was received at closing. The balance of the purchase price is being held in a third-party escrow account pending completion of (a) title review, and (b) transfer of certain mineral interests owned by a venture in which the Company is a member. In first quarter 2017, we expect to recognize a gain on sale of approximately $82,400,000, of which $10,600,000 will be deferred until verification of accepted title for non-producing fee minerals in Texas and Louisiana, transfer of certain mineral interests owned by a venture in which we are a member and release of the escrowed funds. In addition, the Company expects to incur a non-cash charge of $37,900,000 related to oil and gas enterprise goodwill that is impaired due to the sale of substantially all of the Company's remaining oil and gas assets.

Our mineral resources segment is focused on maximizing the value from our owned oil and gas mineral interests through promoting exploration, development and production activities by increasing acreage leased, lease rates, and royalty interests.

A summary of our mineral resources results follows:

	For the Year
	2016			2015			2014
	(In thousands)
Revenues	$	5,076		$	9,094		$	15,690
Cost of mineral resources	(763		)	(2,998		)	(3,790		)
Operating expenses	(1,159		)	(2,141		)	(3,370		)
	3,154			3,955			8,530
Equity in earnings of unconsolidated ventures	173			275			586
Segment earnings (loss)	$	3,327		$	4,230		$	9,116

Revenues consist of:

	For the Year
	2016		2015		2014
	(In thousands)
Oil royalties (a)	$	2,905	$	5,739	$	10,923
Gas royalties	1,304		2,138		3,402
Other (principally lease bonus and delay rentals)	867		1,217		1,365
	$	5,076	$	9,094	$	15,690

 _____________________

^(a)  Oil royalties includes revenues from oil, condensate and natural gas liquids (NGLs).

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Oil and gas produced and average unit prices related to our royalty interests follows:

	For the Year
	2016		2015		2014
Consolidated entities:
Oil production (barrels)	70,700		106,800		101,900
Average oil price per barrel	$	39.74	$	50.48	$	97.55
NGL production (barrels)	8,000		21,500		23,800
Average NGL price per barrel	$	11.84	$	16.32	$	41.39
Total oil production (barrels), including NGLs	78,700		128,300		125,700
Average total oil price per barrel, including NGLs	$	36.91	$	44.76	$	86.91
Gas production (millions of cubic feet)	633.3		771.9		831.0
Average price per thousand cubic feet	$	2.06	$	2.77	$	4.09
Our share of ventures accounted for using the equity method:
Gas production (millions of cubic feet)	143.5		168.3		199.6
Average price per thousand cubic feet	$	1.97	$	2.54	$	3.94
Total consolidated and our share of equity method ventures:
Oil production (barrels)	70,700		106,800		101,900
Average oil price per barrel	$	39.74	$	50.48	$	97.55
NGL production (barrels)	8,000		21,500		23,800
Average NGL price per barrel	$	11.84	$	16.32	$	41.39
Total oil production (barrels), including NGLs	78,700		128,300		125,700
Average total oil price per barrel, including NGLs	$	36.91	$	44.76	$	86.91
Gas production (millions of cubic feet)	776.8		940.2		1,030.6
Average price per thousand cubic feet	$	2.04	$	2.73	$	4.06
Total BOE (barrel of oil equivalent)(a)	208,200		284,900		297,400
Average price per barrel of oil equivalent	$	21.58	$	29.15	$	50.80

  _____________________

^(a)  Gas is converted to barrels of oil equivalent (BOE) using six Mcf to one barrel of oil.

In 2016 and 2015, oil and gas production revenues decreased principally as a result of lower realized oil and gas prices and lower production volumes from our royalty interests.

In 2016, other revenues principally represents $402,000 in lease bonuses received from leasing approximately 2,100 net mineral owned acres for for an average of $191 per acre compared with $996,000 in lease bonuses received from leasing approximately 3,300 net mineral owned acres for an average of $300 per acre in 2015 and $1,244,000 in lease bonus payments in 2014 from leasing approximately 3,900 owned mineral acres for an average of $320 per acre.

Cost of mineral resources consists of:

	For the Year
	2016		2015		2014
	(In thousands)
Depletion and amortization	$	85	$	209	$	498
Exploration costs	103		153		1,689
Production costs	568		814		1,151
Non-cash impairment of proved oil and gas properties	—		1,802		—
Other	7		20		452
	$	763	$	2,998	$	3,790

Cost of mineral resources principally represents our share of oil and gas production severance taxes, which are calculated based on a percentage of oil and gas produced. Cost of mineral resources in 2015 included non-cash impairment charges of $1,802,000 associated with proved oil and gas properties on owned mineral interests.

Operating expenses principally consist of employee compensation and benefits, professional services, property taxes and rent expense. The decrease in operating expenses year over year is primarily due to our key initiative to reduce costs across our entire organization.

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Equity in earnings of unconsolidated ventures includes our share of royalty revenue from producing wells in the Barnett Shale gas formation.

Other

Our other segment, all of which is non-core, manages our timber holdings, recreational leases and water resource initiatives. We have approximately 19,000 acres of timberland and undeveloped land we own directly, primarily in Georgia and Texas, which was classified as assets held for sale at year-end 2016. Other segment revenues are principally derived from sales of wood fiber from our land and leases for recreational uses. We have water interests in 1.5 million acres, including a 45 percent nonparticipating royalty interest in groundwater produced or withdrawn for commercial purposes or sold from 1.4 million acres in Texas, Louisiana, Georgia and Alabama, and 20,000 acres of groundwater leases in central Texas, which were classified as assets held for sale at year-end 2016.

A summary of our other results follows:

	For the Year
	2016			2015			2014
	(In thousands)
Revenues	$	1,965		$	6,652		$	9,362
Cost of sales	(5,075		)	(3,081		)	(3,006		)
Operating expenses	(1,687		)	(4,330		)	(4,419		)
	(4,797		)	(759		)	1,937
Gain on sale and partial termination of timber lease	—			—			3,531
Equity in earnings of unconsolidated ventures	172			151			31
Segment earnings (loss)	$	(4,625	)	$	(608	)	$	5,499

Revenues consist of:

	For the Year
	2016		2015		2014
	(In thousands)
Fiber	$	897	$	5,011	$	7,050
Water	49		489		1,100
Recreational leases and other	1,019		1,152		1,212
	$	1,965	$	6,652	$	9,362

Fiber sold consists of:

	For the Year
	2016		2015		2014
Pulpwood tons sold	23,400		149,700		209,900
Average pulpwood price per ton	$	7.20	$	9.71	$	10.62
Sawtimber tons sold	35,000		77,000		120,000
Average sawtimber price per ton	$	16.74	$	20.86	$	22.47
Total tons sold	58,400		226,700		329,900
Average stumpage price per ton (a)	$	12.91	$	13.50	$	14.93

 _____________________

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

Fiber revenues decreased in 2016 when compared with 2015 and 2014 due to deferral of timber harvest activity in support of our key initiative to divest our non-core timberland and undeveloped land.

Water revenues for 2016 are related to groundwater royalties from our 45 percent nonparticipating royalty interests in groundwater produced or withdrawn for commercial purposes. Water revenues for 2015 and 2014 are associated with a groundwater reservation agreement with Hays County, Texas, which commenced in 2013 and was terminated in 2015.

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Information about our recreational leases follows:

	For the Year
	2016		2015		2014
Average recreational acres leased	75,300		98,300		110,500
Average price per leased acre	$	9.98	$	9.17	$	9.13

Cost of sales principally includes non-cash cost of timber cut and sold and delay rental payments paid to others related to groundwater leases in central Texas. The increase in cost of sales for 2016 is due to a $3,874,000 goodwill non-cash impairment charge related to our water interests in groundwater leases in central Texas as result of entering into an agreement to sell these assets which is expected to close in 2017. Excluding the non-cash impairment charge in 2016, cost of sales decreased due to deferral of timber harvest activity.

Operating expenses principally consist of employee compensation and benefits and professional services. The decrease in operating expenses in 2016 when compared with 2015 and 2014 is primarily due to our key initiative to reduce costs across the entire organization and corresponding reduction in our workforce. Operating expenses associated with our water resources initiatives were $921,000 in 2016, $2,162,000 in 2015 and $2,437,000 in 2014.

Gain on sale and partial termination of timber lease in 2014 includes a $3,366,000 gain associated with partial terminations of a timber lease related to the remaining 2,700 acres of undeveloped land sold from a consolidated venture near Atlanta, Georgia.

Items Not Allocated to Segments

Items not allocated to segments consist of:

	For the Year
	2016			2015			2014
	(In thousands)
General and administrative expense	$	(18,274	)	$	(24,802	)	$	(21,229	)
Share-based and long-term incentive compensation expense	(4,425		)	(4,474		)	(3,417		)
Gain on sale of assets	48,891			—			—
Interest expense	(19,985		)	(34,066		)	(30,286		)
Loss on extinguishment of debt, net	(35,864		)	—			—
Other corporate non-operating income	350			256			453
	$	(29,307	)	$	(63,086	)	$	(54,479	)

Unallocated items represent income and expenses managed on a company-wide basis and include general and administrative expenses, share-based and long-term incentive compensation, gain on sale of strategic timberland and undeveloped land, interest expense, loss on extinguishment of debt and other corporate non-operating income and expense. General and administrative expenses principally consist of costs and expenses related to accounting and finance, tax, legal, human resources, internal audit, information technology and our board of directors. These functions support all of our business segments and are not allocated.

General and administrative expense

General and administrative expenses consist of:

	For the Year
	2016		2015		2014
	(In thousands)
Employee compensation and benefits	$	9,063	$	11,729	$	8,948
Professional and consulting services	4,541		6,056		4,647
Facility costs	744		889		928
Insurance costs	704		682		1,115
Depreciation and amortization	404		595		638
Other	2,818		4,851		4,953
	$	18,274	$	24,802	$	21,229

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The decrease in general and administrative expense in 2016 when compared with 2015 is primarily due to our key initiative to reduce costs across our entire organization. In 2015, employee compensation and benefits include $3,314,000 of severance charges related to the departure of our former CEO and CFO under employment and separation agreements.

Share-based compensation and Long-term incentive compensation expense

Our share-based compensation expense principally fluctuates due to a portion of our awards being cash-settled and as a result are affected by changes in the market price of our common stock.

In 2016 and 2015, we granted $620,000 and $587,000 of long-term incentive compensation in the form of deferred cash compensation. The 2016 deferred cash awards vest annually over two years, and the 2015 deferred cash awards vest after three years. Both awards provide for accelerated vesting upon retirement, disability, death, or if there is a change in control. Expense associated with deferred cash awards is recognized ratably over the vesting period.

Gain on sale of assets

In 2016, we sold over 58,300 acres of timber and timberland in Georgia and Alabama for $104,172,000 in three transactions generating combined net proceeds of $103,238,000. These transactions resulted in a combined gain on sale of assets of $48,891,000.

Interest expense

The decrease in interest expense in 2016 is due to reducing our debt outstanding by $277,790,000 in 2016 and $323,303,000 since third quarter-end 2015.

Loss on extinguishment of debt, net

In 2016, we retired portions of our 8.5% Senior Secured Notes due 2022 and 3.75% Convertible Senior Notes due 2020 resulting in a net loss on debt extinguishment of $35,864,000, which includes write-off of unamortized debt issuance costs of $5,489,000 and $1,301,000 in other costs related to tender offer advisory services.

Income taxes

Our effective tax rate from continuing operations was 17 percent in 2016, 395 percent in 2015 and 36 percent in 2014. Our 2016 effective tax rate differs from the statutory rate of 35 percent primarily due to a 19 percent benefit from a valuation allowance decrease due to a decrease in our deferred tax assets. Our 2015 effective tax rate is attributable almost entirely to a 348 percent detriment from the recording of a valuation allowance on our deferred tax asset.

Our 2016, 2015 and 2014 effective tax rates include the effect of state income taxes, nondeductible items and benefits from noncontrolling interests.

At year-end 2016 and 2015, we have provided a valuation allowance for our deferred tax asset of $73,405,000 and $97,068,000 respectively for the portion of the deferred tax asset that we have determined is more likely than not to be unrealizable.

In determining our valuation allowance, we assessed available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of the existing deferred tax asset. A significant piece of objective evidence evaluated was the cumulative loss incurred over the three-year period ended December 31, 2016, principally driven by impairments of oil and gas and real estate properties. Such evidence limits our ability to consider other subjective evidence, such as our projected future taxable income.

The amount of deferred tax asset considered realizable could be adjusted if negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence, such as our projected future taxable income.

Capital Resources and Liquidity

Sources and Uses of Cash

The consolidated statements of cash flows for 2016, 2015 and 2014 reflects cash flows from both continuing and discontinued operations. We operate in cyclical industries and our cash flows fluctuate accordingly. Our principal sources of cash are proceeds from the sale of real estate and timber, the cash flow from mineral resources and income producing properties, borrowings and reimbursements from utility and improvement districts. Our principal cash requirements are for the acquisition and development of real estate, either directly or indirectly through ventures, taxes, interest and compensation. Operating cash flows are affected by the timing of the payment of real estate development expenditures and the collection of proceeds from the eventual sale of the real estate, the timing of which can vary substantially depending on many factors

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including the size of the project, state and local permitting requirements and availability of utilities and by the timing of oil and gas leasing and production activities. Working capital varies based on a variety of factors, including the timing of sales of real estate and timber, oil and gas leasing and production activities, collection of receivables, reimbursement from utility and improvement districts and the payment of payables and expenses.

We regularly evaluate alternatives for managing our capital structure and liquidity profile in consideration of expected cash flows, growth and operating capital requirements and capital market conditions. We may, at any time, be considering or be in discussions with respect to the purchase or sale of our common stock, debt securities, convertible securities or a combination thereof.

Cash Flows from Operating Activities

Cash flows from our real estate acquisition and development activities, retail undeveloped land sales, commercial and income producing properties, timber sales, income from oil and gas properties, recreational leases and reimbursements from utility and improvement districts are classified as operating cash flows.

In 2016, net cash provided by operating activities was $66,877,000. The increase in net cash provided by operating activities when compared with 2015 is primarily due to lower real estate acquisition and development expenditures of $81,179,000, proceeds of $34,748,000 from retail undeveloped land sales activity and higher lot sales from owned and consolidated ventures, including proceeds of $19,335,000 from sale of non-core community development projects.

In 2015, net cash provided by operating activities was $35,126,000. The decrease in net cash provided by operating activities year over year is primarily the result of lower residential lot sales activity, decrease in reimbursement from utilities and improvement districts and decrease in undeveloped land sales. In addition, oil and gas operating cash flows were negatively impacted as a result of 48 percent decline in realized oil and gas prices on a barrel of oil equivalent basis. However, the sale of Midtown Cedar Hill for $42,880,000 in fourth quarter 2015 generated positive operating cash flow of $42,640,000. These cash flows were partially offset by real estate development and acquisition expenditures of $107,998,000.

In 2014, net cash provided by operating activities was $107,082,000 principally due to $66,047,000 of reimbursements from utilities and improvement districts. In addition, increased residential lot sales and undeveloped land sales activity contributed to our net cash from operations, which are partially offset by $114,694,000 of real estate development and acquisition expenditures exceeding $84,665,000 of real estate cost of sales.

Cash Flows from Investing Activities

Capital contributions to and capital distributions from unconsolidated ventures, costs incurred to acquire, develop and construct multifamily projects that will be held as commercial properties upon stabilization as investment property, business acquisitions and investment in oil and gas properties and equipment are classified as investing activities. In addition, proceeds from the sale of property and equipment, software costs and expenditures related to reforestation activities are also classified as investing activities.

In 2016, net cash provided by investing activities was $420,743,000. The increase in net cash provided by investing activities year over year is primarily due to $427,849,000 in net proceeds from the execution of our key initiative to opportunistically divest non-core assets. Non-core asset sales includes $128,764,000 from sale of Radisson Hotel & Suites, $103,238,000 from sale of over 58,300 acres of strategic timberland and undeveloped land, $77,105,000 from sale of certain oil and gas working interest properties, $59,719,000 from sale of Eleven, $25,428,000 from sale of Dillon, $14,703,000 from sale of Music Row, $13,917,000 from sale our interest in 360⁰ and $4,975,000 from sale of the Downtown Edge multifamily site.

In 2015, net cash used for investing activities was $60,328,000 principally due to our investment of $49,717,000 in oil and gas working interest properties associated with previously committed capital investments related to exploration and production operations and a net investment in unconsolidated ventures of $14,181,000. In addition, we invested $14,690,000 in property and equipment, software and reforestation, of which $5,953,000 is related to capital expenditures for the Radisson Hotel & Suites hotel in Austin, which we sold in 2016. These are partially offset by proceeds from sale of assets of $18,260,000 principally related to sale of certain oil and gas properties.

In 2014, net cash used for investing activities was $129,731,000 principally due to our investment of $101,145,000 in oil and gas properties and equipment associated with our exploration and production operations and purchase of our partner's interest in a 257-unit multifamily property in Austin for $20,155,000, net of cash. In addition, we invested $16,398,000 in property and equipment, software and reforestation, of which $8,780,000 is related to capital expenditures on our 413 guest room hotel in Austin and $4,981,000 is related to water production well development, and a net investment in unconsolidated ventures of $12,895,000. These are partially offset by proceeds from sale of assets of $21,962,000 principally related to sale of certain oil and gas properties in North Dakota and Oklahoma.

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Cash Flows from Financing Activities

In 2016, net cash used for financing activities was $318,264,000 principally due to retirement of $225,245,000 of our 8.5% senior secured notes, $5,000,000 of our 3.75% convertible senior notes, $9,000,000 of payments related to amortizing notes associated with our tangible equity units which are paid in full and our payment in full of $39,336,000 in loans secured by Radisson Hotel & Suites and Eleven multifamily property, which we sold in 2016. In addition, we purchased 283,976 shares of common stock for $3,537,000.

In 2015, net cash used for financing activities was $48,483,000 principally due to our payment in full of a $24,166,000 loan secured by Midtown Cedar Hill, retirement of $19,440,000 of our 8.50% senior secured notes and $9,000,000 of payments related to amortizing notes associated with our tangible equity units.

In 2014, net cash provided by financing activities was $469,000 principally due to net proceeds of $241,947,000 from the issuance of 8.5% senior secured notes, partially offset by debt payments of $225,481,000, of which $200,000,000 is related to retirement of the term loan associated with our senior secured credit facility, $9,450,000 is related to payments of our amortizing notes associated with our tangible equity units, $2,878,000 is related to debt outstanding for our Lantana partnerships and the remaining associated with payment of other indebtedness. In addition, we purchased 1,491,187 shares of our common stock for $24,595,000.

Real Estate Acquisition and Development Activities

We secure entitlements and develop infrastructure, primarily for single family residential and mixed-use communities.

We categorize real estate development and acquisition expenditures as operating activities on the statement of cash flows. These development and acquisition expenditures include costs for development of residential lots and mixed-used communities.

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A summary of our real estate acquisition and development expenditures is shown below:

		2016			2015		2014
		(In thousands)
Community Development	Market
Acquisitions:
Ansley Park	Charlotte	—			5,339		—
Beckwith Crossing	Nashville	—			—		1,294
Dove Mountain	Tucson	—			5,861		—
Cielo	Denver	3,783
Imperial Forest	Houston	—			—		5,343
Morgan Farms	Nashville	—			—		146
Moss Creek	Charlotte	1,178
River's Edge	Dallas	—			—		1,277
Scales Farmstead	Nashville	1,139			3,345		—
Walden	Charlotte	—			12,100		—
Weatherford Estates	Nashville	—			—		855
West Oaks	Atlanta	—			1,657		—
Woodtrace	Houston	—			1,424		8,622
Development:
Owned projects	Various	62,919			63,401		50,506
Consolidated venture projects	Various	9,794			10,534		3,905
Multifamily
Acquisitions and Development:
Pre-acquisition projects	Various	(397		)	1,616		910
Midtown	Dallas	—			1,860		25,034
Acklen (a)	Nashville	—			—		(7,191		)
HiLine (a)	Denver	—			—		(9,372		)
Dillon	Charlotte	—			—		2,905
Music Row	Nashville	—			—		6,757
Downtown Edge	Austin	—			—		11,286
West Austin	Austin	—			—		8,456
Undeveloped Land/Mitigation
Acquisitions:
Crescent Hills	San Antonio	—			—		1,829
Development:
Owned projects	Various	2,763			851		2,132
Total		$	81,179		$	107,988	$	114,694

  _____________________

^(a) Includes reimbursements received from the ventures for land and pre-development costs previously incurred.

Liquidity

Senior Credit Facility

In 2016, we reduced the revolving commitment provided by our senior secured credit facility, which matures on May 15, 2017 (with two one year extension options), from $300,000,000 to $125,000,000, none of which was drawn at year-end 2016. The revolving line of credit may be prepaid at any time without penalty. The revolving line of credit includes a $100,000,000 sublimit for letters of credit, of which $14,850,000 is outstanding at year-end 2016. Total borrowings under our senior secured credit facility (including the face amount of letters of credit) may not exceed a borrowing base formula.

At year-end 2016, net unused borrowing capacity under our senior secured credit facility is calculated as follows:

	Senior Credit Facility
	(In thousands)
Borrowing base availability	$	86,112
Less: borrowings	—
Less: letters of credit	(14,850		)
Net unused borrowing capacity	$	71,262

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Our net unused borrowing capacity for the year 2016 ranged from a high of $284,426,000 to a low of $71,262,000. Certain non-core assets support the borrowing base under our senior secured credit facility so we expect our borrowing capacity to continue to be reduced as certain non-core assets are sold. This facility is used primarily to fund our operating cash needs, which fluctuate due to timing of residential and commercial real estate sales, undeveloped land sales, oil and gas leasing, exploration and production activities and mineral lease bonus payments received, timber sales, reimbursements from utility and improvement districts, payment of payables and expenses and capital expenditures.

Our debt agreements contain financial covenants customary for such agreements including minimum levels of interest coverage and limitations on leverage. At year-end 2016, we were in compliance with the financial covenants of these agreements.

The following table details our compliance with the financial covenants calculated as provided in the senior secured credit facility:

Financial Covenant	Requirement	Year-End 2016
Interest Coverage Ratio (a)	≥ 2.50:1.0	12.01
Total Leverage Ratio (b)	≤ 50%	29.2%
Tangible Net Worth (c)	≥ $426.3 million	$545.2 million

  _____________________

^(a)  Calculated as EBITDA (earnings before interest, taxes, depreciation, depletion and amortization), plus non-cash compensation expense, plus other non-cash expenses, divided by interest expense excluding loan fees. This covenant is applied at the end of each quarter on a rolling four quarter basis.

^(b)  Calculated as total funded debt divided by adjusted asset value. Total funded debt includes indebtedness for borrowed funds, secured liabilities, reimbursement obligations with respect to letters of credit or similar instruments, and our pro-rata share of joint venture debt outstanding. Adjusted asset value is defined as the sum of unrestricted cash and cash equivalents, timberlands, high value timberlands, raw entitled lands, entitled land under development, minerals business, Credo asset value, special improvement district receipts (SIDR) reimbursements value and other real estate owned at book value without regard to any indebtedness and our pro rata share of joint ventures’ book value without regard to any indebtedness. This covenant is applied at the end of each quarter.

^(c)  Calculated as the amount by which consolidated total assets (excluding Credo acquisition goodwill over $50,000,000) exceed consolidated total liabilities. At year-end 2016, the requirement is $426,312,000 computed as: $379,044,000 plus 85 percent of the aggregate net proceeds received by us from any equity offering, plus 75 percent of all positive net income, on a cumulative basis since third quarter-end 2015. This covenant is applied at the end of each quarter.

To make additional discretionary investments, acquisitions, or distributions, we must maintain available liquidity equal to 10 percent of the aggregate commitments in place. At year-end 2016 the minimum liquidity requirement was $12,500,000, compared with $332,927,000 in actual available liquidity based on the unused borrowing capacity under our senior secured credit facility plus unrestricted cash and cash equivalents. The failure to maintain such minimum liquidity does not constitute a default or event of default of our senior secured credit facility.

Discretionary investments in community development may be restricted in the event that the revenue/capital expenditure ratio is less than or equal to 1.0x. As of year-end 2016, the revenue/capital expenditure ratio was 2.4x. Revenue is defined as total gross revenues (excluding revenues attributed to certain oil and gas operations and multifamily properties), plus our pro rata share of the operating revenues from unconsolidated ventures. Capital expenditures are defined as consolidated development and acquisition expenditures (excluding investments related to certain oil and gas operations and multifamily properties), plus our pro rata share of unconsolidated ventures’ development and acquisition expenditures.

We may elect to make distributions to stockholders so long as the total leverage ratio is less than 40 percent, the interest coverage ratio is greater than 3.0:1.0 and available liquidity is not less than $125,000,000, all of which were satisfied at year-end 2016. Regardless of whether the foregoing conditions are satisfied, we may make distributions in an aggregate amount not to exceed $50,000,000 to be funded from up to 65% of the net proceeds from sales of multifamily properties and non-core assets, such as the Radisson Hotel & Suites in Austin, and any oil and gas properties.

3.75% Convertible Senior Notes due 2020

In 2013, we issued $125,000,000 aggregate principal amount of 3.75% convertible senior notes due 2020 (Convertible Notes). Interest on the Convertible Notes is payable semiannually at a rate of 3.75 percent per annum and they mature on March 1, 2020. The Convertible Notes have an initial conversion rate of 40.8351 per $1,000 principal amount. The initial conversion rate is subject to adjustment upon the occurrence of certain events. Prior to November 1, 2019, the Convertible Notes are convertible only upon certain circumstances, and thereafter are convertible at any time prior to the close of business

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on the second scheduled trading day prior to maturity. If converted, holders will receive cash, shares of our common stock or a combination thereof at our election. We intend to settle the principal amount of the Convertible Notes in cash upon conversion, with any excess conversion value to be settled in shares of our common stock. In 2016, we purchased $5,000,000 of Convertible Notes at 93.25% of face value in open market transactions for $4,662,500 and we allocated $4,452,000 to extinguish the debt and $211,000 to reacquire the equity component within the convertible notes based on the fair value of the debt component. We recognized a $110,000 loss on extinguishment of debt based on the difference between the fair value of the debt component prior to conversion and the carrying value of the debt component. Total loss on extinguishment of debt including write-off of debt issuance costs allocated to the repurchased notes was $183,000. The aggregate principal outstanding at year-end 2016, net of discount and unamortized financing fees, was $104,673,000.

8.50% Senior Secured Notes due 2022

In 2014, we issued $250,000,000 aggregate principal of 8.50% Senior Secured Notes due 2022 (Notes). The Notes will mature on June 1, 2022 and interest on the Notes is payable semiannually at a rate of 8.5 percent per annum in arrears. In 2016, we completed a cash tender offer for our Notes, pursuant to which we purchased $215,495,000 principal amount (representing approximately 97.6% outstanding) of the Notes. Total consideration paid was $245,604,000, which included $29,091,000 in premium at 113.5% and $1,018,000 in accrued and unpaid interest. In addition, we received consent from holders of the Notes to eliminate or modify certain covenants, events of default and other provisions contained in the indenture governing the Notes, and to release the subsidiary guarantees and collateral securing the Notes. We also purchased $9,750,000 principal amount of the Notes between 99% and 99.95% of face value principal amount of the Notes in open market transactions. The 2016 tender offer and open market purchases resulted in a $35,681,000 loss on extinguishment of debt, which includes the premium paid to repurchase the Notes, write-off of unamortized debt issuance costs of $5,416,000 and $1,301,000 in other costs related to tender offer advisory services. In 2015, we purchased $19,440,000 principal amount of Notes at 97% of face value, resulting in a gain of $589,000 on the early extinguishment of the retired Notes, offset by the write-off of unamortized debt issuance costs of $506,000 allocated to the retired Notes. The aggregate principal outstanding at year-end 2016, net of unamortized financing fees, was $5,200,000.

6.00% Tangible Equity Units

In 2013, we issued $150,000,000 aggregate principal amount of 6.00% tangible equity units (Units). The total offering was 6,000,000 Units, including 600,000 exercised by the underwriters, each with a stated amount of $25.00. Each Unit is comprised of (i) a prepaid stock purchase contract to be settled by delivery of a number of shares of our common stock, par value $1.00 per share, to be determined pursuant to a purchase contract agreement, and (ii) a senior amortizing note due December 15, 2016 that has an initial principal amount of $4.2522, bears interest at a rate of 4.50% per annum and has a final installment payment date of December 15, 2016. On December 15, 2016, we made the final installment payment of principal and accrued interest and issued 7,857,000 shares upon settlement of the stock purchase contract based on the applicable market value, as defined in the purchase contract agreement associated with issuance of the Units.

Other Notes

In 2016, a secured promissory note of $15,400,000 was paid in full in connection with sale of the Radisson Hotel & Suites, a 413 guest room hotel located in Austin, for $130,000,000.

In 2016, other indebtedness decreased principally as result of selling Eleven, a 257-unit multifamily project in Austin, for $60,150,000 and paying in full the associated debt of $23,936,000.

Contractual Obligations

At year-end 2016, contractual obligations consist of:

	Payments Due or Expiring by Year
	Total		2017		2018-19		2020-21		Thereafter
	(In thousands)
Debt (a) (b)	$	125,801	$	—	$	486	$	120,000	$	5,315
Interest payments on debt	16,772		4,989		9,941		1,654		188
Purchase obligations	18,095		18,095		—		—		—
Operating leases	4,402		2,267		1,891		244		—
Performance bond (a)	6,631		6,631		—		—		—
Standby letter of credit (a)	6,846		6,846		—		—		—
Total	$	178,547	$	38,828	$	12,318	$	121,898	$	5,503

  _____________________

^(a)  Items included in our balance sheet.

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^(b)  Gross debt excluding unamortized discount and financing fees.

Interest payments on debt include interest payments related to our fixed rate debt and estimated interest payments related to our variable rate debt. Estimated interest payments on variable rate debt were calculated assuming that the outstanding balances and interest rates that existed at year-end 2016 remain constant through maturity.

Purchase obligations are defined as legally binding and enforceable agreements to purchase goods and services. Our purchase obligations include open commitments for land acquisition and development related to community development projects.

Our operating leases are for facilities, equipment and groundwater. We lease approximately 22,000 square feet of office space in Austin as our corporate headquarters. At year-end 2016, the remaining contractual obligation for our Austin office is $1,983,000. We also lease office space in other locations in support of our business operations. The total remaining contractual obligations for these leases is $1,925,000. Also included are groundwater leases for about 20,000 acres in central Texas with remaining contractual obligations of $494,000.

The performance bond and standby letter of credit were provided in support of a bond issuance by CCSID. Please read Cibolo Canyons — San Antonio, Texas for additional information.

Off-Balance Sheet Arrangements

From time to time, we enter into off-balance sheet arrangements to facilitate our operating activities. At year-end 2016, our off-balance sheet unfunded arrangements, excluding contractual interest payments, purchase obligations, operating lease obligations and venture contributions included in the table of contractual obligations, consist of:

	Payments Due or Expiring by Year
	Total		2017		2018-19		2020-21		Thereafter
	(In thousands)
Performance bonds	$	8,757	$	8,197	$	560	$	—	$	—
Standby letters of credit	8,005		7,366		639		—		—
Recourse obligations	543		362		100		81		—
Total	$	17,305	$	15,925	$	1,299	$	81	$	—

In 2014, FMF Littleton LLC, an equity method venture in which we own a 25 percent interest, obtained a senior secured construction loan in the amount of $46,384,000 to develop a 385-unit multifamily project located in Littleton, Colorado. The outstanding balance was $44,446,000 at year-end 2016. We provided the lender with a guaranty of completion of the improvements; a guaranty for repayment of 25 percent of the principal balance and unpaid accrued interest; and a standard nonrecourse carve-out guaranty. The principal guaranty will reduce from 25 percent of principal to ten percent upon achievement of certain conditions.

In 2014, CREA FMF Nashville LLC, an equity method venture in which we own a 30 percent interest, obtained a senior secured construction loan in the amount of $51,950,000 to develop a 320-unit multifamily project located in Nashville, Tennessee. The outstanding balance at year-end 2016 was $37,446,000. We provided the lender with a guaranty of completion of the improvements; a guaranty for repayment of 25 percent of the principal balance and unpaid accrued interest; and a standard nonrecourse carve-out guaranty. The principal guaranty will reduce from 25 percent of principal to zero percent

upon achievement of certain conditions.

Cibolo Canyons — San Antonio, Texas

Cibolo Canyons consists of the JW Marriott^® San Antonio Hill Country Resort & Spa development owned by third parties and a mixed-use development we own. We have about $44,905,000 invested in Cibolo Canyons at year-end 2016, all of which is related to the mixed-use development.

Mixed-Use Development

The mixed-use development we own consists of 2,100 acres planned to include 1,791 residential lots and 155 commercial acres designated for multifamily and retail uses, of which 1,142 lots and 97 commercial acres have been sold through year-end 2016.

In 2007, we entered into an agreement with CCSID providing for reimbursement of certain infrastructure costs related to the mixed-use development. Reimbursements are subject to review and approval by CCSID and unreimbursed amounts accrue interest at 9.75 percent. CCSID’s funding for reimbursements is principally derived from its ad valorem tax collections and bond proceeds collateralized by ad valorem taxes, less debt service on these bonds and annual administrative and public service expenses.

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Because the amount of each reimbursement is dependent on several factors, including timing of CCSID approval and CCSID having an adequate tax base to generate funds that can be used to reimburse us, there is uncertainty as to the amount and timing of reimbursements under this agreement. We expect to recover our investment from lot and tract sales and reimbursement of approved infrastructure costs from CCSID. We have not recognized income from interest due, but not collected. As these uncertainties are clarified, we will modify our accounting accordingly.

Through year-end 2016, we have submitted reimbursement approval for $54,376,000 of infrastructure costs, of which we have received reimbursements totaling $45,132,000, of which $10,430,000 was received in 2016. At year-end 2016, we have $9,244,000 in pending approved reimbursements, excluding interest.

Resort Hotel, Spa and Golf Development

In 2007, we entered into agreements to facilitate third-party construction and ownership of the JW Marriott^® San Antonio Hill Country Resort & Spa, which includes a 1,002 room destination resort and two PGA Tour^® Tournament Players Club^® (TPC) golf courses.

In exchange for our commitment to the resort, the third-party owners assigned to us certain rights under an agreement between the third-party owners and CCSID. This agreement includes the right to receive from CCSID nine percent of hotel occupancy revenues and 1.5 percent of other resort sales revenues collected as taxes by the CCSID through 2034. The amount we receive will be net of annual ad valorem tax reimbursements by CCSID to the third-party owners of the resort through 2020. In addition, these payments will be net of debt service on bonds issued by CCSID collateralized by hotel occupancy tax (HOT) and other resort sales tax through 2034. The amounts we collect under this agreement are dependent on several factors including the amount of revenues generated by and ad valorem taxes imposed on the Resort and the amount of any applicable debt service incurred by CCSID. The amount we receive is net of annual ad valorem tax reimbursements by CCSID to the third-party owners of the resort through 2020. In addition, these payments will be net of debt service on bonds issued in 2014 by CCSID as discussed below which are collateralized by hotel occupancy tax (HOT) and other resort sales tax through 2034.

In 2014, we received $50,550,000 from CCSID under 2007 Economic Development Agreements (EDA) related to its issuance of $48,900,000 HOT and Sales and Use Tax Revenue Bonds, resulting in recovery of our full Resort investment. These bonds are obligations solely of CCSID and are payable from HOT and sales and use taxes levied on the Resort by CCSID. To facilitate the issuance of the bonds, we provided a $6,846,000 letter of credit to the bond trustee as security for certain debt service fund obligations in the event CCSID tax collections are not sufficient to support payment of the bonds in accordance with their terms. The letter of credit must be maintained until the earlier of redemption of the bonds or scheduled bond maturity in 2034. We also entered into an agreement with the owner of the Resort to assign its senior rights to us in exchange for consideration provided by us, including a surety bond to be drawn if CCSID tax collections are not sufficient to support ad valorem tax rebates payable. The surety bond has a balance of $6,631,000 at year-end 2016. The surety bond decreases as CCSID makes annual ad valorem tax rebate payments, which obligation is scheduled to be retired in full by 2020. All future receipts are expected to be recognized as gains in the period collected. We received $501,000 in 2016.

Accounting Policies

Critical Accounting Estimates

In preparing our financial statements, we follow generally accepted accounting principles, which in many cases require us to make assumptions, estimates, and judgments that affect the amounts reported. Our significant accounting policies are included in Note 1 to the Consolidated Financial Statements. Many of these principles are relatively straightforward. There are, however, a few accounting policies that are critical because they are important in determining our financial condition and results of operations and involve significant assumptions, estimates and judgments that are difficult to determine. We must make these assumptions, estimates and judgments currently about matters that are inherently uncertain, such as future economic conditions, operating results and valuations, as well as our intentions. As the difficulty increases, the level of precision decreases, meaning actual results can, and probably will, differ from those currently estimated. We base our assumptions, estimates and judgments on a combination of historical experiences and other factors that we believe are reasonable. We have reviewed the selection and disclosure of these critical accounting estimates with our Audit Committee.

At year-end 2016, we have divested substantially all of our oil and gas working interest assets and have classified our owned mineral assets as assets held for sale. Critical accounting estimates related to oil and gas properties such as accrued oil and gas revenue, impairment of oil and gas properties, oil and gas reserves and asset retirement obligations are not material to our financial statements for year-end 2016 but are disclosed to provide our policies and impact on our financial condition and results of operations for the years ended 2015 and 2014.

• Investment in Real Estate and Cost of Real Estate Sales — In allocating costs to real estate owned and real estate sold, we must estimate current and future real estate values. Our estimates of future real estate values sometimes must extend over periods 15 to 20 years from today and are dependent on numerous assumptions including our intentions and future market and economic conditions. In addition, when we sell real estate from projects that are

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not finished, we must estimate future development costs through completion. Differences between our estimates and actual results will affect future carrying values and operating results.

• Impairment of Real Estate Long-Lived Assets — Measuring real estate assets for impairment requires estimating the future undiscounted cash flows based on our intentions as to holding periods, and the residual value of assets under review, primarily undeveloped land. If the carrying amount exceeds the estimated undiscounted future cash flows, we will adjust the carrying amount of the real estate long-lived assets to fair value. Depending on the asset under review, we use varying methods to determine fair value, such as discounting expected future cash flows, determining resale values by market, or applying a capitalization rate to net operating income using prevailing rates in a given market. Changes in economic conditions, demand for real estate, and the projected net operating income for a specific property will inevitably change our estimates.

• Accrued Oil and Gas Revenue — We recognize revenue as oil and gas is produced and sold. There are a significant amount of oil and gas properties which we do not operate and, therefore, revenue is typically recorded in the month of production based on an estimate of our share of volumes produced and prices realized. We obtain the most current available production data from the operators and price indices for each well to estimate the accrual of revenue. Obtaining production data on a timely basis for some wells is not feasible; therefore we utilize past production receipts and estimated sales price information to estimate accrual of working interest revenue on all other non-operated wells each month. Revisions to such estimates are recorded as actual results become known.

• Impairment of Oil and Gas Properties — We review our proved oil and gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. We estimate the expected undiscounted future cash flows of our oil and gas properties and compare such undiscounted future cash flows to the carrying amount of the oil and gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, we will adjust the carrying amount of the oil and gas properties to fair value. The factors used to determine fair value are subject to our judgment and expertise and include, but are not limited to, recent sales prices of comparable properties, the present value of future cash flows, net of estimated operating and development costs using estimates of proved reserves, future commodity pricing, future production estimates, anticipated capital expenditures, and various discount rates commensurate with the risk and current market conditions associated with realizing the expected cash flows projected. Because of the uncertainty inherent in these factors, we cannot predict when or if future impairment charges for proved properties will be recorded.

The assessment of unproved properties to determine any possible impairment requires significant judgment. We assess our unproved properties periodically for impairment on a property-by-property basis based on remaining lease terms, drilling results or future plans to develop acreage. Due to the uncertainty inherent in these factors, we cannot predict the amount of impairment charges that may be recorded in the future.

• Oil and Gas Reserves — The estimation of oil and gas reserves is a significant estimate which affects the amount of non-cash depletion expense we record as well as impairment analysis we perform. On an annual basis, we engage an independent petroleum engineering firm to assist us in preparing estimates of oil and gas reserves based on available geologic and seismic data, reservoir pressure data, core analysis reports, well logs, analogous reservoir performance history, production data and other available sources of engineering, geological and geophysical information. Oil and gas prices are volatile and largely affected by worldwide or domestic production and consumption and are outside our control.

• Asset Retirement Obligations — We make estimates of the future costs of the retirement obligations of our producing oil and gas properties. Estimating future costs involves significant assumptions and judgments regarding such factors as estimated costs of plugging and abandonment, timing of settlements, discount rates and inflation rates. Such cost estimates could be subject to significant revisions in subsequent years due to changes in regulatory requirements, technological advances and other factors which may be difficult to predict.

• Impairment of Goodwill — Measuring goodwill for impairment annually requires estimation of future cash flows and determination of fair values using many assumptions and inputs, including estimated future selling prices and volumes, estimated future costs to develop and explore, observable market inputs, weighted average cost of capital, estimated operating expenses and various other projected economic factors. Changes in economic and operating conditions can affect these assumptions and could result in additional interim testing and goodwill impairment charges in the future periods.

• Share-Based Compensation — We use the Black-Scholes option pricing model to determine the fair value of stock options. The determination of the fair value of share-based payment awards on the date of grant using an option-pricing model is affected by the stock price as well as assumptions regarding a number of other variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock

46

option exercise behaviors (term of option), risk-free interest rate and expected dividends. The expected life was based on the simplified method utilizing the midpoint between the vesting period and the contractual life of the awards. The expected stock price volatility was determined using a blend of historical and implied volatility. Pre-vesting forfeitures are estimated based upon the pool of participants and their expected activity and historical trends. We use Monte Carlo simulation pricing model to determine the fair value of market-leveraged stock units (MSU's) and stock option awards with market condition. A typical Monte Carlo exercise simulates a distribution of stock prices to yield an expected distribution of stock prices at the end of the performance period. The simulations are repeated many times in order to derive a probabilistic assessment of stock performance. The stock-paths are simulated using assumptions which include expected stock price volatility and risk-free interest rate.

• Income Taxes — In preparing our consolidated financial statements, significant judgment is required to estimate our income taxes. Our estimates are based on our interpretation of federal and state tax laws. We estimate our actual current tax due and assess temporary and permanent differences resulting from differing treatment of items for tax and accounting purposes. The temporary differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheet. If needed, we record a valuation allowance against our deferred tax assets. In addition, when we believe a tax position is supportable but the outcome uncertain, we include the item in our tax return but do not recognize the related benefit in our provision for taxes. Instead, we record a reserve for unrecognized tax benefits, which represents our expectation of the most likely outcome considering the technical merits and specific facts of the position. Changes to liabilities are only made when an event occurs that changes the most likely outcome, such as settlement with the relevant tax authority, expiration of statutes of limitations, changes in tax law, or recent court rulings. Adjustments to temporary differences, permanent differences or uncertain tax positions could materially impact our financial position, cash flow and results of operation.

Adopted and Pending Accounting Pronouncements

Please read Note 2 — New and Pending Accounting Pronouncements to the Consolidated Financial Statements.

Effects of Inflation

Inflation has had minimal effects on operating results the past three years.

Legal Proceedings

We are involved in various legal proceedings that arise from time to time in the ordinary course of doing business. We believe we have established adequate reserves for any probable losses, and we do not believe that the outcome of any of these proceedings should have a material adverse effect on our financial position, long-term results of operations, or cash flow. It is possible, however, that charges related to these matters could be significant to results of operations or cash flows in any one accounting period.

47

Item 7A. Quantitative and Qualitative Disclosures About Market Risk.

Interest Rate Risk

We have no significant exposure to interest rate risk as it relates to our variable-rate debt of $485,000 at year-end 2016, maturing in 2018.

Foreign Currency Risk

We have no exposure to foreign currency fluctuations.

Commodity Price Risk

We have no significant exposure to commodity price fluctuations.

48

Item 8. Financial Statements and Supplementary Data.

Index to Financial Statements

	Page
Management’s Annual Report on Internal Control over Financial Reporting	50
Report of Independent Registered Public Accounting Firm	51
Report of Independent Registered Public Accounting Firm	52
Audited Financial Statements
Consolidated Balance Sheets	53
Consolidated Statements of Income (Loss) And Comprehensive Income (Loss)	54
Consolidated Statements of Equity	55
Consolidated Statements of Cash Flows	56
Notes to the Consolidated Financial Statements	57
Financial Statement Schedule
Schedule III — Consolidated Real Estate and Accumulated Depreciation	90

49

MANAGEMENT’S ANNUAL REPORT ON

INTERNAL CONTROL OVER FINANCIAL REPORTING

The management of Forestar is responsible for establishing and maintaining adequate internal control over financial reporting. Management has designed our internal control over financial reporting to provide reasonable assurance that our published financial statements are fairly presented, in all material respects, in conformity with generally accepted accounting principles.

Management is required by paragraph (c) of Rule 13a-15 of the Securities Exchange Act of 1934, as amended, to assess the effectiveness of our internal control over financial reporting as of each year end. In making this assessment, management used the Internal Control — Integrated Framework (2013) by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Management conducted the required assessment of the effectiveness of our internal control over financial reporting as of year-end. Based upon this assessment, management believes that our internal control over financial reporting is effective as of year-end 2016.

Ernst & Young LLP, the independent registered public accounting firm that audited our financial statements included in this Form 10-K, has also audited our internal control over financial reporting. Their attestation report follows this report of management.

50

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Forestar Group Inc.

We have audited Forestar Group Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). Forestar Group Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, Forestar Group Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2016, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Forestar Group Inc. as of December 31, 2016 and 2015, and the related consolidated statements of income (loss) and comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2016 of Forestar Group Inc. and our report dated March 3, 2017 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Austin, Texas

March 3, 2017

51

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Shareholders of Forestar Group Inc.

We have audited the accompanying consolidated balance sheets of Forestar Group Inc. as of December 31, 2016 and 2015, and the related consolidated statements of income (loss) and comprehensive income (loss), equity, and cash flows for each of the three years in the period ended December 31, 2016. Our audits also included the financial statement schedule listed in the Index at Item 15 (a). These financial statements and schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Forestar Group Inc. at December 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Forestar Group Inc.’s internal control over financial reporting as of December 31, 2016, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated March 3, 2017 expressed an unqualified opinion thereon.

/s/ Ernst & Young LLP

Austin, Texas

March 3, 2017

52

FORESTAR GROUP INC.

CONSOLIDATED BALANCE SHEETS

	At Year-End
	2016			2015
	(In thousands, except share data)
ASSETS
Cash and cash equivalents	$	265,798		$	96,442
Real estate, net	293,003			586,715
Assets of discontinued operations	14			104,967
Assets held for sale	30,377			—
Investment in unconsolidated ventures	77,611			82,453
Timber	—			7,683
Receivables, net	8,931			19,025
Income taxes receivable	10,867			12,056
Prepaid expenses	2,000			3,116
Property and equipment, net	3,116			10,732
Deferred tax asset, net	323			—
Goodwill and other intangible assets	37,900			43,455
Other assets	3,268			5,602
TOTAL ASSETS	$	733,208		$	972,246
LIABILITIES AND EQUITY
Accounts payable	$	4,804		$	11,617
Accrued employee compensation and benefits	4,126			5,547
Accrued property taxes	2,008			4,529
Accrued interest	1,585			3,267
Deferred tax liability, net	—			1,037
Earnest money deposits	10,511			10,214
Other accrued expenses	12,598			14,556
Liabilities of discontinued operations	5,295			11,192
Liabilities held for sale	103			—
Other liabilities	19,702			24,657
Debt, net	110,358			381,515
TOTAL LIABILITIES	171,090			468,131
COMMITMENTS AND CONTINGENCIES
EQUITY
Forestar Group Inc. shareholders’ equity:
Common stock, par value $1.00 per share, 200,000,000 authorized shares, 44,803,603 issued at December 31, 2016 and 36,946,603 issued at December 31, 2015	44,804			36,947
Additional paid-in capital	553,005			561,850
Retained earnings (Accumulated deficit)	12,602			(46,046		)
Treasury stock, at cost, 3,187,253 shares at December 31, 2016 and 3,203,768 shares at December 31, 2015	(49,760		)	(51,151		)
Total Forestar Group Inc. shareholders’ equity	560,651			501,600
Noncontrolling interests	1,467			2,515
TOTAL EQUITY	562,118			504,115
TOTAL LIABILITIES AND EQUITY	$	733,208		$	972,246

Please read the notes to the consolidated financial statements.

53

FORESTAR GROUP INC.

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

	For the Year
	2016			2015			2014
	(In thousands, except per share amounts)
REVENUES
Real estate sales and other	$	176,535		$	120,022		$	171,672
Commercial and income producing properties	13,738			82,808			41,440
Real estate	190,273			202,830			213,112
Mineral resources	5,076			9,094			15,690
Other	1,965			6,652			9,362
	197,314			218,576			238,164
COST AND EXPENSES
Cost of real estate sales and other	(147,653		)	(52,640		)	(86,432		)
Cost of commercial and income producing properties	(15,442		)	(61,251		)	(37,332		)
Cost of mineral resources	(763		)	(2,998		)	(3,790		)
Cost of other	(5,075		)	(3,081		)	(3,006		)
Other operating	(33,177		)	(48,996		)	(44,326		)
General and administrative	(21,597		)	(27,253		)	(22,230		)
	(223,707		)	(196,219		)	(197,116		)
GAINON SALE OF ASSETS	166,747			1,585			29,512
OPERATING INCOME	140,354			23,942			70,560
Equity in earnings of unconsolidated ventures	6,123			16,008			8,685
Interest expense	(19,985		)	(34,066		)	(30,286		)
Loss on extinguishment of debt, net	(35,864		)	—			—
Other non-operating income	1,718			3,006			8,588
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES	92,346			8,890			57,547
Income tax expense	(15,302		)	(35,131		)	(20,850		)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS	77,044			(26,241		)	36,697
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES	(16,865		)	(186,130		)	(19,609		)
CONSOLIDATED NET INCOME (LOSS)	60,179			(212,371		)	17,088
Less: Net (income) attributable to noncontrolling interests	(1,531		)	(676		)	(505		)
NET INCOME (LOSS) ATTRIBUTABLE TO FORESTAR GROUP INC.	$	58,648		$	(213,047	)	$	16,583
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic	34,546			34,266			35,317
Diluted	42,334			34,266			43,596
NET INCOME (LOSS) PER BASIC SHARE
Continuing operations	$	1.80		$	(0.79	)	$	0.84
Discontinued operations	$	(0.40	)	$	(5.43	)	$	(0.46	)
NET INCOME (LOSS) PER BASIC SHARE	$	1.40		$	(6.22	)	$	0.38
NET INCOME (LOSS) PER DILUTED SHARE
Continuing operations	$	1.78		$	(0.79	)	$	0.83
Discontinued operations	$	(0.40	)	$	(5.43	)	$	(0.45	)
NET INCOME (LOSS) PER DILUTED SHARE	$	1.38		$	(6.22	)	$	0.38
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO FORESTAR GROUP INC.	$	58,648		$	(213,047	)	$	16,583

Please read the notes to the consolidated financial statements.

54

FORESTAR GROUP INC.

CONSOLIDATED STATEMENTS OF EQUITY

				Forestar Group Inc. Shareholders' Equity
				Common Stock			Additional Paid-in Capital			Treasury Stock					Retained Earnings (Accumulated Deficit)			Non-controlling Interests
	Total			Shares	Amount					Shares		Amount
	(In thousands, except per share amounts)
Balance at December 31, 2013	$	715,397		36,946,603	$	36,947	$	556,676		(2,199,666	)	$	(34,196	)	$	150,418		$	5,552
Net income	17,088			—	—		—			—		—			16,583			505
Distributions to noncontrolling interest	(4,171		)	—	—		—			—		—			—			(4,171		)
Contributions from noncontrolling interest	2,585			—	—		—			—		—			—			2,585
Dissolution of noncontrolling interests	1,342			—	—		—			—		—			—			1,342
Purchase of noncontrolling interests, net	(6,242		)	—	—		(2,969		)	—		—			—			(3,273		)
Issuances of common stock for vested share-settled units	—			—	—		(2,567		)	164,914		2,567			—			—
Issuances from exercises of pre-spin stock options, net of swaps	877			—	—		(43		)	60,823		920			—			—
Issuances from exercises of stock options, net of swaps	329			—	—		(333		)	45,062		662			—			—
Shares withheld for payroll taxes	(1,043		)	—	—		(4		)	(55,238	)	(1,039		)	—			—
Shares repurchased	(24,595		)	—	—		—			(1,491,187	)	(24,595		)	—			—
Forfeitures of restricted stock awards	—			—	—		10			(9,986	)	(10		)	—			—
Share-based compensation	8,033			—	—		8,033			—		—			—			—
Tax benefit from exercise of restricted stock units and stock options and vested restricted stock	142			—	—		142			—		—			—			—
Balance at December 31, 2014	$	709,742		36,946,603	$	36,947	$	558,945		(3,485,278	)	$	(55,691	)	$	167,001		$	2,540
Net income (loss)	(212,371		)	—	—		—			—		—			(213,047		)	676
Distributions to noncontrolling interest	(701		)	—	—		—			—		—			—			(701		)
Issuances of common stock for vested share-settled units	—			—	—		(5,362		)	335,611		5,362			—			—
Issuances from exercises of pre-spin stock options, net of swaps	31			—	—		(33		)	3,999		64			—			—
Shares withheld for payroll taxes	(762		)	—	—		(1		)	(51,521	)	(761		)	—			—
Forfeitures of restricted stock awards	—			—	—		125			(6,579	)	(125		)	—			—
Share-based compensation	8,576			—	—		8,576			—		—			—			—
Tax benefit from exercise of restricted stock units and stock options and vested restricted stock	(400		)	—	—		(400		)	—		—			—			—
Balance at December 31, 2015	$	504,115		36,946,603	$	36,947	$	561,850		(3,203,768	)	$	(51,151	)	$	(46,046	)	$	2,515
Net income	60,179			—	—		—			—		—			58,648			1,531
Distributions to noncontrolling interests	(2,579		)	—	—		—			—		—			—			(2,579		)
Issuances of common stock for vested share-settled units	—			—	—		(4,570		)	288,397		4,570			—			—
Issuances from exercises of stock options, net of swaps	328			—	—		(224		)	35,406		552			—			—
Shares withheld for payroll taxes	(222		)	—	—		(28		)	(23,312	)	(194		)	—			—
Shares repurchased	(3,537		)	—	—		—			(283,976	)	(3,537		)	—			—
Share-based compensation	4,045			—	—		4,045			—		—			—			—
Settlement of tangible equity units	—			7,857,000	7,857		(7,857		)	—		—			—			—
Reacquisition of equity component related to convertible debt	(211		)	—	—		(211		)	—		—			—			—
Balance at December 31, 2016	$	562,118		44,803,603	$	44,804	$	553,005		(3,187,253	)	$	(49,760	)	$	12,602		$	1,467

Please read the notes to the consolidated financial statements.

55

FORESTAR GROUP INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

	For the Year
	2016			2015			2014
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)	$	60,179		$	(212,371	)	$	17,088
Adjustments:
Depreciation, depletion and amortization	11,447			45,085			41,715
Change in deferred income taxes	(1,360		)	41,261			1,645
Equity in earnings of unconsolidated ventures	(6,123		)	(16,008		)	(8,685		)
Distributions of earnings of unconsolidated ventures	7,719			12,741			5,721
Share-based compensation	4,037			4,246			3,417
Real estate cost of sales	98,412			87,733			84,665
Dry hole and unproved leasehold impairment costs	—			67,639			29,528
Real estate development and acquisition expenditures, net	(81,179		)	(107,988		)	(114,694		)
Reimbursements from utility and improvement districts	27,107			15,176			66,047
Asset impairments	60,939			108,184			15,934
Loss on debt extinguishment, net	35,864			—			—
Gain on sale of assets	(153,083		)	(879		)	(38,038		)
Other	5,359			4,680			5,887
Changes in:
Notes and accounts receivables	13,214			(978		)	10,704
Prepaid expenses and other	(133		)	3,026			2,180
Accounts payable and other accrued liabilities	(16,711		)	(11,868		)	(4,653		)
Income taxes	1,189			(4,553		)	(11,379		)
Net cash provided by operating activities	66,877			35,126			107,082
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, equipment, software, reforestation and other	(6,138		)	(14,690		)	(16,398		)
Oil and gas properties and equipment	(579		)	(49,717		)	(101,145		)
Acquisition of partner's interest in unconsolidated multifamily venture, net of cash	—			—			(20,155		)
Acquisition of oil and gas properties	—			—			(1,100		)
Investment in unconsolidated ventures	(6,089		)	(26,349		)	(14,692		)
Proceeds from sale of assets	427,849			18,260			21,962
Return of investment in unconsolidated ventures	5,700			12,168			1,797
Net cash provided by (used for) investing activities	420,743			(60,328		)	(129,731		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of senior secured notes, net	—			—			241,947
Payments of debt	(315,229		)	(58,220		)	(225,481		)
Additions to debt	3,184			11,463			22,593
Deferred financing fees	—			(295		)	(3,217		)
Distributions to noncontrolling interests, net	(2,579		)	(701		)	(3,146		)
Purchase of noncontrolling interests	—			—			(7,971		)
Repurchases of common stock	(3,537		)	—			(24,595		)
Other	(103		)	(730		)	339
Net cash (used for) provided by financing activities	(318,264		)	(48,483		)	469
Net increase (decrease) in cash and cash equivalents	169,356			(73,685		)	(22,180		)
Cash and cash equivalents at beginning of year	96,442			170,127			192,307
Cash and cash equivalents at year-end	$	265,798		$	96,442		$	170,127
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest	$	14,790		$	27,330		$	22,936
Income taxes paid (refunds)	$	10,205		$	(4,077	)	$	18,322
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION:
Capitalized interest	$	2,838		$	2,938		$	1,154
Noncontrolling interests	$	—		$	—		$	2,904

Please read the notes to the consolidated financial statements.

56

FORESTAR GROUP INC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Summary of Significant Accounting Policies

Basis of Presentation

Our consolidated financial statements include the accounts of Forestar Group Inc., all subsidiaries, ventures and other entities in which we have a controlling interest. We account for our investment in other entities in which we have significant influence over operations and financial policies using the equity method (we recognize our share of the entities’ income or loss and any preferential returns and treat distributions as a reduction of our investment). We eliminate all material intercompany accounts and transactions. Noncontrolling interests in consolidated pass-through entities are recognized before income taxes.

We prepare our financial statements in accordance with generally accepted accounting principles in the United States, which require us to make estimates and assumptions about future events. Actual results can, and probably will, differ from those we currently estimate. Examples of significant estimates include those related to allocating costs to real estate, measuring long-lived assets for impairment, oil and gas revenue accruals, capital expenditure and lease operating expense accruals associated with our oil and gas production activities, oil and gas reserves and depletion of our oil and gas properties.

At year-end 2016, we have divested substantially all of our oil and gas working interest properties. As a result of this significant change in our operations, we have reported the results of operations and financial position of these assets as discontinued operations within the consolidated statements of income (loss) and comprehensive income (loss) and consolidated balance sheets for all periods presented. In addition, in second quarter 2016, we changed the name of the oil and gas segment to mineral resources to reflect the strategic shift from oil and gas working interest investments to owned mineral interests. We also changed the name of the other natural resources segment to other.

Cash and Cash Equivalents

Cash and cash equivalents include cash and other short-term instruments with original maturities of three months or less. At year-end 2016 and 2015, restricted cash was $275,000 and $200,000 and is included in other assets.

Cash Flows

The consolidated statements of cash flows for 2016, 2015 and 2014 reflect cash flows from both continuing and discontinued operations. Expenditures for the acquisition and development of single-family and multifamily real estate that we intend to develop for sale are classified as operating activities. Expenditures for the acquisition and development of properties to be held and operated, investment in oil and gas properties and equipment, and business acquisitions are classified as investing activities. Our accrued capital expenditures for unproved leasehold acquisitions and drilling and completion costs at year-end 2016 and 2015 were $834,000 and $7,033,000 and are included in liabilities of discontinued operations in our consolidated balance sheets. These oil and gas property additions will be reflected as cash used for investing activities in the period the accrued payables are settled.

Capitalized Software

We capitalize purchased software costs as well as the direct internal and external costs associated with software we develop for our own use. We amortize these capitalized costs using the straight-line method over estimated useful lives generally ranging from three to five years. The carrying value of capitalized software was $52,000 at year-end 2016 and $237,000 at year-end 2015 and is included in other assets. The amortization of these capitalized costs was $155,000 in 2016, $996,000 in 2015 and $1,067,000 in 2014 and is included in general and administrative and operating expenses.

Environmental and Asset Retirement Obligations

We recognize environmental remediation liabilities on an undiscounted basis when environmental assessments or remediation are probable and we can reasonably estimate the cost. We adjust these liabilities as further information is obtained or circumstances change. Our asset retirement obligations are related to the abandonment and site restoration requirements that result from the acquisition, construction and development of oil and gas working interest properties, which we have divested substantially all at year-end 2016. We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. Accretion expense related to the asset retirement obligation and depletion expense related to capitalized asset retirement costs are included in cost of mineral resources and in discontinued operations on our consolidated statements of income (loss) and comprehensive income (loss). Our asset retirement obligations are recorded in liabilities held for sale at year-end 2016 and in other liabilities and liabilities of discontinued operations at year-end 2015.

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The following summarizes the changes in asset retirement obligations:

	Year-End
	2016			2015
	(In thousands)
Beginning balance	$	1,758		$	1,807
Additions	6			65
Oil and gas working interest property dispositions	(1,610		)	(119		)
Liabilities settled	(107		)	(139		)
Accretion expense	56			144
	$	103		$	1,758

Fair Value Measurements

Financial instruments for which we did not elect the fair value option include cash and cash equivalents, accounts and notes receivables, other assets, long-term debt, accounts payable and other liabilities. With the exception of long-term notes receivable and debt, the carrying amounts of these financial instruments approximate their fair values due to their short-term nature or variable interest rates.

Goodwill and Other Intangible Assets

We record goodwill when the purchase price of a business acquisition exceeds the estimated fair value of net identified tangible and intangible assets acquired. We do not amortize goodwill or other indefinite lived intangible assets. Instead, we measure these assets for impairment based on the estimated fair values at least annually or more frequently if impairment indicators exist. We perform the annual impairment measurement in the fourth quarter of each year. Intangible assets with finite useful lives are amortized over their estimated useful lives.

In 2016, we performed our annual goodwill impairment evaluation and concluded that goodwill related to our mineral interest assets was not impaired at year-end 2016 as the estimated fair value exceeded the carrying value. On February 17, 2017, we sold substantially all of the Company's remaining oil and gas assets for $85,600,000. Please read Note 21—Subsequent Events for additional information about these items.

In addition, we performed our annual goodwill impairment evaluation and concluded that goodwill related to our central Texas water assets was impaired at year-end 2016 as the estimated fair value exceeded the carrying value. We recorded a $3,874,000 non-cash impairment charge as a result of entering into an agreement to sell these assets. At year-end 2016, our central Texas water assets are classified as held for sale.

Income Taxes

We provide deferred income taxes using current tax rates for temporary differences between the financial accounting carrying value of assets and liabilities and their tax accounting carrying values. We recognize and value income tax exposures for the various taxing jurisdictions where we operate based on laws, elections, commonly accepted tax positions, and management estimates. We include tax penalties and interest in income tax expense. We provide a valuation allowance for any deferred tax asset that is not likely to be recoverable in future periods.

When we believe a tax position is supportable but the outcome uncertain, we include the item in our tax return but do not recognize the related benefit in our provision for taxes. Instead, we record a reserve for unrecognized tax benefits, which represents our expectation of the most likely outcome considering the technical merits and specific facts of the position. Changes to liabilities are only made when an event occurs that changes the most likely outcome, such as settlement with the relevant tax authority, expiration of statutes of limitations, changes in tax law, or recent court rulings.

Owned Mineral Interests

When we lease our mineral interests to third-party exploration and production entities, we retain a royalty interest and may take an additional participation in production, including a working interest. At year-end 2016, mineral interests and any remaining oil and gas working interests are included in assets held for sale.

Oil and Gas Properties (Discontinued Operations)

We use the successful efforts method of accounting for our oil and gas producing activities. Costs to acquire mineral interests leased, costs to drill and complete development of oil and gas wells and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determination of whether the wells have proved reserves and if determined incapable of producing commercial quantities of oil and gas these costs are expensed as dry hole costs. At year-end 2016, we have no capitalized exploratory well costs pending determination of proved reserves. Exploration costs include dry

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hole costs, geological and geophysical costs, expired unproved leasehold costs and seismic studies, and are expensed as incurred. Production costs incurred to maintain wells and related equipment are charged to expense as incurred.

Depreciation and depletion of producing oil and gas properties is calculated using the units-of-production method. Proved developed reserves are used to compute unit rates for unamortized tangible and intangible drilling and completion costs. Proved reserves are used to compute unit rates for unamortized acquisition of proved leasehold costs. Unit-of-production amortization rates are revised whenever there is an indication of the need for revision but at least once a year and those revisions are accounted for prospectively as changes in accounting estimates.

Impairment of Oil and Gas Properties

We evaluate our oil and gas properties, including facilities and equipment, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We estimate the expected undiscounted future cash flows of our oil and gas properties and compare such undiscounted future cash flows to the carrying amount of the oil and gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, we will adjust the carrying amount of the oil and gas properties to fair value. The factors used to determine fair value are subject to our judgment and expertise and include, but are not limited to, recent sales prices of comparable properties, the present value of future cash flows, net of estimated operating and development costs using estimates of proved reserves, future commodity pricing, future production estimates, anticipated capital expenditures, and various discount rates commensurate with the risk and current market conditions associated with realizing the expected cash flows projected. Because of the uncertainty inherent in these factors, we cannot predict when or if future impairment charges for proved properties will be recorded.

The assessment of unproved leasehold properties to determine any possible impairment requires significant judgment. We assess our unproved leasehold properties periodically for impairment on a property-by-property basis based on remaining lease terms, drilling results or future plans to develop acreage. Impairment expense for proved and unproved oil and gas properties are included in cost of mineral resources and cost of oil and gas producing activities in discontinued operations.

Operating Leases

We occupy office space in various locations under operating leases. The lease agreements may contain rent escalation clauses, construction allowances and/or contingent rent provisions. We expense operating leases ratably over the shorter of the useful life or the lease term. For scheduled rent escalation clauses, we recognize the base rent expense on a straight-line basis and record the difference between the recognized rent expense and the amounts payable under the lease as deferred lease credits included in other liabilities in the consolidated balance sheets. Deferred lease credits are amortized over the lease term. For construction allowances, we record leasehold improvement assets included in property and equipment in the consolidated balance sheets amortized over the shorter of their economic lives or the lease term. The related deferred lease credits are amortized as a reduction of rent expense over the lease term.

Property and Equipment

We carry property and equipment at cost less accumulated depreciation. We capitalize the cost of significant additions and improvements, and we expense the cost of repairs and maintenance. We capitalize interest costs incurred on major construction projects. We depreciate these assets using the straight-line method over their estimated useful lives as follows:

	Estimated	Year-End
	Useful Lives	2016			2015
		(In thousands)
Buildings and building improvements	10 to 40 years	$	2,700		$	4,044
Property and equipment	2 to 10 years	4,957			12,230
		7,657			16,274
Less: accumulated depreciation		(4,541		)	(5,542		)
		$	3,116		$	10,732

Depreciation expense of property and equipment was $889,000 in 2016, $1,067,000 in 2015 and $903,000 in 2014.

Real Estate

We carry real estate at the lower of cost or fair value less cost to sell. We capitalize interest costs once development begins, and we continue to capitalize throughout the development period. We also capitalize infrastructure, improvements, amenities, and other development costs incurred during the development period. We determine the cost of real estate sold using the relative sales value method. When we sell real estate from projects that are not finished, we include in the cost of real estate

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sold estimates of future development costs through completion, allocated based on relative sales values. These estimates of future development costs are reevaluated at least annually, with any adjustments being allocated prospectively to the remaining units available for sale. We receive cash deposits from home builders for purchases of vacant developed lots from community development projects. These earnest money deposits are released to the home builders as lots are developed and sold.

Income producing properties are carried at cost less accumulated depreciation computed using the straight-line method over their estimated useful lives.

We have agreements with utility or improvement districts, principally in Texas, whereby we agree to convey to the districts water, sewer and other infrastructure-related assets we have constructed in connection with projects within their jurisdiction. The reimbursement for these assets ranges from 70 to 90 percent of allowable cost as defined by the district. The transfer is consummated and we receive payment when the districts have a sufficient tax base to support funding of their bonds. The cost we incur in constructing these assets is included in capitalized development costs, and upon collection, we remove the assets from capitalized development costs. We provide an allowance to reflect our past experiences related to claimed allowable development costs.

Impairment of Real Estate Long-Lived Assets

We review real estate long-lived assets held for use for impairment when events or circumstances indicate that their carrying value may not be recoverable. Impairment exists if the carrying amount of the long-lived asset is not recoverable from the undiscounted cash flows expected from its use and eventual disposition. We determine the amount of the impairment loss by comparing the carrying value of the long-lived asset to its estimated fair value. In the absence of quoted market prices, we determine estimated fair value generally based on the present value of future probability weighted cash flows expected from the sale of the long-lived asset. Non-cash impairment charges related to our owned and consolidated real estate assets are included in cost of real estate sales and other. In 2016, we recorded $56,453,000 in non-cash impairment charges related to six non-core community development projects and two multifamily sites.

Revenue

Real Estate

We recognize revenue from sales of real estate when a sale is consummated, the buyer’s initial investment is adequate, any receivables are probable of collection, the usual risks and rewards of ownership have been transferred to the buyer, and we do not have significant continuing involvement with the real estate sold. If we determine that the earnings process is not complete, we defer recognition of any gain until earned. We recognize revenue from hotel room sales and other guest services when rooms are occupied and other guest services have been rendered. We recognize rental revenues from our multifamily properties when earned in accordance with the terms of the respective leases on a straight-line basis for the period of occupancy.

We recognize construction revenues on multifamily projects that we develop as a general contractor. Construction revenues are recognized as costs are incurred plus fixed fee earned. We are reimbursed for costs paid to subcontractors plus we may earn a development and construction management fee on multifamily projects we develop, both of which are included in commercial and income producing properties revenue. On multifamily projects where our fee is based on a fixed fee plus guaranteed maximum price contract, any cost overruns incurred during construction, as compared to the original budget, will reduce the net fee generated on these projects. Any excess cost overruns estimated over the net fee generated are recognized in the period in which they become evident. At year-end 2016, we were not a general contractor on any of the multifamily projects currently under construction and we do not anticipate to be a general contractor on any new multifamily projects as we determined multifamily was non-core and we would not be making any new investments in this business.

We exclude from revenue amounts we collect from utility or improvement districts related to the conveyance of water, sewer and other infrastructure related assets. We also exclude from revenue amounts we collect for timber sold on land being developed. These proceeds reduce capitalized development costs. We exclude from revenue amounts we collect from customers that represent sales tax or other taxes that are based on the sale. These amounts are included in other accrued expenses until paid.

Oil and Gas Working Interest Revenues (Discontinued Operations)

We recognize revenue as oil and gas is produced and sold. There are a significant amount of oil and gas properties which we do not operate and, therefore, revenue is typically recorded in the month of production based on an estimate of our share of volumes produced and prices realized. We obtain the most current available production data from the operators and price indices for each well to estimate the accrual of revenue. Obtaining production data on a timely basis for some wells is not feasible; therefore we utilize past production receipts and estimated sales price information to estimate accrual of working interest revenue on all other non-operated wells each month. Revisions to such estimates are recorded as actual results become

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known. We review accounts receivable periodically and reduce the carrying amount by a valuation allowance that reflects our best estimate of the amount that may not be collectible.

A majority of our sales are made under contractual arrangements with terms that are considered to be usual and customary in the oil and gas industry. The contracts are for periods of up to five years with prices determined upon a percentage of pre-determined and published monthly index price. The terms of these contracts have not had an effect on how we recognize revenue.

Mineral Resources

We recognize revenue from mineral bonus payments when we have received an executed agreement with the exploration company transferring the rights to any oil or gas it may find and requiring drilling be done within a specified period, the payment has been collected, and we have no obligation to refund the payment. We recognize revenue from delay rentals received if drilling has not started within the specified period and when the payment has been collected. We recognize revenue from mineral royalties and non-working interests when the minerals have been delivered to the buyer, the value is determinable, and we are reasonably sure of collection.

Other

We recognize revenue from timber sales upon passage of title, which occurs at delivery; when the price is fixed and determinable; and we are reasonably sure of collection. We recognize revenue from recreational leases on the straight-line basis over the lease term. We recognize revenue from the sale of water rights or groundwater reservation agreements upon receipt of an executed agreement and payment has been collected and all conditions to the agreement have been met and we have no further performance obligations to meet. The water delivery revenues will be recognized as water is being delivered and metered at the delivery point.

Share-Based Compensation

We use the Black-Scholes option pricing model for stock options, Monte Carlo simulation pricing model for market-leveraged stock units and for stock options with market conditions, grant date fair value for equity-settled awards and period-end fair value for cash-settled awards. We expense share-based awards ratably over the vesting period or earlier based on retirement eligibility.

Timber

We carry timber at cost less the cost of timber cut. We expense the cost of timber cut based on the relationship of the timber carrying value to the estimated volume of recoverable timber multiplied by the amount of timber cut. We include the cost of timber cut in cost of other. We determine the estimated volume of recoverable timber using statistical information and other data related to growth rates and yields gathered from physical observations, models and other information gathering techniques. Changes in yields are generally due to adjustments in growth rates and similar matters and are accounted for prospectively as changes in estimates. We capitalize reforestation costs incurred in developing viable seedling plantations (up to two years from planting), such as site preparation, seedlings, planting, fertilization, insect and wildlife control, and herbicide application. We expense all other costs, such as property taxes and costs of forest management personnel, as incurred. Once the seedling plantation is viable, we expense all costs to maintain the viable plantations, such as fertilization, herbicide application, insect and wildlife control, and thinning, as incurred.

We own about 19,000 acres of non-core timberland and undeveloped land, in Georgia and Texas. The non-cash cost of timber cut and sold is $63,000 in 2016, $250,000 in 2015 and $371,000 in 2014 and is included in depreciation, depletion and amortization in our consolidated statements of cash flows.

Note 2 — New and Pending Accounting Pronouncements

Adoption of New Accounting Standards

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, as part of its initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15, Interest-Imputation of Interest (Subtopic 835-30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update), which allows an entity to defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The updated standards are effective for

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financial statements issued for annual and interim periods beginning after December 15, 2015. We adopted ASU 2015-03 in first quarter 2016 and prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2015, $8,267,000 of debt issuance costs were reclassified in the consolidated balance sheets from other assets to debt. The adoption did not impact our consolidated financial position, results of operations or cash flows. As permitted under this guidance, we will continue to present debt issuance costs associated with revolving-debt agreements as other assets.

In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis (Topic 810), requiring entities to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The revised consolidation model: (1) modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, (2) eliminates the presumption that a general partner should consolidate a limited partnership, (3) affects the consolidation analysis of reporting entities that are involved with VIEs, and (4) provides a scope exception from consolidation guidance for reporting entities with interests in certain legal entities. The updated standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2015. The adoption of this guidance, which was applied retrospectively, had no impact to our consolidated financial statements.

In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items(Subtopic 225-20), which eliminates the concept of extraordinary items from U.S. GAAP. The updated standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of this guidance had no impact on our financial statements and related disclosures.

Pending Accounting Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for annual and interim periods beginning after December 15, 2017. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). We currently anticipate adopting the standard using the cumulative catch-up transition method. We anticipate this standard will not have a material impact on our consolidated financial statements. While we are continuing to assess all potential impacts of the standard, we expect revenue related to lot and tract sales to remain substantially unchanged. Due to the complexity of certain of our real estate sale transactions, the revenue recognition treatment required under the standard will be dependent on contract-specific terms, and may vary in some instances from recognition at the time of the sale closing.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner that is similar to today's accounting. This guidance also eliminates today's real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. This guidance is effective in 2019, and interim periods within that year. Early adoption is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the effect the updated standard will have on our financial position and disclosures.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, as part of its simplification initiative. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The updated standard becomes effective for annual and interim periods beginning after December 31, 2016. We are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures, but we do not expect it to have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), in order to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated standard is effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those fiscal years with early adoption permitted. We are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures, but we do not expect it to have a material effect on our consolidated financial statements.

In November, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230). This ASU requires that a statement of cash flow explain the change during the period in the total of cash, cash equivalents, and amounts generally

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described as restricted cash or restricted cash investments. This standard is effective for fiscal years beginning after December 15, 2017. The adoption of ASU 2016-18 will modify our current disclosures and reclassifications relating to the consolidated statements of cash flows, but we do not expect it to have a material effect on our consolidated financial statements.

Note 3 — Real Estate

Real estate consists of:

	Year-End 2016						Year-End 2015
	Carrying Value		Accumulated Depreciation		Net Carrying Value		Carrying Value		Accumulated Depreciation			Net Carrying Value
	(In thousands)
Entitled, developed and under development projects	$	263,859	$	—	$	263,859	$	352,141	$	—		$	352,141
Undeveloped land (includes land in entitlement)	29,144		—		29,144		98,181		—			98,181
Commercial
Radisson Hotel & Suites (a)	—		—		—		62,889		(29,268		)	33,621
Income producing properties
Eleven (a)	—		—		—		53,896		(2,861		)	51,035
Dillon (a)	—		—		—		19,987		—			19,987
Music Row (a)	—		—		—		9,947		—			9,947
Downtown Edge (a)	—		—		—		12,706		—			12,706
West Austin (b)	—		—		—		9,097		—			9,097
	$	293,003	$	—	$	293,003	$	618,844	$	(32,129	)	$	586,715

 _________________________

^(a)  Sold in 2016.

^(b)  Classified as assets held for sale at year-end 2016.

In 2016, we recognized non-cash impairment charges of $56,453,000 related to six non-core community development projects and two multifamily sites. These impairments were a result of our key initiative to review our entire portfolio of assets which resulted in business plan changes, inclusive of cash tax savings considerations, to market these properties for sale, which resulted in adjustment of the carrying value to fair value.

In 2016, we sold the Radisson Hotel & Suites, a 413 room hotel in Austin, for $130,000,000, generating $128,764,000 in net proceeds before paying in full the associated debt of $15,400,000 and recognized a gain on sale of $95,336,000. We also sold Eleven, a wholly-owned 257-unit multifamily property in Austin, for $60,150,000, generating $59,719,000 in net proceeds before paying in full the associated debt of $23,936,000 and recognized a gain on sale of $9,116,000. In addition, we sold Dillon, a planned 379-unit multifamily property that was under construction in Charlotte, for $25,979,000, generating $25,428,000 in net proceeds and recognized a gain on sale of $1,223,000, and Music Row, a planned 230-unit multifamily property that was under construction in Nashville, for $15,025,000, generating $14,703,000 in net proceeds and recognized a gain on sale of $3,968,000 . We also sold Downtown Edge, a multifamily site in Austin, for $5,000,000, generating $4,975,000 in net proceeds and recognized a loss of $3,870,000.

In 2016, we sold over 58,300 acres of timber and timberland in Georgia and Alabama for $104,172,000 in three transactions generating combined net proceeds of $103,238,000. These transactions resulted in a combined gain on sale of assets of $48,891,000.

In 2015, we sold Midtown Cedar Hill, a 354-unit multifamily property we developed near Cedar, Hill, Texas for $42,880,000, generating segment earnings of $9,265,000 and generating $42,639,000 in net proceeds before paying in full the associated debt of $24,166,000.

Depreciation expense related to commercial and income producing properties was $816,000 in 2016, $6,810,000 in 2015 and $3,319,000 in 2014 and is included in other operating expense.

As a general contractor on guaranteed maximum price contracts associated with two multifamily venture properties, we recognized charges of $392,000 in 2016, $1,543,000 in 2015 and $5,111,000 in 2014 related to cost overruns.

Our estimated cost of assets for which we expect to be reimbursed by utility and improvement districts were $45,157,000 at year-end 2016 and $67,554,000 at year-end 2015, which included $14,749,000 at year-end 2016 and $22,302,000 at year-end 2015 related to our Cibolo Canyons project near San Antonio. In 2016, we collected $26,606,000 in reimbursements that were previously submitted to these districts. At year-end 2016, our inception to-date submitted and approved reimbursements for the

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Cibolo Canyons project were $54,376,000, of which we have collected $45,132,000. These costs are principally for water, sewer and other infrastructure assets that we have incurred and submitted or will submit to utility or improvement districts for approval and reimbursement. We expect to be reimbursed by utility and improvement districts when these districts achieve adequate tax basis or otherwise have funds available to support payment.

In 2014, we received $50,550,000 from Cibolo Canyons special improvement district (CCSID) and recognized a gain of $6,577,000 related to its issuance of $48,900,000 Hotel Occupancy Tax (HOT) and Sales and Use Tax Revenue Bonds. These bonds are obligations solely of CCSID and are payable from HOT and sales and use taxes levied on the Resort by CCSID. To facilitate the issuance of the bonds, we provided a $6,846,000 letter of credit to the bond trustee as security for certain debt service fund obligations in the event CCSID tax collections are not sufficient to support payment of the bonds in accordance with their terms. The letter of credit must be maintained until the earlier of redemption of the bonds or scheduled bond maturity in 2034. We also entered into an agreement with the owner of the Resort to assign its senior rights to us in exchange for consideration provided by us, including a surety bond to be drawn if CCSID tax collections are not sufficient to support ad valorem tax rebates payable. The surety bond has a balance of $6,631,000 at year-end 2016. The deferred gains related to the letter of credit and surety bond are included in other liabilities on our consolidated balance sheet. The surety bond decreases and gains are recognized as CCSID makes annual ad valorem tax rebate payments, which obligation is scheduled to be retired in full by 2020. All future receipts are expected to be recognized as gains in the period collected. We recorded gains of $1,219,000 and $1,160,000 in 2016 and 2015 associated with reduction of surety bond and gains of $501,000 and $425,000 in 2016 and 2015 associated with excess hotel occupancy and sales and use tax revenues from CCSID in 2015.

Note 4 — Investment in Unconsolidated Ventures

We participate in real estate ventures for the purpose of acquiring and developing residential, multifamily and mixed-use communities in which we may or may not have a controlling financial interest. U.S. GAAP requires consolidation of Variable Interest Entities (VIEs) in which an enterprise has a controlling financial interest and is the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance and (b) the obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE. We examine specific criteria and use judgment when determining whether a venture is a VIE and whether we are the primary beneficiary. We perform this review initially at the time we enter into venture agreements and reassess upon reconsideration events.

At year-end 2016, we had ownership interests in 16 ventures that we accounted for using the equity method, none of which are a VIE.

In 2016, we sold our interest in FMF Peakview LLC (360⁰), a 304-unit multifamily joint venture near Denver, generating $13,917,000 in net proceeds and recognized a gain of $10,363,000 which is included in gain on sale of assets.

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Combined summarized balance sheet information for our ventures accounted for using the equity method follows:

	Venture Assets				Venture Borrowings (a)				Venture Equity				Our Investment
	At Year-End
	2016		2015		2016		2015		2016		2015		2016		2015
	(In thousands)
242, LLC (b)	$	26,503	$	26,687	$	1,107	$	—	$	23,136	$	24,877	$	10,934	$	11,766
CL Ashton Woods, LP (c)	2,653		7,654		—		—		2,198		6,084		1,107		3,615
CL Realty, LLC	8,048		7,872		—		—		7,899		7,662		3,950		3,831
CREA FMF Nashville LLC (b)	56,081		57,820		37,446		50,845		17,091		4,291		4,923		3,820
Elan 99, LLC	49,652		34,192		36,238		14,587		13,100		15,838		11,790		14,255
FMF Littleton LLC	70,282		52,376		44,446		22,347		23,798		24,370		6,128		6,270
FMF Peakview LLC	—		48,869		—		30,485		—		16,828		—		3,447
FOR/SR Forsyth LLC	10,672		6,500		1,568		—		8,990		6,500		8,091		5,850
HM Stonewall Estates, Ltd (c)	852		2,842		—		—		852		2,842		477		1,294
LM Land Holdings, LP (c)	25,538		31,984		3,477		7,728		20,945		22,751		9,685		9,664
MRECV DT Holdings LLC	4,155		4,215		—		—		4,144		4,215		3,729		3,807
MRECV Edelweiss LLC	3,484		2,237		—		—		3,484		2,237		3,358		2,029
MRECV Juniper Ridge LLC	4,156		3,006		—		—		4,156		3,006		3,741		2,730
MRECV Meadow Crossing II LLC	2,492		728		—		—		2,491		728		2,242		655
Miramonte Boulder Pass, LLC	10,738		12,627		4,006		5,869		5,265		5,474		5,330		5,349
Temco Associates, LLC	4,368		5,284		—		—		4,253		5,113		2,126		2,557
Other ventures (d)	—		4,174		—		2,242		—		1,922		—		1,514
	$	279,674	$	309,067	$	128,288	$	134,103	$	141,802	$	154,738	$	77,611	$	82,453

Combined summarized income statement information for our ventures accounted for using the equity method follows:

	Revenues						Earnings (Loss)									Our Share of Earnings (Loss)
	For the Year
	2016		2015		2014		2016			2015			2014			2016			2015			2014
	(In thousands)
242, LLC (b)	$	5,835	$	20,995	$	5,612	$	1,259		$	9,588		$	2,951		$	668		$	4,919		$	1,514
CL Ashton Woods, LP (c)	2,870		9,820		5,431		914			3,881			1,748			1,332			5,000			2,471
CL Realty, LLC	567		856		1,573		237			424			1,068			119			212			534
CREA FMF Nashville LLC (b) (d)	4,955		1,227		—		(1,420		)	(1,696		)	(163		)	1,103			(1,696		)	(163		)
Elan 99, LLC	1,392		—		—		(2,739		)	(49		)	(87		)	(2,465		)	(44		)	(78		)
FMF Littleton LLC	3,116		120		—		(571		)	(367		)	(239		)	(143		)	(92		)	(60		)
FMF Peakview LLC	939		2,057		4		(248		)	(1,116		)	(410		)	(50		)	(223		)	(83		)
FOR/SR Forsyth LLC	—		—				(65		)	—						(58		)	—
HM Stonewall Estates, Ltd. (c)	2,112		3,990		1,728		832			1,881			613			361			952			248
LM Land Holdings, LP (c)	10,001		10,956		21,980		7,288			8,251			15,520			2,458			3,342			4,827
MRECV DT Holdings LLC	495		—				477			167						429			—
MRECV Edelweiss LLC	416		—				409			151						368			137
MRECV Juniper Ridge LLC	379		—				380			106						342			—
MRECV Meadow Crossing II LLC	267		—		—		220			—			—			198			—			—
Miramonte Boulder Pass, LLC	4,923		—				(399		)	(250		)				(200		)	(125		)
PSW Communities, LP	—		29,986		—		—			2,688			(86		)	—			1,169			(76		)
TEMCO Associates, LLC	1,344		9,485		2,155		440			2,358			494			220			1,179			247
Other ventures	6,519		36,237		3,960		2,105			33,303			3,879			1,441			1,278			(696		)
	$	46,130	$	125,729	$	42,443	$	9,119		$	59,320		$	25,288		$	6,123		$	16,008		$	8,685

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_____________________

^(a)  Total includes current maturities of $89,756,000 at year-end 2016, of which $78,557,000 is non-recourse to us, and $39,590,000 at year-end 2015, of which $29,691,000 is non-recourse to us.

^(b)  Includes unamortized deferred gains on real estate contributed by us to ventures. We recognize deferred gains as income as real estate is sold to third parties. Deferred gains of $1,457,000 are reflected as a reduction to our investment in unconsolidated ventures at year-end 2016.

^(c)  Includes unrecognized basis difference of $259,000 which is reflected as an increase of our investment in unconsolidated ventures at year-end 2016. This difference between estimated fair value of the equity investment and our capital account within the respective ventures at closing will be accreted as income or expense over the life of the investment and included in our share of earnings (loss) from the respective ventures.

^(d)  Our share of venture earnings in 2016 includes reallocation of prior year cumulative losses incurred by the venture as a result of equity contribution by the venture partner in 2016.

In 2016, we invested $6,089,000 in these ventures and received $13,419,000 in distributions; in 2015, we invested $26,349,000 in these ventures and received $24,909,000 in distributions; and in 2014, we invested $14,692,000 in these ventures and received $7,518,000 in distributions. Distributions include both return of investments and distributions of earnings.

We provide construction and development services for some of these ventures for which we receive fees. Fees for these services were $2,466,000 in 2016, $1,856,000 in 2015 and $2,275,000 in 2014, and are included in real estate revenues.

Note 5 — Goodwill and Other Intangible Assets

Carrying value of goodwill and other intangible assets follows:

	Year-End
	2016		2015
	(In thousands)
Goodwill	$	37,900	$	41,774
Identified intangibles, net	—		1,681
	$	37,900	$	43,455

Goodwill related to our mineral interests was $37,900,000 at year-end 2016 and 2015. Goodwill associated with our water resources initiatives was $0 and $3,874,000 at year-end 2016 and 2015. In 2016, we recognized a goodwill non-cash impairment charge of $3,874,000 related to interests in groundwater leases in central Texas as result of entering into an agreement to sell these assets. Impairment charges are included in cost of other on our consolidated statements of income (loss) and comprehensive income (loss).

Identified intangibles include $1,681,000 in indefinite lived groundwater leases associated with our water resources initiatives and is included in assets held for sale at year-end 2016.

Note 6—Held for Sale

At year-end 2016, assets held for sale includes approximately 19,000 acres of timberland and undeveloped land and the related timber, a multifamily site in Austin, our owned mineral interest assets and central Texas groundwater assets.

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The major classes of assets and liabilities of the properties held for sale at year-end 2016 are as follows:

	At Year-End
	2016
Assets Held for Sale:	(In thousands)
Real estate	$	19,931
Timber	1,682
Other intangible assets	1,681
Oil and gas properties and equipment, net	782
Property and equipment, net	6,301
	$	30,377
Liabilities Held for Sale:
Other liabilities	103
	$	103

Note 7 — Discontinued Operations

At year-end 2016, we have divested substantially all of our oil and gas working interest properties. As a result of this significant change in our operations, we have reported the results of operations and financial position of these assets as discontinued operations within the consolidated statements of income (loss) and comprehensive income (loss) and consolidated balance sheets for all periods presented. In addition, in second quarter 2016, we changed the name of the oil and gas segment to mineral resources to reflect the strategic shift from oil and gas working interest investments to owned mineral interests.

Summarized results from discontinued operations were as follows:

	For the Year
	2016			2015			2014
Revenues	$	5,862		$	43,845		$	68,610
Cost of oil and gas producing activities	(6,578		)	(221,402		)	(94,581		)
Other operating expenses	(7,754		)	(10,363		)	(14,357		)
Loss from discontinued operations before income taxes	$	(8,470	)	$	(187,920	)	$	(40,328	)
Gain (loss) on sale of assets before income taxes	(13,664		)	(706		)	8,526
Income tax benefit	5,269			2,496			12,193
Loss from discontinued operations, net of taxes	$	(16,865	)	$	(186,130	)	$	(19,609	)

In 2016, we recorded a net loss of $13,664,000 on the sale of 199,263 net mineral acres leased from others and 379 gross (95 net) producing oil and gas working interest wells in Nebraska, Kansas, Oklahoma and North Dakota for total net proceeds of $80,374,000, which includes $3,269,000 in reimbursement of capital costs incurred on in-progress wells that were assumed by the buyer. Other operating expenses in 2016 include loss contingency charges of $2,990,000 related to litigation and $1,155,000 related to potential environmental liabilities to plug and abandon certain oil and gas wells in Wyoming. Please read Note 14—Litigation and Environmental Contingencies for additional information about these items.

In 2015, we recorded a net loss of $706,000 on the sale of 109,000 net mineral acres leased from others and the disposition of 39 gross (7 net) producing oil and gas wells in Nebraska, Texas, Colorado, North Dakota and Oklahoma for total net proceeds of $17,800,000.

In 2014, we recorded a net gain of $8,526,000 on the sale of 650 net mineral acres leased from others and 124 gross (18 net) producing oil and gas working interest wells in Nebraska, Kansas, Oklahoma and North Dakota for total net proceeds of $17,660,000.

Cost of sales includes non-cash impairment charges of $612,000 in 2016, $163,029,000 in 2015 and $32,665,000 in 2014 related to our proved properties and unproved leasehold oil and gas working interests.

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The major classes of assets and liabilities of discontinued operations at year-end 2016 and 2015 are as follows:

	At Year-End
	2016		2015
	(In thousands)
Assets of Discontinued Operations:
Receivables, net of allowance for bad debt	$	6	$	4,632
Oil and gas properties and equipment, net	—		79,733
Goodwill and other intangible assets	—		19,673
Prepaid expenses	8		96
Other assets	—		833
	$	14	$	104,967
Liabilities of Discontinued Operations:
Accounts payable	$	67	$	342
Accrued property taxes	—		259
Other accrued expenses	5,228		8,924
Other liabilities	—		1,667
	$	5,295	$	11,192

Significant operating activities and investing activities of discontinued operations are as follows:

	For the Year
	2016			2015			2014
	(In thousands)
Operating activities:
Asset impairments	$	612		$	105,337		$	15,535
Dry hole and unproved leasehold impairment charges	—			67,639			29,528
Loss (gain) on sale of assets	13,664			706			(8,526		)
Depreciation, depletion and amortization	2,202			28,391			28,758
	$	16,478		$	202,073		$	65,295
Investing activities:
Oil and gas properties and equipment	$	(579	)	$	(49,717	)	$	(101,145	)
Acquisition of oil and gas properties	—			—			(1,100		)
Proceeds from sales of assets	77,105			17,800			17,660
	$	76,526		$	(31,917	)	$	(84,585	)

Note 8 — Receivables

Receivables consist of:

	At Year-End
	2016			2015
	(In thousands)
Funds held by qualified intermediary for potential 1031 like-kind exchange	$	—		$	14,703
Other receivables and accrued interest	1,505			2,218
Other loans secured by real estate, average interest rate of 5.86% at year-end 2016 and 11.31% at year-end 2015	7,452			2,130
	8,957			19,051
Allowance for bad debts	(26		)	(26		)
	$	8,931		$	19,025

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In 2016, we received funds previously held by qualified intermediary because we did not complete an intended like-kind exchange related to a sale of 6,915 acres of undeveloped land.

Other loans secured by real estate generally are secured by a deed of trust and due within three to five years.

Note 9 — Debt

Debt consists of:

	At Year-End
	2016		2015
	(In thousands)
8.50% senior secured notes due 2022	5,200		224,647
3.75% convertible senior notes due 2020, net of discount	104,673		104,719
6.00% tangible equity units, net	—		8,666
Secured promissory notes — average interest rates of 3.42% at year-end 2015	—		15,400
Other indebtedness due through 2018 at variable and fixed interest rates ranging from 5.0% to 5.50%	485		28,083
	$	110,358	$	381,515

In 2016, we reduced the revolving commitment provided by our senior secured credit facility, which matures on May 15, 2017 (with twoone-year extension options), from $300,000,000 to $125,000,000, none of which was drawn at year-end 2016. The revolving line of credit may be prepaid at any time without penalty. The revolving line of credit includes a $100,000,000 sublimit for letters of credit, of which $14,850,000 was outstanding at year-end 2016. Total borrowings under our senior secured credit facility (including the face amount of letters of credit) may not exceed a borrowing base formula. At year-end 2016, we had $71,262,000 in net unused borrowing capacity under our senior credit facility.

Under the terms of our senior secured credit facility, at our option, we can borrow at LIBOR plus 4.0 percent or at the alternate base rate plus 3.0 percent. The alternate base rate is the highest of (i) KeyBank National Association’s base rate, (ii) the federal funds effective rate plus 0.5 percent or (iii) 30 day LIBOR plus 1 percent. Borrowings under the senior secured credit facility are or may be secured by (a) mortgages on the timberland, high value timberland and portions of raw entitled land, as well as pledges of other rights including certain oil and gas operating properties, (b) assignments of current and future leases, rents and contracts, (c) a security interest in our primary operating account, (d) a pledge of the equity interests in current and future material operating subsidiaries and most of our majority-owned joint venture interests, or if such pledge is not permitted, a pledge of the right to distributions from such entities, and (e) a pledge of certain reimbursements payable to us from special improvement district tax collections in connection with our Cibolo Canyons project. The senior secured credit facility provides for releases of real estate and other collateral provided that borrowing base compliance is maintained.

Our debt agreements contain financial covenants customary for such agreements including minimum levels of interest coverage and limitations on coverage. At year-end 2016, our tangible net worth requirement was $426,312,000 computed as: $379,044,000 plus 85 percent of the aggregate net proceeds received by us from any equity offering, plus 75 percent of all positive net income, on a cumulative basis since third quarter 2015. At year-end 2016, we were in compliance with the financial covenants of these agreements.

We may elect to make distributions to stockholders so long as the total leverage ratio is less than 40 percent, the interest coverage ratio is greater than 3.0:1.0 and available liquidity is not less than $125,000,000, all of which were satisfied at year-end 2016. Regardless of whether the foregoing conditions are satisfied, we may make distributions in an aggregate amount not to exceed $50,000,000 to be funded from up to 65% of the net proceeds from sales of multifamily properties and non-core assets, such as the Radisson Hotel & Suites in Austin, and any oil and gas properties.

In 2014, we issued $250,000,000aggregate principal of8.5% Senior Secured Notes due 2022 (Notes). The Notes will mature on June 1, 2022 and interest on the Notes is payable semiannually at a rate of 8.5 percent per annum in arrears. In 2016, we completed a cash tender offer for our Notes, pursuant to which we purchased $215,495,000 principal amount (representing approximately 97.6% outstanding) of the Notes. Total consideration paid was $245,604,000, which included $29,091,000 in premium at 113.5% and $1,018,000 in accrued and unpaid interest. In addition, we received consent from holders of the Notes to eliminate or modify certain covenants, events of default and other provisions contained in the indenture governing the Notes, and to release the subsidiary guarantees and collateral securing the Notes. We also purchased $9,750,000 principal amount of the Notes between 99% and 99.95% of face value in open market transactions. The 2016 tender offer and open market purchases resulted in a $35,681,000 loss on extinguishment of debt, which includes the premium paid to repurchase the Notes, write-off of unamortized debt issuance costs of $5,416,000 and $1,301,000 in other costs related to tender offer advisory services.

69

In 2015, we purchased $19,440,000 principal amount of Notes at 97% of face value, resulting in a gain of $589,000 on the early extinguishment of the retired Notes, offset by the write-off of unamortized debt issuance costs of $506,000 allocated to the retired Notes.

In 2013, we issued $125,000,000 aggregate principal amount of 3.75% convertible senior notes due 2020 (Convertible Notes). Interest on the Convertible Notes is payable semiannually at a rate of 3.75 percent per annum and they mature on March 1, 2020. The Convertible Notes have an initial conversion rate of 40.8351 per $1,000 principal amount. The initial conversion rate is subject to adjustment upon the occurrence of certain events. Prior to November 1, 2019, the Convertible Notes are convertible only upon certain circumstances, and thereafter are convertible at any time prior to the close of business on the second scheduled trading day prior to maturity. If converted, holders will receive cash, shares of our common stock or a combination thereof at our election. We intend to settle the principal amount of the Convertible Notes in cash upon conversion, with any excess conversion value to be settled in shares of our common stock. At year-end 2016, unamortized debt discount of our Convertible Notes was $13,809,000.

In 2016, we purchased $5,000,000 of 3.75% Convertible Senior Notes due 2020 at 93.25% of face value in open market transactions for $4,663,000 and we allocated $4,452,000 to extinguish the debt and $211,000 to reacquire the equity component within the convertible notes based on the fair value of the debt component. We recognized a $110,000 loss on extinguishment of debt based on the difference between the fair value of the debt component prior to conversion and the carrying value of the debt component. Total loss on extinguishment of debt including write-off of debt issuance costs allocated to the repurchased notes was $183,000.

In 2013, we issued $150,000,000 aggregate principal amount of 6.00% tangible equity units (Units). The total offering was 6,000,000 Units, including 600,000 exercised by the underwriters, each with a stated amount of $25.00. Each Unit is comprised of (i) a prepaid stock purchase contract to be settled by delivery of a number of shares of our common stock, par value $1.00 per share to be determined pursuant to a purchase contract agreement, and (ii) a senior amortizing note due December 15, 2016 that has an initial principal amount of $4.2522, bears interest at a rate of 4.50% per annum and has a final installment payment date of December 15, 2016. On December 15, 2016, we made the final installment payment of principal and accrued interest and issued 7,857,000 shares upon settlement of the stock purchase contract based on the applicable market value, as defined in the purchase contract agreement associated with issuance of the Units.

In 2016, a secured promissory note of $15,400,000 was paid in full in connection with sale of the Radisson Hotel & Suites, for $130,000,000.

In 2016, other indebtedness decreased principally as a result of selling Eleven, a 257-unit multifamily project in Austin, for $60,150,000 and paying in full the associated debt of $23,936,000.

At year-end 2016 and 2015, we have $1,633,000 and $8,267,000 in unamortized deferred fees which were deducted from our debt. In addition, at year-end 2016 and 2015, unamortized deferred financing fees related to our senior credit facility included in other assets were $314,000 and $2,768,000. Amortization of deferred financing fees was $3,598,000 in 2016, $4,002,000 in 2015 and $3,845,000 in 2014 and is included in interest expense.

Debt maturities during the next five years are: 2017 — $0; 2018 — $485,000; 2019 — $0; 2020 — $104,673,000; 2021 — $0 and thereafter — $5,200,000.

Note 10 — Fair Value

Fair value is the exchange price that would be the amount received for an asset or paid to transfer a liability in an orderly transaction between market participants. In arriving at a fair value measurement, we use a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable. The three levels of inputs used to establish fair value are the following:

• Level 1 — Quoted prices in active markets for identical assets or liabilities;

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

We elected not to use the fair value option for cash and cash equivalents, accounts receivable, other current assets, variable debt, accounts payable and other current liabilities. The carrying amounts of these financial instruments approximate their fair values due to their short-term nature or variable interest rates. We determine the fair value of fixed rate financial instruments using quoted prices for similar instruments in active markets.

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Information about our fixed rate financial instruments not measured at fair value follows:

	Year-End 2016						Year-End 2015
	Carrying Amount			Fair Value			Carrying Amount			Fair Value			Valuation Technique
	(In thousands)
Fixed rate debt	$	(111,506	)	$	(109,789	)	$	(346,090	)	$	(321,653	)	Level 2

Non-financial assets measured at fair value on a non-recurring basis principally include real estate assets, oil and gas properties, assets held for sale, goodwill and intangible assets, which are measured for impairment.

In 2016, we recognized non-cash impairment charges of $56,453,000 related to six non-core community development projects and two multifamily sites as a result of the review of our entire portfolio of assets and marketing these properties for sale, of which four non-core community development projects and one multifamily site were sold in 2016. We based our valuations primarily on executed purchase and sale agreements, current negotiations and letters of intent with expected buyers and third party broker price opinions. In 2016, we recognized non-cash impairment charges of $612,000 related to non-core oil and gas working interest properties that were sold in 2016.

In 2015, we recognized non-cash impairment charges of $107,140,000 related to non-core oil and gas working interest assets classified as discontinued operations in 2016. These properties were primarily located in North Dakota, Nebraska and Kansas and were impaired primarily due to a significant decline in oil and gas prices and the likelihood these assets will be sold. The fair value of these properties was determined using Level 3 inputs and income valuation method based on estimated future commodity prices and our various operational assumptions. In instances where a third party bid was received for a combination of proved and unproved properties, an estimate of the allocation of bid prices was performed and fair value was adjusted accordingly. Included in proved oil and gas non-cash impairments were impairments associated with properties that were sold in fourth quarter 2015. In addition, in 2015 we recognized impairments of $57,691,000 for unproved leasehold interests as a result of continued decline in oil prices and our current plans to only allocate capital to these non-core assets to preserve values and optionality for ultimate sale. Fair value of certain unproved leasehold interests that were impaired were based on market comparables or where a third party bid was received for a combination of proved and unproved properties, an estimate of the allocation of fair value was performed which reduced the carrying value of these leasehold interests.

In 2015, certain real estate assets were remeasured and reported at fair value due to events or circumstances that indicated the carrying value may not be recoverable. We determined estimated fair value based on the present value of future probability weighted cash flows expected from the sale of the long-lived asset or based on a third party appraisal of current value. As a result, we recognized non-cash asset impairment charges of $1,044,000 in 2015 associated with a residential development with golf course and country club property near Fort Worth which was sold in April 2015, one owned project near Atlanta where the remaining lots were sold in August 2015 and one owned entitled project in Atlanta.

Non-financial assets measured at fair value on a non-recurring basis are as follows:

	Year-End 2016								Year-End 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Non-financial Assets and Liabilities:
Real estate	$	—	$	—	$	—	$	—	$	—	$	—	$	641	$	641
Assets of discontinued operations	$	—	$	—	$	—	$	—	$	—	$	—	$	57,219	$	57,219

Note 11 — Capital Stock

In 2015, we accelerated the expiration date of our shareholder rights plan from December 11, 2017 to March 13, 2015, resulting in termination of the plan.

Please read Note 12 — Net Income (Loss) per Share for information about shares of common stock that could be issued under our 3.75% convertible senior notes due 2020.

Please read Note 17 — Share-Based and Long-Term Incentive Compensation for information about additional shares of common stock that could be issued under terms of our share-based compensation plans.

Please read Note 21 — Subsequent Events for information about preferred stock purchase rights pursuant to our tax benefits preservation plan.

71

At year-end 2016, personnel of former affiliates held options to purchase 234,764 shares of our common stock. The options have a weighted average exercise price of $30.56 and will expire in February 2017. At year-end 2016, the options have an aggregate intrinsic value of $0.

On December 15, 2016, we issued 7,857,000 shares of our common stock upon settlement of the stock purchase contract related to the 6.00% tangible equity units. In 2016, we repurchased 283,976 shares of our common stock for $3,537,000. In 2014, we repurchased 1,491,187 shares of our common stock for $24,595,000. We have repurchased 3,777,308 shares of our common stock for $57,696,000 since we announced our 2009 strategic initiative of repurchasing up to 20 percent or up to 7,000,000 shares of our common stock.

Note 12 — Net Income (Loss) per Share

Basic and diluted earnings (loss) per share are computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security. We have determined that our 6.00% tangible equity units are participating securities. Per share amounts are computed by dividing earnings available to common shareholders by the weighted average shares outstanding during each period. In periods with a net loss, no such adjustment is made to earnings as the holders of the participating securities have no obligation to fund losses.

The computations of basic and diluted earnings (loss) per share are as follows:

	For the Year
	2016			2015			2014
	(In thousands)
Numerator:
Continuing operations
Net income (loss) from continuing operations	$	77,044		$	(26,241	)	$	36,697
Less: Net (income) attributable to noncontrolling interest	(1,531		)	(676		)	(505		)
Earnings (loss) available for diluted earnings per share	$	75,513		$	(26,917	)	$	36,192
Less: Undistributed net income from continuing operations allocated to participating securities	(13,493		)	—			(6,586		)
Earnings (loss) from continuing operations available to common shareholders for basic earnings per share	$	62,020		$	(26,917	)	$	29,606
Discontinued operations
Net income (loss) from discontinued operations available for diluted earnings per share	(16,865		)	(186,130		)	(19,609		)
Less: Undistributed net income from discontinued operations allocated to participating securities	3,014			—			3,569
Earnings (loss) from discontinued operations available to common shareholders for basic earnings per share	(13,851		)	(186,130		)	(16,040		)
Denominator:
Weighted average common shares outstanding — basic	34,546			34,266			35,317
Weighted average common shares upon conversion of participating securities (a)	7,515			—			7,857
Dilutive effect of stock options, restricted stock and equity-settled awards	273			—			422
Total weighted average shares outstanding — diluted	42,334			34,266			43,596
Anti-dilutive awards excluded from diluted weighted average shares outstanding	2,102			10,864			2,238

 _____________________

^(a) Our earnings per share calculation reflects the weighted average shares issuable upon settlement of the prepaid stock purchase contract component of our 6.00% tangible equity units, issued in 2013.

On December 15, 2016, we issued 7,857,000 shares of our common stock upon settlement of the stock purchase contract related to the 6.00% tangible equity units.

We intend to settle the principal amount of the Convertible Notes in cash upon conversion with any excess conversion value to be settled in shares of our common stock. Therefore, only the amount in excess of the par value of the Convertible Notes will be included in our calculation of diluted net income per share using the treasury stock method. As such, the Convertible Notes have no impact on diluted net income per share until the price of our common stock exceeds the conversion price of the Convertible Notes of $24.49. The average price of our common stock in 2016 did not exceed the conversion price which resulted in no additional diluted outstanding shares.

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Note 13 — Income Taxes

Income tax (expense) benefit from continuing operations consists of:

	For the Year
	2016			2015			2014
	(In thousands)
Current tax provision:
U.S. Federal	$	(15,089	)	$	6,740		$	(18,905	)
State and other	(1,520		)	(418		)	(2,182		)
	(16,609		)	6,322			(21,087		)
Deferred tax provision:
U.S. Federal	1,382			(38,262		)	184
State and other	(75		)	(3,191		)	53
	1,307			(41,453		)	237
Income tax (expense) benefit	$	(15,302	)	$	(35,131	)	$	(20,850	)

A reconciliation of the federal statutory rate to the effective income tax rate on continuing operations follows:

	For the Year
	2016		2015		2014
Federal statutory rate (benefit)	35	%	35	%	35	%
State, net of federal benefit	—		10		2
Valuation allowance	(19	)	348
Noncontrolling interests	(1	)	(3	)	—
Installment sale ace adjustment	2		—		—
Stock based compensation	—		5		—
Charitable contributions	—		—		(1	)
Oil and gas percentage depletion	—		(1	)	—
Other	—		1		—
Effective tax rate	17	%	395	%	36	%

Our 2016 effective tax rate includes a 19 percent benefit from a valuation allowance decrease due to a decrease in our deferred tax assets. Our 2015 effective tax rate includes a 348 percent detriment from the recording of a valuation allowance.

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Significant components of deferred taxes are:

	At Year-End
	2016			2015
	(In thousands)
Deferred Tax Assets:
Real estate	$	50,759		$	69,594
Employee benefits	13,185			15,752
Net operating loss carryforwards	2,804			13,827
Oil and gas properties	1,672			5,510
AMT credits	5,900			3,620
Income producing properties	2,055			—
Oil and gas percentage depletion carryforwards	3,478			3,616
Accruals not deductible until paid	552			911
Other assets	—			139
Gross deferred tax assets	80,405			112,969
Valuation allowance	(73,405		)	(97,068		)
Deferred tax asset net of valuation allowance	7,000			15,901
Deferred Tax Liabilities:
Undeveloped land	(1,359		)	(7,588		)
Convertible debt	(5,035		)	(6,516		)
Income producing properties	—			(2,257		)
Timber	(283		)	(577		)
Gross deferred tax liabilities	(6,677		)	(16,938		)
Net Deferred Tax Asset (Liability)	$	323		$	(1,037	)

At year-end 2016, we had approximately $7,500,000 and $64,200,000 of federal and state net operating loss carryforwards. Approximately $7,500,000 of the federal and $2,400,000 of the state net operating loss carryforwards were from our acquisition of Credo at third quarter 2012 and are subject to certain limitations. If not utilized, the federal carryforwards will expire in 2031 and the state carryforwards will expire in 2017 to 2036. We had approximately $9,200,000 of oil and gas percentage depletion carryforwards of which approximately $9,200,000 were a result of our acquisition of Credo and are subject to certain limitations. We had approximately $5,900,000 of AMT credit carryforwards. The percentage depletion and AMT credit carryforwards do not expire.

Goodwill associated with our oil and gas and mineral resources enterprise are not deductible for income tax purposes.

At year-end 2016 and 2015, we have provided a valuation allowance for our deferred tax asset of $73,405,000 and $97,068,000 respectively for the portion of the deferred tax asset that is more likely than not to be unrealizable. The decrease in the valuation allowance for the year was $23,663,000.

In determining our valuation allowance, we assessed available positive and negative evidence to estimate whether sufficient future taxable income would be generated to permit use of the existing deferred tax asset. A significant piece of objective evidence was the cumulative loss incurred over the three-year period ended December 31, 2016, principally driven by impairments of oil and gas and real estate assets. Such evidence limited our ability to consider other subjective evidence, such as our projected future taxable income.

The amount of deferred tax asset considered realizable could be adjusted if negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence, such as our projected future taxable income.

We file income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. We are no longer subject to U.S. federal and state income tax examinations for years before 2012.

At year-end 2016, our unrecognized tax benefit for book purposes was $2,499,000 as a result of tax positions taken in the current year. We did not have any unrecognized tax benefits for the years 2015 and 2014. If the total amount of unrecognized tax benefits were recognized, it would result in a deferred tax asset and a corresponding increase in our valuation allowance. Therefore, such tax benefit would not affect the effective tax rate if recognized in the current year.

We recognize interest accrued related to unrecognized tax benefits in income tax expense. In 2016, 2015 and 2014, we recognized no interest expense. At year-end 2016 and 2015, we have no accrued interest or penalties.

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Note 14 — Litigation and Environmental Contingencies

Litigation

We are involved in various legal proceedings that arise from time to time in the ordinary course of doing business and believe that adequate reserves have been established for any probable losses. We do not believe that the outcome of any of these proceedings should have a significant adverse effect on our financial position, long-term results of operations or cash flows. It is possible, however, that charges related to these matters could be significant to our results or cash flows in any one accounting period.

On October 4, 2014, James Huffman, a former director and CEO of CREDO Petroleum Corporation (Credo), which we acquired in 2012 and is now known as Forestar Petroleum Corporation, filed Huffman vs. Forestar Petroleum Corporation, Case Number 14CV33811, Civ. Div., Dist. Ct., City and County of Denver, Colorado, claiming entitlement to certain overriding royalty interests under a Credo compensation program. In third quarter 2016, we settled a portion of the case for $150,000 and accrued an additional $1,100,000 following an adverse jury verdict in Huffman's favor in regard to the portion of his claim related to past damages. In fourth quarter 2016, following additional rulings by the court, we accrued an additional $1,890,000 representing our estimate of future damages to which Huffman is entitled plus interest and costs, resulting in a total accrual of $2,990,000 at year-end 2016. The case was settled for the amount of accrual.

Environmental

Environmental remediation liabilities arise from time to time in the ordinary course of doing business, and we believe we have established adequate reserves for any probable losses that we can reasonably estimate. In 2016, we sold all but 25 of our 289 acres near Antioch, California, approximately 80 acres of which had not yet received a certificate of completion under the voluntary remediation program in which we were participating. The buyer of the former paper manufacturing sites assumed responsibility for environmental, remediation and monitoring activities, subject to limited exclusions, and obtained a $20,000,000, ten year pollution legal liability insurance policy naming us as an additional insured.

We have asset retirement obligations related to the abandonment and site restoration requirements that result from the acquisition, construction and development of oil and gas properties. We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. Accretion expense related to the asset retirement obligation and depletion expense related to capitalized asset retirement cost are included in cost of mineral resources and cost of oil and gas producing activities in discontinued operations on our consolidated statements of income (loss) and comprehensive income (loss). At year-end 2016, our asset retirement obligation was $103,000, which is included in liabilities held for sale. In addition, at year-end 2016, we have accrued $1,155,000 related to potential environmental liabilities to plug and abandon certain oil and gas wells in Wyoming which is included in liabilities of discontinued operations.

Note 15 — Commitments and Other Contingencies

We lease facilities and equipment under non-cancelable long-term operating lease agreements. In addition, we have various obligations under other office space and equipment leases of less than one year. Rent expense on facilities and equipment was $1,923,000 in 2016, $3,872,000 in 2015 and $2,617,000 in 2014. Future minimum rental commitments under non-cancelable operating leases having a remaining term in excess of one year are: 2017 — $2,267,000; 2018 — $1,593,000; 2019 — $298,000; 2020 — $182,000; 2021 — $62,000; and thereafter —$0.

We have one year remaining on groundwater leases of about 20,000 acres. At year-end 2016, the remaining contractual obligation for these groundwater leases is $494,000.

We lease approximately 22,000 square feet of office space in Austin, Texas, which we occupy as our corporate headquarters. The remaining contractual obligation for this lease is $1,983,000. We also lease office space in other locations in support of our business operations. The total remaining contractual obligations for these leases is $1,925,000.

We may provide performance bonds and letters of credit on behalf of certain ventures that would be drawn on due to failure to satisfy construction obligations as general contractor or for failure to timely deliver streets and utilities in accordance with local codes and ordinances.

Unallocated Severance-related Costs

In connection with the departures of our former CEO and CFO in September 2015, we recorded severance-related charges of $3,314,000 which are included in general and administrative expense on our consolidated statements of income (loss) and comprehensive income (loss). We paid $2,732,000 of these severance-related charges in fourth quarter 2015 with the remainder paid in 2016.

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Non-core Assets Restructuring Costs

In connection with key initiatives to reduce costs across our entire organization and divest non-core assets, in 2016, we incurred and paid severance costs related to workforce reductions of $1,422,000 in our real estate segment, $164,000 in our other segment and $486,000 in unallocated general and administrative expenses. In addition, we offered retention bonuses to certain key personnel provided they remained our employees through completion of sale transactions. We expensed retention bonus costs over the estimated retention periods. These restructuring costs are included in other operating expense.

The following table summarizes activity related to liabilities associated with our restructuring activities in 2016:

	Employee-Related Costs			Retention Bonuses			Total
	(In thousands)
Balance at year-end 2015	$	(1,049	)	$	—		$	(1,049	)
Additions	(2,072		)	(832		)	(2,904		)
Payments	3,121			832			3,953
Balance at year-end 2016	$	—		$	—		$	—

Note 16 — Segment Information

We manage our operations through three business segments: real estate, mineral resources and other. Real estate secures entitlements and develops infrastructure on our lands for single-family residential and mixed-use communities, and manages our undeveloped land, commercial and income producing properties, which consist of three projects and one multifamily site. Mineral resources manages our owned mineral interests. Other manages our timber, recreational leases and water resource initiatives.

At year-end 2016 we have divested substantially all of our oil and gas working interest properties. As a result of this significant change in our operations, we have reported the results of operations and financial position of these assets as discontinued operations for all periods presented. In addition, we changed the name of the oil and gas segment to mineral resources to reflect the strategic shift from oil and gas working interest investments to owned mineral interests. We also changed the name of the other natural resources segment to other.

We evaluate performance based on segment earnings (loss) before unallocated items and income taxes. Segment earnings (loss) consist of operating income, equity in earnings (loss) of unconsolidated ventures, gain on sales of assets, interest income on loans secured by real estate and net (income) loss attributable to noncontrolling interests. Items not allocated to our business segments consist of general and administrative expense, share-based and long-term incentive compensation, gain on sale of strategic timberland, interest expense, loss on extinguishment of debt and other corporate non-operating income and expense. The accounting policies of the segments are the same as those described in Note 1 — Summary of Significant Accounting Policies. Our revenues are derived from our U.S. operations and all of our assets are located in the U.S. In 2016, 2015 and 2014, no single customer accounted for more than 10 percent of our total revenues, other than the customer associated with the sale of our Midtown Cedar Hill multifamily project in 2015.

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	Real Estate		Mineral Resources		Other			Items Not Allocated to Segments				Total
	(In thousands)
For the year or at year-end 2016
Revenues	$	190,273	$	5,076	$	1,965		$	—			$	197,314
Depreciation, depletion and amortization	976		145		352			7,772				9,245
Equity in earnings of unconsolidated ventures	5,778		173		172			—				6,123
Income (loss) before taxes from continuing operations attributable to Forestar Group Inc.	121,420		3,327		(4,625		)	(29,307		)	(a)	90,815
Total assets (b)	403,062		38,907		11,531			279,694				733,194
Investment in unconsolidated ventures	77,611		—		—			—				77,611
Capital expenditures	5,783		—		299			56				6,138
For the year or at year-end 2015
Revenues	$	202,830	$	9,094	$	6,652		$	—			$	218,576
Depreciation, depletion and amortization	7,605		383		540			8,166				16,694
Equity in earnings of unconsolidated ventures	15,582		275		151			—				16,008
Income (loss) before taxes from continuing operations attributable to Forestar Group Inc.	67,678		4,230		(608		)	(63,086		)	(a)	8,214
Total assets (b)	691,238		39,469		19,106			117,466				867,279
Investment in unconsolidated ventures	82,453		—		—			—				82,453
Capital expenditures	13,644		59		745			242				14,690
For the year or at year-end 2014
Revenues	$	213,112	$	15,690	$	9,362		$	—			$	238,164
Depreciation, depletion and amortization	3,741		684		497			8,035				12,957
Equity in earnings of unconsolidated ventures	8,068		586		31			—				8,685
Income (loss) before taxes from continuing operations attributable to Forestar Group Inc.	96,906		9,116		5,499			(54,479		)	(a)	57,042
Investment in unconsolidated ventures	65,005		—		—			—				65,005
Capital expenditures	28,980		2,240		5,817			616				37,653

 _____________________

^(a)  Items not allocated to segments consist of:

	For the Year
	2016			2015			2014
	(In thousands)
General and administrative expense	$	(18,274	)	$	(24,802	)	$	(21,229	)
Share-based and long-term incentive compensation expense	(4,425		)	(4,474		)	(3,417		)
Gain on sale of assets	48,891			—			—
Interest expense	(19,985		)	(34,066		)	(30,286		)
Loss on extinguishment of debt, net	(35,864		)	—			—
Other corporate non-operating income	350			256			453
	$	(29,307	)	$	(63,086	)	$	(54,479	)

^(b)  Total assets excludes assets of discontinued operations of $14 and $104,967 in 2016 and 2015.

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Note 17 — Share-Based and Long-Term Incentive Compensation

Share-based and long-term incentive compensation expense consists of:

	For the Year
	2016		2015			2014
	(In thousands)
Cash-settled awards	$	717	$	(3,127	)	$	(3,710	)
Equity-settled awards	2,444		5,026			5,168
Restricted stock	22		(8		)	(25		)
Stock options	854		2,355			1,984
Total share-based compensation	$	4,037	$	4,246		$	3,417
Deferred cash	388		228			—
	$	4,425	$	4,474		$	3,417

Share-based and long-term incentive compensation expense is included in:

	For the Year
	2016		2015		2014
	(In thousands)
General and administrative	$	3,323	$	2,451	$	1,001
Other operating	1,102		2,023		2,416
	$	4,425	$	4,474	$	3,417

Excluded from share-based compensation expense in the table above are fees earned by directors in the amount of $725,000 for 2016, $1,203,000 for 2015 and $906,000 for 2014 for which they elected to defer payment until retirement in the form of share-settled units. These expenses are included in general and administrative expense on our consolidated statements of income (loss) and comprehensive income (loss).

Share-Based Compensation

The fair value of awards granted to retirement-eligible employees and expensed at the date of grant was $600,000 in 2016, $517,000 in 2015 and $760,000 in 2014. Unrecognized share-based compensation expense related to non-vested equity-settled awards and stock options was $1,878,000 at year-end 2016. The weighted average period over which this amount will be recognized is estimated to be one year. We did not capitalize any share-based compensation in 2016, 2015 or 2014.

In 2016 and 2015, we issued 300,491 and 288,089 shares out of our treasury stock associated with vesting of stock-based awards or exercise of stock options, net of 25,082 and 51,521 shares withheld having a value of $222,000 and $762,000 for payroll taxes in connection with vesting of stock-based awards or exercise of stock options which are reflected in financing activities in our consolidated statements of cash flows.

A summary of awards granted under our 2007 Stock Incentive Plan follows:

Cash-settled awards

Cash-settled awards granted to our employees in the form of restricted stock units or stock appreciation rights generally vest over three to four years from the date of grant and generally provide for accelerated vesting upon death, disability or if there is a change in control. Cash-settled stock appreciation rights have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, disability or if there is a change in control. Stock appreciation rights were granted with an exercise price equal to the market value of our stock on the date of grant.

Cash-settled awards granted to our directors in the form of restricted stock units are fully vested at the time of grant and payable upon retirement.

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The following table summarizes the activity of cash-settled restricted stock unit awards in 2016:

	Equivalent Units		Weighted Average Grant Date Fair Value
	(In thousands)		(Per unit)
Non-vested at beginning of period	117		$16.00
Granted	—		—
Vested	(41	)	18.84
Forfeited	(34	)	13.83
Non-vested at end of period	42		14.98

The weighted average grant date fair value of cash-settled restricted stock unit awards was $13.26 per unit for 2015 and $18.96 per unit for 2014. The fair value of cash-settled restricted stock unit awards settled was $1,195,000 in 2016, $2,469,000 in 2015, and $2,286,000 in 2014. The aggregate current value of non-vested awards is $555,000 at year-end 2016 based on a year-end stock price of $13.30.

The following table summarizes the activity of cash-settled stock appreciation rights in 2016:

	Rights Outstanding		Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (Current Value Less Exercise Price)
	(In thousands)		(Per share)	(In years)	(In thousands)
Balance at beginning of period	487		$12.97	4	$404
Granted	—		—
Exercised	(52	)	9.29
Forfeited	(61	)	16.12
Balance at end of period	374		12.97	3	773
Exercisable at end of period	345		12.87	3	773

The intrinsic value of cash-settled stock appreciation rights settled was $154,000 in 2016, $206,000 in 2015 and $1,181,000 in 2014.

The fair value of accrued cash-settled awards at year-end 2016 and year-end 2015 were $1,758,000 and $3,757,000 and is included in other liabilities in our consolidated balance sheets.

Equity-settled awards

Equity-settled awards granted to our employees include restricted stock units (RSU), which vest after three years from the date of grant, market-leveraged stock units (MSU), which vest after three years from date of grant and performance stock units (PSU), which generally vest after three years from the date of grant if certain performance goals are met. Equity settled awards in the form of restricted stock units granted to our directors are fully vested at time of grant and settled upon retirement. The following table summarizes the activity of equity-settled awards in 2016:

	Equivalent Units		Weighted Average Grant Date Fair Value
	(In thousands)		(Per unit)
Non-vested at beginning of period	631		$	18.25
Granted	313		9.04
Vested	(281	)	15.12
Forfeited	(108	)	17.91
Non-vested at end of period	555		14.70

In 2016, we granted 313,000 RSU awards at market value of the stock on the date of the grant. In 2015 and 2014, we granted 234,000 and 86,000 MSU awards. These awards will be settled in common stock based upon our stock price performance over three years from the date of grant. The number of shares to be issued could range from a high of 351,000 shares if our stock price increases by 50 percent or more, to 117,000 shares if our stock price decreases by 50 percent, or could be zero if our stock price decreases by more than 50 percent, the minimum threshold performance. We estimate the grant date

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fair value of MSU awards using a Monte Carlo simulation pricing model and the following assumptions:

	For the Year
	2015			2014
Expected stock price volatility	32.9		%	42.2		%
Risk-free interest rate	1.0		%	0.7		%
Expected dividend yield	—		%	—		%
Weighted average grant date fair value of MSU awards (per unit)	$	15.11		$	20.38

The weighted average grant date fair value of equity-settled awards (RSU, MSU and PSU) per unit in 2016, 2015 and 2014 was $9.04, $12.99 and $19.18. The fair value of equity-settled awards settled was $2,884,478, $4,451,000 and $3,119,000 in 2016, 2015 and 2014.

Unrecognized share-based compensation expense related to non-vested equity-settled awards is $1,106,000 at year-end 2016. The weighted average period over which this amount will be recognized is estimated to be one year.

Restricted stock awards

Restricted stock awards generally vest over three years, typically if we achieve a minimum one percent annualized return on assets over such three-year period. The following table summarizes the activity of restricted stock awards in 2016:

	Restricted Shares		Weighted Average Grant Date Fair Value
	(In thousands)		(Per unit)
Non-vested at beginning of period	4		$	20.55
Granted	—		—
Vested	(4	)	20.55
Forfeited	—		—
Non-vested at end of period	—		—

The fair value of our restricted stock awards settled in 2016, 2015 and 2014 was $44,000, $88,000 and $341,000.

Stock options

Stock options have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, disability or if there is a change in control. In 2016 and 2015, options were granted with an exercise price equal to the market value of our stock on the date of grant. In the first quarter of 2016, stock options were issued to each of two new directors to acquire 20,000 shares of common stock of which 6,500 shares vest on the first and second anniversary of the date of grant and the remaining 7,000 shares vest on the third anniversary of the date of grant. Expense associated with annual restricted stock units and non-qualified stock options to our board of directors is included in share-based compensation expense. The following table summarizes the activity of stock option awards in 2016:

	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (Current Value Less Exercise Price)
	(In thousands)		(Per share)		(In years)	(In thousands)
Balance at beginning of period	2,171		$	19.56	5	$	156
Granted	53		9.98
Exercised	(35	)	9.29
Forfeited	(353	)	20.03
Balance at end of period	1,836		19.39		5	449
Exercisable at end of period	1,597		20.25		4	261

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We estimate the grant date fair value of stock options that do not have a market condition using the Black-Scholes option pricing model and the following assumptions:

	For the Year
	2016			2015
Expected stock price volatility	39.5		%	45.6		%
Risk-free interest rate	1.5		%	1.8		%
Expected life of options (years)	6			6
Expected dividend yield	—		%	—		%
Weighted average grant date fair value of options (per share)	$	8.60		$	6.51

We determine the expected life using the simplified method which utilizes the midpoint between the vesting period and the contractual life of the awards. The expected stock price volatility assumption was determined using a blend of historical and implied volatility.

Stock option awards granted in third quarter 2015 in connection with management promotions have a ten-year term, vest ratably over three years and are exercisable only when our stock price exceeds $17.50 per share. We estimated the fair value of these options with market conditions using Monte Carlo simulation pricing model and the following assumptions:

Expected stock price volatility	61.4		%
Risk-free interest rate	2.2		%
Expected dividend yield	—		%
Weighted average grant date fair value of options (per share)	$	7.87

The fair value of vested stock options was $0 in 2016, $0 in 2015 and $21,000 in 2014. The intrinsic value of options exercised was $61,000 in 2016, $0 in 2015 and $568,000 in 2014. Unrecognized share-based compensation expense related to non-vested stock options is $772,000 at year-end 2016. The weighted average period over which this amount will be recognized is estimated to be two years.

Pre-Spin Awards

Certain of our employees participated in Temple-Inland’s share-based compensation plans. In conjunction with our 2007 spin-off, these awards were equitably adjusted into separate awards of the common stock of Temple-Inland and the spin-off entities. No pre-spin awards were exercised in 2016. The intrinsic value of pre-spin awards exercised was $0 in 2016, $24,000 in 2015 and $352,000 in 2014.

Pre-spin stock option awards to our employees to purchase our common stock have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, disability or if there is a change in control. At year-end 2016, there were 17,000 pre-spin awards outstanding and exercisable on our stock with a weighted average exercise price of $30.56 and weighted average remaining term of less than one year.

Long-Term Incentive Compensation

In 2016, we granted $620,000 of long-term incentive compensation in the form of deferred cash compensation. The 2016 deferred cash awards vest annually over two years, and the 2015 deferred cash awards vest after three years. Both awards provide for accelerated vesting upon retirement, disability, death, or if there is a change in control. Expense associated with deferred cash awards is recognized ratably over the vesting period or earlier based on retirement eligibility. The accrued liability was $539,000 at year-end 2016 and is included in other liabilities.

Note 18 — Retirement Plans

Our defined contribution retirement plans include a 401(k) plan, which is funded, and a supplemental plan for certain employees, which is unfunded. The expense of our defined contribution retirement plans was $978,000 in 2016, $1,060,000 in 2015 and $1,338,000 in 2014. The unfunded liability for our supplemental plan was $334,000 at year-end 2016 and $802,000 at year-end 2015 and is included in other liabilities.

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Note 19 — Supplemental Oil and Gas Disclosures (Unaudited)

The following unaudited information regarding our oil and gas reserves has been prepared and is presented pursuant to requirements of the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB).

As of year-end 2016, we have divested substantially all of our oil and gas working interest properties. As a result of this significant change in our operations, we have reported the results of operations and financial position of these assets as discontinued operations within our consolidated statements of income (loss) and comprehensive income (loss) and consolidated balance sheets for all periods presented. However, all information presented in this unaudited supplemental oil and gas disclosures footnote includes all oil and gas reserve estimates and results of operations.

We lease our mineral interests, principally in Texas and Louisiana, to third-party entities for the exploration and production of oil and gas. When we lease our mineral interests, we may negotiate a lease bonus payment and we retain a royalty interest and may take an additional participation in production, including a working interest in which we pay a share of the costs to drill, complete and operate a well and receive a proportionate share of the production revenues.

We engaged independent petroleum engineers, Netherland, Sewell & Associates, Inc., to assist in preparing estimates of our proved oil and gas reserves, all of which are located in the U.S., and future net cash flows as of year-end 2016, 2015 and 2014.

These estimates were based on the economic and operating conditions existing at year-end 2016, 2015 and 2014. Proved developed reserves are those quantities of petroleum from existing wells and facilities, which by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward for known reservoirs and under defined economic conditions, operating methods and government regulations.

SEC rules require disclosure of proved reserves using the twelve-month average beginning-of-month price (which we refer to as the average price) for the year. These same average prices also are used in calculating the amount of (and changes in) future net cash inflows related to the standardized measure of discounted future net cash flows.

For 2016, 2015 and 2014, the average spot price per barrel of oil based on the West Texas Intermediate price is $42.75, $50.28 and $94.99 and the average price per MMBTU of gas based on the Henry Hub spot is $2.48, $2.59 and $4.35. All prices were then adjusted for quality, transportation fees and differentials.

The process of estimating proved reserves and future net cash flows is complex involving decisions and assumptions in evaluating the available engineering and geologic data and prices for oil and gas and the cost to produce these reserves and other factors, many of which are beyond our control. As a result, these estimates are imprecise and should be expected to change as future information becomes available. These changes could be significant. In addition, this information should not be construed as being the current fair market value of our proved reserves.

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Estimated Quantities of Proved Oil and Gas Reserves

Estimated quantities of proved oil and gas reserves are summarized as follows:

	Reserves
	Oil (a) (Barrels)		Gas (Mcf)
	(In thousands)
Consolidated entities:
Year-end 2013	5,824		13,630
Revisions of previous estimates	608		293
Extensions and discoveries	2,191		774
Acquisitions	85		31
Sales	(105	)	(218	)
Production	(931	)	(1,861	)
Year-end 2014	7,672		12,649
Revisions of previous estimates	(855	)	(1,675	)
Extensions and discoveries	224		173
Acquisitions	—		—
Sales	(704	)	(1,223	)
Production	(1,158	)	(1,967	)
Year-end 2015	5,179		7,957
Revisions of previous estimates	(11	)	631
Extensions and discoveries	29		—
Acquisitions	—		—
Sales	(4,460	)	(3,756	)
Production	(291	)	(996	)
Year-end 2016	446		3,836
Our share of ventures accounted for using the equity method:
Year-end 2013	—		2,332
Revisions of previous estimates	—		(382	)
Production	—		(199	)
Year-end 2014	—		1,751
Revisions of previous estimates	—		(320	)
Production	—		(168	)
Year-end 2015	—		1,263
Revisions of previous estimates	—		79
Production	—		(143	)
Year-end 2016	—		1,199
Total consolidated and our share of equity method ventures:
Year-end 2014
Proved developed reserves	5,269		12,599
Proved undeveloped reserves	2,403		1,801
Total Year-end 2014	7,672		14,400
Year-end 2015
Proved developed reserves	5,179		9,220
Proved undeveloped reserves	—		—
Total Year-end 2015	5,179		9,220
Year-end 2016
Proved developed reserves	446		5,035
Proved undeveloped reserves	—		—
Total Year-end 2016	446		5,035

 _____________________

^(a)  Includes natural gas liquids (NGLs).

83

We do not have any estimated reserves of synthetic oil, synthetic gas or products of other non-renewable natural resources that are intended to be upgraded into synthetic oil and gas.

At year-end 2016, estimated quantities of proved oil and gas reserves are related to our owned mineral interests which are classified as assets held for sale.

In 2016, we sold oil and gas wells located primarily in Oklahoma, Kansas, Nebraska and North Dakota. Our net reserves for those properties as of year-end 2015 less our share of 2016 production were 4,155,000 barrels of oil, 305,000 barrels of NGL, and 3,756,000 Mcf of gas. Oklahoma properties sold were mainly mature gas wells. Kansas and Nebraska produce oil from the Lansing/Kansas City formation. The North Dakota oil wells produce from the Bakken/Three Forks formation.

In 2015, oil and gas properties having reserves consisting of approximately 704,000 barrels of oil and 1,223,000 Mcf of gas located primarily in the Texas Panhandle and Bakken/Three Forks formations were sold. Due to the significant decline in oil and gas prices during 2015, net negative revisions of previous estimates were 855,000 barrels of oil and 1,995,000 Mcf of gas. At year-end 2015, we had no barrels of oil equivalent (BOE) of proved undeveloped (PUD) reserves based on our plan to exit non-core oil and gas working interest assets compared with 2,703,000 BOE of PUD reserves at year-end 2014.

In 2014, increases in extensions and discoveries of 2,191,000 barrels were primarily associated with new reserves in the Bakken/Three Forks formations. An estimated 694,000 barrels of these extensions and discoveries were associated with new producing wells while a further 913,000 barrels of proved undeveloped reserves were added during 2014. Approximately 105,000 barrels of oil and 218,000 Mcf of gas reserves located primarily in Oklahoma were sold during the year. We realized a net positive revision of previous estimates of 608,000 barrels which is primarily driven by improved drilling results in the Bakken/Three Forks formation yielding higher average estimated ultimate recoverable quantities of proved reserves per well.

In 2015 and 2014, reserve additions from new wells drilled and completed during the year are shown for both consolidated entities and ventures accounted for using the equity method under extensions and discoveries. There were no new well additions in 2016, 36 new well additions in 2015 and 106 new well additions in 2014.

Capitalized Costs Relating to Oil and Gas Producing Activities

Capitalized costs related to our oil and gas producing activities classified as assets held for sale at year-end 2016 are as follows:

	At Year-End
	2016			2015
	(In thousands)
Consolidated entities:
Unproved oil and gas properties	$	374		$	19,441
Proved oil and gas properties	5,159			119,414
Total costs	5,533			138,855
Less accumulated depreciation, depletion and amortization	(4,751		)	(58,242		)
	$	782		$	80,613

We have not capitalized any costs for our share in ventures accounted for using the equity method.

Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development

Costs incurred in oil and gas property acquisition, exploration and development activities, whether capitalized or expensed, follows:

	For the Year
	2016		2015		2014
	(In thousands)
Consolidated entities:
Acquisition costs
Proved properties	$	—	$	—	$	2,001
Unproved properties	15		4,832		25,666
Exploration costs	21		17,922		39,399
Development costs	537		27,609		40,277
	$	573	$	50,363	$	107,343

84

We have not incurred any costs for our share in ventures accounted for using the equity method. In 2015, acquisition of leasehold interests, exploration expenses, and development costs have decreased as a result of our increased focus on exiting and selling our leasehold working interests.

Standardized Measure of Discounted Future Net Cash Flows

Estimates of future cash flows from proved oil and gas reserves are shown in the following table. Estimated income taxes are calculated by applying the appropriate tax rates to the estimated future pre-tax net cash flows less depreciation of the tax basis of properties and the statutory depletion allowance.

	At Year-End
	2016			2015			2014
	(In thousands)
Consolidated entities:
Future cash inflows	$	24,304		$	216,588		$	665,657
Future production and development costs	(2,988		)	(93,623		)	(271,735		)
Future income tax expenses	(3,926		)	(22,218		)	(106,002		)
Future net cash flows	17,390			100,747			287,920
10% annual discount for estimated timing of cash flows	(7,077		)	(33,951		)	(124,079		)
Standardized measure of discounted future net cash flows	$	10,313		$	66,796		$	163,841
Our share in ventures accounted for using the equity method:
Future cash inflows	$	2,010		$	2,283		$	6,186
Future production and development costs	(216		)	(245		)	(664		)
Future income tax expenses	(537		)	(774		)	(2,098		)
Future net cash flows	1,257			1,264			3,424
10% annual discount for estimated timing of cash flows	(585		)	(562		)	(1,649		)
Standardized measure of discounted future net cash flows	$	672		$	702		$	1,775
Total consolidated and our share of equity method ventures	$	10,985		$	67,498		$	165,616

Future net cash flows were computed using prices used in estimating proved oil and gas reserves, year-end costs, and statutory tax rates (adjusted for tax deductions) that relate to proved oil and gas reserves.

85

Changes in the standardized measure of discounted future net cash flow follows:

	For the Year
	Consolidated			Our Share of Equity Method Ventures			Total
	(In thousands)
Year-end 2013	$	135,553		$	1,300		$	136,853
Changes resulting from:
Net change in sales prices and production costs	(1,064		)	1,571			507
Net change in future development costs	1,308			—			1,308
Sales of oil and gas, net of production costs	(63,192		)	(787		)	(63,979		)
Net change due to extensions and discoveries	58,228			—			58,228
Net change due to acquisition of reserves	2,778			—			2,778
Net change due to divestitures of reserves	(5,804		)	—			(5,804		)
Net change due to revisions of quantity estimates	15,303			(343		)	14,960
Previously estimated development costs incurred	15,497			—			15,497
Accretion of discount	18,067			210			18,277
Net change in timing and other	4,198			115			4,313
Net change in income taxes	(17,031		)	(291		)	(17,322		)
Aggregate change for the year	28,288			475			28,763
Year-end 2014	163,841			1,775			165,616
Changes resulting from:
Net change in sales prices and production costs	(136,536		)	(1,112		)	(137,648		)
Net change in future development costs	92			—			92
Sales of oil and gas, net of production costs	(31,732		)	(428		)	(32,160		)
Net change due to extensions and discoveries	11,747			—			11,747
Net change due to acquisition of reserves	—			—			—
Net change due to divestitures of reserves	(15,855		)	—			(15,855		)
Net change due to revisions of quantity estimates	(15,164		)	(267		)	(15,431		)
Previously estimated development costs incurred	15,096			—			15,096
Accretion of discount	22,600			286			22,886
Net change in timing and other	4,018			(210		)	3,808
Net change in income taxes	48,689			658			49,347
Aggregate change for the year	(97,045		)	(1,073		)	(98,118		)
Year-end 2015	66,796			702			67,498
Changes resulting from:
Net change in sales prices and production costs	(3,585		)	(60		)	(3,645		)
Net change in future development costs	—			—			—
Sales of oil and gas, net of production costs	(5,663		)	(208		)	(5,871		)
Net change due to extensions and discoveries	410			—			410
Net change due to acquisition of reserves	—			—			—
Net change due to divestitures of reserves	(63,535		)				(63,535		)
Net change due to revisions of quantity estimates	1,304			63			1,367
Previously estimated development costs incurred	—			—			—
Accretion of discount	2,992			113			3,105
Net change in timing and other	(128		)	(80		)	(208		)
Net change in income taxes	11,722			142			11,864
Aggregate change for the year	(56,483		)	(30		)	(56,513		)
Year-end 2016	$	10,313		$	672		$	10,985

Results of Operations for Oil and Gas Producing Activities

Our royalty interests are contractually defined and based on a percentage of production at prevailing market prices. We receive our percentage of production in cash. Similarly, for operating properties our working interests and the associated net revenue interests are contractually defined and we pay our proportionate share of the capital and operating costs to develop and operate the well and we market our share of the production. Our revenues fluctuate based on changes in the market prices for

86

oil and gas, the decline in production from existing wells, and other factors affecting oil and gas exploration and production activities, including the cost of development and production.

Information about the results of operations of our oil and gas interests follows:

	For the Year
	2016			2015			2014
	(In thousands)
Consolidated entities
Revenues	$	10,111		$	51,553		$	82,919
Production costs	(4,392		)	(19,820		)	(19,727		)
Exploration costs	(124		)	(11,864		)	(17,416		)
Depreciation, depletion, amortization	(2,157		)	(28,774		)	(29,442		)
Non-cash impairment of proved oil and gas properties and unproved leasehold interests	(612		)	(164,831		)	(32,665		)
Oil and gas administrative expenses	(8,700		)	(11,700		)	(17,000		)
Accretion expense	(56		)	(144		)	(121		)
Income tax (expense) benefit	(20		)	14,717			13,398
Results of operations	(5,950		)	(170,863		)	(20,054		)
Our share in ventures accounted for using the equity method:
Revenues	$	284		$	428		$	786
Production costs	(76		)	(102		)	(105		)
Oil and gas administrative expenses	(35		)	(51		)	(95		)
Income tax (expense) benefit	—			21			(235		)
Results of operations	$	173		$	296		$	351
Total results of operations	$	(5,777	)	$	(170,567	)	$	(19,703	)

Production costs represent our share of oil and gas production severance taxes, and lease operating expenses. Exploration costs principally represent exploratory dry hole costs, geological and geophysical and seismic study costs.

87

Note 20 — Summary of Quarterly Results of Operations (Unaudited)

Summarized quarterly financial results for 2016 and 2015 follows:

	First Quarter (a)			Second Quarter (a)			Third     Quarter (a)			Fourth     Quarter (a)
	(In thousands, except per share amounts)
2016
Total revenues	$	37,618		$	47,992		$	47,207		$	64,497
Gross profit (loss)	18,579			(24,953		)	17,403			17,352
Operating income (loss)	13,590			69,528			6,256			50,980
Equity in earnings of unconsolidated ventures	47			188			3,637			2,251
Income from continuing operations before taxes attributable to Forestar Group Inc.	5,992			26,591			7,163			51,069
Income (loss) from discontinued operations, net of taxes	(8,216		)	(2,048		)	(7,164		)	563
Net income (loss) attributable to Forestar Group Inc.	(4,376		)	9,614			9,665			43,745
Net income (loss) per share — basic
Continuing operations	$	0.11		$	0.28		$	0.40		$	1.03
Discontinued operations	$	(0.24	)	$	(0.05	)	$	(0.17	)	$	0.01
Net income (loss) per share — basic	$	(0.13	)	$	0.23		$	0.23		$	1.04
Net income (loss) per share — diluted
Continuing operations	$	0.09		0.28			0.40			$	1.02
Discontinued operations	$	(0.19	)	(0.05		)	(0.17		)	$	0.01
Net income (loss) per share — diluted	$	(0.10	)	0.23			0.23			$	1.03
2015
Total revenues	$	37,374		$	43,625		$	32,185		$	105,392
Gross profit (loss)	18,012			21,060			12,879			46,655
Operating income (loss)	(3,424		)	5,919			(8,482		)	29,929
Equity in earnings of unconsolidated ventures	3,045			5,584			2,909			4,470
Income from continuing operations before taxes attributable to Forestar Group Inc.	(8,204		)	3,382			(13,711		)	26,747
Income (loss) from discontinued operations, net of taxes	(2,719		)	(36,992		)	(106,937		)	(39,482		)
Net loss attributable to Forestar Group Inc.	(8,158		)	(34,507		)	(164,216		)	(6,166		)
Net income (loss) per share — basic
Continuing operations	$	(0.16	)	$	0.07		$	(1.67	)	$	0.97
Discontinued operations	$	(0.08	)	$	(1.08	)	$	(3.12	)	$	(1.15	)
Net income (loss) per share — basic	$	(0.24	)	$	(1.01	)	$	(4.79	)	$	(0.18	)
Net income (loss) per share — diluted
Continuing operations	$	(0.16	)	$	0.06		$	(1.67	)	$	0.79
Discontinued operations	$	(0.08	)	$	(0.87	)	$	(3.12	)	$	(0.93	)
Net income (loss) per share — diluted	$	(0.24	)	$	(0.81	)	$	(4.79	)	$	(0.14	)

 _____________________

^(a)Non-cash impairment charges related to real estate, water assets and unproved leasehold interests and proved oil and gas properties included in our quarterly financial results are as follows:

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(In thousands)
2016
Continuing operations	$	—	$	48,826	$	7,627	$	3,874
Discontinued operations	$	—	$	612	$	—	$	—
2015
Continuing operations	$	504	$	225	$	—	$	315
Discontinued operations	$	7	$	45,938	$	81,240	$	37,646

88

Note 21 — Subsequent Events

On January 5, 2017, we entered into a tax benefits preservation plan (the “Plan”) with Computershare Trust Company, N.A., as rights agent, and our Board of Directors declared a dividend distribution of one right (a “Right”) for each outstanding share of common stock, par value $1.00 per share, to stockholders of record at the close of business on January 17, 2017. Each Right is governed by the terms of the Plan and entitles the registered holder to purchase from the Company a unit consisting of one one-thousandth of a share of Series B Junior Participating Preferred Stock, par value $0.01 per share, at a purchase price of $50 per unit, subject to adjustment. The Plan is intended to help protect our tax attributes, such as built in losses and other tax attributes, by deterring any person from becoming a “5-percent shareholder” (as defined in Section 382 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder).

On February 17, 2017, we entered into a Purchase and Sale Agreement with Mineral Resource Partners, LLC, whereby we sold substantially all of our remaining oil and gas assets for $85,600,000, of which $75,000,000 was received at closing. The balance of the purchase price is being held in a third-party escrow account pending completion of (a) title review, and (b) transfer of certain mineral interests owned by a venture in which the Company is a member (Venture Minerals). Prorations of operating revenues and expenses will be made utilizing an effective date of January 1, 2017. This agreement also contains representations, warranties and indemnities customary for oil and gas industry entity and asset sale and purchase transactions, and includes purchase price adjustment provisions, within certain parameters, relating to title and failure or inability to transfer the Venture Minerals. In first quarter 2017, we expect to recognize a gain on sale of approximately $82,400,000, of which $10,600,000 will be deferred until verification of title for non-producing fee minerals in Texas and Louisiana, transfer of certain mineral interests owned by a venture in which the Company is a member and release of the escrowed funds. In addition, the Company expects to incur a non-cash charge of $37,900,000 related to oil and gas enterprise goodwill that is impaired due to the sale of substantially all of the Company's remaining oil and gas assets.

89

Forestar Group Inc.

Schedule III — Consolidated Real Estate and Accumulated Depreciation

Year-End 2016

(In thousands)

		Initial Cost to Company			Costs Capitalized Subsequent to Acquisition					Gross Amount Carried at End of Period
Description	Encumbrances	Land		Buildings & Improvements	Improvements less Cost of Sales and Other			Carrying Costs(a)		Land & Land Improvements		Buildings & Improvements	Total		Accumulated Depreciation	Date of Construction	Date Acquired
Entitled, Developed, and Under Development Projects:
ARIZONA
Pima County
Dove Mountain		$	5,860		$	3				$	5,863		$	5,863			2015
CALIFORNIA
Contra Costa County
San Joaquin River		12,225			(10,558		)			1,667			1,667				(b)
COLORADO
Douglas County
Pinery West		7,308			3,791					11,099			11,099			2006	2006
Cielo		3,933			2,645					6,578			6,578				2016
Weld County
Buffalo Highlands		3,001			(295		)			2,706			2,706			2006	2005
Johnstown Farms		2,749			4,189			$	100	7,038			7,038			2002	2002
Stonebraker		3,878			(1,786		)			2,092			2,092			2005	2005
GEORGIA
Cobb County
West Oaks		1,669			1,543					3,212			3,212			2015	2015
Paulding County
Harris Place		265			(111		)			154			154				2012
Seven Hills		2,964			1,162			13		4,139			4,139				2012
NORTH CAROLINA
Cabbarrus County
Moss Creek		1,254			101					1,355			1,355				2016
Mecklenburg County
Walden		12,085			2,279			87		14,451			14,451			2016	2015
SOUTH CAROLINA
Lancaster County
Ansley Park		5,089			1,594					6,683			6,683				2015
York County
Habersham		3,877			1,128			421		5,426			5,426			2014	2013

90

Forestar Group Inc.

Schedule III — Consolidated Real Estate and Accumulated Depreciation

Year-End 2016

(In thousands)

		Initial Cost to Company			Costs Capitalized Subsequent to Acquisition					Gross Amount Carried at End of Period
Description	Encumbrances	Land		Buildings & Improvements	Improvements less Cost of Sales and Other			Carrying Costs(a)		Land & Land Improvements		Buildings & Improvements	Total		Accumulated Depreciation	Date of Construction	Date Acquired
TENNESEE
Williamson County
Morgan Farms		$	6,841		$	(1,808	)	$	88	$	5,121		$	5,121		2013	2013
Scales Farmstead		3,575			9,319			389		13,283			13,283				2015
Weatherford Estates		856			374			138		1,368			1,368			2015	2014
Wilson County
Beckwith Crossing		1,294			2,397			161		3,852			3,852			2015	2014
TEXAS
Bastrop County
Hunter’s Crossing		3,613			5,226					8,839			8,839			2001	2001
Bexar County
Cibolo Canyons		17,305			26,397			1,203		44,905			44,905			2004	1986
Calhoun County
Caracol		8,603			(8,025		)			578			578			2006	2006
Collin County
Lakes of Prosper		8,951			(3,005		)	348		6,294			6,294				2012
Parkside		2,177			(4		)	183		2,356			2,356			2014	2013
Timber Creek		7,282			9,862					17,144			17,144			2007	2007
Village Park		4,772			(4,720		)			52			52				2012
Comal County
Oak Creek Estates		1,921			685			22		2,628			2,628			2006	2005
Dallas County
Stoney Creek		12,822			327			443		13,592			13,592			2007	2007
Denton County
Lantana		27,673			(11,242		)	529		16,960			16,960			2000	1999
River's Edge		1,227			436					1,663			1,663				2014
The Preserve at Pecan Creek		5,855			(1,387		)	47		4,515			4,515			2006	2005
Fort Bend County
Summer Lakes		4,269			374			78		4,721			4,721			2013	2012
Summer Park		4,804			(2,557		)	17		2,264			2,264			2013	2012
Willow Creek Farms	486	3,479			(1,187		)			2,292			2,292			2012	2012
Harris County
Barrington		8,950			(7,483		)			1,467			1,467				2011
City Park		3,946			(2,243		)	229		1,932			1,932			2002	2001
Imperial Forest		5,345			(957		)	4		4,392			4,392			2015	2014

91

Forestar Group Inc.

Schedule III — Consolidated Real Estate and Accumulated Depreciation

Year-End 2016

(In thousands)

			Initial Cost to Company				Costs Capitalized Subsequent to Acquisition					Gross Amount Carried at End of Period
Description	Encumbrances		Land		Buildings & Improvements		Improvements less Cost of Sales and Other			Carrying Costs(a)		Land & Land Improvements		Buildings & Improvements		Total		Accumulated Depreciation		Date of Construction	Date Acquired
Hays County
Arrowhead Ranch			$	12,856			$	9,204		$	233	$	22,293			$	22,293			2015	2007
Tarrant County
Summer Creek Ranch			2,887				(1,377		)			1,510				1,510					2012
The Bar C Ranch			1,365				842			197		2,404				2,404					2012
Other			5,222				(276		)	25		4,971				4,971
Total Entitled, Developed, and Under Development Projects	$	486	$	234,047	$	—	$	24,857		$	4,955	$	263,859	$	—	$	263,859	$	—
Undeveloped Land and land in entitlement:
CALIFORNIA
Los Angeles County
Land In Entitlement Process			$	3,950			$	20,838				$	24,788			$	24,788				1997
GEORGIA
Cherokee County
Undeveloped Land			80									80				80					(b)
TEXAS
Bexar County
Undeveloped Land							2,548					2,548				2,548					(b)
Montgomery County
Undeveloped Land							5					5				5					(b)
Other
Undeveloped Land							1,723					1,723				1,723					(b)
Total Undeveloped Land and Land in Entitlement	$	—	$	4,030	$	—	$	25,114		$	—	$	29,144	$	—	$	29,144	$	—
Total	$	486	$	238,077	$	—	$	49,971		$	4,955	$	293,003	$	—	$	293,003	$	—

____________________

(a)We do not capitalize carrying costs until development begins.

(b)The acquisition date is not available.

92

Reconciliation of real estate:

	2016			2015			2014
	(In thousands)
Balance at beginning of year	$	618,844		$	607,133		$	547,530
Amounts capitalized	89,780			124,633			214,184
Amounts retired or adjusted	(415,621		)	(112,922		)	(154,581		)
Balance at close of period	$	293,003		$	618,844		$	607,133

Reconciliation of accumulated depreciation:

	2016			2015			2014
	(In thousands)
Balance at beginning of year	$	(32,129	)	$	(31,377	)	$	(28,066	)
Depreciation expense	(816		)	(6,810		)	(3,319		)
Amounts retired or adjusted	32,945			6,058			8
Balance at close of period	$	—		$	(32,129	)	$	(31,377	)

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

None.

Item 9A. Controls and Procedures.

(a) Disclosure controls and procedures

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (or the Exchange Act)) as of the end of the period covered by this report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by us in the reports that we file or submit under the Exchange Act and were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

(b) Internal control over financial reporting

Management’s report on internal control over financial reporting and the report of our independent registered public accounting firm are included in Part II, Item 8 of this Annual Report on Form 10-K.

(c) Changes in Internal Control over Financial Reporting

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter 2016 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information.

None.

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PART III

Item 10. Directors, Executive Officers and Corporate Governance.

Set forth below is certain information about the members of our Board of Directors:

Name	Age	Year First Elected to the Board	Principal Occupation
James A. Rubright	70	2007	Retired Chairman and Chief Executive Officer of Rock-Tenn Company
M. Ashton Hudson	44	2016	President and General Counsel of Rock Creek Capital Group, Inc.
William C. Powers, Jr.	70	2007	Professor of Law at The University of Texas at Austin
Daniel B. Silvers	40	2015	Managing Member at Matthews Lane Capital Partners LLC
Richard M. Smith	71	2007	President of Pinkerton Foundation
Richard D. Squires	59	2016	Managing Director and Co-Founder of Lennox Capital Partners, LLC
Phillip J. Weber	56	2015	Chief Executive Officer of Forestar Group Inc.

The remaining information required by this item is incorporated herein by reference from our definitive proxy statement, involving the election of directors, to be filed pursuant to Regulation 14A with the SEC not later than 120 days after the end of the fiscal year covered by this Form 10-K (or Definitive Proxy Statement). Certain information required by this item concerning executive officers is included in Part I of this report.

Item 11. Executive Compensation.

The information required by this item is incorporated by reference from our Definitive Proxy Statement.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

Equity Compensation Plan Information

We have only one equity compensation plan, the Forestar 2007 Stock Incentive Plan. It was approved by our sole stockholder prior to spin-off and material terms and amendments thereto were subsequently approved by our stockholders. Information at year-end 2016 about our equity compensation plan under which our common stock may be issued follows:

Plan Category	Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights(1)(2)	Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights		Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
	(a)	(b)		(c)
Equity compensation plans approved by security holders	2,935,557	$	20.73	1,097,059
Equity compensation plans not approved by security holders	None	None		None
Total	2,935,557	$	20.73	1,097,059

  _____________________

⁽¹⁾  Includes 234,764 shares issuable to former Temple-Inland and the other spin-off entity personnel resulting from the equitable adjustment of Temple-Inland equity awards in connection with our spin-off.

⁽²⁾  Includes 484,406 equity-settled restricted stock units, 224,616 market-leveraged stock units and 138,819 performance stock units, which are excluded from the calculation of weighted-average exercise price. Market-leveraged stock unit and performance stock unit awards will be settled in common stock based upon performance over three years from the date of grant. For market-leveraged stock units, the number of shares to be issued could range from a high of 336,924 shares if our stock price increases by 50 percent or more, to 112,308 shares if our stock price decreases by 50 percent, or could be zero if our stock price decreases by more than 50 percent, the minimum threshold performance. For performance stock units, the number of shares to be issued could range from 277,638 shares at maximum performance to 138,819 at threshold performance, or could be zero below threshold performance.

The remaining information required by this item is incorporated by reference from our Definitive Proxy Statement.

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Item 13. Certain Relationships and Related Transactions, and Director Independence.

The information required by this item is incorporated by reference from our Definitive Proxy Statement.

Item 14. Principal Accountant Fees and Services.

The information required by this item is incorporated by reference from our Definitive Proxy Statement.

PART IV

Item 15. Exhibits and Financial Statement Schedules.

(a) Documents filed as part of this report.

(1) Financial Statements

Our Consolidated Financial Statements are included in Part II, Item 8 of this Annual Report on Form 10-K.

(2) Financial Statement Schedules

Schedule III — Consolidated Real Estate and Accumulated Depreciation is included in Part II, Item 8 of this Annual Report on Form 10-K.

Schedules other than those listed above are omitted as the required information is either inapplicable or the information is presented in our Consolidated Financial Statements and notes thereto.

(3) Exhibits

The exhibits listed in the Exhibit Index in (b) below are filed or incorporated by reference as part of this Annual Report on Form 10-K.

(b) Exhibits

Exhibit Number	Exhibit
3.1	Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Commission on December 11, 2007).
3.2	Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed with the Commission on December 11, 2007).
3.3	First Amendment to Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Commission on February 19, 2008).
3.4	Second Amendment to Amended and Restated Bylaws (incorporated by reference to Exhibit 3.5 of the Company’s Annual Report on Form 10-K filed with the Commission on March 5, 2009).
3.5	Certificate of Ownership and Merger, dated November 21, 2008 (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Commission on November 24, 2008).
3.6	Third Amendment to Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 of the Company’s Current Report on Form 8-K filed with the Commission on November 24, 2008).
3.7	Fourth Amendment to the Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Commission on November 26, 2012).
3.8	Fifth Amendment to Amended and Restated Bylaws (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Commission on September 28, 2015).
3.9	Certificate of Amendment to Amended and Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 of the Company’s Quarterly Report on Form 10-Q filed with the Commission on November 6, 2015).
3.10	Certificate of Designations, Preferences and Rights of Series B Junior Participating Preferred Stock of Forestar Group Inc. (incorporated by reference to Exhibit 3.1 of the Company’s Current Report on Form 8-K filed with the Commission on January 5, 2017).
4.1	Specimen Certificate for shares of common stock, par value $1.00 per share (incorporated by reference to Exhibit 4.2 of the Company's Current Report on Form 8-K filed with the Commission on January 5, 2017).
4.2	Indenture, dated February 26, 2013 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the Commission on February 26, 2013).
4.3	Supplemental Indenture, dated February 26, 2013 (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the Commission on February 26, 2013).
4.4	Form of 3.75% Convertible Senior Notes due 2020 (included in Exhibit 4.3 above) (incorporated by reference to Exhibit 4.2 of the Company’s Current Report on Form 8-K filed with the Commission on February 26, 2013).

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4.5	Indenture, dated May 12, 2014 (incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K filed with the Commission on May 15, 2014).
4.6	Form of 8.500% Senior Secured Notes due 2022 (included in Exhibit 4.10 above) (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed with the Commission on May 15, 2014).
4.7	Supplemental Indenture, dated as of June 21, 2016, among Forestar (USA) Real Estate Group Inc., as issuer, the Guarantors named therein and U.S. Bank National Association, as trustee, to the Indenture, dated as of May 12, 2014, among Forestar (USA) Real Estate Group Inc., the Guarantors named therein and U.S. Bank National Association (incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K filed with the Commission on June 21, 2016).
4.8	Tax Benefits Preservation Plan, dated as of January 5, 2017, between Forestar Group Inc. and Computershare Trust Company, N.A. (incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K filed with the Commission on January 5, 2017).
10.1†	Forestar Real Estate Group Inc. Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.5 of Amendment No. 5 to the Company’s Form 10 filed with the Commission on December 10, 2007).
10.2†	Amendment No. 1 to Forestar Group Inc. Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.3 of the Company’s Annual Report on Form 10-K filed with the Commission on March 14, 2013).
10.3†	Forestar Real Estate Group Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.6 of Amendment No. 5 to the Company’s Form 10 filed with the Commission on December 10, 2007).
10.4†	Amended and Restated Forestar Group Inc. Amended and Restated Directors' Fee Deferral Plan (incorporated by reference to Exhibit 10.5 of the Company's Annual Report on Form 10-K filed with the Commission on March 11, 2014).
10.5†	Form of Indemnification Agreement to be entered into between the Company and each of its directors (incorporated by reference to Exhibit 10.9 of Amendment No. 5 to the Company’s Form 10 filed with the Commission on December 10, 2007).
10.6†	Form of Change in Control/Severance Agreement between the Company and its named executive officers (incorporated by reference to Exhibit 10.10 to the Company’s Form 10 filed with the Commission on August 10, 2007).
10.7†	Form of Nonqualified Stock Option Agreement (incorporated by reference to Exhibit 10.12 of the Company’s Annual Report on Form 10-K filed with the Commission on March 5, 2009).
10.8†	Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.10 of the Company’s Annual Report on Form 10-K filed with the Commission on March 14, 2013).
10.9†	Form of Restricted Stock Units Agreement (incorporated by reference to Exhibit 10.11 of the Company’s Annual Report on Form 10-K filed with the Commission on March 14, 2013).
10.10†	Form of Stock Appreciation Right Agreement (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on February 12, 2009).
10.11†	First Amendment to the Forestar Real Estate Group Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on May 13, 2009).
10.12†	Second Amendment to the Forestar Group Inc. 2007 Stock Incentive Plan (incorporated by reference to Exhibit 10.22 to the Company’s Annual Report on Form 10-K filed with the Commission on March 3, 2010).
10.13†	Form of Market-Leveraged Stock Unit Award Agreement (incorporated by reference to Exhibit 10.18 of the Company’s Annual Report on Form 10-K filed with the Commission on March 14, 2013).
10.14†	Form of Indemnification Agreement entered into between the Company and each of its executive officers (incorporated by reference to Exhibit 10.19 of the Company’s Annual Report on Form 10-K filed with the Commission on March 14, 2013).
10.15†	Amendment No. 2 to Forestar Group Inc. Supplemental Executive Retirement Plan (incorporated by reference to Exhibit 10.25 of the Company's Annual Report on Form 10-K filed with the Commission on March 11, 2014).
10.16	Agreement of Guaranty and Suretyship (Completion), dated January 17, 2014, by Forestar Group Inc. in favor of PNC Bank, National Association (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on January 17, 2014).
10.17	Agreement of Guaranty and Suretyship (Payment), dated January 17, 2014, by Forestar Group Inc. in favor of PNC Bank, National Association (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Commission on January 17, 2014).
10.18	Third Amended and Restated Revolving Credit Agreement dated May 15, 2014, by and among the Company, Forestar (USA) Real Estate Group Inc. and certain of its wholly-owned subsidiaries; Key Bank National Association, as lender, swing line lender and agent, the lenders party thereto; and the other parties thereto (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed with the Commission on May 16, 2014).
10.19	Guaranty, dated July 15, 2014, by Forestar (USA) Real Estate Group Inc. in favor of Regions Bank (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Commission on July 18, 2014).
10.20	Limited Waiver and Amendment to the Third Amended and Restated Revolving Credit Agreement, dated September 30, 2015, by and among the Company, Forestar (USA) Real Estate Group Inc. and certain of its wholly-owned subsidiaries signatory thereto, KeyBank National Association, as lender, swing line lender and agent, the lenders party thereto, and the other parties thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 6, 2015).
10.21	First Amendment to Third Amended and Restated Revolving Credit Agreement dated December 30, 2015, by and among the Company, Forestar (USA) Real Estate Group Inc. and certain of its wholly-owned subsidiaries signatory thereto, KeyBank National Association, as lender, swing line lender and agent, the lenders party thereto, and the other parties thereto (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on December 31, 2015).
10.22†	Employment Agreement, dated October 21, 2015, between the Company and Phillip J. Weber (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 26, 2015).
10.23	Purchase and Sale Agreement, dated February 4, 2016, by and between Capital of Texas Insurance Group and Austin Lakeside Hotel Owner LLC (incorporated by reference to Exhibit 10.1 of the Company’s Quarterly Report on Form 10-Q filed with the Commission on May 10, 2016).
10.24	Director Nomination Agreement, dated February 5, 2016, by and between Forestar Group Inc. and Carlson Capital, L.P. (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on February 8, 2016).
10.25	Director Nomination Agreement, dated February 5, 2016, by and between Forestar Group Inc. and Cove Street Capital, LLC (incorporated by reference to Exhibit 10.2 of the Company’s Current Report on Form 8-K filed with the Commission on February 8, 2016).

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10.26	Purchase and Sale Agreement, dated April 7, 2016, by and between Forestar Petroleum Corporation and DW Slate, LLC (incorporated by reference to Exhibit 10.1 of the Company’s Current Report on Form 8-K filed with the Commission on April 11, 2016).
10.27	Consent to Third Amended and Restated Credit Agreement dated June 30, 2016, by and among the Company, Forestar (USA) Real Estate Group Inc. and certain of its wholly-owned subsidiaries signatory thereto, KeyBank National Associate, as agent and lender, the lenders thereto, and the other parties thereto (incorporated by reference to Exhibit 10.2 of the Company’s Quarterly Report on Form 10-Q filed with the Commission on August 5, 2016).
10.28*	Purchase and Sale Agreement, dated November 9, 2016 among Forestar Real Estate Group Inc., Forestar Petroleum Corporation and SPP Land, LLC.
10.29*	Purchase and Sale Agreement, dated November 10, 2016 among Forestar Real Estate Group Inc., Forestar Petroleum Corporation and Hubble Timber, LLC.
10.30*	Purchase and Sale Agreement, dated November 11, 2016 among Forestar Real Estate Group Inc., Forestar Petroleum Corporation and TIR Europe Forestry Fund S.C.A. SICAV-SIF.
10.31	Purchase and Sale Agreement, dated February 17, 2017, between Forestar (USA) Real Estate Group Inc. and Mineral Resources Partners, LLC (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K filed with the Commission on February 17, 2017).
21.1*	List of Subsidiaries of the Company.
23.1*	Consent of Ernst & Young LLP.
23.2*	Consent of Netherland, Sewell & Associates, Inc.
31.1*	Certification of Chief Executive Officer pursuant to Exchange Act rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer pursuant to Exchange Act rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*	Reserve report of Netherland, Sewell & Associates, Inc., dated February 3, 2017.
101.1*	The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2015, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss), (iii) Consolidated Statement of Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Consolidated Financial Statements.

  _____________________

* Filed herewith.

† Management contract or compensatory plan or arrangement.

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Item 16. Form 10-K Summary.

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

FORESTAR GROUP INC.
By:	/s/ Phillip J. Weber
	Phillip J. Weber
	Chief Executive Officer

Date: March 3, 2017

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Capacity	Date
/s/ Phillip J. Weber	Director and Chief Executive Officer (Principal Executive Officer)	March 3, 2017
Phillip J. Weber
/s/ Charles D. Jehl	Chief Financial Officer (Principal Financial Officer)	March 3, 2017
Charles D. Jehl
/s/ Sabita C. Reddy	Vice President Accounting (Principal Accounting Officer)	March 3, 2017
Sabita C. Reddy
/s/ James A. Rubright	Chairman of the Board	March 3, 2017
James A. Rubright
/s/ M. Ashton Hudson	Director	March 3, 2017
M. Ashton Hudson
/s/ William C. Powers, Jr.	Director	March 3, 2017
William C. Powers, Jr.
/s/ Daniel B. Silvers	Director	March 3, 2017
Daniel B. Silvers
/s/ Richard M. Smith	Director	March 3, 2017
Richard M. Smith
/s/ Richard D. Squires	Director	March 3, 2017
Richard D. Squires

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EX-10.28

Exhibit 10.28

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of November 9, 2016 (the “Effective Date”), by and among FORESTAR (USA) REAL ESTATE GROUP INC., a Delaware corporation (“Forestar (USA)”), FORESTAR PETROLEUM CORPORATION, a Delaware corporation (“Forestar Petroleum” and Forestar (USA), each a “Seller” and together “Sellers”), SPP LAND, LLC, a Georgia limited liability company (“Purchaser”; each of Purchaser, Forestar (USA) and Forestar Petroleum being a “Party” and, collectively, the “Parties”), and METROPOLITAN TITLE AGENCY, INC., a Georgia corporation(“Escrow Agent”).

STATEMENT OF BACKGROUND

A.    Forestar Petroleum is the owner of certain real property located in Banks, Bartow, Cherokee, Dawson, Elbert, Franklin, Gilmer, Hall, Hart, Jackson, and Pickens Counties, Georgia, subject to certain timber rights held by Forestar (USA) on such real property.

B.    Purchaser desires to acquire, and Forestar (USA) and Forestar Petroleum desire to sell, such real property and timber rights, all in accordance with the terms of, and subject to the conditions set forth in this Agreement.

STATEMENT OF AGREEMENT

NOW, THEREFORE, in consideration of $10.00 in hand paid by Purchaser to Forestar (USA) and Forestar Petroleum, the foregoing, their respective representations, warranties, covenants and agreements set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties (and Escrow Agent, to the extent applicable), intending to be legally bound, hereby agree as follows:

1.Agreement of Purchase and Sale. Subject to the provisions of this Agreement, and for the consideration herein stated, Forestar Petroleum agrees to sell to Purchaser the Forestar Petroleum Property (as hereinafter defined), Forestar (USA) agrees to sell to Purchaser the Forestar (USA) Property (as hereinafter defined), and Purchaser agrees to buy the same from Sellers.

(a)As used herein, the “Forestar Petroleum Property” shall mean all of the right, title and interest of Forestar Petroleum in and to the assets described in subsections (i), (ii), and (iii) of this Section 1(a), subject to the Permitted Encumbrances (as hereinafter defined):

(i)Those certain tracts or parcels of land located in Banks, Bartow, Cherokee, Dawson, Elbert, Franklin, Gilmer, Hall, Hart, Jackson, and Pickens Counties, Georgia, containing approximately 26,319 acres, which tracts or parcels are more fully described on Schedule 1 attached hereto, together with all buildings, structures, and other improvements located thereon, all tenements, hereditaments, easements, appurtenances and privileges thereto belonging, including all oil, gas and mineral rights owned by the Sellers, but excluding, and subject to, the Timber Rights (as defined below) (collectively, the “Timberlands”);

1

(ii)Forestar Petroleum’s rights in those certain agreements described on Schedule 2attached hereto (the “Forestar Petroleum Contracts”); and

(iii)To the extent transferable under applicable law, all permits, authorizations, utility capacity, development rights, entitlements, orders, registrations, certificates, variances, approvals, franchises, claims, causes of action, and consents of any applicable governmental authority with respect to the Timberlands (the “Development Rights”).

(b)As used herein, the “Forestar (USA) Property” shall mean all of the right, title and interest of Forestar (USA) in and to the assets described in subsections (i) and (ii) of this Section 1(b), subject to the Permitted Encumbrances (as hereinafter defined):

(i)All rights in and to the timber growing, standing or lying on the Timberlands to the extent set forth in the reservation of timber in the deeds described on Schedule 4 attached hereto (collectively, the “Timber Rights” and, together with the Timberlands, the “Real Property”); and

(ii)Forestar (USA)’s rights in those certain agreements described on Schedule 5attached hereto (the “Forestar (USA) Contracts” and, together with the Forestar Petroleum Contracts, the “Contracts”).

(c)The Forestar Petroleum Property together with the Forestar (USA) Property shall be referred to herein as the “Property.”

(d)Bar Flint Litigation.

(i)Removal. Forestar (USA), on behalf of Sellers, shall have the option, no later than December 15, 2016 (the “Deadline”), to either (A) remove from the Property, and the transaction contemplated by this Agreement, a portion of Compartment 13527 located in Cherokee County, Georgia (the “Removable Property”) and enter into a settlement agreement to resolve the Bar Flint Litigation (as defined on Schedule 9 attached hereto) or (B) remove the Removable Property from the transaction contemplated by this Agreement (subsections (A) or (B), a “Removal”). In the event of a Removal, each of the following provisions shall apply: (1) the Removable Property shall contain no more than 200 acres which shall be surveyed out of Compartment 13527, (2) the Purchase Price (as hereinafter defined) shall be reduced by $2,250.00 per acre (allocated to Forestar (USA) in accordance with the value of timber pursuant the Value Table (as hereinafter defined) with the remainder allocated to Forestar Petroleum) for each acre contained within the Removable Property as determined by a survey made by a Georgia registered land surveyor and approved by Purchaser and Sellers (the “Survey”), (3) the configuration and location of the Removable Property shall be subject to the commercially reasonable approval of Purchaser, (4) all costs and expenses relating to the Survey, the Removable Property and the Bar Flint Litigation shall be the sole responsibility of the Sellers, (5) the conveyance Compartment 13527 located in Cherokee County, Georgia less the Removable Property (the “Remainder Property”) shall occur at Closing using a legal description and/or compartment maps for such Remainder

2

Property reasonably acceptable to Sellers and Purchaser, (6) Sellers shall indemnify and hold harmless the Purchaser from any and all claims, loss, costs, expenses, actions, and damages related to or arising in connection with the Bar Flint Litigation or any related claims that the plaintiffs thereunder could have asserted before the Closing, excluding only those claims caused by Purchaser or Purchaser’s agents, contractors or invitees that such plaintiffs could have asserted only after the Closing, and (7) if the Survey is not complete by the Deadline and is completed after Closing, no later than sixty (60) days after Closing, Sellers and Purchaser shall record a corrective limited warranty deed reasonably acceptable to Purchaser and Sellers to correct the legal description attached to limited warranty deed conveying the Remainder Property to Purchaser; provided, however, that the Title Company agrees to insure, without exception, the legal description of the Remainder Property used at Closing. If, however, the Title Company is unwilling to insure the legal description of the Remainder Property used at Closing, then (y) Sellers shall have the option to remove Compartment 13527 from the Property for the purposes of Closing and the Purchase Price shall be reduced by the value of Compartment 13527 by reference to the Value Table (provided that any disputes regarding the value of Compartment 13527 shall be resolved in accordance with Section 29) and (z) if Sellers elect option (y) immediately above, then (1) upon completion of the Survey, Sellers shall convey Compartment 13527 to Purchaser utilizing the legal description of such compartment per the Survey by limited warranty deed and the portion of the Purchase Price due with respect to Compartment 13527 shall be paid to Sellers and (2) Sellers shall be responsible for the following costs and expenses related to the post-Closing conveyance of the Remainder Property: the cost of recording the deed, the cost of the Survey, and Purchaser’s reasonable attorney’s fees for reviewing the Survey and the deed form in an amount not to exceed ONE THOUSAND TWO HUNDRED AND NO/100THS DOLLARS ($1,200.00).

(ii)No Removal. In the event that a Removal does not occur by the Deadline pursuant to Section 1(d)(A) or Section 1(d)(B), Sellers shall indemnify and hold harmless the Purchaser from any and all claims, loss, costs, expenses, actions, and damages related to or arising in connection with the Bar Flint Litigation or any related claims that the plaintiffs thereunder could have asserted before the Closing, but excluding any claims caused by Purchaser or Purchaser’s agents, contractors or invitees that such plaintiffs could have asserted only after the Closing.

(iii)For the avoidance of doubt, in no event shall Purchaser assume the Bar Flint Litigation at Closing. The terms of this Section 1(d) shall survive Closing for one (1) year.

2.Purchase Price. The purchase price to be paid by Purchaser for the Forestar Petroleum Property shall be EIGHTEEN MILLION SIX HUNDRED FIFTEEN THOUSAND SIX HUNDRED NINETY-TWO AND NO/100 DOLLARS ($18,615,692.00) (the “Forestar Petroleum Purchase Price”), lessa credit for the Forestar Petroleum Earnest Money (as defined below) and subject to adjustment as set forth in this Agreement, and shall be payable to Forestar Petroleum by wire transfer of immediately available funds at the Closing to an account designated by Forestar Petroleum. The purchase price to be paid by Purchaser for the Forestar (USA) Property

3

shall be TWENTY-FOUR MILLION, EIGHT HUNDRED AND TEN THOUSAND, SIX HUNDRED FIFTY-EIGHT AND NO/100 DOLLARS ($24,810,658.00) (the “Forestar (USA) Purchase Price” and, together with the Forestar Petroleum Purchase Price, the “Purchase Price”), lessa credit for the Forestar (USA) Earnest Money (as defined below) and subject to adjustment as set forth in this Agreement, and shall be payable to Forestar (USA) by wire transfer of immediately available funds at the Closing to an account designated by Forestar (USA). The Forestar (USA) Purchase Price shall be allocated among premerchantable timber, merchantable timber less than 15 years of age, and merchantable timber 15 years of age and older as set forth on Schedule 6 attached hereto. Purchaser shall reasonably cooperate with any request by any Seller to further allocate the Purchase Price among the components of the Property.

3.Earnest Money. Within one (1) business day after the Effective Date, Purchaser shall deliver to Escrow Agent (a) the sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00), (such sum together with all interest earned thereon being the “Forestar Petroleum Earnest Money”) and (b) the sum of ONE MILLION AND NO/100 DOLLARS ($1,000,000.00), (such sum together with all interest earned thereon being the “Forestar (USA) Earnest Money” and, together with the Forestar Petroleum Earnest Money, the “Earnest Money”). Escrow Agent agrees to hold the Earnest Money in an interest-bearing account and disburse the Earnest Money in accordance with the terms hereof. At the Closing, the Forestar Petroleum Earnest Money shall be applied as a credit against the Forestar Petroleum Purchase Price and the Forestar (USA) Earnest Money shall be applied as a credit against the Forestar (USA) Purchase Price.

4.Closing.

(a)The execution and delivery of the documents and instruments for the consummation of the purchase and sale pursuant hereto (the “Closing”) shall take place on December 30, 2016 (the actual date of Closing being the “Closing Date”), through the escrow services of Escrow Agent, or such earlier date and time, or such other location, as may be mutually agreeable to the Sellers and Purchaser. The Closing Date is subject to extension only as specifically provided in this Agreement, and, notwithstanding anything herein to the contrary, in no event shall the Closing Date be extended beyond December 30, 2016.

(b)At the Closing, Forestar Petroleum shall deliver the following items:

(i)one limited warranty deed in the form of Exhibit A attached hereto with respect to each county in Georgia in which the Timberlands are located (the “Timberland Deeds”) executed by Forestar Petroleum, conveying the Timberlands to Purchaser, subject only to the Permitted Encumbrances (as defined below), and each containing a legal description of the applicable portion of the Timberlands identical to the applicable portion of the legal description of the Timberlands set forth in the applicable Title Commitments (as defined below);

(ii)a counterpart of a general assignment and assumption agreement in the form of Exhibit B attached hereto executed by Forestar Petroleum, by which Forestar Petroleum shall assign its right, title, and interest in, and Purchaser shall assume Forestar

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Petroleum’s obligations under the Forestar Petroleum Contracts and the Development Rights (the “Forestar Petroleum Assignment”);

(iii)an executed affidavit from Forestar Petroleum as to its non-foreign status;

(iv)an executed counterpart of a closing statement in form mutually agreeable to the Sellers and Purchaser in their reasonable discretion (the “Closing Statement”);

(v)a reliance letter in favor of Purchaser and executed by SLR International Corp. with respect to the Phase I Report (as defined below);

(vi)a notice of assignment of the Forestar Petroleum Contracts executed by Forestar Petroleum;

(vii)a commercially reasonable and customary form gap indemnity agreement to the Title Company; and

(viii)such other certificates, affidavits, evidence of authority and instruments as may be reasonably necessary or desirable to consummate the purchase and sale contemplated hereby and to enable Purchaser to obtain a title insurance policy insuring marketable title to the Real Property.

(c)At the Closing, Forestar (USA) shall deliver the following items:

(i)one limited warranty deed in the form of Exhibit C attached hereto with respect to each county in Georgia in which the Timberlands are located (the “Timber Rights Deeds” and, together with the Timberland Deeds and the Timber Rights Deeds, collectively, the “Deeds”) executed by Forestar (USA), conveying the Timber Rights to Purchaser, subject only to the Permitted Encumbrances (as defined below);

(ii)Intentionally Deleted;

(iii)a counterpart of an assignment and assumption of the Forestar (USA) Assumable Claims in a form reasonably approved by Purchaser and Seller (as that term is defined in Section 13(c)) (the “Assumable Claims Assignment”);

(iv)an executed affidavit from Forestar (USA) as to its non-foreign status;

(v)an executed counterpart of the Closing Statement;

(vi)a commercially reasonable and customary form gap indemnity agreement to the Title Company;

(vii)an indemnification which shall survive Closing from Forestar (USA) in favor of Purchaser against all claims, actions, loss, damages, costs and expenses relating

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to the Bar Flint Litigation and the Forestar (USA) Assumable Claims as disclosed on Schedule 9 that are not assumed by Purchaser; and

(viii) such other certificates, affidavits, evidence of authority and instruments as may be reasonably necessary or desirable to consummate the purchase and sale contemplated hereby and to enable Purchaser to obtain a title insurance policy insuring marketable title to the Real Property.

(d)At the Closing, Purchaser shall deliver the following items:

(i)the Purchase Price;

(ii)an executed counterpart of the Forestar Petroleum Assignment;

(iii)an executed counterpart of the Assumable Claims Assignment in the form of Exhibit “D”attached hereto;

(iv)an executed counterpart of the Closing Statement; and

(v)such other certificates, affidavits, evidence of authority and instruments as may be reasonably necessary or desirable to consummate the purchase and sale contemplated hereby and to enable Purchaser to obtain a title insurance policy insuring Purchaser’s title to the Real Property.

5.Title.

(a)Forestar Petroleum agrees to convey to Purchaser fee simple title to the Timberlands by the Timberland Deeds, and Forestar (USA) agrees to convey to Purchaser title to the Timber Rights by the Timber Rights Deeds, free and clear of all liens, encumbrances, assessments, agreements, options and covenants, except for the encumbrances set forth on Exhibit E attached hereto (the “Permitted Encumbrances”).

(b)Purchaser acknowledges that, prior to the Effective Date, Purchaser has received from Metropolitan Title Agency, Inc. (the “Title Company”) commitments to insure Purchaser’s title to the Real Property upon the Closing, together with copies of substantially all documents, instruments, surveys and plats as referenced in the commitments (each a “Title Commitment” and, collectively, the “Title Commitments”), which Title Commitments are more particularly identified on Schedule 7 attached hereto. Purchaser shall have thirty (30) days following the Effective Date (the “Title Objection Period”) to deliver to Sellers written notice of any objection to matters reflected in the Title Commitments, other than the Permitted Encumbrances, that would render title to the Real Property or a portion thereof unmarketable or which would materially interfere with the use of the Real Property (each, a “Title Objection” and collectively, the “Title Objections”); provided, however, that Purchaser shall be permitted to object to all Title Failures affecting the Property. For the purposes of this Agreement, the term “Title Failure” shall mean any portion of the Property described in this Agreement, the Commitments or represented on the Sellers’ compartment maps that is not, or immediately prior to Closing will not, be owned by the Sellers

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(the “Title Failure Property”). Failure of Purchaser to deliver Title Objections within the Title Objection Period shall be deemed a waiver by Purchaser of its right to make such Title Objections. Notwithstanding anything contained within this Agreement, including the agreement by the Parties that lack of access shall be a Permitted Encumbrance, the Sellers acknowledge and agree that Sellers, at their expense, shall cause the Title Company to promptly revise all of the Title Commitments to remove all blanket and/or generic lack of access exceptions and instead the Title Company shall identify the specific portions of the Property that actually lack legal access. If a portion of the Property does not front on a public road but is contiguous to other portions of the Property that do front on a public road, or otherwise have legal access, then no exception as to lack of access will be made. Further, once those portions of the Property that lack legal access are identified, Seller agrees to reasonably consider Purchaser’s request to provide an affidavit of historical and/or practical access to said portions of the Property.

(c)Upon receipt of the Title Objections, each of Forestar Petroleum and Forestar (USA) may elect (but shall not be obligated) to cure or cause to be cured any such Title Objection, and such Party shall notify Purchaser in writing whether it elects to cure the same by the date that is five (5) business days after receipt of such Title Objections (“Sellers’ Response Period”). Failure of Forestar Petroleum or Forestar (USA), as applicable, to respond in writing within Sellers’ Response Period shall be deemed an election by such Party not to cure such Title Objections. Any Title Objection, other than Title Failures, shall be deemed to be cured if a Seller causes the Title Company to commit to issue a title insurance policy to Purchaser for the affected Real Property affirmatively insuring over, or not raising as an exception to the title policy, such Title Objection; provided, however, that the Title Company confirms said coverage shall be provided to any future buyer from Purchaser at regular rates. Notwithstanding the foregoing, Forestar Petroleum and Forestar (USA) shall be obligated to cure, on or before the Closing Date, all liens, mortgages or financing statements encumbering the Timberlands or the Timber Rights, respectively, and securing a monetary obligation which was created or suffered by Forestar Petroleum or Forestar (USA), respectively, or any party claiming by, through or under such Seller (other than liens for non-delinquent real estate taxes or assessments) (each, a “Monetary Lien”).

(d)If Forestar Petroleum or Forestar (USA), as applicable, does not elect to cure such matter by written notice to Purchaser within Sellers’ Response Period, then Purchaser must elect by delivering written notice to Sellers either (i) to waive such Title Objection and proceed to the Closing, accepting title to those portions of the Timberlands or Timber Rights, as applicable, that are subject to such uncured Title Objection (which Title Objection shall become a Permitted Encumbrance) without adjustment to the Purchase Price; or (ii) to identify those portions of the Timberlands or Timber Rights (other than Title Failures) that are subject to such uncured Title Objection (a “Title Objection Property”) in which event the Purchase Price shall be reduced by the reduction in value of the Title Objection Property due to such Title Objections, to the extent such value exceeds one percent (1%) of the Purchase Price (the “Title Basket”), as determined by reference to (A) the value of such Title Objection Property encumbered by such Title Objection compared to its value if unencumbered by such Title Objection and (B) the value table attached hereto as Schedule 8 (the “Value Table”) (provided that any disputes regarding the value of any Title Objection Property shall be resolved in accordance with Section 29); provided, however, that any Title Objection Property shall remain part of the Property for purposes of the transaction contemplated by this

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Agreement and such Timberland or Timber Rights shall be conveyed to Purchaser at Closing. For the avoidance of doubt, any objections arising from Title Failures shall not be subject to the Title Basket, shall not count towards the Title Objection Property and shall be governed by Section 5(g). Failure of Purchaser to deliver to Sellers such written notice within five (5) business days following Sellers’ response (or following the expiration of Sellers’ Response Period if Sellers deliver no such response) shall be deemed an election of clause (i).

(e)In the event any title matter, other than a Permitted Encumbrance, that would render title to the Real Property or a portion thereof unmarketable and which would materially interfere with the use of the Real Property first arises or is first disclosed to Purchaser after the expiration of the Title Objection Period which was not reflected on the Title Commitments, then the following provisions will apply:

(i)Purchaser shall notify Sellers of such matter in writing within two (2) business days of Purchaser’s discovery of such matter, and failure by Purchaser to deliver such notice within such time period shall be deemed a waiver of any objection right with respect to such matter, which shall become a Permitted Encumbrance.

(ii)If such Title Objection is a Monetary Lien, or if such Title Objection arose solely by reason of an act or omission of Forestar Petroleum or Forestar (USA) in breach of such Party’s obligations under this Agreement, such breaching Party shall be obligated to cure such Title Objection on or before the Closing Date.

(iii)If such Title Objection is not described in Section 5(e)(ii), and Forestar Petroleum or Forestar (USA), as applicable, does not elect to cure such matter by written notice to Purchaser within three (3) business days following Sellers’ receipt of Purchaser’s notice under Section 5(e)(i) (“Sellers’ Supplemental Response Period”), then Purchaser must elect by delivering written notice to Sellers either (A) to waive such Title Objection and proceed to the Closing, accepting title to those portions of the Real Property that are subject to such uncured Title Objection (which Title Objection shall become a Permitted Encumbrance) without adjustment to the Purchase Price; or (B) to identify those portions of the Timberlands or Timber Rights that are subject to such uncured Title Objection, which excluded portion shall be a Title Objection Property, in which event the Purchase Price shall be reduced by the reduction in value of the Title Objection Property due to such Title Objections, to the extent such value exceeds one percent (1%) of the Purchase Price, as determined by reference to (1) the value of such Title Objection property encumbered by such Title Objection compared to its value if unencumbered by such Title Objection and (2) the Value Table (provided that any disputes regarding the value of any Title Objection Property shall be resolved in accordance with Section 29); provided, however, that any Title Objection Property shall remain part of the Property for purposes of the transaction contemplated by this Agreement and such Timberland or Timber Rights shall be conveyed to Purchaser at Closing. Failure of Purchaser to deliver to Sellers such written notice within three (3) days following Sellers’ response (or following the expiration of Sellers’ Supplemental Response Period if Sellers deliver no such response) shall be deemed an election of clause (A).

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(f)So long as this Agreement remains in force, neither Forestar Petroleum nor Forestar (USA) shall, without the prior written consent of Purchaser, (i) lease, encumber or convey all or part of the Property or any interest therein, or (ii) enter into any agreement granting to any person any right with respect to the Property or any portion thereof; provided, however, Forestar Petroleum shall have the right, in the ordinary course of business, provided prompt written notice is provided to Purchaser along with a copy of any agreements, to (x) renew the Forestar Petroleum Contracts, (y) enter into new recreational leases substantially in the form of the existing recreational leases included in the Forestar Petroleum Contracts, and (z) enter into new, customary access agreements, provided that any such renewal or new recreational lease (A) shall be for a term of not more than twelve (12) months, and (B) shall be terminable by the lessor thereunder upon no more than sixty (60) days prior notice.

(g)    Purchaser may object to any Title Failures at any time prior to the expiration of the Title Objection Period. Title Failure objections shall not be subject to the Title Basket, but rather the Purchase Price will be reduced by the value of the Title Failure Property as determined by reference to the Value Table, provided that any disputes regarding the value of any Title Failure Property shall be resolved in accordance with the dispute resolution process of Section 29. The Title Failure Property shall be excluded from the transaction and shall not be conveyed to Purchaser at Closing; provided that if (A) either (1) Sellers reasonably believe that the Title Failure Property is of economic value to Sellers or (2) if there is colorable title or a sufficient period of time has passed that would allow Sellers to establish an adverse possession claim with respect to the Title Failure Property, then (B) any Title Failure Property excluded from the transaction contemplated by this Agreement shall contain adjacent parcels and be no less than thirty (30) acres and (C) Forestar Petroleum and Purchaser shall enter into customary access easements, for the benefit of Forestar (USA) and Forestar Petroleum, to allow Forestar (USA) and Forestar Petroleum to access any Title Failure Property removed from the transaction contemplated by this Agreement.

6.Inspection.

(a)Purchaser and its agents, representatives, employees, engineers and contractors shall have the right during the term of this Agreement to enter upon the Real Property to inspect, examine, survey and make timber cruises and other tests or surveys which it may deem necessary or advisable and to verify the accuracy of all data and information, if any, provided by any Seller to Purchaser in connection with the Real Property; provided, however, that Purchaser shall obtain the written consent of the applicable Seller prior to conducting any core sampling, test borings or other invasive testing. Purchaser and the contractors, representatives and agents of Purchaser who enter upon the Real Property shall maintain commercial general liability insurance, naming each Seller as an additional insured, in an amount not less than One Million and 00/100 Dollars ($1,000,000.00) per occurrence and Two Million and 00/100 Dollars ($2,000,000.00) in the aggregate for personal injury and/or property damage and products/completed operations coverage. Purchaser shall forward to Sellers a certificate of insurance (a “Certificate”) for such policy, together with evidence of Purchaser’s worker’s compensation coverage and automobile liability insurance prior to any entry upon the Real Property, but in no event later than five (5) business days after the Effective Date, which Certificate shall name Sellers as an “additional insured” on such commercial general liability policy. Such commercial general liability coverage maintained

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by Purchaser shall be primary and non-contributory to any insurance carried by a Seller. Purchaser hereby agrees to indemnify and hold Forestar Petroleum and Forestar (USA) harmless for any and all cost and expense resulting from claims or damages caused by said inspections, examinations and tests. The foregoing indemnification shall survive any termination, cancellation or expiration of this Agreement or the Closing.

(b)Notwithstanding the inspection rights provided in Section 6(a), Purchaser expressly acknowledges and agrees (i) that Purchaser has had the opportunity, prior to the Effective Date, to fully and carefully investigate and inspect the physical, structural and environmental condition of the Real Property and the volume of timber located thereon and to review and analyze documents and records related to the Property, all laws, statutes, rules, regulations, ordinances and orders affecting the Property, and all other materials and information affecting or in any manner relating to the Property and the ownership, use, occupancy, management, operation and maintenance thereof, (ii) that Purchaser has received and reviewed that certain Phase I Environmental Site Assessment Report dated September 2016 (SLR Project No. 110.01667.00001) prepared by SLR International Corporation with respect to the Property (the “Phase I Report”), and (iii) that Purchaser acknowledges that it is satisfied with the results of such review, inspection and analysis. Except with respect to a breach of any of Sellers’ representations and warranties set forth in Section 10, Purchaser, on behalf of itself and all of its officers, directors, shareholders, employees, partners, members, subsidiaries and other affiliated or related entities, representatives, consultants and agents, and Purchaser’s and each of the foregoing parties’ successors and assigns (collectively, the “Purchaser Parties”) hereby expressly waives, relinquishes and releases any and all rights, remedies and claims any of the Purchaser Parties may now or hereafter have, against each Seller, and all the Sellers’ respective officers, directors, shareholders, employees, partners, members, subsidiaries and other affiliated or related entities, representatives, consultants and agents, and the Sellers and each of the foregoing parties’ successors and assigns, whether known or unknown, arising from or related to (x) the physical condition, quality, quantity and state of repair of the Property and the prior management and operation thereof; (y) the Property’s failure to comply with any federal, state or local laws, regulations, ordinances or orders, including, without limitation, those relating to health, safety, zoning, and the environment; or (z) any past, present or future presence, alleged presence, release or alleged release of any Hazardous Substance (as hereinafter defined) in, on, under or about, or otherwise migrating to, from, across or under, the Property. “Hazardous Substance” means any chemical, compound, constituent, material, waste, contaminant (including petroleum, crude oil or any fraction thereof) or other substance, defined as hazardous or toxic, or otherwise regulated by any of the following laws and regulations promulgated thereunder as amended from time to time prior to the Effective Date: (1) the Comprehensive Environmental Response, Compensation and Liability Act (as amended by the Superfund Amendments and Reauthorization Act), 42 U.S.C. § 9601 et seq.; (2) the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq.; (3) the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq.; (4) the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; (5) the Clean Water Act, 33 U.S.C. § 1251 et seq.; (6) the Clean Air Act, 42 U.S.C. § 1857 et seq.; and (7) all laws of the states in which the Real Property is located that are based on, or substantially similar to, the federal statutes listed in clauses (1) through (6) of this sentence. Notwithstanding the foregoing, Purchaser’s waiver and release of Sellers as described above shall not prevent Purchaser from joining Sellers as a potentially responsible party in any suit or action brought against Purchaser by a third party arising from the alleged breach of

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environmental law with respect to the Real Property prior to the Closing. Purchaser or its successors and assigns shall have no obligation at any time or as a result of any provision contained in this Agreement to indemnify, defend or save harmless Sellers from claims by third parties for any conditions, actions or omissions which occurred prior to the Closing, regardless of whether claims are brought before or after Closing. The foregoing release, subject to the Purchaser’s rights with regard to third party claims, shall survive any termination, cancellation or expiration of this Agreement or the Closing.

7.HSR Act. Sellers and Purchaser acknowledge that the transaction contemplated by this Agreement may be subject to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and it will be a condition to the Closing hereunder that the parties obtain such approvals as may be required under the HSR Act. Each of Purchaser, Forestar Petroleum and Forestar (USA) agree to provide such information to the others as is reasonably requested by any of the others in order to determine if the transaction contemplated herein is exempt from the filing requirements described in the HSR Act. If counsel for Purchaser, Forestar Petroleum or Forestar (USA) has a good faith reasonable belief that any closing of the transactions contemplated under this Agreement requires the filing of a pre-merger notification under the HSR Act, Purchaser, Forestar Petroleum and Forestar (USA) shall promptly file any notification and report forms and related material that it may be required to file with the Federal Trade Commission or the Antitrust Division of the U.S. Department of Justice under the HSR Act, shall use its diligent, good faith efforts to obtain a waiver of the applicable waiting period, shall make any filings pursuant thereto that may be necessary, and shall cooperate and coordinate with the other party in connection with such filings and returns. Purchaser shall pay one-half of any filing fees required in connection with any filings required by this Section 7, and Forestar Petroleum and Forestar (USA) shall pay the other one-half of such filing fees in proportion to each such Party’s share of the Purchase Price. The Closing Date shall be extended to the extent necessary to permit the compliance with all procedures set forth in this Section 7, but in no event beyond December 30, 2016, provided that if the Parties have not received the applicable approvals, or if all applicable waiting periods have not expired, on or before December 15, 2016, then either Forestar Petroleum, Forestar (USA) or Purchaser will have the right, exercisable at its sole election, to terminate this Agreement by delivering written notice to the other party, whereupon Escrow Agent will return the Earnest Money to Purchaser, and the parties hereto shall have no further rights or obligations hereunder (except as otherwise expressly provided herein).

8.Deliveries; No Contact. Purchaser acknowledges that Sellers have delivered to Purchaser, and Purchaser is in receipt of, (i) Sellers’ current compartment maps for each tract within the Real Property, (ii) copies of the Contracts, and (iii) copies of other items related to the ownership, development and management of the Property and requested by Purchaser, to the extent the same are in the possession or control of Forestar Petroleum or Forestar (USA) and are reasonably available to such Parties, with the exception of the Claims Material. Prior to the Closing, Purchaser shall not contact or communicate with any counterparty to any Contract without the prior written consent of the applicable Seller, which shall not be unreasonably withheld. Purchaser acknowledges that all information with respect to the Property delivered by either Seller to Purchaser under this Agreement is for informational purposes only and, except as expressly set forth to the contrary in this Agreement, is given without representation or warranty of any kind. If this Agreement is terminated or if Closing

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does not occur, Purchaser shall promptly return to Forestar Petroleum and Forestar (USA) all information delivered to Purchaser pursuant to this Agreement, provided that, to the extent such information is in electronic format, Purchaser shall delete or destroy all such information and promptly deliver to Sellers written certification of such destruction. The provisions of this Section 8 shall survive any termination, cancellation or expiration of this Agreement or the Closing.

9.Condition of Property; Damage; Condemnation.

(a)Each Seller agrees that at the Closing, the Forestar Petroleum Property and the Forestar (USA) Property, as applicable, shall be in substantially the same condition as exists on the Effective Date, subject to Sellers’ operation on the Property in accordance with usual and customary timberland operations, natural wear and tear, the Permitted Encumbrances, condemnation, and casualties beyond Sellers’ control. Subject to the provisions of this Section 9, all risk of loss to the Property or any part thereof prior to the Closing shall be borne by the applicable Seller.

(b)If at any time prior to the Closing, the Property or any material part thereof (including, but not limited to, any timber thereon) is destroyed or damaged by fire or other casualty, Sellers shall deliver to Purchaser prompt written notice of such damage along with the amount of such damage (calculated as the value of the destroyed or damaged Property less the salvage value of such destroyed or damaged Property) (the “Casualty Damage Value”). If Purchaser, by delivering written notice to Sellers within ten (10) days following Sellers’ delivery of written notice of the damage, disputes the Casualty Damage Value reported by Sellers, Purchaser and Sellers shall attempt in good faith to resolve such dispute and agree upon the Casualty Damage Value. If Purchaser and Sellers are unable to agree as to the Casualty Damage Value on or before ten (10) days after Purchaser delivers to Sellers written notice of its dispute, then such dispute shall be resolved in accordance with Section 29. The Closing Date shall be extended to the extent necessary, but in no event beyond December 30, 2016, to allow for the completion of all procedures set forth in this Section 9(b), including the resolution of any such dispute. Notwithstanding such casualty, Purchaser shall be required to purchase the Property in accordance with this Agreement, provided that, if the Casualty Damage Value exceeds one percent (1%) of the Purchase Price, the Forestar (USA) Purchase Price shall be reduced by an amount equal to the difference of (i) the Casualty Damage Value, minus (ii) one percent (1%) of the Purchase Price.

(c)If at any time prior to the Closing, any action or proceeding is filed or threatened under which any portion of the Property may be taken pursuant to any law, ordinance or regulation by condemnation or the right of eminent domain, Sellers shall deliver to Purchaser prompt written notice thereof. In such event, Purchaser and Sellers shall be required to consummate the transactions contemplated by this Agreement, and Purchaser shall receive a credit against the Purchase Price in the amount of all proceeds of any awards payable with respect to the Property, or, if such amount is not known at the time of the Closing, the Purchase Price shall not be reduced and Sellers shall assign to Purchaser at the Closing all of Sellers’ right to such proceeds from such action or proceeding.

10.Warranties, Representations, and Disclaimers.

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(a)Forestar (USA) hereby warrants and represents to Purchaser, as of the Effective Date and as of the Closing Date, that:

(i)Forestar (USA) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business in the State of Georgia and has all requisite corporate power and authority to: (A) own, lease and operate the Forestar (USA) Property and to carry on its business as now being conducted; (B) execute this Agreement and all other agreements, instruments and documents to be executed by it in connection with the consummation of the transactions contemplated by this Agreement; and (C) perform its obligations and consummate the transactions contemplated hereby.

(ii)The execution, delivery and performance of this Agreement and the consummation of transactions contemplated hereby by Forestar (USA) have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Forestar (USA) are necessary for it to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Forestar (USA) and, assuming due authorization, execution and delivery by Forestar Petroleum and Purchaser, is a legal, valid and binding obligation of Forestar (USA), enforceable against Forestar (USA) in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(iii)The execution, delivery or performance of this Agreement by Forestar (USA) will not result in a breach or violation of, or default under, (A) the terms, conditions or provisions of Forestar (USA)’s certificate of incorporation, bylaws or any standing resolution of its board of directors; (B) any Forestar (USA) Contract; (C) any law applicable to Forestar (USA) or any portion of the Forestar (USA) Property; or (D) any permit, license, order, judgment or decree of any governmental authority by which Forestar (USA) or the Forestar (USA) Property is or may be bound, excluding from the foregoing clauses (B), (C) and (D) such breaches, violations or defaults that would not be reasonably likely, individually or in the aggregate, to have a material adverse effect on the Forestar (USA) Property or on Forestar (USA)’s ability to perform its obligations under this Agreement.

(iv)There are no approvals, consents or registration requirements with respect to any governmental authority that are or will be necessary for the valid execution and delivery by Forestar (USA) of this Agreement, or the consummation of the transactions contemplated hereby and thereby, other than those which (A) have been obtained, or (B) are of a routine nature and not customarily obtained or made prior to execution of purchase and sale agreements in transactions similar in nature and size to those contemplated hereby and where the failure to obtain the same would not, individually or in the aggregate, have a material adverse effect on the Forestar (USA) Property or on Forestar (USA)’s ability to perform its obligations under this Agreement.

(v)Except as set forth on Schedule 9 (the “Forestar (USA) Litigation”), there is no pending or, to Forestar (USA)’s knowledge, threatened action or proceeding

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(including, but not limited to, any condemnation or eminent domain action or proceeding) before any court, governmental agency or arbitrator which may materially adversely affectForestar (USA)’s ability to perform this Agreement or which may materially adversely affect title to the Forestar (USA) Property. For purposes of this Section 10(a)(v), “Forestar (USA)’s knowledge” shall mean the actual knowledge, without any duty on the part of such individuals to investigate or inquire into any particular matter, of either of (A) Michael Quinley, and (B) Kenneth B. Gibson, Jr.

(vi)Schedule 5 contains a list, and Forestar (USA) has made available to Purchaser copies, of the Forestar (USA) Contracts in effect as of the Effective Date and each material amendment, supplement, and modification in respect of any of the foregoing. To Forestar (USA)’s Knowledge each of the Forestar (USA) Contracts (1) are in full force and effect, and (2) have no defaults or events that with the passage of time or giving of notice, or both, could become a default thereunder. Forestar (USA) is not a party to, and the Timber Rights are not subject to, any contract or agreement of any kind whatsoever, written or oral, formal or informal, with respect to the Timber Rights that would be binding upon the Timber Rights or Purchaser after Closing, other than the Permitted Exceptions and the Forestar (USA) Contracts.

(vii)To Forestar (USA)’s Knowledge, Forestar (USA)’s use of the Timber Rights is in material compliance with all statutes, ordinances, rules, regulations, orders and requirements of all federal and local authorities and any other governmental entity having jurisdiction over the Timber Rights. Forestar (USA) has not received any written notice from any governmental entity having jurisdiction over the Forestar (USA) Property of any violation of any statutes, ordinances, rules, regulations, orders or requirements applicable to the Forestar (USA) Property, which violation is continuing as of the Effective Date.

(viii)Except as set forth in the Phase I Report, Forestar (USA) has not received notice from any public authority or from any other source and has no actual knowledge that (A) any portion of the land underlying the Timber Rights has been used as a land fill or as a dump to receive garbage, refuse, or waste, whether or not hazardous, or (B) any Hazardous Substance has been disposed of or released in, on or about any portion of the land underlying the Timber Rights in violation of applicable law.

(ix)Forestar (USA) (x) has not been designated as a “specifically designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, <http://www.treas.gov/ofac/t11sdn.pdf> or at any replacement website or other replacement official publication of such list and (y) is currently in compliance with and will at all times during the term of this Agreement remain in compliance with the regulations of the Office of Foreign Asset Control of the Department of the Treasury and any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action relating thereto.

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(b)Forestar Petroleum hereby warrants and represents to Purchaser, as of the Effective Date and as of the Closing Date, that:

(i)Forestar Petroleum is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business in the State of Georgia and has all requisite corporate power and authority to: (A) own, lease and operate the Forestar Petroleum Property and to carry on its business as now being conducted; (B) execute this Agreement and all other agreements, instruments and documents to be executed by it in connection with the consummation of the transactions contemplated by this Agreement; and (C) perform its obligations and consummate the transactions contemplated hereby.

(ii)The execution, delivery and performance of this Agreement and the consummation of transactions contemplated hereby by Forestar Petroleum have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Forestar Petroleum are necessary for it to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Forestar Petroleum and, assuming due authorization, execution and delivery by Forestar (USA) and Purchaser, is a legal, valid and binding obligation of Forestar Petroleum, enforceable against Forestar Petroleum in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(iii)The execution, delivery or performance of this Agreement by Forestar Petroleum will not result in a breach or violation of, or default under, (A) the terms, conditions or provisions of Forestar Petroleum’s certificate of incorporation, bylaws or any standing resolution of its board of directors; (B) any Forestar Petroleum Contract; (C) any law applicable to Forestar Petroleum or any portion of the Forestar Petroleum Property; or (D) any permit, license, order, judgment or decree of any governmental authority by which Forestar Petroleum or the Forestar Petroleum Property is or may be bound, excluding from the foregoing clauses (B), (C) and (D) such breaches, violations or defaults that would not be reasonably likely, individually or in the aggregate, to have a material adverse effect on the Forestar Petroleum Property or on Forestar Petroleum’s ability to perform its obligations under this Agreement.

(iv)There are no approvals, consents or registration requirements with respect to any governmental authority that are or will be necessary for the valid execution and delivery by Forestar Petroleum of this Agreement, or the consummation of the transactions contemplated hereby and thereby, other than those which (A) have been obtained, or (B) are of a routine nature and not customarily obtained or made prior to execution of purchase and sale agreements in transactions similar in nature and size to those contemplated hereby and where the failure to obtain the same would not, individually or in the aggregate, have a material adverse effect on the Forestar Petroleum Property or on Forestar Petroleum’s ability to perform its obligations under this Agreement.

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(v)Except as set forth on Schedule 10 (the “Forestar Petroleum Litigation”), there is no pending or, to Forestar Petroleum’s knowledge, threatened action or proceeding (including, but not limited to, any condemnation or eminent domain action or proceeding) before any court, governmental agency or arbitrator which may materially adversely affectForestar Petroleum’s ability to perform this Agreement or which may materially adversely affect title tothe Forestar Petroleum Property. For purposes of this Section 10(b)(v), “Forestar Petroleum’s knowledge” shall mean the actual knowledge, without any duty on the part of such individuals to investigate or inquire into any particular matter, of either of (A) Michael Quinley, and (B) Kenneth B. Gibson, Jr.

(vi)Schedule 2 contains a list, and Forestar Petroleum has made available to Purchaser copies, of the Forestar Petroleum Contracts in effect as of the Effective Date and each material amendment, supplement, and modification in respect of any of the foregoing. To Forestar Petroleum’s Knowledge each of the Forestar Petroleum Contracts set forth on Schedule 2 (1) are in full force and effect, and (2) have no defaults or events that with the passage of time or giving of notice, or both, could become a default thereunder. Forestar Petroleum is not a party to, and the Timberlands are not subject to, any contract or agreement of any kind whatsoever, written or oral, formal or informal, with respect to the Timberlands that would be binding upon the Timberlands or Purchaser after Closing, other than the Permitted Exceptions, the Forestar Petroleum Contracts and the Development Rights.

(vii)To Forestar Petroleum’s Knowledge, Forestar Petroleum’s use of the Timberlands is in material compliance with all statutes, ordinances, rules, regulations, orders and requirements of all federal and local authorities and any other governmental entity having jurisdiction over the Timberlands. Forestar Petroleum has not received any written notice from any governmental entity having jurisdiction over the Forestar Petroleum Property of any violation of any statutes, ordinances, rules, regulations, orders or requirements applicable to the Forestar Petroleum Property, which violation is continuing as of the Effective Date.

(viii)Except as set forth in the Phase I Report, Forestar Petroleum has not received notice from any public authority or from any other source and has no actual knowledge that (A) any portion of the Timberlands has been used as a land fill or as a dump to receive garbage, refuse, or waste, whether or not hazardous, or (B) any Hazardous Substance has been disposed of or released in, on or about any portion of the land underlying the Timber Rights in violation of applicable law.

(ix)Forestar Petroleum (x) has not been designated as a “specifically designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, <http://www.treas.gov/ofac/t11sdn.pdf> or at any replacement website or other replacement official publication of such list and (y) is currently in compliance with and will at all times during the term of this Agreement remain in compliance with the regulations of the Office of Foreign Asset Control of the Department of the Treasury and any statute, executive order (including

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the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action relating thereto.

(c)Purchaser hereby warrants and represents to each Seller, as of the Effective Date and as of the Closing Date, that:

(i)Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Georgia, and has all requisite company power and authority to: (A) own, lease and operate the Property and to carry on its business as now being conducted; (B) execute this Agreement; and (C) perform its obligations and consummate the transactions contemplated hereby.

(ii)The execution, delivery and performance of this Agreement and the consummation of transactions contemplated hereby by Purchaser have been duly and validly authorized by all necessary company action, and no other company proceedings on the part of Purchaser are necessary for it to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Purchaser and, assuming due authorization, execution and delivery by Sellers, is a legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(iii)The execution, delivery, and performance by Purchaser of this Agreement will not result in a breach or violation of, or default under, the terms, conditions or provisions of its limited liability company agreement or any standing resolution of its members or any other organizational document.

(iv)There are no approvals, consents or registration requirements with respect to any governmental authority that are or will be necessary for the valid execution and delivery by Purchaser of this Agreement, or the consummation of the transactions contemplated hereby and thereby, other than those which (A) have been obtained, or (B) are of a routine nature and not customarily obtained or made prior to execution of purchase and sale agreements in transactions similar in nature and size to those contemplated hereby and where the failure to obtain the same would not, individually or in the aggregate, have a material adverse effect on Purchaser’s ability to perform its obligations under this Agreement.

(v)There is no pending or, to Purchaser’s knowledge, threatened action or proceeding before any court, governmental agency or arbitrator which may materially adversely affectPurchaser’s ability to perform this Agreement.

(vi)Purchaser has the financial capacity, or has sufficient binding subscriptions from its investors, to pay the Purchase Price at Closing and all expenses and

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fees incurred by Purchaser pursuant to or in connection with the transactions contemplated by this Agreement.

(vii)The Confidentiality and Non-Disclosure Agreement, Land Entry Permit, and Release entered into between Forestar (USA) and Purchaser dated May 6, 2016 is in full force and effect and Purchaser has taken no action or omission that would constitute a default thereunder.

(viii)Purchaser (which for this purpose includes Purchaser’s partners, members, principal stockholders and any other constituent entities) (x) has not been designated as a “specifically designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, <http://www.treas.gov/ofac/t11sdn.pdf> or at any replacement website or other replacement official publication of such list and (y) is currently in compliance with and will at all times during the term of this Agreement remain in compliance with the regulations of the Office of Foreign Asset Control of the Department of the Treasury and any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action relating thereto.

(d)PURCHASER ACKNOWLEDGES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT OR IN THE DOCUMENTS TO BE DELIVERED AT THE CLOSING: (i) NO REPRESENTATIONS, WARRANTIES OR PROMISES, EXPRESS OR IMPLIED, HAVE BEEN OR ARE BEING MADE BY OR ON BEHALF OF SELLERS OR ANY OTHER PERSON WITH RESPECT TO THE PROPERTY, INCLUDING WITH RESPECT TO THE PHYSICAL OR ENVIRONMENTAL CONDITION (WHETHER PATENT OR LATENT), HABITABILITY, QUANTITY OR QUALITY OF TIMBER, NURSERY STOCK OR SEEDLINGS, FUTURE FIBER GROWTH OR HARVEST, FUTURE FINANCIAL RESULTS FROM THE SALE OF FIBER GROWN ON THE PROPERTY OR FROM THE SALE OF THE PROPERTY, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ZONING, TAX CONSEQUENCES, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS, AND SELLERS HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES, EITHER EXPRESS OR IMPLIED RELATING TO ANY OF THE FOREGOING MATTERS, AND (ii) IN ENTERING INTO THIS AGREEMENT, PURCHASER HAS NOT RELIED AND DOES NOT RELY ON ANY SUCH REPRESENTATION, WARRANTY OR PROMISE, EXPRESS OR IMPLIED, BY OR ON BEHALF OF SELLERS OR ANY OTHER PERSON. PURCHASER ACKNOWLEDGES AND AGREES THAT PURCHASER SHALL TAKE THE PROPERTY IN “AS IS, WHERE IS, AND WITH ALL FAULTS” CONDITION ON THE CLOSING DATE, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE DOCUMENTS TO BE DELIVERED AT THE CLOSING. THIS SECTION 10(d) SHALL SURVIVE THE CLOSING.

(e)UPON THE CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING ADVERSE ENVIRONMENTAL CONDITIONS,

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MAY NOT HAVE BEEN REVEALED BY SELLERS’ OR PURCHASER’S INVESTIGATION, AND UPON THE CLOSING, PURCHASER SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLERS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLERS AT ANY TIME BY REASON OF OR ARISING OUT OF PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY. NOTWITHSTANDING THE FOREGOING, PURCHASER’S WAIVER AND RELEASE OF SELLERS AS DESCRIBED ABOVE SHALL NOT PREVENT PURCHASER FROM JOINING EITHER OR BOTH SELLERS AS A POTENTIALLY RESPONSIBLE PARTY IN ANY SUIT OR ACTION BROUGHT AGAINST PURCHASER BY A THIRD PARTY ARISING FROM THE ALLEGED BREACH OF ENVIRONMENTAL LAW WITH RESPECT TO THE REAL PROPERTY PRIOR TO THE CLOSING. PURCHASER OR ITS SUCCESSORS AND ASSIGNS SHALL HAVE NO OBLIGATION AT ANY TIME OR AS A RESULT OF ANY PROVISION CONTAINED IN THIS AGREEMENT TO INDEMNIFY, DEFEND OR SAVE HARMLESS SELLERS FROM CLAIMS BY THIRD PARTIES FOR ANY CONDITIONS, ACTIONS OR OMISSIONS WHICH OCCURRED PRIOR TO THE CLOSING, REGARDLESS OF WHETHER CLAIMS ARE BROUGHT BEFORE OR AFTER CLOSING. THIS SECTION 10(e) SHALL SURVIVE THE CLOSING.

11.Survival; Indemnification.

(a)Survival. Notwithstanding anything herein to the contrary, all representations and warranties made in this Agreement shall survive the Closing and the delivery of the conveyance instruments to Purchaser for a period of one (1) year after the Closing Date (the “Indemnity Period”). After the Indemnity Period, the Parties agree that no claims or causes of action may be brought against any Party or any of its directors, officers, employees, affiliates, controlling persons, agents or representatives based upon, directly or indirectly, any of the representations and warranties contained in this Agreement. This Section 11(a) shall not limit any covenant or agreement of the Parties that contemplates performance after the Closing. All provisions of this Agreement that contemplate performance after the Closing Date, the waiver and indemnity provisions set forth in this Agreement, and any other provisions that expressly survive the Closing shall survive the Closing and be fully enforceable thereafter, but subject to the specific time limitations set forth in this Section 11(a) as to the representations of Sellers and Purchaser.

(b)Indemnification by Forestar Petroleum. From and after the Closing Date, Forestar Petroleum ‎shall, subject to the other terms and conditions of this Section 11(b), indemnify, defend and hold ‎Purchaser, and any of its respective agents, employees, officers and directors, and each of the heirs, executors, successors and assigns thereof (collectively, the “Purchaser Indemnitees”) harmless from any and all ‎claims, actions, demands, liabilities, losses, fines, costs, expenses (including reasonable attorneys’ ‎fees), and compensatory damages only, and not including

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any punitive, consequential, incidental or special damages, whether or not resulting from third-party claims (each of the foregoing, a “Loss”) to ‎Purchaser, arising out of or with respect to any breach of any representation or warranty of Forestar Petroleum in this ‎Agreement.‎ For the purposes of determining Losses, all qualifications based on the word material or ‎similar phrases shall be disregarded.

(c)Indemnification by Forestar (USA). From and after the Closing Date, Forestar (USA) ‎shall, subject to the other terms and conditions of this Section 11(c), indemnify, defend and hold the ‎Purchaser Indemnitees harmless from any and all Losses to ‎Purchaser, arising out of or with respect to any breach of any representation or warranty of Forestar (USA) in this ‎Agreement.‎ For the purposes of determining Losses, all qualifications based on the word material or ‎similar phrases shall be disregarded.

(d)Indemnification by Purchaser. From and after the Closing Date, Purchaser ‎shall, subject to the other terms and conditions of this Section 11(d), indemnify, defend and hold Forestar Petroleum and any of its respective agents, employees, officers and directors, and each of the heirs, executors, successors and assigns thereof (collectively, the “Forestar Petroleum Indemnitees”) and Forestar (USA) and any of its respective agents, employees, officers and directors, and each of the heirs, executors, successors and assigns thereof (collectively, the “Forestar (USA) Indemnitees” and, together with the Forestar Petroleum Indemnitees, the “Sellers Indemnitees”) harmless from any and all ‎Losses to ‎the applicable Sellers Indemnitees, arising out of or with respect to any breach of any representation or warranty of Purchaser in this ‎Agreement.‎ For the purposes of determining Losses, all qualifications based on the word material or ‎similar phrases shall be disregarded.

(e)Certain Limitations and Rules. With respect to the indemnification obligations in Sections 11(b), 11(c) and 11(d) above:

(i)Time Limitations. Forestar Petroleum and Forestar (USA) shall be obligated to indemnify the Purchaser Indemnitees and Purchaser shall be obligated to indemnify the Sellers Indemnitees only for those claims giving rise to any Loss as to which the person claiming the right to be indemnified (the “Indemnified Party”) has given the Party from whom it is claiming indemnification (the “Indemnifying Party”) written notice prior to the end of the Indemnity Period.

(ii)Basket. No indemnification shall be made by either Forestar Petroleum, Forestar (USA) or Purchaser with respect to any claim made pursuant to Section 11(b), Section 11(c) or Section 11(d) unless the aggregate amount of Losses incurred or suffered by all Purchaser Indemnitees or all Sellers Indemnitees, as the case may be, under all claims exceeds one percent (1%) of the Purchase Price (the “Basket Amount”) and, in such event, indemnification shall be made by the Indemnifying Party only to the extent the Losses exceed, in the aggregate, the Basket Amount.

(iii)Cap. In no event shall Purchaser’s aggregate obligation to indemnify the Sellers Indemnitees pursuant to this Section 11 exceed an amount equal to five percent (5%) of the Purchase Price. In no event shall Forestar Petroleum’s aggregate obligation to

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indemnify the Purchaser Indemnitees pursuant to this Section 11 exceed an amount equal to five percent (5%) of the Forestar Petroleum Purchase Price. In no event shall Forestar (USA)’s aggregate obligation to indemnify the Purchaser Indemnitees pursuant to this Section 11 exceed an amount equal to five percent (5%) of the Forestar (USA) Purchase Price.

(iv)Knowledge. If on or prior to the Closing, Purchaser, Forestar Petroleum or Forestar (USA) has actual knowledge of any information that would cause one or more of the representations and warranties made by Forestar Petroleum or Forestar (USA) (in the case of Purchaser) or Purchaser (in the case of Sellers) to be inaccurate as of the date made or as of the Closing Date, the Purchaser Indemnitees, the Forestar Petroleum Indemnitees or the Forestar (USA) Indemnitees, as the case may be, shall not have any right or remedy after the Closing with respect to such inaccuracy and shall be deemed to have waived its rights to indemnification in respect thereof.

(v)Adjustment to Purchase Price. There shall be no indemnification under any provision of this Section 11 for a breach of any representation or warranty to the extent an adjustment to the Purchase Price has been made pursuant to this Agreement with respect to such breach.

(f)Indemnification Procedure. All claims for indemnification under this Section 11 shall be resolved in accordance with the following procedures:

(i)Notice of Claim. The Indemnified Party will give the Indemnifying Party prompt notice of any such Loss, and the Indemnifying Party will undertake the defense thereof by counsel chosen by it. The failure to promptly notify the Indemnifying Party shall not relieve such party of its obligations hereunder except to the extent the failure to so notify has prejudiced the Indemnified Party. Any written notice delivered by an Indemnified Party to the Indemnifying Party with respect to a Loss shall set forth, with as much specificity as is reasonably practicable, the facts that are the basis of the claim for such Loss and, to the extent reasonably practicable, a reasonable estimate of the amount thereof.

(ii)Contest. Following written notice by the Indemnified Party to the Indemnifying Party of a Loss, the Indemnifying Party shall be entitled at its cost and expense to contest and defend by all appropriate legal proceedings such Loss; provided, however, that notice of the intention so to contest shall be delivered by the Indemnifying Party to the Indemnified Party within thirty (30) days from the date of receipt by the Indemnifying Party of notice from the Indemnified Party of the assertion of such Loss. Any such contest may be conducted in the name and on behalf of the Indemnifying Party or the Indemnified Party, as may be appropriate. Such contest shall be conducted diligently by reputable counsel with appropriate experience in the relevant subject matter employed or retained by the Indemnifying Party, but the Indemnifying Party shall keep the Indemnified Party fully informed with respect to such Loss and the contest thereof. If the Indemnified Party joins in any such contest, the Indemnifying Party shall have full authority, in consultation with the Indemnified Party, to determine all action to be taken with respect thereto; provided, however, that in no event shall the Indemnifying Party have authority to agree to any relief

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other than the payment of money damages by the Indemnifying Party unless agreed to by the Indemnified Party. Each Party shall bear its own expenses of such representation. If any Loss is asserted and the Indemnifying Party fails to contest and defend such Loss within a reasonable period of time, the Indemnified Party may take such action in connection therewith as the Indemnified Party deems necessary or desirable, including retention of counsel, and the Indemnified Party shall be entitled to indemnification for costs incurred in connection with such defense.

(iii)Cooperation and Access. If requested by the Indemnifying Party, the Indemnified Party agrees to cooperate with the Indemnifying Party and its counsel, including permitting reasonable access to books, records, files, data, property and personnel in contesting any Loss that the Indemnifying Party elects to contest or, if appropriate, in making any counterclaim against the person asserting the Loss, or any cross-complaint against any person, but the Indemnifying Party will reimburse the Indemnified Party for reasonable out-of-pocket costs (but not the cost of employee time expended) incurred by the Indemnified Party in so cooperating. The Indemnified Party shall permit such access only after advance written notice and during regular business hours, and the Indemnifying Party agrees not to unreasonably interfere with the Indemnified Party’s business operations. The Indemnified Party will take steps necessary to ensure that, upon request, the Indemnifying Party is provided copies of requested documents which may relate to its indemnification obligations; provided, however, that the Indemnified Party shall not be required, as a result of this Agreement, to provide the Indemnifying Party with (i) any document or information that would be subject to protection under the attorney work product doctrine, attorney-client privilege, or other legal privilege, (ii) any information regarding the pricing of timber, timber harvest records, internal appraisals of the Property, other valuations or similar pricing or financial records, or any other information that is confidential and proprietary to the Indemnified Party or (iii) any document or item that the Indemnified Party is contractually or otherwise bound to keep confidential.

(iv)Participation and Settlement. The Indemnifying Party agrees to afford the Indemnified Party and its counsel the opportunity to be present at, and to participate in, conferences with all persons, including governmental authorities, asserting any Loss against the Indemnified Party or conferences with representatives of or counsel for such persons.

(v)Insurance Recoveries. The amount of any Loss shall be reduced by any amount received by the Indemnified Party (or an affiliate) with respect thereto under any third party insurance coverage or from any other person (excluding an affiliate of the Indemnified Party) alleged to be responsible therefor, net of any expense incurred by the Indemnified Party in collecting such amount. Any Indemnified Party that makes a claim for indemnification under this Section 11 shall use commercially reasonable efforts to collect any amount available under any such insurance coverage and from any such other person alleged to have responsibility. If an Indemnified Party (or an affiliate) receives an amount under insurance coverage or from such other person with respect to a Loss at any time subsequent to any indemnification provided the Indemnifying Party pursuant to this Section

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11, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by the Indemnifying Party in connection with providing such indemnification up to such amount received by the Indemnified Party (or affiliate), net of any expense incurred by the Indemnified Party in collecting such amount.

(g)Exclusive Remedy. Each of the Parties agrees that if the Closing occurs, the indemnification provided in this Section 11 is the exclusive remedy for a breach by any Party of any representation or warranty contained in this Agreement and is in lieu of any and all other rights and remedies that any other Party may have under this Agreement or otherwise for monetary relief or equitable relief with respect to the matters described in this Section 11.

12.No Brokerage Commission. Other than with respect to the services of LandVest, Inc., each of Forestar Petroleum and Forestar (USA) warrants and represents to Purchaser that it has not incurred any liability for any brokerage fee or commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, and the payment of LandVest, Inc. shall be the sole obligation of Forestar Petroleum and Forestar (USA). Purchaser warrants and represents to each Seller that Purchaser has not incurred any liability for any brokerage fee or commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. Each Seller and Purchaser each agree to indemnify and hold harmless the others from any and all damage, loss, liability, expense and claim (including but not limited to attorneys’ fees and court costs) arising with respect to any such fee or commission which may be suffered by the indemnified Party by reason of any action or agreement of the indemnifying Party. This Section 12 shall survive the termination, cancellation or expiration of this Agreement.

13.Taxes; Expenses; Claims.

(a)Taxes. Ad valorem real property taxes on the Real Property and special assessments, as well as revenue under the Contracts, shall be prorated as of the Closing Date. If actual tax bills for the taxable year of the Closing are not available, said taxes shall be prorated based on tax bills for the previous taxable year and the Parties agree to cause a reproration of said taxes upon the receipt of tax bills for the taxable year of the Closing. If the Real Property is not designated a separate tax parcel, said taxes shall be adjusted to an amount bearing the same relationship to the total tax bill which the acreage contained within the applicable portion of the Real Property bears to the acreage contained within the property included within said tax bill. Purchaser and Sellers shall reasonably cooperate in good faith to cause all real property taxes on the Property and Sellers’ retained property to be paid (and to reimburse the appropriate Party making such payments, as applicable), to the extent subdivisions or changes of ownership are not reflected on future real property tax bills. Any deferred or “rollback” taxes assessed against the Property as a result of Seller’s change in use of the Property before the Closing or sale of the Property shall be paid by Sellers within thirty (30) days of final determination thereof. Any deferred or “rollback” taxes assessed against the Property as a result of the Purchaser’s change in the use of the Property after Closing or failure to maintain the Property in any property tax reduction program shall be paid by Purchaser within thirty (30) days of final determination thereof. Notwithstanding anything to the contrary contained herein, the Sellers shall remain responsible for all reassessment taxes and

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penalties related to a breach of any Conservation Use Assessment (Agricultural or Forestland) (as described in O.C.G.A. §48-5-7.4 or O.C.G.A. §48-5-7.7) due solely to the sale of the Property to Purchaser. The obligations of this Section 13(a) shall survive the Closing.

(b)Expenses and Transfer Taxes.

(i)Purchaser shall pay all costs in connection with the recording of the Deeds, all costs of obtaining updates of the Title Commitments if requested of Title Company by Purchaser after the Effective Date, all costs of purchasing a title insurance policy and any endorsements thereto, all costs of Purchaser’s due diligence, all costs of Purchaser’s legal representation, one-half (1/2) of all costs of the Phase I Report, one-half (1/2) of all transfer taxes, and one-half (1/2) of all escrow expenses of Escrow Agent.

(ii)Forestar Petroleum and Forestar (USA) shall pay, in proportion to their respective shares of the Purchase Price, all costs of initially producing the Title Commitments (inclusive of all revisions related to removal of blanket lack of access exceptions and blanket mineral rights exceptions), one-half (1/2) of all transfer taxes, one-half (1/2) of all costs of the Phase I Report, all costs of Sellers’ legal representation and one-half (1/2) of all escrow expenses of Escrow Agent.

(iii)Except as set forth in this Agreement, all other costs shall be borne by the Party incurring them.

(c)Claims. As of the Effective Date, Forestar (USA) has provided copies of petitions and pending settlement agreements (the “Claims Material”) concerning the Forestar (USA) Assumable Claims (as that term is defined in Schedule 9). During the Title Objection Period, Sellers shall allow Purchaser to discuss the Access Matters (as hereinafter defined) and Condemnation Litigation (as hereinafter defined) with Sellers’ litigation counsel, Douglas H. Flint and/or John F. Connolly with Flint, Connolly & Walker, LLP.

(i)Access Matters. With respect to the Prescriptive Easement Litigation and the Road Access Litigation (as those terms are defined on Schedule 9) (the “Access Matters”), Purchaser shall have until the expiration of the Title Objection Period to review the Claims Material related to the Access Matters and notify Forestar (USA) of its election, at Purchaser’s sole discretion, to assume either or both of the Access Matters. If Purchaser fails to make an election within the Title Objection Period, Purchaser shall be deemed to have elected not to assume either of the Access Matters. If Purchaser elects not to assume, or is deemed to have elected not to assume one or both of the Access Matters, the portion of the Property subject to such Access Matters that are not assumed shall remain in the Property and Forestar (USA) shall cause such Access Matters to be dismissed no later than ninety (90) days after Closing. For the avoidance of doubt, Purchaser shall have the option to object to the lack of access with respect to the portion of the Property subject to the Road Access Litigation in accordance with Section 5(b) as a Title Objection (“Road Access Litigation Objection”). In the event that (A) Purchaser makes a Road Access Litigation Objection and elects to assume the Road Access Litigation, (B) as a result of such Road Access Litigation objection and other Title Objections, the Purchase Price is reduced

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pursuant to the terms of Section 5(d), and (C) Purchaser prevails in the Road Access Litigation, then, no later than the three (3) business days after a final judgment in Purchaser’s favor with respect to the Road Access Litigation, Purchaser shall notify Sellers of the judgment and deliver by wire transfer of immediately available United States funds to Forestar (USA) an amount equal to the lesser of the following: (1) the amount of the Purchase Price reduction calculated pursuant to Section 5(d) or (2) the amount of the Purchase Price reduction with respect to the portion of the Property subject to the Road Access Litigation as determined in accordance with Section 5.

(ii)Condemnation Litigation.

a.Purchaser shall have the right to review the Claims Material related to the Condemnation Litigation (as that term is defined in Schedule 9), object to the Condemnation Litigation, and, no later than the expiration of the Title Objection Period, notify Forestar (USA) in writing of its election, at Purchaser’s sole discretion, to assume the Condemnation Litigation (an “Assumption Election”). If Purchaser fails to make an Assumption Election within the Title Objection Period, Purchaser shall be deemed to have elected not to assume the Condemnation Litigation.

b.If Purchaser makes the Assumption Election, then the Purchase Price shall remain unadjusted, Purchaser shall acquire the portion of the Property subject to the Condemnation Litigation (the “Condemnation Property”) at Closing, Purchaser shall retain all condemnation proceeds, and the terms of Section 13(c)(iii) shall apply.

c.If Purchaser elects not to make an Assumption Election or is deemed to have elected not to assume the Condemnation Litigation, then all of the following terms shall apply: (w) the Condemned Property shall be acquired by Purchaser at Closing and the Purchase Price shall be reduced by an amount equal to the portion of the Purchase Price due with respect to the Condemnation Property by reference to the Value Table (provided that any disputes regarding the value of any such Condemnation Property shall be resolved in accordance with Section 29), (x) Sellers shall continue to defend Sellers in the Condemnation Litigation until resolution and Purchaser shall cooperate with Sellers to the extent necessary for such defense, including, but not limited to, Sellers’ right to direct any negotiations, claims, defenses, and settlements, (y) Sellers shall indemnify and hold harmless the Purchaser from any and all claims, loss, costs, expenses, actions, and damages related to or arising in connection with the Condemnation Litigation and (z) Seller shall receive the condemnation proceeds. No later than the date that is three (3) business days after Purchaser receives any condemnation proceeds, Purchaser shall notify Sellers of its receipt of the condemnation proceeds and the amount of such proceeds and deliver by wire transfer of immediately available United States funds to Forestar (USA) an amount equal to the condemnation proceeds.

(iii)In the event that Purchaser elects to assume all or one of the Forestar (USA) Assumable Claims, then Purchaser and Forestar (USA) shall cooperate in good faith, to substitute Purchaser for Forestar (USA) as plaintiff in the Forestar (USA) Assumable Claims by filing with the appropriate arbitrators and courts all motions, pleadings or other documents required to complete such substitution, and the obligations hereof shall survive Closing, provided that Seller shall not indemnify Purchaser with respect to any such assumed

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claim. In the event Purchaser does not elect to assume the Forestar (USA) Assumable Claims, at Closing, Forestar (USA) shall indemnify and hold harmless the Purchaser from any and all claims, loss, costs, expenses, actions, and damages related to or arising in connection with the Forestar (USA) Assumable Claims that Purchaser does not assume. As used herein, the “Forestar (USA) Assumable Claims” shall mean the Prescriptive Easement Litigation, Road Access Litigation, and Condemnation Litigation, collectively.

14.Conditions.

(a)The obligations of Sellers and Purchaser to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver, on or before the Closing Date, of the following conditions:

(i)All waiting periods (and any extension thereof) under laws applicable to the transactions contemplated by this Agreement shall have expired or been earlier terminated.

(ii)There shall be no injunction, restraining order or decree of any nature of any court or governmental authority that is in effect that restrains or prohibits the consummation of the transactions contemplated by this Agreement or imposes conditions on such consummation not otherwise provided for herein.

(iii)Neither Purchaser nor any Seller shall have been advised by any United States federal government agency (which advisory has not been officially withdrawn on or prior to the Closing Date) that such government agency is investigating the transactions contemplated by this Agreement to determine whether to file or commence any litigation that seeks or would seek to enjoin, restrain or prohibit the consummation of the transactions contemplated by this Agreement.

In the event any of the above conditions is not satisfied on or before the Closing, either Forestar Petroleum, Forestar (USA) or Purchaser will have the right, exercisable at its sole election, to terminate this Agreement by delivering written notice to the other Parties before the Closing, whereupon Escrow Agent will return the Earnest Money to Purchaser, and the Parties will have no further rights or obligations hereunder (except as otherwise expressly provided herein).

(b)Unless waived by Purchaser, the obligations of Purchaser under this Agreement are expressly made subject to the fulfillment in all respects of the following conditions precedent:

(i)the truth and accuracy as of the Closing Date, in all material respects, of each and every warranty and representation herein made by any Seller; and

(ii)Each Seller’s timely performance of and compliance with, in all material respects, each and every term, condition, agreement, restriction and obligation to be performed and complied with by such Seller under this Agreement; and

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(iii)Title Company delivering to Purchaser at Closing its Marked Commitment to issue an Owner’s Policy to Purchaser insuring Purchaser’s marketable, fee simple title to the Real Property.

In the event any of the above conditions is not satisfied on or before the Closing, Purchaser will have the right, exercisable at Purchaser’s sole election, to exercise the remedies described in Section 15(b). Notwithstanding the foregoing sentence, in the event of either Seller’s failure to fulfill any condition precedent set forth in Section 14(b)(ii), Purchaser shall provide written notice to such Seller and such Seller shall have seven (7) days from receipt of such notice to fulfill the condition precedent before Purchaser may exercise any remedies described in Section 15(b).

(c)Unless waived by a Seller, the obligations of such Seller under this Agreement are expressly made subject to the fulfillment in all respects of the following conditions precedent:

(i)the truth and accuracy as of the Closing Date, in all material respects, of each and every warranty and representation herein made by Purchaser; and

(ii)Purchaser’s timely performance of and compliance with, in all material respects, each and every term, condition, agreement, restriction and obligation to be performed and complied with by Purchaser under this Agreement.

(iii)The aggregate acreage of all Title Objection Property shall not exceed ten percent (10%)of the acreage of the Timberlands

In the event any of the above conditions is not satisfied on or before the Closing, either Seller will have the right, exercisable at such Party’s sole election, to exercise the remedies described in Section 15(a), provided that if either Seller elects to exercise such remedy, the other Seller shall be deemed to have made an identical election. Notwithstanding the foregoing sentence, in the event of Purchaser’s failure to fulfill any condition precedent set forth in Section 14(c)(ii), Sellers shall provide written notice to Purchaser and Purchaser shall have seven (7) days from receipt of such notice to fulfill the condition precedent before Seller may exercise any remedies described in Section 15(a).

15.Earnest Money; Default; Remedies.

(a)If the purchase and sale of any portion of the Property contemplated hereby is not consummated because of a default by Purchaser under this Agreement, then Sellers shall require Escrow Agent to pay the entire Forestar Petroleum Earnest Money to Forestar Petroleum and the entire Forestar (USA) Earnest Money to Forestar (USA) as full liquidated damages and not as a penalty and as Sellers’ sole and exclusive remedy against Purchaser for a failure by Purchaser to consummate the purchase and sale of the Property (the Parties acknowledging that Sellers’ damages as a result of such default are not capable of exact ascertainment and that said liquidated damages are fair and reasonable).

(b)If the purchase and sale of any portion of the Property contemplated hereby is not consummated because of a default by either Seller under this Agreement, then Purchaser’s

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sole remedies shall be limited to either of the following as selected by Purchaser in Purchaser’s sole discretion: (i) termination of this Agreement, whereupon Escrow Agent shall promptly return the Earnest Money to Purchaser and Seller shall reimburse Purchaser for all actual, third party costs and expenses incurred by Purchaser in connection with this Agreement, including attorney’s fees, as of the date of Purchaser’s termination up to, but not exceeding $250,000, or (ii) pursue Sellers for specific performance of this Agreement, in which event Escrow Agent shall continue to hold the Earnest Money until the final disposition of the action for specific performance in favor of the Purchaser, whereupon the Earnest Money shall be applied to the Purchase Price, or if, the final disposition of the action for specific performance is in favor of the Seller, the Escrow Agent shall pay the Earnest Money to the Purchaser.

(c)The duties of Escrow Agent shall be as follows:

(i)During the term of this Agreement, Escrow Agent shall hold and deliver the Earnest Money in accordance with the terms and provisions of this Agreement.

(ii)If this Agreement is terminated by the mutual written agreement of Sellers and Purchaser, or if Escrow Agent is unable to determine at any time to whom the Earnest Money should be delivered, or if a dispute develops between Sellers and Purchaser concerning to whom the Earnest Money should be delivered, then in any such event, Escrow Agent shall request joint written instructions from Sellers and Purchaser and shall deliver the Earnest Money in accordance with such joint written instructions. In the event that such written instructions are not received by Escrow Agent within ten (10) days after Escrow Agent has served a written request for instructions upon Sellers and Purchaser, Escrow Agent shall have the right to pay the Earnest Money into a court of competent jurisdiction and interplead Sellers and Purchaser in respect thereof, and thereafter Escrow Agent shall be discharged of any obligations in connection with this Agreement.

(iii)If costs or expenses are incurred by Escrow Agent because of litigation or a dispute between Sellers and Purchaser arising out of the holding of the Earnest Money in escrow, Sellers and Purchaser shall each pay Escrow Agent one-half of such costs and expenses (with each Seller responsible for such Seller’s one-half in proportion to their respective shares of the Purchase Price). Except for such costs and expenses, no fee or charge shall be due or payable to Escrow Agent for its services as escrow holder.

(iv)By joining herein, Escrow Agent undertakes only to perform the duties and obligations imposed upon it under the terms of this Agreement and expressly does not undertake to perform any of the other covenants, terms and provisions incumbent upon Sellers and Purchaser hereunder.

(v)Purchaser and Sellers hereby agree and acknowledge that Escrow Agent assumes no liability in connection herewith except for any loss, costs or damage arising out of Escrow Agent’s own negligence or willful misconduct; that Escrow Agent shall never be responsible for the validity, correctness or genuineness of any document or notice referred to under this Agreement; that Escrow Agent shall not be liable or responsible for any loss occurring which arises from bank failure or error, insolvency or suspension, or

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a situation or event which falls under the Federal Deposit Insurance Corporation (FDIC) coverage (Sellers and Purchaser are aware that FDIC coverage applies to a maximum amount of $250,000 per depositor, as may be modified by the FDIC from time to time); and that Escrow Agent may seek advice from its own counsel and shall be fully protected in any action taken by it or omitted to be taken by it in good faith in accordance with the opinion of its counsel.

16.Assignment. Except as otherwise expressly contemplated by this Agreement, no Party shall assign its rights or obligations hereunder, in whole or in part, without the prior written consent of the other Parties, given or withheld in the sole discretion of each Party. Notwithstanding the foregoing, Purchaser shall have the right to assign its rights and obligations in whole, but not in part, under this Agreement to any party controlling, controlled by, or under common control with Purchaser, provided that no such assignment shall relieve SPP LAND, LLC of any liability hereunder.

17.No Waiver. Except as specifically set forth herein, no action or failure to act by any Party shall constitute a waiver of any right or duty afforded to such Party under this Agreement, nor shall any such action or failure to act constitute an approval of or acquiescence in any breach of this Agreement except as may be specifically agreed in writing.

18.GoverningLaw. This Agreement shall be governed in all respects, including validity, construction, interpretation and effect, by the laws of the State of Georgia, without giving effect to its principles or rules of conflicts of law to the extent such principles or rules would require or permit the application of the laws of another jurisdiction. Any and all actions concerning any dispute arising hereunder shall be filed and maintained in the state courts of Georgia in Fulton County, Georgia, or the federal courts for and in the Northern District of Georgia located in Atlanta, Georgia. The parties specifically consent and submit to the jurisdiction and venue of such state or federal court, and irrevocably waive any objections either may have based on improper venue or forum non conveniens to the conducting of any proceeding in any such court.

19.Notice. Any and all notices required or permitted under this Agreement shall be made or given in writing and shall be delivered in person or sent by postage, pre-paid, United States Mail, certified or registered, return receipt requested, or by a recognized overnight carrier, or by facsimile or e-mail, to the other Parties or Escrow Agent at the addresses set forth below, and such address as may be furnished by notice in accordance with this Section 19; provided, however, if any delivery is made by facsimile or e-mail, such delivery shall be deemed delivered only if the Party (or Escrow Agent) giving such notice obtains a confirmation of receipt and delivers such notice by hand delivery, United States mail or recognized overnight carrier for next day delivery. All notices shall be deemed given and effective upon the earliest to occur of: (i) the confirmed facsimile or e-mail transmission or hand delivery of such notice to the address for notices; (ii) one business day after the deposit of such notice with an overnight courier service by the time deadline for next day delivery addressed to the address for notices; or (iii) three business days after depositing the notice in the United States mail.

Sellers:            Forestar (USA) Real Estate Group Inc.

6300 Bee Cave Road

29

Building II, Suite 500

Austin, TX 78746

Attention: Mr. David M. Grimm, Esq.

Phone: 512-433-5223

Fax: 512-433-5203

Email: davidgrimm@forestargroup.com

And to:        Forestar Petroleum Corporation

6300 Bee Cave Road

Building II, Suite 500

Austin, TX 78746

Attention: Mr. David M. Grimm, Esq.

Phone: 512-433-5223

Fax: 512-433-5203

Email: davidgrimm@forestargroup.com

with a copy to:     Sutherland Asbill & Brennan LLP

999 Peachtree Street, N.E.

Suite 2300

Atlanta, Georgia 30309

Attention: Daniel R. McKeithen

Phone: 404-853-8342

Fax: 404-853-8806

Email:    daniel.mckeithen@sutherland.com

Purchaser:        SPP Land, LLC

6304 Peake Road

Macon, Georgia 31210

Attention: Patrick C. Patton, Manager

Phone: 478.477.1000

Fax:478.477.8084

Email:ppatton@sppland.com

with a copy to:    Martin Snow, LLP

P.O. Box 1606 (31202-1606)

240 3^rd Street (31201)

Macon, Georgia

Attention: K. Amber Duff

Phone: 478.749.1710

Fax: 478.743.4204

Email:kaduff@martinsnow.com

Escrow Agent: Metropolitan Title Agency, Inc.,

on behalf of Chicago Title Insurance Company

1820 The Exchange

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Suite 550

Atlanta, Georgia 30339

Attention: John Cripe

Phone: 770-933-0073

Fax: 770-933-0233

Email: jcripe@mtaga.com

20.Entire Agreement. This Agreement contains the entire agreement among the Parties and Escrow Agent with respect to the subject matter hereof and cannot be amended or supplemented except by a written agreement signed by the Parties.

21.Captions. The captions of sections in this Agreement are for convenience and reference only and are not part of the substance hereof.

22.Severability. In the event that any one or more of the provisions, sections, words, clauses, phrases or sentences contained in this Agreement, or the application thereof in any circumstance is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, section, word, clause, phrase or sentence in every other respect and of the remaining provisions, sections, words, clauses, phrases or sentences of this Agreement, shall not be in any way impaired, it being the intention of the Parties and Escrow Agent that this Agreement shall be enforceable to the fullest extent permitted by law.

23.Counterparts. This Agreement may be executed in several counterparts, each of which may be deemed an original, and all of such counterparts together shall constitute one and the same Agreement. This Agreement may be executed by each Party and Escrow Agent upon a separate copy and attached to another copy in order to form on or more counterparts.

24.Binding Effect. This Agreement shall bind the Parties (and Escrow Agent, to the extent applicable) and their respective heirs, legal representatives, successors and assigns.

25.Time of Essence. Time is of the essence of this Agreement.

26.No Survival. Except as may otherwise expressly be provided herein, the provisions of this Agreement shall not survive the Closing and shall be merged into the delivery of the Deeds and other documents and the payment of all monies pursuant hereto at the Closing.

27.Incorporation of Exhibits. All exhibits referred to in this Agreement are hereby incorporated herein by this reference.

28.Confidentiality; Public Announcements. Purchaser and Sellers agree that the terms and conditions of the transactions contemplated in this Agreement are to remain confidential, except that either Party and its affiliates may disclose the terms and provisions of this Agreement (i) to the extent that such Party or any of its affiliates is required by applicable law (including the rules and regulations promulgated by the SEC or any stock exchange) to make public disclosure, or (ii) in any legal proceeding, including any audit, to the extent necessary to enforce any rights under this Agreement, provided that, in either case, the disclosing Party shall provide the other Parties with

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prior notice of such disclosure and the content thereof. This Section 28 shall survive any termination, cancellation or expiration of this Agreement or the Closing.

29.Dispute Resolution. If Purchaser and either or both of Forestar (USA) and Forestar Petroleum are unable to agree as to the value of Compartment 13527 under Section 1(d)(i), value of a Title Objection Property or Title Failure Property under Section 5, the Casualty Damage Value under Section 9, or the value of the Condemnation Property under Section 13(c)(ii), then any such disagreeing Party shall have the right to invoke the procedures of this Section 29 by delivering written notice to the other Parties. The applicable Seller (or, if both Sellers are participants to the dispute, the Sellers acting jointly) and Purchaser each shall appoint an independent forestry consultant within five (5) days following the delivery of such written notice, each of which may be a consultant previously engaged by the appointing Party, and such two consultants will in turn select a third independent forestry consultant within five (5) days to act with them in a panel to determine the appropriate value. A majority of the panel of consultants will reach a binding decision within thirty (30) days following the selection of the third consultant, and the decision of the panel of consultants will be final. Purchaser will bear the cost of its consultant and one-half (1/2) of the cost of the third consultant, and the applicable Seller (or, if both Sellers are participants to the dispute, the Sellers acting jointly in proportion to their share of the Purchase Price) will bear the cost of its consultant and one-half (1/2) of the cost of the third consultant. If the Closing Date is extended to resolve a dispute in accordance with this Section 29, in no event shall Closing occur after December 30, 2016. If any such dispute remains unresolved as of the Closing, then (a) the Purchase Price shall be adjusted, if applicable, after Closing in accordance with the decision of the panel; and (b) if the disputed amounts, based on the Value Table, exceed one (1) percent of the Purchase Price in the aggregate, then (i) the Purchase Price shall be reduced at Closing by the lesser of the amounts claimed by the parties (or by zero if the full amount is in dispute), (ii) the portion of the Purchase Price paid to Sellers shall be reduced by the disputed amounts, and (iii) Purchaser shall deposit with Escrow Agent the full disputed amount and such escrowed funds shall be disbursed after Closing pursuant to the final resolution of the dispute. The terms of this Section 29 shall survive Closing.

30.Business Days. If any date set forth in this Agreement for the performance of any obligation by any Party or Escrow Agent, or for the delivery of any instrument or notice as herein provided, should be a Saturday, Sunday or legal holiday, the compliance with such obligation or delivery shall be deemed acceptable on the next day which is not a Saturday, Sunday or legal holiday. As used herein, the term “legal holiday” means any state or federal holiday for which financial institutions or post offices are generally closed in the State of Georgia for observance thereof, and the term “business day” means any day other than a Saturday, Sunday or legal holiday.

31.    Post-Closing Corrective Deeds and Adjustments.    If, within one (1) year after Closing, it is discovered that there are any mutual errors in any of the documents or instruments executed and delivered at Closing, the Parties agree to and shall in good faith cooperate with and assist each other in obtaining corrective documents or instruments. The Parties agree to split equally any expenses related to any corrective deeds. If any errors or omissions in the closing statement and the monetary calculations are discovered after Closing, the Parties agree to and shall in good faith cooperate to remedy the error promptly.

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[remainder of page intentionally left blank; signatures appear on following pages]

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IN WITNESS WHEREOF, this Agreement has been duly executed, sealed and delivered by the Parties and Escrow Agent as of the Effective Date.

SELLERS:

FORESTAR (USA) REAL ESTATE GROUP INC., a Delaware corporation

By:    /s/ Michael Quinley                                        Name:    Michael Quinley                                        Its:    President – Community Development    

FORESTAR PETROLEUM CORPORATION, a Delaware corporation

By:    /s/ Michael Quinley                                        Name:    Michael Quinley                                        Its:    President – Community Development    

[Signatures Continue on Following Pages]

(Purchaser’s Signature Page to Purchase and Sale Agreement)

PURCHASER:

SPP LAND, LLC, a Georgia limited liability company

By:/s/ Patrick C. Patton    

Name:    Patrick C. Patton    

Title: Manager    

[Signatures Continue on Following Page]

(Escrow Agent’s Signature Page to Purchase and Sale Agreement)

ESCROW AGENT:

METROPOLITAN TITLE AGENCY, INC.

By: /s/ John Perry Cripe    

Name:    John Perry Cripe                

Title:    President                    

EX-10.29

Exhibit 10.29

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of November 10, 2016 (the “Effective Date”), by and among FORESTAR (USA) REAL ESTATE GROUP INC., a Delaware corporation (“Forestar (USA)”), FORESTAR PETROLEUM CORPORATION, a Delaware corporation (“Forestar Petroleum” and Forestar (USA), each a “Seller” and together “Sellers”), HUBBLE TIMBER, LLC, a Missouri limited liability company (“Purchaser”; each of Purchaser, Forestar (USA) and Forestar Petroleum being a “Party” and, collectively, the “Parties”), and METROPOLITAN TITLE AGENCY, INC. (“Escrow Agent”).

STATEMENT OF BACKGROUND

A.    Forestar Petroleum is the owner of certain real property located in Cherokee and Cleburne Counties, Alabama; and Bartow, Chattooga, Floyd, Gordon, Haralson, Murray, Paulding, Polk and Walker Counties, Georgia, subject to certain timber rights held by Forestar (USA) on such real property.

B.    Purchaser desires to acquire, and Forestar Petroleum and Forestar (USA) desire to sell, such real property and timber rights, all in accordance with the terms of, and subject to the conditions set forth in, this Agreement.

STATEMENT OF AGREEMENT

NOW, THEREFORE, in consideration of $10.00 in hand paid by Purchaser to Forestar (USA) and Forestar Petroleum, the foregoing, their respective representations, warranties, covenants and agreements set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties (and Escrow Agent, to the extent applicable), intending to be legally bound, hereby agree as follows:

1.Agreement of Purchase and Sale. Subject to the provisions of this Agreement, and for the consideration herein stated, Forestar Petroleum agrees to sell to Purchaser the Forestar Petroleum Property (as hereinafter defined), Forestar (USA) agrees to sell to Purchaser the Forestar (USA) Property (as hereinafter defined), and Purchaser agrees to buy the same from Sellers.

(a)As used herein, the “Forestar Petroleum Property” shall mean all of the right, title and interest of Forestar Petroleum in and to the assets described in subsections (i), (ii), (iii) and (iv) of this Section 1(a), subject to the Permitted Encumbrances (as hereinafter defined):

(i)Those certain tracts or parcels of land located in Cherokee and Cleburne Counties, Alabama; and Bartow, Chattooga, Floyd, Gordon, Haralson, Murray, Paulding, Polk and Walker Counties, Georgia, containing approximately 12,043.11 acres, which tracts or parcels are more fully described on Schedule 1 attached hereto, together with all buildings, structures, and other improvements located thereon, all tenements, hereditaments, easements, appurtenances and privileges thereto belonging, but excluding, and subject to, the Timber Rights (as defined below) (collectively, the “Timberlands”);

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(ii)Forestar Petroleum’s rights in those certain agreements described on Schedule 2attached hereto (the “Forestar Petroleum Contracts”);

(iii)To the extent transferable under applicable law, all permits, authorizations, utility capacity, development rights, entitlements, orders, registrations, certificates, variances, approvals, franchises, claims, causes of action, and consents of any applicable governmental authority with respect to the Timberlands (the “Development Rights”); and

(b)As used herein, the “Forestar (USA) Property” shall mean all of the right, title and interest of Forestar (USA) in and to the assets described in subsections (i) and (ii) of this Section 1(b), subject to the Permitted Encumbrances (as hereinafter defined):

(i)All rights in and to the timber growing, standing or lying on the Timberlands as set forth in the reservation of timber in the deeds described on Schedule 4 attached hereto (collectively, the “Timber Rights” and, together with the Timberlands, the “Real Property”); and

(ii)Forestar (USA)’s rights in those certain agreements described on Schedule 5attached hereto (the “Forestar (USA) Contracts” and, together with the Forestar Petroleum Contracts, the “Contracts”).

(c)The Forestar Petroleum Property together with the Forestar (USA) Property shall be collectively referred to herein as the “Property.” The Property shall specifically exclude any and all tangible personal property located on the Property within Compartment 10020 in Floyd County, Georgia, including, but not limited to, all equipment, furnishings and all office furniture, and Seller shall remove all of such excluded tangible personal property prior to Closing.

(d)Purchaser acknowledges the following: A 467-acre tract located in Compartment 12033 in Polk County, Georgia (the “TEMCO Property”) is, as of the Effective Date, owned by TEMCO Associates, LLC, a limited liability company owned in part by an affiliate of Sellers. Title to the TEMCO Property has been searched and the TEMCO Property is included in the Title Commitment (as hereinafter defined) for Polk County, Georgia. Forestar USA will acquire the TEMCO Property and Forestar Petroleum will thereafter, but in no event later than the Closing Date (as hereinafter defined), acquire the land, together with all buildings, structures, and other improvements located on the TEMCO Property, all tenements, hereditaments, easements, appurtenances and privileges thereto belonging, but excluding, and subject to, a reservation of the Timber Rights by Forestar (USA).

2.Purchase Price. The purchase price to be paid by Purchaser for the Forestar Petroleum Property shall be THIRTEEN MILLION FORTY-FOUR THOUSAND SIX HUNDRED THIRTY-FOUR AND 82/100THS DOLLARS ($13,044,634.82) (the “Forestar Petroleum Purchase Price”), lessa credit for the Forestar Petroleum Earnest Money (as defined below) and subject to adjustment as set forth in this Agreement, and shall be payable to Forestar Petroleum by wire transfer of immediately available funds at the Closing to an account designated by Forestar Petroleum. The purchase price to be paid by Purchaser for the Forestar (USA) Property shall be TEN MILLION

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SIX HUNDRED EIGHTY-SIX THOUSAND ONE HUNDRED NINETY-THREE AND NO/100THS DOLLARS ($10,686,193.00) (the “Forestar (USA) Purchase Price” and, together with the Forestar Petroleum Purchase Price, the “Purchase Price”), lessa credit for the Forestar (USA) Earnest Money (as defined below) and subject to adjustment as set forth in this Agreement, and shall be payable to Forestar (USA) by wire transfer of immediately available funds at the Closing to an account designated by Forestar (USA). The Forestar (USA) Purchase Price shall be allocated among premerchantable timber, merchantable timber less than 15 years of age, and merchantable timber 15 years of age and older (“Merchantable Timber”) as set forth on Schedule 6 attached hereto. Purchaser shall reasonably cooperate with any request by any Seller to further allocate the Purchase Price among the components of the Property.

3.Earnest Money. Within five (5) days after the Effective Date, Purchaser shall deliver to Escrow Agent (a) the sum of THREE HUNDRED FIFTY-FIVE THOUSAND AND NO/100THS DOLLARS ($355,000.00) (such sum together with all interest earned thereon being the “Forestar Petroleum Earnest Money”), and (b) the sum of THREE HUNDRED FIFTY-FIVE THOUSAND AND NO/100THS DOLLARS ($355,000.00) (such sum together with all interest earned thereon being the “Forestar (USA) Earnest Money” and, together with the Forestar Petroleum Earnest Money, the “Earnest Money”). Escrow Agent agrees to hold the Earnest Money in an interest-bearing account and disburse the Earnest Money in accordance with the terms hereof. At the Closing, the Forestar Petroleum Earnest Money shall be applied as a credit against the Forestar Petroleum Purchase Price and the Forestar (USA) Earnest Money shall be applied as a credit against the Forestar (USA) Purchase Price.

4.Closing.

(a)The execution and delivery of the documents and instruments for the consummation of the purchase and sale pursuant hereto (the “Closing”) shall take place on or before December 30, 2016, but the Parties shall use good faith efforts to close by December 15, 2016 (the actual date of Closing being the “Closing Date”), through the escrow services of Escrow Agent, or such earlier date and time, or such other location, as may be mutually agreeable to the Sellers and Purchaser.

(b)At the Closing, Forestar Petroleum shall deliver the following items:

(i)one special warranty deed in the form of Exhibit A attached hereto with respect to each county in Alabama in which the Timberlands are located (the “Alabama Timberland Deeds”) executed by Forestar Petroleum, and one limited warranty deed in the form of Exhibit B attached hereto with respect to each county in Georgia in which the Timberlands are located (the “Georgia Timberland Deeds” and, together with the Alabama Timberland Deeds, the “Timberland Deeds”) executed by Forestar Petroleum, conveying the Timberlands to Purchaser, subject only to the Permitted Encumbrances (as defined below), and each containing a legal description of the applicable portion of the Timberlands identical to the applicable portion of the legal description of the Timberlands set forth in the applicable Title Commitments (as defined below);

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(ii)a counterpart of a general assignment and assumption agreement in the form of Exhibit C attached hereto executed by Forestar Petroleum, by which Forestar Petroleum shall assign its right, title, and interest in, and Purchaser shall assume Forestar Petroleum’s continuing and future obligations under, the Forestar Petroleum Contracts and the Development Rights (the “Forestar Petroleum Assignment”);

(iii)an executed affidavit from Forestar Petroleum as to its non-foreign status;

(iv)an affidavit of gain in the form required by O.C.G.A. §§48-7-128 and 129 and the regulations promulgated thereunder;

(v)an affidavit of gain in the form required by Ala. Code 1975 §40-18-86 and the regulations promulgated thereunder (“Alabama Affidavit of Gain”);

(vi)Real Estate Sales Validation form in compliance with Alabama Code 40-22-1;

(vii)an executed counterpart of a closing statement in form mutually agreeable to the Sellers and Purchaser in their reasonable discretion (the “Closing Statement”);

(viii)a reliance letter in favor of Purchaser in a form reasonably acceptable to Purchaser and executed by SLR International Corporation (“Sellers’ Environmental Consultant”) with respect to the Phase I Report (as defined below);

(ix)a notice of assignment of the Forestar Petroleum Contracts executed by Forestar Petroleum; and

(x)such other certificates, affidavits, evidence of authority and instruments as may be reasonably necessary or desirable to consummate the purchase and sale contemplated hereby and to enable Purchaser to obtain a title insurance policy insuring title to the Real Property, subject to the Permitted Encumbrances.

(c)At the Closing, Forestar (USA) shall deliver the following items:

(i)one special warranty deed in the form of Exhibit D attached hereto with respect to each county in Alabama in which the Timberlands are located (the “Alabama Timber Rights Deeds”) executed by Forestar (USA), and one limited warranty deed in the form of Exhibit E attached hereto with respect to each county in Georgia in which the Timberlands are located (the “Georgia Timber Rights Deeds” and, together with the Alabama Timber Rights Deeds, the “Timber Rights Deeds”; the Timberland Deeds and the Timber Rights Deeds, collectively, the “Deeds”) executed by Forestar (USA), conveying the Timber Rights to Purchaser, subject only to the Permitted Encumbrances (as defined below);

(ii)[Intentionally Omitted]

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(iii)a counterpart of an assignment and assumption of the Forestar (USA) Claim, to the extent necessary as a result of Purchaser assuming the Forestar (USA) Claim pursuant to Section 13(c), in a form reasonably approved by Purchaser and Seller (the “Forestar (USA) Claim Assignment”);

(iv)an executed affidavit from Forestar (USA) as to its non-foreign status;

(v)an affidavit sufficient under O.C.G.A. Section 48-7-128 to establish that Forestar (USA) is not a “non-resident” of Georgia; 

(vi)an Alabama Affidavit of Gain;

(vii)Real Estate Sales Validation form in compliance with Alabama Code 40-22-1;

(viii)an executed counterpart of the Closing Statement;

(ix)a notice of assignment of the Forestar (USA) Contracts executed by Forestar (USA); and

(x) such other certificates, affidavits, evidence of authority and instruments as may be reasonably necessary or desirable to consummate the purchase and sale contemplated hereby and to enable Purchaser to obtain a title insurance policy insuring title to the Real Property, subject to the Permitted Encumbrances.

(d)At the Closing, Purchaser shall deliver the following items:

(i)the Purchase Price (provided that Purchaser shall instruct Escrow Agent to withhold and deliver to the Georgia Department of Revenue and Alabama Department of Revenue any withholding required by applicable law in accordance with affidavits delivered by Sellers at Closing);

(ii)an executed counterpart of the Forestar Petroleum Assignment;

(iii)an executed counterpart of the Forestar (USA) Assignment;

(iv)a counterpart of the Forestar (USA) Claim Assignment;

(v)an executed counterpart of the Closing Statement; and

(vi)such other certificates, affidavits, evidence of authority and instruments as may be reasonably necessary or desirable to consummate the purchase and sale contemplated hereby and to enable Purchaser to obtain a title insurance policy insuring Purchaser’s title to the Real Property, subject to the Permitted Encumbrances.

5.Title.

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(a)Forestar Petroleum agrees to convey to Purchaser fee simple title to the Timberlands by the Timberland Deeds, and Forestar (USA) agrees to convey to Purchaser title to the Timber Rights by the Timber Rights Deeds, free and clear of all liens, encumbrances, assessments, agreements, options and covenants, except for the encumbrances set forth on Exhibit G attached hereto (the “Permitted Encumbrances”).

(b)Purchaser acknowledges that, prior to the Effective Date, Purchaser has received from Metropolitan Title Agency, Inc. (the “Title Company”) commitments to insure Purchaser’s title to the Real Property upon the Closing, (each a “Title Commitment” and, collectively, the “Title Commitments”), which Title Commitments are more particularly identified on Schedule 7 attached hereto, together with copies of those documents, instruments, surveys and plats in the data room referenced in Section 8 below. Purchaser shall have until November 30, 2016 (the “Title Objection Period”) to deliver to Sellers written notice of any objection to matters reflected in the Title Commitments that would render title to the Real Property or a portion thereof unmarketable or which would materially interfere with the use of the Real Property for commercial forestry purposes (each, a “Title Objection” and collectively, the “Title Objections”). Purchaser shall have the option to deliver a Title Objection with respect to parcels of the Property that lack legal access; provided, however, that such Title Objection shall not concern parcels that lack legal access as disclosed by Sellers on Schedule 11 attached hereto. Purchaser shall also have the option to object to all Title Failures affecting the Property. For the purposes of this Agreement, the term “Title Failure” shall mean any portion of the Property described in this Agreement, the Commitments or represented on the Sellers’ compartment maps that the Title Company will not insure because such portion of the Property is not or will not be owned by Purchaser free and clear of any monetary liens at the Closing (the “Title Failure Property”). Failure of Purchaser to deliver Title Objections within the Title Objection Period shall be deemed a waiver by Purchaser of its right to make such Title Objections.

(c)Upon receipt of the Title Objections, each of Forestar Petroleum and Forestar (USA) may elect (but shall not be obligated) to cure or cause to be cured any such Title Objection, and such Party shall notify Purchaser in writing whether it elects to cure the same by the date that is ten (10) business days after receipt of such Title Objections (“Sellers’ Response Period”). Failure of Forestar Petroleum or Forestar (USA), as applicable, to respond in writing within Sellers’ Response Period shall be deemed an election by such Party not to cure such Title Objections. Any Title Objection, other than Title Failures, shall be deemed to be cured if a Seller causes the Title Company to issue a title insurance policy or marked-up binder at Closing to Purchaser for the affected Real Property affirmatively insuring over, or not raising as an exception to the title policy, such Title Objection. Notwithstanding the foregoing, Forestar Petroleum and Forestar (USA) shall be obligated to cure, on or before the Closing Date, all liens, mortgages or financing statements encumbering the Timberlands or the Timber Rights, respectively, and securing a monetary obligation which was created or suffered by Forestar Petroleum or Forestar (USA), respectively, or any party claiming by, through or under such Seller (other than liens for non-delinquent real estate taxes or assessments) (each, a “Monetary Lien”).

(d)If Forestar Petroleum or Forestar (USA), as applicable, does not elect to cure such matter by written notice to Purchaser within Sellers’ Response Period, then Purchaser must

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elect by delivering written notice to Sellers either (i) to waive such Title Objection and proceed to the Closing, accepting title to those portions of the Timberlands or Timber Rights, as applicable, that are subject to such uncured Title Objection (which Title Objection shall become a Permitted Encumbrance) without adjustment to the Purchase Price; or (ii) to identify those portions of the Timberlands or Timber Rights (other than Title Failures) that are subject to such uncured Title Objection (a “Title Objection Property”) in which event the Purchase Price shall be reduced by the reduction in value of the Title Objection Property due to such Title Objection, to the extent such value exceeds two percent (2%) of the Purchase Price (the “Title Basket”), as determined by reference to (A) the value of such Title Objection Property encumbered by such Title Objection compared to its value if unencumbered by such Title Objection and (B) the value table attached hereto as Schedule 8 (the “Value Table”) (provided that any disputes regarding the value of any Title Objection Property shall be resolved in accordance with Section 29); provided, however, that in the event that Purchaser elects (y) Section 5(d)(i), then any such Title Objection Property shall remain part of the Property for purposes of the transaction contemplated by this Agreement and such Timberland or Timber Rights shall be conveyed to Purchaser at Closing or (z) Section 5(d)(ii), then Seller or Purchaser shall have the option to remove such Title Objection Property from the Property for purposes of the transaction contemplated by this Agreement and the Purchase Price shall be reduced by the value of such Title Objection Property by reference to the Value Table (provided that any disputes regarding the value of any such Title Objection Property shall be resolved in accordance with Section 29); provided, however, that with respect to Section 5(d)(z) immediately above, that any such removed Title Objection Property shall contain a minimum of thirty (30) acres and, to the extent necessary, Purchaser and Forestar Petroleum shall enter into customary access easements for the benefit of the appropriate parties. For the avoidance of doubt, any objections arising from Title Failures shall not be subject to the Title Basket, shall not count towards the Title Objection Property and shall be governed by Section 5(i). Failure of Purchaser to deliver to Sellers such written notice within five (5) business days following Sellers’ affirmative response shall be deemed an election of clause (i).

(e)In the event any title matter that would render title to the Real Property or a portion thereof unmarketable or which would materially interfere with the use of the Real Property for commercial forestry purposes first arises or is first disclosed to Purchaser after the expiration of the Title Objection Period, and such title matter was not reflected on the Title Commitments and is not attributable in whole or in part to any action or inaction of Sellers or not permitted by Sellers, then the following provisions will apply, provided, that in no case shall the Closing Date be extended beyond December 30, 2016 in connection with this Section 5(e):

(i)Purchaser shall notify Sellers of such matter in writing within five (5) business days after the earlier to occur of (A) Purchaser receiving written notice of such matter and (B) Purchaser discovering such matter, and if Seller is materially prejudiced by any delay in receiving such notice, failure by Purchaser to deliver such notice within such time period shall be deemed a waiver of any objection right with respect to such matter, which shall become a Permitted Encumbrance.

(ii)If such Title Objection is a Monetary Lien, or if such Title Objection arose by reason of an act or omission of Forestar Petroleum or Forestar (USA) in breach of

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such Party’s obligations under this Agreement, such breaching Party shall be obligated to cure such Title Objection on or before the Closing Date.

(iii)If such Title Objection is not described in Section 5(e)(ii), and Forestar Petroleum or Forestar (USA), as applicable, does not elect to cure such matter by written notice to Purchaser within Sellers’ Supplemental Response Period (as hereinafter defined), then Purchaser must elect by delivering written notice to Sellers either (A) to waive such Title Objection and proceed to the Closing, accepting title to those portions of the Real Property that are subject to such uncured Title Objection (which Title Objection shall become a Permitted Encumbrance) without adjustment to the Purchase Price; or (B) to identify those portions of the Timberlands or Timber Rights that are subject to such uncured Title Objection, which excluded portion shall be a Title Objection Property, in which event the Purchase Price shall be reduced by the value of the Title Objection Property, to the extent such value exceeds two percent (2%) of the Purchase Price, as determined by reference to (y) the value of such Title Objection Property encumbered by such Title Objection compared to its value if unencumbered by such Title Objection and (z) the Value Table (provided that any disputes regarding the value of any Title Objection Property shall be resolved in accordance with Section 29); provided, however, that in the event that Purchaser elects (1) Section 5(e)(iii)(A), then any Title Objection Property shall remain part of the Property for purposes of the transaction contemplated by this Agreement and such Timberland or Timber Rights shall be conveyed to Purchaser at Closing or (2) Section 5(e)(iii)(B), then Seller or Purchaser shall have the option to remove such Title Objection Property from the Property for purposes of the transaction contemplated by this Agreement and the Purchase Price shall be reduced by the value of such Title Objection Property by reference to the Value Table (provided that any disputes regarding the value of any such Title Objection Property shall be resolved in accordance with Section 29); provided, however, that with respect to Section 5(e)(iii)(2) immediately above, that any such removed Title Objection Property shall contain a minimum of thirty (30) acres and, to the extent necessary, Purchaser and Forestar Petroleum shall enter into customary access easements for the benefit of the appropriate parties. Failure of Purchaser to deliver to Sellers such written notice within three (3) business days following Purchaser’s receipt of Sellers’ written response shall be deemed an election of clause (A).

(f)In the event that any title matter that would render title to the Real Property or a portion thereof unmarketable or which would materially interfere with the use of the Real Property for commercial forestry purposes first arises or is first disclosed to Purchaser after the expiration of the Title Objection Period, and such title matter was not reflected on the Title Commitments and is attributable in whole or in part to any action or inaction of Sellers or permitted by Sellers, then the following provisions will apply, provided, that in no case shall the Closing Date be extended beyond December 30, 2016 in connection with this Section 5(f):

(i)Purchaser shall notify Sellers of such matter in writing.

(ii)If such Title Objection is a Monetary Lien, or if such Title Objection arose by reason of an act or omission of Forestar Petroleum or Forestar (USA), such Party shall be obligated to cure such Title Objection on or before the Closing Date.

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(iii)If such Title Objection is not described in Section 5(f)(ii), and Forestar Petroleum or Forestar (USA), as applicable, does not elect to cure such matter by written notice to Purchaser within Sellers’ Supplemental Response Period, then Purchaser must elect by delivering written notice to Sellers either (A) to waive such Title Objection and proceed to the Closing, accepting title to those portions of the Real Property that are subject to such uncured Title Objection (which Title Objection shall become a Permitted Encumbrance) without adjustment to the Purchase Price; or (B) to identify those portions of the Timberlands or Timber Rights that are subject to such uncured Title Objection, which excluded portion shall be a Title Objection Property, in which event either (I) Purchaser shall have the option to remove such Title Objection Property from the Property for purposes of the transaction contemplated by this Agreement and the Purchase Price shall be reduced by the reduction in the value of such Title Objection Property by reference to the Value Table (provided that any disputes regarding the value of any such Title Objection Property shall be resolved in accordance with Section 29) or (II) the Purchase Price shall be reduced by the value of the Title Objection Property as determined by reference to (y) the value of such Title Objection Property encumbered by such Title Objection compared to its value if unencumbered by such Title Objection and (z) the Value Table (provided that any disputes regarding the value of any Title Objection Property shall be resolved in accordance with Section 29), in which event any Title Objection Property shall remain part of the Property for purposes of the transaction contemplated by this Agreement and such Timberland or Timber Rights shall be conveyed to Purchaser at Closing. In the event of Section 5(f)(iii)(I) immediately above, any such removed Title Objection Property shall contain a minimum of thirty (30) acres and, to the extent necessary, Purchaser and Forestar Petroleum shall enter into customary access easements for the benefit of the appropriate parties. Failure of Purchaser to deliver to Sellers such written notice within three (3) business days following Purchaser’s receipt of Sellers’ written response shall be deemed an election of clause (A).

(iv)As used in Section 5(e)(iii) and Section 5(f)(iii), “Seller’s Supplemental Response Period” shall mean the three (3) business day period following Sellers’ receipt of Purchaser’s notice under Section 5(e)(i) or Section 5(f)(i), as applicable.

(g)So long as this Agreement remains in force, neither Forestar Petroleum nor Forestar (USA) shall, without the prior written consent of Purchaser, (i) lease, encumber or convey all or part of the Property or any interest therein, or (ii) enter into any agreement granting to any person any right with respect to the Property or any portion thereof; provided, however, Forestar Petroleum shall have the right, in the ordinary course of business, to (x) renew the Forestar Petroleum Contracts, (y) enter into new recreational leases substantially in the form of the existing recreational leases included in the Forestar Petroleum Contracts, and (z) enter into new, customary temporary access agreements, provided that any such renewal or new recreational lease or temporary access agreements (A) shall be for a term of not more than twelve (12) months, and (B) shall be terminable by the lessor thereunder upon no more than sixty (60) days’ prior notice.

(h)The Parties acknowledge that (i) the Property has not been surveyed and (ii) the estimated acreage of the Property is 12,043.11 acres based on GIS data provided by Sellers. To the extent that Purchaser determines, prior to December 9, 2016, that material discrepancies exist

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between the legal description of the Timberlands and Sellers’ GIS data (taking into account the rural nature of the Timberlands and unsurveyed legal descriptions customary for such parcels), then Purchaser shall have the right to deliver notice of a Title Failure with respect to the acreage discrepancy in accordance with Section 5(b), as modified by this Section 5(h). In connection with Sellers’ response to such Title Failures, Purchaser and Seller agree to negotiate in good faith to determine the materiality and accuracy of each such Title Failure, whether and how the applicable legal description may be corrected, and the net effect of all such Title Failures (utilizing the acreage per tract contained in diligence materials provided by the Sellers to Purchaser, taking into consideration any tracts that are reasonably determined to be less than the acreage set forth in such materials as well as any tracts whose acreage is reasonably determined to be in excess of the acreage set forth in such materials).

(i)Purchaser may object to any Title Failures no later than November 30, 2016. Title Failure objections shall not be subject to the Title Basket, but rather the Purchase Price will be reduced by the value of the Title Failure Property as determined by reference to the Value Table, provided that any disputes regarding the value of any Title Failure Property shall be resolved in accordance with the dispute resolution process of Section 29. The Title Failure Property shall be excluded from the transaction and shall not be conveyed to Purchaser at Closing; provided, however, that (A) Sellers also shall have the right to exclude portions of the Property adjacent to the Title Failure Property from the transaction contemplated by this Agreement, if necessary, to achieve a thirty (30) acre minimum if Sellers have colorable title to such Title Failure Property or a sufficient period of time has passed that would allow Sellers to establish an adverse possession claim with respect to such Title Failure Property, and (B) Forestar Petroleum and Purchaser shall enter into customary access easements, for the benefit of the appropriate parties.

6.Inspection; Timber Inventory Verification and Post Closing Adjustment.

(a)Purchaser and its agents, representatives, employees, engineers and contractors shall have the right during the term of this Agreement to enter upon the Real Property to inspect, examine, survey and make timber cruises and other tests or surveys which it may deem necessary or advisable and to verify the accuracy of all data and information, if any, provided by any Seller to Purchaser in connection with the Real Property; provided, however, that Purchaser shall obtain the written consent of the applicable Seller prior to conducting any core sampling, test borings or other invasive testing. Purchaser and the contractors, representatives and agents of Purchaser who enter upon the Real Property shall maintain commercial general liability insurance, naming each Seller as an additional insured, in an amount not less than One Million and 00/100 Dollars ($1,000,000.00) per occurrence and Two Million and 00/100 Dollars ($2,000,000.00) in the aggregate for personal injury and/or property damage and products/completed operations coverage. Purchaser shall forward to Sellers a certificate of insurance (a “Certificate”) for such policy, together with evidence of Purchaser’s worker’s compensation coverage and automobile liability insurance prior to any entry upon the Real Property, but in no event later than one (1) business days prior to any physical entry onto the Property, which Certificate shall name Sellers as an “additional insured” on such commercial general liability policy. Such commercial general liability coverage maintained by Purchaser shall be primary and non-contributory to any insurance carried by a Seller. Purchaser hereby agrees to indemnify and hold Forestar Petroleum and Forestar

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(USA) harmless for any and all cost and expense resulting from claims or damages caused by said inspections, examinations and tests. The foregoing indemnification shall survive any termination, cancellation or expiration of this Agreement or the Closing.

(b)Notwithstanding the inspection rights provided in Section 6(a), Purchaser expressly acknowledges and agrees that Purchaser will have the opportunity, prior to 11:59 p.m. on December 9, 2016 (the “Physical Inspection Deadline”), to fully and carefully investigate and inspect the physical, structural and environmental condition of the Real Property and the volume of timber located thereon and to review and analyze documents and records related to the Property, all laws, statutes, rules, regulations, ordinances and orders affecting the Property, and all other materials and information affecting or in any manner relating to the Property and the ownership, use, occupancy, management, operation and maintenance thereof, and that certain Phase I Environmental Site Assessment Report dated September 2016 (SLR Project No. 110.01667.00001) prepared by Sellers’ Environmental Consultant with respect to the Property (the “Phase I Report”).

(c)In the event that Purchaser’s environmental consultant, Geo-Source, Inc. (“Purchaser’s Environmental Consultant”), discovers that there are recognized environmental conditions under ASTM Practice E 2247-08 standards (“RECs”) affecting a portion of the Property (the “Environmental Property”), Purchaser shall deliver written notice to Sellers of such findings with supporting evidence prepared by Purchaser’s Environmental Consultant, including, but not limited to, applicable supplemental reports, by the Physical Inspection Deadline (the “Environmental Notice”) and failure to deliver the Environmental Notice shall be deemed a waiver of Purchaser’s right to deliver the Environmental Notice. Within ten (10) days following Sellers’ receipt of the Environmental Notice from Purchaser, Sellers shall deliver to Purchaser written notice indicating whether Sellers (i) disagree with such findings and whether Sellers desire, at Sellers’ option, to conduct testing on the Environmental Property to establish that there are no RECs on the Environmental Property or (ii) agrees with such findings and intends to cure such RECs before Closing. In the event of subsection (i) immediately above, within five (5) business days following the delivery of Sellers’ written notice, Sellers and Purchaser shall cause Sellers’ Environmental Consultant and Purchaser’s Environmental Consultant to discuss, in good faith, each consultant’s findings to reach a final determination as to whether any RECs exist on the Environmental Property. If Purchaser’s Environmental Consultant and Seller’s Environmental Consultant are unable to agree whether any RECs exist on the Environmental Property within such five (5) business day period, Purchaser’s Environmental Consultant and Seller’s Environmental Consultant will in turn select a third environmental consultant within five (5) days to make a final determination regarding the existence of any RECs on the Environmental Property. The third environmental consultant shall reach a final, binding decision within fifteen (15) days following the selection of the third environmental consultant; provided, however, that if the Closing Date is extended to resolve a dispute in accordance with this Section 6(b), in no event shall Closing occur after December 30, 2016. If the third environmental consultant has not given its final determination by the Closing Date, then Purchaser shall deposit with the Escrow Agent an amount equal to the portion of the Purchase Price due with respect to the Environmental Property as determined by reference to the Value Table and the Environmental Property shall be removed from the Property for purposes of the Closing on the remaining portion of the Property by the Closing Date. Within fifteen (15) days after the final determination by the third environmental consultant, any Environmental Property

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determined by the third environmental consultant to be unaffected by RECs shall be conveyed to Purchaser and the Purchase Price due with respect to such Environmental Property shall be delivered to Sellers. Any Environmental Property determined by the third environmental consultant to contain RECs shall not be conveyed to Purchaser and the portion of the Purchase Price escrowed with respect to such Environmental Property shall be returned to Purchaser within two (2) business day after Purchaser notifies the Escrow Agent of such final determination. Purchaser will bear the cost of Purchaser’s Environmental Consultant and one-half (1/2) of the cost of the third environmental consultant, and Sellers will bear the cost of Seller’s Environmental Consultant and one-half (1/2) of the cost of the third environmental consultant.

(d)Except with respect to a breach of any of Sellers’ representations and warranties set forth in this Agreement, Purchaser, on behalf of itself and all of its officers, directors, shareholders, employees, partners, members, subsidiaries and other affiliated or related entities, representatives, consultants and agents, and Purchaser’s and each of the foregoing parties’ successors and assigns (collectively, the “Purchaser Parties”) hereby expressly waives, relinquishes and releases any and all rights, remedies and claims any of the Purchaser Parties may now or hereafter have, against each Seller, and all the Sellers’ respective officers, directors, shareholders, employees, partners, members, subsidiaries and other affiliated or related entities, representatives, consultants and agents, and the Sellers and each of the foregoing parties’ successors and assigns, whether known or unknown, arising from or related to (x) the physical condition, quality, quantity and state of repair of the Property and the prior management and operation thereof; (y) the Property’s failure to comply with any federal, state or local laws, regulations, ordinances or orders, including, without limitation, those relating to health, safety, zoning, and the environment; or (z) any past, present or future presence, alleged presence, release or alleged release of any Hazardous Substance (as hereinafter defined) in, on, under or about, or otherwise migrating to, from, across or under, the Property; provided, however, such waiver and release shall not apply to a breach of any representation, warranty or covenant made by Seller under this Agreement or any of the closing documents delivered at Closing that expressly survives the closing under, or termination of, this Agreement. “Hazardous Substance” means any chemical, compound, constituent, material, waste, contaminant (including petroleum, crude oil or any fraction thereof) or other substance, defined as hazardous or toxic, or otherwise regulated by any of the following laws and regulations promulgated thereunder as amended from time to time prior to the Effective Date: (1) the Comprehensive Environmental Response, Compensation and Liability Act (as amended by the Superfund Amendments and Reauthorization Act), 42 U.S.C. § 9601 et seq.; (2) the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq.; (3) the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq.; (4) the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; (5) the Clean Water Act, 33 U.S.C. § 1251 et seq.; (6) the Clean Air Act, 42 U.S.C. § 1857 et seq.; and (7) all laws of the states in which the Real Property is located that are based on, or substantially similar to, the federal statutes listed in clauses (1) through (6) of this sentence. The foregoing release shall survive any termination, cancellation or expiration of this Agreement or the Closing.

(e)Forestar (USA) and Purchaser acknowledge that Purchaser has engaged American Forest Management an independent third party consultant hired by Purchaser and reasonably acceptable to Forestar (USA) (a “Cruise Consultant”) to perform a timber cruise of the Property (a “Timber Cruise”) and determine the Verified Value (as hereinafter defined) with volumes

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to be determined as of the Effective Date (the “Timber Cruise Determinations”) and that such Timber Cruise Determinations may not be complete prior to Closing. The Timber Cruise Determinations shall be completed no later than April 1, 2017 (the “Determinations Deadline”). Neither Purchaser nor Sellers shall undertake any harvesting activities on the Property until the expiration of the Determinations Deadline. If Purchaser fails to have the Timber Cruise Determinations completed by the Determinations Deadline, then this subsection (c) shall become null and void. As used herein, “Verified Value” shall mean the value of the Merchantable Timber located on the Timberlands based on the volume by species and product of the Merchantable Timber on the Property based on the Value Table. Purchaser shall deliver to Forestar (USA) the final Timber Cruise Determinations or any incomplete Timber Cruise Determinations no later than two (2) business days after receipt with respect to the final Timber Cruise Determinations or the Determinations Deadline with respect to any incomplete Timber Cruise Determinations. If Purchaser determines, prior to the completion of the Timber Cruise, that the Timber Cruise Determinations will be satisfactory to Purchaser, then Purchaser shall have the option to waive the right to adjust the Forestar (USA) Purchase Price pursuant to this Section 6(c) by delivering written notice to Sellers of its satisfaction with the Timber Cruise accompanied by the incomplete Timber Cruise Determinations. Within five (5) business days following the receipt of the Timber Cruise Determinations (the “Review Deadline”), Forestar (USA) and Purchaser shall review the Timber Cruise Determinations and notify the other party, in writing, whether it agrees or disagrees with the Timber Cruise Determinations. In the event that Forestar (USA) disagrees with the Timber Cruise Determinations, then (x) Forestar (USA) shall have the option to conduct its own audit timber cruise (the “Audit Cruise”) of the Property within thirty (30) days following Forestar (USA)’s receipt of the Timber Cruise Determinations (the “Initial Audit Period”) and Purchaser shall grant Forestar (USA) access to the Property to conduct such timber cruise in the event that such cruise must occur after Closing, (y) Purchaser shall not commence any harvesting activities until the disagreement is resolved, and (z) such disagreement shall be resolved in accordance with Section 29, taking into account the timber cruise completed by Forestar (USA), if at all. If Forestar (USA), after exercising commercially reasonable efforts, has not completed the Audit Cruise prior to the expiration of the Initial Audit Period, then Forestar (USA) shall have the option, by delivery of written notice to Purchaser prior to the expiration of the Initial Audit Period, to receive an additional thirty (30) days to complete the Audit Cruise (such additional thirty (30) day period being the “Final Audit Period”), commencing on the day immediately following the expiration of the Initial Audit Period; provided, however, that both of the following provisions shall apply: (1) the Audit Cruise during the Final Audit Period shall be limited to the compartments of the Property for which Forestar (USA) has not completed its Audit Cruise (the “Review Property”) and (2) from and after the day immediately following the expiration of the Initial Audit Period, Purchaser shall have the option to conduct harvesting activities on all Property except the Review Property. If Forestar (USA) fails to complete the Audit Cruise or otherwise does not deliver any objections to the Timber Cruise Determinations prior to the expiration of the Final Audit Period, Forestar (USA) shall be deemed to have waived such right and to have accepted the Timber Cruise Determinations. If, however, Forestar (USA) and Purchaser agree with the Timber Cruise Determinations, then within two (2) business days following the Review Deadline, Forestar (USA) and Purchaser shall adjust the Forestar (USA) Purchase Price after the Closing in accordance with the following provisions. If the Verified Value of the Merchantable Timber, as finally determined by the parties, is less than EIGHT MILLION SIX HUNDRED NINETY-ONE THOUSAND NINE HUNDRED SIXTY AND 60/100THS DOLLARS ($8,691,960.60) (the

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“Target Threshold”) and (A) such determination is completed at or prior to Closing, the Forestar (USA) Purchase Price shall be reduced at Closing by the amount of the deficiency below the Target Threshold (the “Timber Inventory Credit”) or (B) such determination is made after Closing, within two (2) business days after such determination, Forestar (USA) shall pay the Timber Inventory Credit in cash by wire transfer of immediately available funds to the bank account or accounts designated by Purchaser. The terms of this Section 6(e) shall survive Closing.

7.Intentionally Deleted.

8.Deliveries; No Contact. Sellers have delivered to Purchaser and Purchaser is in receipt of, (i) Sellers’ current compartment maps for each tract within the Real Property, (ii) copies of the Contracts, and (iii) copies of other items related to the ownership, development and management of the Property and posted to the “Forestar Timberlands” data room managed by LandVest, Inc. and available at www.dataroom.ansarada.com (Ansarada). Prior to the Closing, Purchaser shall not contact or communicate with any counterparty to any Contract without the prior written consent of the applicable Seller. Purchaser acknowledges that all information with respect to the Property delivered by either Seller to Purchaser under this Agreement is for informational purposes only and, except as expressly set forth to the contrary in this Agreement, is given without representation or warranty of any kind. If this Agreement is terminated or if Closing does not occur, Purchaser shall promptly return to Forestar Petroleum and Forestar (USA) all information delivered to Purchaser pursuant to this Agreement, provided that, to the extent such information is in electronic format, Purchaser shall delete or destroy all such information and promptly deliver to Sellers written certification of such destruction; provided, however, Purchaser shall be entitled to retain copies if required by any applicable law or regulation, but shall keep confidential any non-public information that either Seller has identified as confidential. The provisions of this Section 8 shall survive any termination, cancellation or expiration of this Agreement or the Closing.

9.Condition of Property; Damage; Condemnation.

(a)Each Seller agrees that at the Closing, the Forestar Petroleum Property and the Forestar (USA) Property, as applicable, shall be in substantially the same condition as exists on the Effective Date, subject to Sellers’ operation on the Property in accordance with usual and customary timberland operations (but specifically excluding the harvesting of timber from the Property, Seller hereby agreeing not to conduct any harvesting activities on the Property so long as this Agreement is in effect), natural wear and tear, the Permitted Encumbrances, condemnation, and casualties beyond Sellers’ control. Subject to the provisions of this Section 9, all risk of loss to the Property or any part thereof prior to the Closing shall be borne by the applicable Seller.

(b)If at any time prior to the Closing, the Property or any material part thereof (including, but not limited to, any timber thereon) is destroyed or damaged by fire or other casualty (the “Damaged Property”), Sellers shall deliver to Purchaser prompt written notice of such damage along with the amount of such damage (calculated as the value of the destroyed or damaged Property less the salvage value of such destroyed or damaged Property) (the “Casualty Damage Value”). If Purchaser, by delivering written notice to Sellers within ten (10) days following Sellers’ delivery of written notice of the damage, disputes the Casualty Damage Value reported by Sellers, Purchaser and Sellers shall attempt in good faith to resolve such dispute and agree upon the Casualty Damage

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Value. If Purchaser and Sellers are unable to agree as to the Casualty Damage Value on or before ten (10) days after Purchaser delivers to Sellers written notice of its dispute, then such dispute shall be resolved in accordance with Section 29. The Closing Date shall be extended to the extent necessary, but in no event beyond December 30, 2016, to allow for the completion of all procedures set forth in this Section 9(b), including the resolution of any such dispute. Notwithstanding such casualty, if the Casualty Damage Value exceeds FOUR HUNDRED FIFTY-EIGHT AND NO/100THS DOLLARS ($458,000.00) (the “Casualty Threshold”), the Purchase Price shall be reduced by the Casualty Damage Value. Notwithstanding the immediately preceding sentence, Seller or Purchaser shall have the option to remove the Damaged Property from the Property and the transaction contemplated by this Agreement if the Casualty Damage Value exceeds the Casualty Threshold; provided, however, that with respect to the immediately preceding clause, any such removed Damaged Property shall contain a minimum of thirty (30) acres and, to the extent necessary, Purchaser and Forestar Petroleum shall enter into customary access easements for the benefit of the appropriate parties. If Seller elects to remove the Damaged Property from the Property and the transaction contemplated by this Agreement, the Forestar (USA) Purchase Price shall be reduced by the value of the Damaged Property as determined by reference to the Value Table based on condition of Damaged Property immediately before the Closing, provided that any disputes regarding the value of any Damaged Property shall be resolved in accordance with the dispute resolution process of Section 29. The terms of this subsection (b) shall survive closing.

(c)If at any time prior to the Closing, any action or proceeding is filed or threatened under which any portion of the Property may be taken pursuant to any law, ordinance or regulation by condemnation or the right of eminent domain, Sellers shall deliver to Purchaser prompt written notice thereof. In such event, Purchaser and Sellers shall be required to consummate the transactions contemplated by this Agreement, and Purchaser shall receive a credit against the Purchase Price in the amount of all proceeds of any awards payable with respect to the Property, or, if such amount is not known at the time of the Closing, the Purchase Price shall not be reduced and Sellers shall assign to Purchaser at the Closing all of Sellers’ right to such proceeds from such action or proceeding. Notwithstanding the foregoing, in the event that more than fifteen percent (15%) of the gross acres of the Property are subject to an actual or written threat of condemnation or eminent domain at any time before Closing, Purchaser shall have the right to terminate this Agreement by providing written notice to Seller within five (5) days after Purchaser’s receipt of Seller’s notice, whereupon Escrow Agent will return the Earnest Money to Purchaser, and the Parties will have no further rights or obligations hereunder (except as otherwise expressly provided herein). Failure of Purchaser to provide written notice as provided herein shall be deemed an election by Purchaser to waive its right to terminate the Agreement.

10.Warranties, Representations, and Disclaimers.

(a)Forestar (USA) hereby warrants and represents to Purchaser, as of the Effective Date and as of the Closing Date, that:

(i)Forestar (USA) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business in the States of Alabama and Georgia and has all requisite corporate power and authority to:

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(A) own, lease and operate the Forestar (USA) Property and to carry on its business as now being conducted; (B) execute this Agreement and all other agreements, instruments and documents to be executed by it in connection with the consummation of the transactions contemplated by this Agreement; and (C) perform its obligations and consummate the transactions contemplated hereby.

(ii)The execution, delivery and performance of this Agreement and the consummation of transactions contemplated hereby by Forestar (USA) have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Forestar (USA) are necessary for it to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Forestar (USA) and, assuming due authorization, execution and delivery by Forestar Petroleum and Purchaser, is a legal, valid and binding obligation of Forestar (USA), enforceable against Forestar (USA) in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(iii)The execution, delivery or performance of this Agreement by Forestar (USA) will not result in a breach or violation of, or default under, (A) the terms, conditions or provisions of Forestar (USA)’s certificate of incorporation, bylaws or any standing resolution of its board of directors; (B) any Forestar (USA) Contract; (C) any law applicable to Forestar (USA) or any portion of the Forestar (USA) Property; or (D) any permit, license, order, judgment or decree of any governmental authority by which Forestar (USA) or the Forestar (USA) Property is or may be bound, excluding from the foregoing clauses (B), (C) and (D) such breaches, violations or defaults that would not, individually or in the aggregate, have a material adverse effect on the Forestar (USA) Property or on Forestar (USA)’s ability to perform its obligations under this Agreement.

(iv)There are no approvals, consents or registration requirements with respect to any governmental authority that are or will be necessary for the valid execution and delivery by Forestar (USA) of this Agreement, or the consummation of the transactions contemplated hereby and thereby, other than those which (A) have been obtained, or (B) are of a routine nature and not customarily obtained or made prior to execution of purchase and sale agreements in transactions similar in nature and size to those contemplated hereby and where the failure to obtain the same would not, individually or in the aggregate, have a material adverse effect on the Forestar (USA) Property or on Forestar (USA)’s ability to perform its obligations under this Agreement.

(v)Except as set forth on Schedule 9 (the “Forestar (USA) Claim”), there is no pending or, to Forestar (USA)’s knowledge, threatened action or proceeding (including, but not limited to, any condemnation or eminent domain action or proceeding) before any court, governmental agency or arbitrator which may affectForestar (USA)’s ability to perform this Agreement or which may affect title to the Forestar (USA) Property. For purposes of this Section 10(a)(v), “Forestar (USA)’s knowledge” shall mean the actual

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knowledge, without any duty on the part of such individuals to investigate or inquire into any particular matter, of either of (A) Michael Quinley, and (B) Kenneth B. Gibson, Jr.

(vi)Schedule 5 contains a complete list, and Forestar (USA) will make available to Purchaser true and complete copies, of the Forestar (USA) Contracts in effect as of the Effective Date and each amendment, supplement, and modification in respect of any of the foregoing. To Forestar (USA)’s Knowledge each of the Forestar (USA) Contracts (1) are in full force and effect, and (2) have no defaults or events that with the passage of time or giving of notice, or both, could become a default thereunder. Forestar (USA) is not a party to, and the Timber Rights are not subject to, any contract or agreement of any kind whatsoever, written or oral, formal or informal, with respect to the Timber Rights that would be binding upon the Timber Rights or Purchaser after Closing, other than the Permitted Exceptions and the Forestar (USA) Contracts.

(vii)To Forestar (USA)’s Knowledge, Forestar (USA)’s use of the Timber Rights is in material compliance with all statutes, ordinances, rules, regulations, orders and requirements of all federal and local authorities and any other governmental entity having jurisdiction over the Timber Rights. Forestar (USA) has not received any written notice from any governmental entity having jurisdiction over the Forestar (USA) Property of any violation of any statutes, ordinances, rules, regulations, orders or requirements applicable to the Forestar (USA) Property, which violation is continuing as of the Effective Date.

(viii)Except as set forth in the Phase I Report, Forestar (USA) has not received notice from any public authority or from any other source and has no actual knowledge that (A) any portion of the land underlying the Timber Rights has been used as a land fill or as a dump to receive garbage, refuse, or waste, whether or not hazardous, or (B) any Hazardous Substance has been disposed of or released in, on or about any portion of the land underlying the Timber Rights in violation of applicable law.

(ix)None of the Timber Rights is subject to any rollback, greenbelt or change of use taxes or other increased taxes resulting from any change in the use of the Timber Rights prior to the Closing that has not been paid.

(x)Between the Effective Date and the Closing Date, Forestar (USA) shall (i) operate and maintain the Timber Rights in substantially the same condition as existed on the Effective Date, (ii) not remove nor permit the removal of any timber, harvestable crop, improvements, or other items from the Timberlands, (iii) not lease, encumber or convey any of the Timber Rights without the prior written consent of Purchaser, which consent may be withheld in Purchaser’s sole discretion (subject to Section 5(g)); and (iv) maintain the current tax status of the Timber Rights.

(xi)To Forestar (USA)’s knowledge, except as described in Schedule 11 attached hereto, Forestar (USA) has legal access to all of the Timber Rights.

(xii)Forestar (USA) has no rights to the timber growing, standing or lying on the Timberlands other than those reserved in the deeds described on Schedule 4, and

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Forestar (USA) has not conveyed any such timber rights to any third party since the reservation of the timber in the deeds described on Schedule 4.

(b)Forestar Petroleum hereby warrants and represents to Purchaser, as of the Effective Date and as of the Closing Date, that:

(i)Forestar Petroleum is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business in the States of Alabama and Georgia and has all requisite corporate power and authority to: (A) own, lease and operate the Forestar Petroleum Property and to carry on its business as now being conducted; (B) execute this Agreement and all other agreements, instruments and documents to be executed by it in connection with the consummation of the transactions contemplated by this Agreement; and (C) perform its obligations and consummate the transactions contemplated hereby.

(ii)The execution, delivery and performance of this Agreement and the consummation of transactions contemplated hereby by Forestar Petroleum have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Forestar Petroleum are necessary for it to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Forestar Petroleum and, assuming due authorization, execution and delivery by Forestar (USA) and Purchaser, is a legal, valid and binding obligation of Forestar Petroleum, enforceable against Forestar Petroleum in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(iii)The execution, delivery or performance of this Agreement by Forestar Petroleum will not result in a breach or violation of, or default under, (A) the terms, conditions or provisions of Forestar Petroleum’s certificate of incorporation, bylaws or any standing resolution of its board of directors; (B) any Forestar Petroleum Contract; (C) any law applicable to Forestar Petroleum or any portion of the Forestar Petroleum Property; or (D) any permit, license, order, judgment or decree of any governmental authority by which Forestar Petroleum or the Forestar Petroleum Property is or may be bound, excluding from the foregoing clauses (B), (C) and (D) such breaches, violations or defaults that would not be reasonably likely, individually or in the aggregate, to have a material adverse effect on the Forestar Petroleum Property or on Forestar Petroleum’s ability to perform its obligations under this Agreement.

(iv)There are no approvals, consents or registration requirements with respect to any governmental authority that are or will be necessary for the valid execution and delivery by Forestar Petroleum of this Agreement, or the consummation of the transactions contemplated hereby and thereby, other than those which (A) have been obtained, or (B) are of a routine nature and not customarily obtained or made prior to execution of purchase and sale agreements in transactions similar in nature and size to those contemplated hereby and where the failure to obtain the same would not, individually or in

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the aggregate, have a material adverse effect on the Forestar Petroleum Property or on Forestar Petroleum’s ability to perform its obligations under this Agreement.

(v)Except as set forth on Schedule 10 (the “Forestar Petroleum Litigation”), there is no pending or, to Forestar Petroleum’s knowledge, threatened action or proceeding (including, but not limited to, any condemnation or eminent domain action or proceeding) before any court, governmental agency or arbitrator which may materially adversely affectForestar Petroleum’s ability to perform this Agreement or which may materially adversely affect title tothe Forestar Petroleum Property. For purposes of this Section 10(b)(v), “Forestar Petroleum’s knowledge” shall mean the actual knowledge, without any duty on the part of such individuals to investigate or inquire into any particular matter, of either of (A) Michael Quinley, and (B) Kenneth B. Gibson, Jr.

(vi)Schedule 2 contains a list, and Forestar Petroleum has made available to Purchaser copies, of the Forestar Petroleum Contracts in effect as of the Effective Date and each material amendment, supplement, and modification in respect of any of the foregoing. To Forestar Petroleum’s Knowledge each of the Forestar Petroleum Contracts set forth on Schedule 3 (1) are in full force and effect, (2) have no defaults or events that with the passage of time or giving of notice, or both, could become a default thereunder, and (3) with respect to the hunting licenses listed as Forestar Petroleum Contracts only, all such hunting licenses are on the form of one of two of the recreational use agreement forms, copies of which Forestar Petroleum has previously provided to Purchaser. Forestar Petroleum is not a party to, and the Timberlands are not subject to, any contract or agreement of any kind whatsoever, written or oral, formal or informal, with respect to the Timberlands that would be binding upon the Timberlands or Purchaser after Closing, other than the Permitted Exceptions, the Forestar Petroleum Contracts, and the Development Rights.

(vii)To Forestar Petroleum’s Knowledge, Forestar Petroleum’s use of the Timberlands is in material compliance with all statutes, ordinances, rules, regulations, orders and requirements of all federal and local authorities and any other governmental entity having jurisdiction over the Timberlands. Forestar Petroleum has not received any written notice from any governmental entity having jurisdiction over the Forestar Petroleum Property of any violation of any statutes, ordinances, rules, regulations, orders or requirements applicable to the Forestar Petroleum Property, which violation is continuing as of the Effective Date.

(viii)Except as set forth in the Phase I Report, Forestar Petroleum has not received notice from any public authority or from any other source and has no actual knowledge that (A) any portion of the Timberlands has been used as a land fill or as a dump to receive garbage, refuse, or waste, whether or not hazardous, or (B) any Hazardous Substance has been disposed of or released in, on or about any portion of the land underlying the Timber Rights in violation of applicable law.

(ix)None of the Timberlands is subject to any rollback, greenbelt or change of use taxes or other increased taxes resulting from any change in the use of the Timberlands prior to the Closing that has not been paid.

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(x)Between the Effective Date and the Closing Date, Forestar Petroleum shall (i) operate and maintain the Timberlands in substantially the same condition as existed on the Effective Date, (ii) not remove nor permit the removal of any timber, harvestable crop, improvements, or other items from the Timberlands, (iii) not lease, encumber or convey any of the Timberlands without the prior written consent of Purchaser, which consent may be withheld in Purchaser’s sole discretion (subject to Section 5(g)); and (iv) maintain the current tax status of the Timberlands. The terms of this subsection (x) shall not apply to any agreements entered into by Forestar Petroleum in accordance with the terms of Section 5(g).

(xi)To Forestar Petroleum’s knowledge, except as described in Schedule 11 attached hereto, Forestar Petroleum has legal access to all of the Timberlands.

(xii)Forestar Petroleum has no rights to the timber growing, standing or lying on the Timberlands other than the reversionary rights set forth in the deeds described on Schedule 4.

(c)Purchaser hereby warrants and represents to each Seller, as of the Effective Date and as of the Closing Date, that:

(i)Purchaser is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Missouri, and has all requisite limited liability company power and authority to: (A) own, lease and operate the Property and to carry on its business as now being conducted; (B) execute this Agreement; and (C) perform its obligations and consummate the transactions contemplated hereby.

(ii)The execution, delivery and performance of this Agreement and the consummation of transactions contemplated hereby by Purchaser have been duly and validly authorized by all necessary limited liability company action, and no other limited liability company proceedings on the part of Purchaser are necessary for it to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Purchaser and, assuming due authorization, execution and delivery by Sellers, is a legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(iii)The execution, delivery, and performance by Purchaser of this Agreement will not result in a breach or violation of, or default under, the terms, conditions or provisions of its certificate of limited liability company, limited liability company agreement or any standing resolution of its members or any other organizational document.

(iv)There are no approvals, consents or registration requirements with respect to any governmental authority that are or will be necessary for the valid execution and delivery by Purchaser of this Agreement, or the consummation of the transactions contemplated hereby and thereby, other than those which (A) have been obtained, or (B) are

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of a routine nature and not customarily obtained or made prior to execution of purchase and sale agreements in transactions similar in nature and size to those contemplated hereby and where the failure to obtain the same would not, individually or in the aggregate, have a material adverse effect on Purchaser’s ability to perform its obligations under this Agreement.

(v)There is no pending or, to Purchaser’s knowledge, threatened action or proceeding before any court, governmental agency or arbitrator which may materially adversely affectPurchaser’s ability to perform this Agreement.

(vi)Purchaser has the financial capacity, or has sufficient binding subscriptions from its investors, to pay the Purchase Price at Closing and all expenses and fees incurred by Purchaser pursuant to or in connection with the transactions contemplated by this Agreement.

(vii)The Confidentiality and Non-Disclosure Agreement, Land Entry Permit, and Release entered into between Forestar (USA) and Timberland Investment Resources LLC (“TIR”) dated May 6, 2016 (the “Confidentiality Agreement”), is in full force and effect, and neither TIR nor Purchaser has taken any action or omission that would constitute a default thereunder.  Purchaser acknowledges that it is subject to the Confidentiality Agreement and shall execute such reasonably requested documentation as needed to evidence the same.

(viii)Purchaser (which for this purpose includes Purchaser’s partners, members, principal stockholders and any other constituent entities) (x) has not been designated as a “specifically designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, <http://www.treas.gov/ofac/t11sdn.pdf> or at any replacement website or other replacement official publication of such list and (y) is currently in compliance with and will at all times during the term of this Agreement remain in compliance with the regulations of the Office of Foreign Asset Control of the Department of the Treasury and any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action relating thereto.

(d)EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT AND AS SET FORTH BELOW, PURCHASER ACKNOWLEDGES THAT: (i) NO REPRESENTATIONS, WARRANTIES OR PROMISES, EXPRESS OR IMPLIED, HAVE BEEN OR ARE BEING MADE BY OR ON BEHALF OF SELLERS OR ANY OTHER PERSON WITH RESPECT TO THE PROPERTY, INCLUDING WITH RESPECT TO THE PHYSICAL OR ENVIRONMENTAL CONDITION (WHETHER PATENT OR LATENT), HABITABILITY, QUANTITY OR QUALITY OF TIMBER, NURSERY STOCK OR SEEDLINGS, FUTURE FIBER GROWTH OR HARVEST, FUTURE FINANCIAL RESULTS FROM THE SALE OF FIBER GROWN ON THE PROPERTY OR FROM THE SALE OF THE PROPERTY, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ZONING, TAX CONSEQUENCES, GOVERNMENTAL

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APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS, AND SELLERS HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES, EITHER EXPRESS OR IMPLIED RELATING TO ANY OF THE FOREGOING MATTERS, AND (ii) IN ENTERING INTO THIS AGREEMENT, PURCHASER HAS NOT RELIED AND DOES NOT RELY ON ANY SUCH REPRESENTATION, WARRANTY OR PROMISE, EXPRESS OR IMPLIED, BY OR ON BEHALF OF SELLERS OR ANY OTHER PERSON. PURCHASER ACKNOWLEDGES AND AGREES THAT PURCHASER SHALL TAKE THE PROPERTY IN “AS IS, WHERE IS, AND WITH ALL FAULTS” CONDITION ON THE CLOSING DATE, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE DOCUMENTS TO BE DELIVERED AT THE CLOSING. THIS SECTION 10(d) SHALL SURVIVE THE CLOSING.

(e)UPON THE CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING ADVERSE ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY SELLERS’ OR PURCHASER’S INVESTIGATION, AND UPON THE CLOSING, PURCHASER SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLERS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLERS AT ANY TIME BY REASON OF OR ARISING OUT OF PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE PROPERTY. PURCHASER AGREES THAT, SHOULD ANY INVESTIGATION, CLEAN-UP, REMEDIATION, CORRECTIVE ACTION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ADVERSE ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE REQUIRED AFTER THE CLOSING, SUCH INVESTIGATION, CLEAN-UP, REMOVAL, CORRECTIVE ACTION OR REMEDIATION SHALL BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF PURCHASER; PROVIDED, HOWEVER THAT IN THE EVENT ANY REQUIRED ACTION ARISES FROM THE BREACH OF A SELLER REPRESENTATION OR WARRANTY UNDER THIS AGREEMENT, THEN SELLER SHALL BE RESPONSIBLE FOR SUCH REQUIRED ACTION AT SELLER’S SOLE COST AND EXPENSE. NOTWITHSTANDING THE FOREGOING, PURCHASER SHALL HAVE NO LIABILITY OR RESPONSIBILITY TO SELLER FOR PRE-EXISTING CONDITIONS IN THE EVENT SELLER IS INDEPENDENTLY NAMED IN ANY ACTION OR PROCEEDING REGARDING ENVIRONMENTAL CONDITIONS ON THE PROPERTY. THIS SECTION 10(e) SHALL SURVIVE THE CLOSING.

11.Survival; Indemnification.

(a)Survival. Notwithstanding anything herein to the contrary, all representations and warranties made in this Agreement shall survive the Closing and the delivery of the conveyance instruments to Purchaser for a period of nine (9) months after the Closing Date (the “Indemnity Period”). After the Indemnity Period, the Parties agree that no claims or causes of action may be brought against any Party or any of its directors, managers, officers, employees, affiliates, controlling

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persons, agents or representatives based upon, directly or indirectly, any of the representations and warranties contained in this Agreement. This Section 11(a) shall not limit any covenant or agreement of the Parties that contemplates performance after the Closing. All provisions of this Agreement that contemplate performance after the Closing Date, the waiver and indemnity provisions set forth in this Agreement, and any other provisions that expressly survive the Closing shall survive the Closing and be fully enforceable thereafter, but subject to the specific time limitations set forth in this Section 11(a) as to the representations of Sellers and Purchaser.

(b)Indemnification by Forestar Petroleum. From and after the Closing Date, Forestar Petroleum ‎shall, subject to the other terms and conditions of this Section 11(b), indemnify, defend and hold ‎Purchaser, and any of its respective agents, employees, officers and directors, and each of the heirs, executors, successors and assigns thereof (collectively, the “Purchaser Indemnitees”) harmless from any and all ‎claims, actions, demands, liabilities, losses, fines, costs, expenses (including reasonable attorneys’ ‎fees), and compensatory damages only, and not including any punitive, consequential, incidental or special damages, whether or not resulting from third-party claims (each of the foregoing, a “Loss”) to ‎Purchaser, arising out of or with respect to any breach of any representation or warranty of Forestar Petroleum in this ‎Agreement.‎ For the purposes of determining Losses, all qualifications based on the word material or ‎similar phrases shall be disregarded.

(c)Indemnification by Forestar (USA). From and after the Closing Date, Forestar (USA) ‎shall, subject to the other terms and conditions of this Section 11(c), indemnify, defend and hold the ‎Purchaser Indemnitees harmless from any and all Losses to ‎Purchaser, arising out of or with respect to any breach of any representation or warranty of Forestar (USA) in this ‎Agreement.‎ For the purposes of determining Losses, all qualifications based on the word material or ‎similar phrases shall be disregarded.

(d)Indemnification by Purchaser. From and after the Closing Date, Purchaser ‎shall, subject to the other terms and conditions of this Section 11(d), indemnify, defend and hold Forestar Petroleum and any of its respective agents, employees, officers and directors, and each of the heirs, executors, successors and assigns thereof (collectively, the “Forestar Petroleum Indemnitees”) and Forestar (USA) and any of its respective agents, employees, officers and directors, and each of the heirs, executors, successors and assigns thereof (collectively, the “Forestar (USA) Indemnitees” and, together with the Forestar Petroleum Indemnitees, the “Sellers Indemnitees”) harmless from any and all ‎Losses to ‎the applicable Sellers Indemnitees, arising out of or with respect to any breach of any representation or warranty of Purchaser in this ‎Agreement.‎ For the purposes of determining Losses, all qualifications based on the word material or ‎similar phrases shall be disregarded.

(e)Certain Limitations and Rules. With respect to the indemnification obligations in Sections 11(b), 11(c) and 11(d) above:

(i)Time Limitations. Forestar Petroleum and Forestar (USA) shall be obligated to indemnify the Purchaser Indemnitees and Purchaser shall be obligated to indemnify the Sellers Indemnitees only for those claims giving rise to any Loss as to which the person claiming the right to be indemnified (the “Indemnified Party”) has given the Party

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from whom it is claiming indemnification (the “Indemnifying Party”) written notice prior to the end of the Indemnity Period.

(ii)Basket. No indemnification shall be made by either Forestar Petroleum, Forestar (USA) or Purchaser with respect to any claim made pursuant to Section 11(b), Section 11(c) or Section 11(d) unless the aggregate amount of Losses incurred or suffered by all Purchaser Indemnitees or all Sellers Indemnitees, as the case may be, under all claims exceeds $250,000 .

(iii)Cap. In no event shall Purchaser’s aggregate obligation to indemnify the Sellers Indemnitees pursuant to this Section 11 exceed an amount equal to seven percent (7%) of the Purchase Price. In no event shall Forestar Petroleum’s aggregate obligation to indemnify the Purchaser Indemnitees pursuant to this Section 11 exceed an amount equal to seven percent (7%) of the Forestar Petroleum Purchase Price. In no event shall Forestar (USA)’s aggregate obligation to indemnify the Purchaser Indemnitees pursuant to this Section 11 exceed an amount equal to seven percent (7%) of the Forestar (USA) Purchase Price.

(iv)Knowledge. If on or prior to the Closing, Purchaser, Forestar Petroleum or Forestar (USA) has actual knowledge of any information that would cause one or more of the representations and warranties made by Forestar Petroleum or Forestar (USA) (in the case of Purchaser) or Purchaser (in the case of Sellers) to be inaccurate as of the date made or as of the Closing Date and (A) such party closes the transactions contemplated by this Agreement, and (B) such party had the right under this Agreement to terminate this Agreement, the Purchaser Indemnitees, the Forestar Petroleum Indemnitees or the Forestar (USA) Indemnitees, as the case may be, shall not have any right or remedy after the Closing with respect to such inaccuracy and shall be deemed to have waived its rights to indemnification in respect thereof.

(v)Adjustment to Purchase Price. There shall be no indemnification under any provision of this Section 11 for a breach of any representation or warranty to the extent an adjustment to the Purchase Price has been made pursuant to this Agreement with respect to such breach.

(f)Indemnification Procedure. All claims for indemnification under this Section 11 shall be resolved in accordance with the following procedures:

(i)Notice of Claim. The Indemnified Party will give the Indemnifying Party prompt notice of any such Loss, and the Indemnifying Party will undertake the defense thereof by counsel chosen by it. The failure to promptly notify the Indemnifying Party shall not relieve such party of its obligations hereunder except to the extent the failure to so notify has materially and adversely prejudiced the Indemnified Party. Any written notice delivered by an Indemnified Party to the Indemnifying Party with respect to a Loss shall set forth, with as much specificity as is reasonably practicable, the facts that are the basis of the claim for such Loss and, to the extent reasonably practicable, a reasonable estimate of the amount thereof.

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(ii)Contest. If any Loss is asserted and the Indemnifying Party fails to resolve such Loss before the earlier to occur of (i) thirty (30) days after receipt of notice of the Loss, or (ii) ten (10) days before the deadline to file an answer in the event that a complaint is filed in connection with a Loss, the Indemnified Party may take such action in connection therewith as the Indemnified Party deems necessary or desirable, including retention of reputable counsel with appropriate experience in the relevant subject matter, and the Indemnified Party shall be entitled to indemnification for costs incurred in connection with such defense. The Indemnified Party shall provide prompt notice to the Indemnifying Party of any such complaint described in the immediately preceding sentence. The Indemnifying Party may, at its election and its cost, retain its own legal counsel.

(iii)Cooperation and Access. If requested by the Indemnifying Party, the Indemnified Party agrees to reasonably cooperate with the Indemnifying Party and its counsel, including permitting reasonable access to books, records, files, data, property and personnel in contesting any Loss that the Indemnifying Party elects to contest or, if appropriate, in making any counterclaim against the person asserting the Loss, or any cross-complaint against any person, but the Indemnifying Party will reimburse the Indemnified Party for reasonable out-of-pocket costs (but not the cost of employee time expended) incurred by the Indemnified Party in so cooperating. The Indemnified Party shall permit such access only after advance written notice and during regular business hours, and the Indemnifying Party agrees not to unreasonably interfere with the Indemnified Party’s business operations. The Indemnified Party will take steps necessary to ensure that, upon request, the Indemnifying Party is provided copies of requested documents which may relate to its indemnification obligations; provided, however, that the Indemnified Party shall not be required, as a result of this Agreement, to provide the Indemnifying Party with (i) any document or information that would be subject to protection under the attorney work product doctrine, attorney-client privilege, or other legal privilege, (ii) any information regarding the pricing of timber, timber harvest records, internal appraisals of the Property, other valuations or similar pricing or financial records, or any other information that is confidential and proprietary to the Indemnified Party or (iii) any document or item that the Indemnified Party is contractually or otherwise bound to keep confidential.

(iv)Participation and Settlement. The Indemnifying Party agrees to afford the Indemnified Party and its counsel the opportunity to be present at, and to participate in, conferences with all persons, including governmental authorities, asserting any Loss against the Indemnified Party or conferences with representatives of or counsel for such persons.

(v)Insurance Recoveries. The amount of any Loss shall be reduced by any amount received by the Indemnified Party (or an affiliate) with respect thereto under any third party insurance coverage or from any other person (excluding an affiliate of the Indemnified Party) alleged to be responsible therefor, net of any expense incurred by the Indemnified Party in collecting such amount. Any Indemnified Party that makes a claim for indemnification under this Section 11 shall use commercially reasonable efforts to collect any amount available under any such insurance coverage and from any such other person

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alleged to have responsibility. If an Indemnified Party (or an affiliate) receives an amount under insurance coverage or from such other person with respect to a Loss at any time subsequent to any indemnification provided the Indemnifying Party pursuant to this Section 11, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by the Indemnifying Party in connection with providing such indemnification up to such amount received by the Indemnified Party (or affiliate), net of any expense incurred by the Indemnified Party in collecting such amount.

(g)Exclusive Remedy. Each of the Parties agrees that if the Closing occurs, the indemnification provided in this Section 11 is the exclusive remedy for a breach by any Party of any representation or warranty contained in this Agreement and is in lieu of an and all other rights and remedies that any other Party may have under this Agreement or otherwise for monetary relief or equitable relief with respect to the matters described in this Section 11. For the avoidance of doubt, Sections 11(b) and 11(c) shall not be Purchaser’s exclusive remedies for any covenants to be fulfilled after Closing as described in this Agreement.

12.No Brokerage Commission. Other than with respect to the services of LandVest, Inc., each of Forestar Petroleum and Forestar (USA) warrants and represents to Purchaser that it has not incurred any liability for any brokerage fee or commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, and the payment of LandVest, Inc. shall be the sole obligation of Forestar Petroleum and Forestar (USA). Purchaser warrants and represents to each Seller that Purchaser has not incurred any liability for any brokerage fee or commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. Each Seller and Purchaser each agree to indemnify and hold harmless the others from any and all damage, loss, liability, expense and claim (including but not limited to attorneys’ fees and court costs) arising with respect to any such fee or commission which may be suffered by the indemnified Party by reason of any action or agreement of the indemnifying Party. This Section 12 shall survive the termination, cancellation or expiration of this Agreement.

13.Taxes; Expenses; Forestar (USA) Claim.

(a)Taxes. Ad valorem real property taxes on the Real Property and special assessments, as well as revenue under the Contracts, shall be prorated as of the Closing Date. If actual tax bills for the taxable year of the Closing are not available, said taxes shall be prorated based on tax bills for the previous taxable year and the Parties agree to cause a reproration of said taxes upon the receipt of tax bills for the taxable year of the Closing. If the Real Property is not designated a separate tax parcel, said taxes shall be adjusted to an amount bearing the same relationship to the total tax bill which the acreage contained within the applicable portion of the Real Property bears to the acreage contained within the property included within said tax bill. Purchaser and Sellers shall reasonably cooperate in good faith to cause all real property taxes on the Property and Sellers’ retained property to be paid (and to reimburse the appropriate Party making such payments, as applicable), to the extent subdivisions or changes of ownership are not reflected on future real property tax bills. Any deferred or “rollback” taxes assessed against the Property as a result of Purchaser’s acquisition of the Property, change in the use of the Property or failure to

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maintain the Property in any property tax reduction program shall be paid by Purchaser within thirty (30) days of final determination thereof. Any deferred or “rollback” taxes assessed against the Property as a result of change in the use of the Property by Sellers or failure by Sellers to maintain the Property in any property tax reduction program before the Closing shall be paid by Seller within thirty (30) days of final determination thereof. The obligations of this Section 13(a) shall survive the Closing.

(b)Expenses and Transfer Taxes.

(i)Purchaser shall pay all costs in connection with the recording of the Deeds, all costs of obtaining updates of the Title Commitments, all costs of purchasing a base title insurance policy and all costs of any endorsements thereto, all costs of Purchaser’s due diligence, all costs of Purchaser’s legal representation, one-half (1/2) of all transfer taxes, and one-half (1/2) of all escrow expenses of Escrow Agent.

(ii)Forestar Petroleum and Forestar (USA) shall pay, in proportion to their respective shares of the Purchase Price, all costs of initially producing the Title Commitments, including the preliminary search and examination fees incurred to initially produce the Title Commitments, one-half (1/2) of all transfer taxes, all costs of the Phase I Report, all costs of Sellers’ legal representation and one-half (1/2) of all escrow expenses of Escrow Agent.

(iii)Except as set forth in this Agreement, all other costs shall be borne by the Party incurring them.

(c)Forestar (USA) Claim. As of the Effective Date, Forestar (USA) has provided copies of the petition and pending settlement agreement concerning the Forestar (USA) Claim (as that term is defined in Schedule 9) (the “Claim Material”). Purchaser shall have thirty (30) days after the Effective Date to review the Claim Material and notify Forestar (USA) of its election, at Purchaser’s sole discretion, to assume the Forestar (USA) Claim. If Purchaser fails to make an election within such thirty (30) day period, Purchaser shall be deemed to have elected to assume the Forestar (USA) Claim. In the event that Purchaser assumes the Forestar (USA) Claim, (i) there shall be no adjustment in the Purchase Price, (ii) Sellers shall not indemnify Purchaser for any matters relating to or arising from the Forestar (USA) Claim, (iii) the property subject to the Forestar (USA) Claim shall be included in the Property and conveyed to Purchaser at Closing, and (iv) Purchaser shall, at Purchaser’s sole cost and expense, use commercially reasonable efforts, and Forestar (USA) shall cooperate in good faith, to substitute Purchaser for Forestar (USA) as plaintiff in the Forestar (USA) Claim by filing with the appropriate arbitrators and courts all motions, pleadings or other documents required to complete such substitution. If Purchaser elects not to assume the Forestar (USA) Claim, then (A) the portion of the Property subject to such Forestar (USA) Claim shall remain in the Property without any adjustment to the Purchase Price, (B) Forestar (USA) shall cause such Forestar (USA) Claim to be dismissed no later than sixty (60) days after Closing, and (C) the portion of the Property subject to the Forestar (USA) Claim shall be conveyed to Purchaser by a quitclaim deed. The terms of this Section 13(c) shall survive Closing.

14.Conditions.

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(a)The obligations of Sellers and Purchaser to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver, on or before the Closing Date, of the following conditions:

(i)All waiting periods (and any extension thereof) under laws applicable to the transactions contemplated by this Agreement shall have expired or been earlier terminated.

(ii)There shall be no injunction, restraining order or decree of any nature of any court or governmental authority that is in effect that restrains or prohibits the consummation of the transactions contemplated by this Agreement or imposes conditions on such consummation not otherwise provided for herein.

(iii)Neither Purchaser nor any Seller shall have been advised by any United States federal government agency (which advisory has not been officially withdrawn on or prior to the Closing Date) that such government agency is investigating the transactions contemplated by this Agreement to determine whether to file or commence any litigation that seeks or would seek to enjoin, restrain or prohibit the consummation of the transactions contemplated by this Agreement.

In the event any of the above conditions is not satisfied on or before the Closing, either Forestar Petroleum, Forestar (USA) or Purchaser will have the right, exercisable at its sole election, to terminate this Agreement by delivering written notice to the other Parties before the Closing, whereupon Escrow Agent will return the Earnest Money to Purchaser, and the Parties will have no further rights or obligations hereunder (except as otherwise expressly provided herein).

(b)Unless waived by Purchaser, in addition to any other conditions set forth in this Agreement, the obligations of Purchaser under this Agreement are expressly made subject to the fulfillment in all respects of the following conditions precedent:

(i)the truth and accuracy as of the Closing Date, in all material respects, of each and every warranty and representation herein made by any Seller;

(ii)Each Seller’s timely performance of and compliance with, in all material respects, each and every term, condition, agreement, restriction and obligation to be performed and complied with by such Seller under this Agreement;

(iii)The aggregate acreage of all Title Objection Property, Title Failure Property and Environmental Property shall not exceed twenty percent (20%) of the acreage of the Timberlands;

(iv)Purchaser’s receipt of a binding commitment from the Title Company to issue a title insurance policy insuring Purchaser’s title to the Property following the Closing, subject only to the Permitted Encumbrances; and

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(v)Sellers’ obtaining of all corporate approvals, consents and authorizations as may be required for Sellers to consummate the transaction contemplated by this Agreement.

In the event any of the above conditions is not satisfied on or before the Closing, Purchaser will have the right, exercisable at Purchaser’s sole election, to exercise the remedies described in Section 15(b). Notwithstanding the foregoing sentence, in the event of either Seller’s failure to fulfill any condition precedent set forth in Section 14(b)(ii), Purchaser shall provide written notice to such Seller and such Seller shall have seven (7) days from receipt of such notice to fulfill the condition precedent before Purchaser may exercise any remedies described in Section 15(b).

(c)Unless waived by a Seller, the obligations of such Seller under this Agreement are expressly made subject to the fulfillment in all respects of the following conditions precedent:

(i)the truth and accuracy as of the Closing Date, in all material respects, of each and every warranty and representation herein made by Purchaser; and

(ii)Purchaser’s timely performance of and compliance with, in all material respects, each and every term, condition, agreement, restriction and obligation to be performed and complied with by Purchaser under this Agreement.

(iii)The aggregate acreage of all Title Objection Property shall not exceed ten percent (10%)of the acreage of the Timberlands

In the event any of the above conditions is not satisfied on or before the Closing, either Seller will have the right, exercisable at such Party’s sole election, to exercise the remedies described in Section 15(a), provided that if either Seller elects to exercise such remedy, the other Seller shall be deemed to have made an identical election. Notwithstanding the foregoing sentence, in the event of Purchaser’s failure to fulfill any condition precedent set forth in Section 14(c)(i) or (ii), Sellers shall provide written notice to Purchaser and Purchaser shall have seven (7) days from receipt of such notice to fulfill the condition precedent before Sellers may exercise any remedies described in Section 15(c).

15.Earnest Money; Default; Remedies.

(a)If the purchase and sale of any portion of the Property contemplated hereby is not consummated because of a default by Purchaser under this Agreement, then Sellers shall require Escrow Agent to pay the entire Forestar Petroleum Earnest Money to Forestar Petroleum and the entire Forestar (USA) Earnest Money to Forestar (USA) as full liquidated damages and not as a penalty and as Sellers’ sole and exclusive remedy against Purchaser for a failure by Purchaser in breach of this Agreement to consummate the purchase and sale of the Property (the Parties acknowledging that Sellers’ damages as a result of such default are not capable of exact ascertainment and that said liquidated damages are fair and reasonable).

(b)If the purchase and sale of any portion of the Property contemplated hereby is not consummated because of a default by either Seller under this Agreement, then Purchaser’s

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sole remedies shall be limited to either of the following as selected by Purchaser in Purchaser’s sole discretion: (i) termination of this Agreement, whereupon Escrow Agent shall promptly return the Earnest Money to Purchaser (after the notice requirements and following the procedures in Section 15.(c)(ii) below), and Sellers shall reimburse Purchaser for all of Purchaser’s reasonable out-of-pocket costs and expenses actually incurred in connection with the transaction contemplated by this Agreement, including, without limitation, legal fees and expenses, due diligence expenses, third party inspection costs and travel expenses, not to exceed $100,000 in the aggregate, whereupon the Parties will have no further rights or obligations hereunder (except as otherwise expressly provided herein), or (ii) shall be entitled to sue Sellers for specific performance; provided, however, should specific performance not be available because Sellers have deeded or mortgaged the Property to a third party prior to Closing (and if a mortgage, such mortgage is not capable of being repaid in full from the Closing proceeds payable to Sellers), then Purchaser may pursue the recovery of its actual damages. Purchaser acknowledges that the foregoing shall be its sole remedies against Seller for a default by Sellers under this Agreement.

(c)The duties of Escrow Agent shall be as follows:

(i)During the term of this Agreement, Escrow Agent shall hold and deliver the Earnest Money in accordance with the terms and provisions of this Agreement.

(ii)If this Agreement is terminated by the mutual written agreement of Sellers and Purchaser, or if Escrow Agent is unable to determine at any time to whom the Earnest Money should be delivered, or if a dispute develops between Sellers and Purchaser concerning to whom the Earnest Money should be delivered, then in any such event, Escrow Agent shall request joint written instructions from Sellers and Purchaser and shall deliver the Earnest Money in accordance with such joint written instructions. In the event that such written instructions are not received by Escrow Agent within ten (10) days after Escrow Agent has served a written request for instructions upon Sellers and Purchaser, Escrow Agent shall have the right to pay the Earnest Money into a court of competent jurisdiction and interplead Sellers and Purchaser in respect thereof, and thereafter Escrow Agent shall be discharged of any obligations in connection with this Agreement.

(iii)If costs or expenses are incurred by Escrow Agent because of litigation or a dispute between Sellers and Purchaser arising out of the holding of the Earnest Money in escrow, Sellers and Purchaser shall each pay Escrow Agent one-half of such costs and expenses (with each Seller responsible for such Seller’s one-half in proportion to their respective shares of the Purchase Price). Except for such costs and expenses, no fee or charge shall be due or payable to Escrow Agent for its services as escrow holder.

(iv)By joining herein, Escrow Agent undertakes only to perform the duties and obligations imposed upon it under the terms of this Agreement and expressly does not undertake to perform any of the other covenants, terms and provisions incumbent upon Sellers and Purchaser hereunder.

(v)Purchaser and Sellers hereby agree and acknowledge that Escrow Agent assumes no liability in connection herewith except for any loss, costs or damage

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arising out of Escrow Agent’s own negligence or willful misconduct; that Escrow Agent shall never be responsible for the validity, correctness or genuineness of any document or notice referred to under this Agreement; that Escrow Agent shall not be liable or responsible for any loss occurring which arises from bank failure or error, insolvency or suspension, or a situation or event which falls under the Federal Deposit Insurance Corporation (FDIC) coverage (Sellers and Purchaser are aware that FDIC coverage applies to a maximum amount of $250,000 per depositor, as may be modified by the FDIC from time to time); and that Escrow Agent may seek advice from its own counsel and shall be fully protected in any action taken by it or omitted to be taken by it in good faith in accordance with the opinion of its counsel.

16.Assignment. Except as otherwise expressly contemplated by this Agreement, no Party shall assign its rights or obligations hereunder, in whole or in part, without the prior written consent of the other Parties, given or withheld in the sole discretion of each Party. Notwithstanding the foregoing, Purchaser shall have the right to assign its rights and obligations in whole, but not in part, under this Agreement to any party controlling, controlled by, or under common control with Purchaser or managed directly or indirectly by Timberland Investment Resources, LLC, provided that no such assignment shall relieve Hubble Timber, LLC of any liability hereunder unless such assignment takes place concurrently with the Closing.

17.No Waiver. Except as specifically set forth herein, no action or failure to act by any Party shall constitute a waiver of any right or duty afforded to such Party under this Agreement, nor shall any such action or failure to act constitute an approval of or acquiescence in any breach of this Agreement except as may be specifically agreed in writing.

18.GoverningLaw. This Agreement shall be governed in all respects, including validity, construction, interpretation and effect, by the laws of the State of Georgia, without giving effect to its principles or rules of conflicts of law to the extent such principles or rules would require or permit the application of the laws of another jurisdiction. Any and all actions concerning any dispute arising hereunder shall be filed and maintained in the state courts of Georgia in Fulton County, Georgia, or the federal courts for and in the Northern District of Georgia located in Atlanta, Georgia. The parties specifically consent and submit to the jurisdiction and venue of such state or federal court, and irrevocably waive any objections either may have based on improper venue or forum non conveniens to the conducting of any proceeding in any such court.

19.Notice. Any and all notices required or permitted under this Agreement shall be made or given in writing and shall be delivered in person or sent by postage, pre-paid, United States Mail, certified or registered, return receipt requested, or by a recognized overnight carrier, or by facsimile or e-mail, to the other Parties or Escrow Agent at the addresses set forth below, and such address as may be furnished by notice in accordance with this Section 19; provided, however, if any delivery is made by facsimile or e-mail, such delivery shall be deemed delivered only if the Party (or Escrow Agent) giving such notice obtains a confirmation of receipt and delivers such notice by hand delivery, United States mail or recognized overnight carrier for next day delivery. All notices shall be deemed given and effective upon the earliest to occur of: (i) the confirmed facsimile or e-mail transmission or hand delivery of such notice to the address for notices; (ii) one

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business day after the deposit of such notice with an overnight courier service by the time deadline for next day delivery addressed to the address for notices; or (iii) three business days after depositing the notice in the United States mail.

Sellers:            Forestar (USA) Real Estate Group Inc.

6300 Bee Cave Road

Building II, Suite 500

Austin, TX 78746

Attention: Mr. David M. Grimm, Esq.

Phone: 512-433-5223

Fax: 512-433-5203

Email: davidgrimm@forestargroup.com

And to:        Forestar Petroleum Corporation

6300 Bee Cave Road

Building II, Suite 500

Austin, TX 78746

Attention: Mr. David M. Grimm, Esq.

Phone: 512-433-5223

Fax: 512-433-5203

Email: davidgrimm@forestargroup.com

with a copy to:     Sutherland Asbill & Brennan LLP

999 Peachtree Street, N.E.

Suite 2300

Atlanta, Georgia 30309

Attention: Daniel R. McKeithen

Phone: 404-853-8342

Fax: 404-853-8806

Email:    daniel.mckeithen@sutherland.com

Purchaser:        Hubble Timber, LLC

c/o Timberland Investment Resources, LLC

115 Perimeter Center Place, Suite 940

Atlanta, GA 30346

Attention: Mark Seaman and Gary Allred

Phone:    404-848-2000

Email: seaman@tirllc.com and allred@tirllc.com     

with a copy to:     Schreeder, Wheeler & Flint, LLP

1100 Peachtree St., Suite 800

Atlanta, GA 30309

Attention: Leo Rose, Esq.

Phone:404-954-9823

Email:lrose@swfllp.com

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Escrow Agent:        Metropolitan Title Agency, Inc.,

on behalf of Chicago Title Insurance Company

1820 The Exchange

Suite 550

Atlanta, Georgia 30339

Attention: John Cripe

Phone: 770-933-0073

Fax: 770-933-0233

Email: jcripe@mtaga.com

20.Entire Agreement. This Agreement contains the entire agreement among the Parties and Escrow Agent with respect to the subject matter hereof and cannot be amended or supplemented except by a written agreement signed by the Parties.

21.Captions. The captions of sections in this Agreement are for convenience and reference only and are not part of the substance hereof.

22.Severability. In the event that any one or more of the provisions, sections, words, clauses, phrases or sentences contained in this Agreement, or the application thereof in any circumstance is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, section, word, clause, phrase or sentence in every other respect and of the remaining provisions, sections, words, clauses, phrases or sentences of this Agreement, shall not be in any way impaired, it being the intention of the Parties and Escrow Agent that this Agreement shall be enforceable to the fullest extent permitted by law.

23.Counterparts. This Agreement may be executed in several counterparts, each of which may be deemed an original, and all of such counterparts together shall constitute one and the same Agreement. This Agreement may be executed by each Party and Escrow Agent upon a separate copy and attached to another copy in order to form on or more counterparts. Signatures of either party delivered in an electronic format, such as an attachment to an e-mail or by telecopy, shall be acceptable and shall be as valid as an original signature.

24.Binding Effect. This Agreement shall bind the Parties (and Escrow Agent, to the extent applicable) and their respective heirs, legal representatives, successors and assigns.

25.Time of Essence. Time is of the essence of this Agreement.

26.No Survival. Except as may otherwise expressly be provided herein, the provisions of this Agreement shall not survive the Closing and shall be merged into the delivery of the Deeds and other documents and the payment of all monies pursuant hereto at the Closing.

27.Incorporation of Exhibits. All exhibits referred to in this Agreement are hereby incorporated herein by this reference.

28.Confidentiality; Public Announcements. Purchaser and Sellers agree that the terms and conditions of the transactions contemplated in this Agreement are to remain confidential for a

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period of five (5) days after the Closing, except that either Party and its affiliates may disclose the terms and provisions of this Agreement (i) to the extent that such Party or any of its affiliates is required by applicable law (including the rules and regulations promulgated by the SEC or any stock exchange) to make public disclosure, (ii) in any legal proceeding, including any audit, to the extent necessary to enforce any rights under this Agreement, provided that, in either case, the disclosing Party shall provide the other Parties with prior notice of such disclosure and the content thereof and (iii) to any party assisting with Purchaser’s due diligence or the Closing of this Agreement. Notwithstanding the foregoing, the Confidentiality Agreement shall remain applicable following the Closing to all portions of the property of Sellers and information related thereto that is not the subject of this Agreement. This Section 28 shall survive the Closing.

29.Dispute Resolution. If Purchaser and either or both of Forestar (USA) and Forestar Petroleum are unable to agree as to the value of a Title Objection Property under Section 5, the value of an Environmental Property under section 6(b), the Timber Cruise Determinations under Section 6(c), the Casualty Damage Value under Section 9, or the value of a Damaged Property under Section 9(b), then any such disagreeing Party shall have the right to invoke the procedures of this Section 29 by delivering written notice to the other Parties. The applicable Seller (or, if both Sellers are participants to the dispute, the Sellers acting jointly) and Purchaser each shall appoint an independent forestry consultant within five (5) days following the delivery of such written notice, each of which may be a consultant previously engaged by the appointing Party, and such two consultants will in turn select a third independent forestry consultant within five (5) days to act with them in a panel to determine the appropriate value. A majority of the panel of consultants will reach a binding decision within thirty (30) days following the selection of the third consultant, and the decision of the panel of consultants will be final. Purchaser will bear the cost of its consultant and one-half (1/2) of the cost of the third consultant, and the applicable Seller (or, if both Sellers are participants to the dispute, the Sellers acting jointly in proportion to their share of the Purchase Price) will bear the cost of its consultant and one-half (1/2) of the cost of the third consultant. If the Closing Date is extended to resolve a dispute in accordance with this Section 29, in no event shall Closing occur after December 30, 2016. If any such dispute regarding the value of an Environmental Property remains unresolved as of the Closing, then such dispute shall be resolved in accordance with the terms of Section 6(c). With respect to any other such disputes described in the first sentence of this Section 29 remaining unresolved as of the Closing, then (a) the Purchase Price shall be adjusted, if applicable, after Closing in accordance with the decision of the panel; and (b) if the disputed amounts, based on the Value Table, exceed ONE MILLION AND NO/100THS DOLLARS ($1,000,000.00) in the aggregate, then (i) the Purchase Price shall be reduced at Closing by the lesser of the amounts claimed by the parties (or by zero if the full amount is in dispute), (ii) the portion of the Purchase Price paid to Sellers shall be reduced by the disputed amounts, and (iii) Purchaser shall deposit with Escrow Agent the full disputed amount and such escrowed funds shall be disbursed after Closing pursuant to the final resolution of the dispute. The terms of this Section 29 shall survive Closing.

30.Business Days. If any date set forth in this Agreement for the performance of any obligation by any Party or Escrow Agent, or for the delivery of any instrument or notice as herein provided, should be a Saturday, Sunday or legal holiday, the compliance with such obligation or delivery shall be deemed acceptable on the next day which is not a Saturday, Sunday or legal holiday.

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As used herein, the term “legal holiday” means any state or federal holiday for which financial institutions or post offices are generally closed in the State of Georgia for observance thereof, and the term “business day” means any day other than a Saturday, Sunday or legal holiday.

[remainder of page intentionally left blank; signatures appear on following pages]

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IN WITNESS WHEREOF, this Agreement has been duly executed, sealed and delivered by the Parties and Escrow Agent as of the Effective Date.

SELLERS:

FORESTAR (USA) REAL ESTATE GROUP INC., a Delaware corporation

By:    /s/ Michael Quinley                                        Name:    Michael Quinley                                        Its:    President – Community Development    

FORESTAR PETROLEUM CORPORATION, a Delaware corporation

By:    /s/ Michael Quinley                                        Name:    Michael Quinley                                        Its:    President – Community Development    

[Signatures Continue on Following Pages]

(Purchaser’s Signature Page to Purchase and Sale Agreement)

PURCHASER:

HUBBLE TIMBER, LLC, a Missouri limited liability company

By: Gateway Arch, LLC

Its: Sole Member

By: Timberland Investment Resources, LLC

Its: Manager

By: /s/ Mark T. Seaman

Name: Mark T. Seaman

Title: Manager

[Signatures Continue on Following Page]

(Escrow Agent’s Signature Page to Purchase and Sale Agreement)

ESCROW AGENT:

METROPOLITAN TITLE AGENCY, INC.

By: /s/ John Perry Cripe    

Name:    John Perry Cripe                

Title:    President                    

EX-10.30

Exhibit 10.30

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of November 11, 2016 (the “Effective Date”), by and among FORESTAR (USA) REAL ESTATE GROUP INC., a Delaware corporation (“Forestar (USA)”), FORESTAR PETROLEUM CORPORATION, a Delaware corporation (“Forestar Petroleum” and Forestar (USA), each a “Seller” and together “Sellers”), TIR EUROPE FORESTRY FUND S.C.A. SICAV-SIF (“Purchaser”; each of Purchaser, Forestar (USA) and Forestar Petroleum being a “Party” and, collectively, the “Parties”), and METROPOLITAN TITLE AGENCY, INC. (“Escrow Agent”).

STATEMENT OF BACKGROUND

A.    Forestar Petroleum is the owner of certain real property located in Carroll, Coweta, Douglas, Harris, and Heard Counties, Georgia, subject to certain timber rights held by Forestar (USA) on such real property.

B.    Purchaser desires to acquire, and Forestar Petroleum and Forestar (USA) desire to sell, such real property and timber rights, all in accordance with the terms of, and subject to the conditions set forth in, this Agreement.

STATEMENT OF AGREEMENT

NOW, THEREFORE, in consideration of $10.00 in hand paid by Purchaser to Forestar (USA) and Forestar Petroleum, the foregoing, their respective representations, warranties, covenants and agreements set forth in this Agreement, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties (and Escrow Agent, to the extent applicable), intending to be legally bound, hereby agree as follows:

1.Agreement of Purchase and Sale. Subject to the provisions of this Agreement, and for the consideration herein stated, Forestar Petroleum agrees to sell to Purchaser the Forestar Petroleum Property (as hereinafter defined), Forestar (USA) agrees to sell to Purchaser the Forestar (USA) Property (as hereinafter defined), and Purchaser agrees to buy the same from Sellers.

(a)As used herein, the “Forestar Petroleum Property” shall mean all of the right, title and interest of Forestar Petroleum in and to the assets described in subsections (i), (ii), (iii) and (iv) of this Section 1(a), subject to the Permitted Encumbrances (as hereinafter defined):

(i)Those certain tracts or parcels of land located in Carroll, Coweta, Douglas, Harris, and Heard Counties, Georgia, containing approximately 20,142.99 acres, which tracts or parcels are more fully described on Schedule 1 attached hereto, together with all buildings, structures, and other improvements located thereon, all tenements, hereditaments, easements, appurtenances and privileges thereto belonging, but excluding, and subject to, the Timber Rights (as defined below) (collectively, the “Timberlands”);

(ii)Forestar Petroleum’s rights in those certain agreements described on Schedule 2attached hereto (the “Forestar Petroleum Contracts”);

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(iii)To the extent transferable under applicable law, all permits, authorizations, utility capacity, development rights, entitlements, orders, registrations, certificates, variances, approvals, franchises, claims, causes of action, and consents of any applicable governmental authority with respect to the Timberlands (the “Development Rights”); and

(b)As used herein, the “Forestar (USA) Property” shall mean all of the right, title and interest of Forestar (USA) in and to the assets described in subsections (i) and (ii) of this Section 1(b), subject to the Permitted Encumbrances (as hereinafter defined):

(i)All rights in and to the timber growing, standing or lying on the Timberlands as set forth in the reservation of timber in the deeds described on Schedule 4 attached hereto (collectively, the “Timber Rights” and, together with the Timberlands, the “Real Property”); and

(ii)Forestar (USA)’s rights in those certain agreements described on Schedule 5attached hereto (the “Forestar (USA) Contracts” and, together with the Forestar Petroleum Contracts, the “Contracts”).

(c)The Forestar Petroleum Property together with the Forestar (USA) Property shall be collectively referred to herein as the “Property.”

2.Purchase Price. The purchase price to be paid by Purchaser for the Forestar Petroleum Property shall be TWENTY MILLION ONE HUNDRED TWELVE THOUSAND NINE HUNDRED EIGHTY AND 18/100THS DOLLARS ($20,112,980.18) (the “Forestar Petroleum Purchase Price”), lessa credit for the Forestar Petroleum Earnest Money (as defined below) and subject to adjustment as set forth in this Agreement, and shall be payable to Forestar Petroleum by wire transfer of immediately available funds at the Closing to an account designated by Forestar Petroleum. The purchase price to be paid by Purchaser for the Forestar (USA) Property shall be SEVENTEEN MILLION THREE HUNDRED NINE THOUSAND SEVEN HUNDRED EIGHTY-TWO AND NO/100THS DOLLARS ($17,309,782.00) (the “Forestar (USA) Purchase Price” and, together with the Forestar Petroleum Purchase Price, the “Purchase Price”), lessa credit for the Forestar (USA) Earnest Money (as defined below) and subject to adjustment as set forth in this Agreement, and shall be payable to Forestar (USA) by wire transfer of immediately available funds at the Closing to an account designated by Forestar (USA). The Forestar (USA) Purchase Price shall be allocated among premerchantable timber, merchantable timber less than 15 years of age (“Premerchantable Timber”), and merchantable timber 15 years of age and older (“Merchantable Timber”) as set forth on Schedule 6 attached hereto. Purchaser shall reasonably cooperate with any request by any Seller to further allocate the Purchase Price among the components of the Property.

3.Earnest Money. Within thirty (30) days after the Effective Date, Purchaser shall deliver to Escrow Agent (a) the sum of NINE HUNDRED THIRTY-FIVE THOUSAND AND NO/100THS DOLLARS ($935,00.00) (such sum together with all interest earned thereon being the “Forestar Petroleum Earnest Money”), and (b) the sum of NINE HUNDRED THIRTY-FIVE THOUSAND AND NO/100THS DOLLARS ($935,000.00) (such sum together with all interest

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earned thereon being the “Forestar (USA) Earnest Money” and, together with the Forestar Petroleum Earnest Money, the “Earnest Money”). Escrow Agent agrees to hold the Earnest Money in an interest-bearing account and disburse the Earnest Money in accordance with the terms hereof. At the Closing, the Forestar Petroleum Earnest Money shall be applied as a credit against the Forestar Petroleum Purchase Price and the Forestar (USA) Earnest Money shall be applied as a credit against the Forestar (USA) Purchase Price.

4.Closing.

(a)The execution and delivery of the documents and instruments for the consummation of the purchase and sale pursuant hereto (the “Closing”) shall take place on or before December 30, 2016, but the Parties shall use good faith efforts to close by December 15, 2016 (the actual date of Closing being the “Closing Date”), through the escrow services of Escrow Agent, or such earlier date and time, or such other location, as may be mutually agreeable to the Sellers and Purchaser.

(b)At the Closing, Forestar Petroleum shall deliver the following items:

(i)one limited warranty deed in the form of Exhibit B attached hereto with respect to each county in Georgia in which the Timberlands are located (the “Timberland Deeds”) executed by Forestar Petroleum, conveying the Timberlands to Purchaser, subject only to the Permitted Encumbrances (as defined below), and each containing a legal description of the applicable portion of the Timberlands identical to the applicable portion of the legal description of the Timberlands set forth in the applicable Title Commitments (as defined below);

(ii)a counterpart of a general assignment and assumption agreement in the form of Exhibit C attached hereto executed by Forestar Petroleum, by which Forestar Petroleum shall assign its right, title, and interest in, and Purchaser shall assume Forestar Petroleum’s continuing and future obligations under, the Forestar Petroleum Contracts and the Development Rights (the “Forestar Petroleum Assignment”);

(iii)an executed affidavit from Forestar Petroleum as to its non-foreign status;

(iv)an affidavit of gain in the form required by O.C.G.A. §§48-7-128 and 129 and the regulations promulgated thereunder;

(v)[Intentionally Omitted]

(vi)[Intentionally Omitted]

(vii)an executed counterpart of a closing statement in form mutually agreeable to the Sellers and Purchaser in their reasonable discretion (the “Closing Statement”);

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(viii)a reliance letter in favor of Purchaser in a form reasonably acceptable to Purchaser and executed by SLR International Corporation (“Sellers’ Environmental Consultant”) with respect to the Phase I Report (as defined below);

(ix)a notice of assignment of the Forestar Petroleum Contracts executed by Forestar Petroleum; and

(x)such other certificates, affidavits, evidence of authority and instruments as may be reasonably necessary or desirable to consummate the purchase and sale contemplated hereby and to enable Purchaser to obtain a title insurance policy insuring title to the Real Property, subject to the Permitted Encumbrances.

(c)At the Closing, Forestar (USA) shall deliver the following items:

(i)one limited warranty deed in the form of Exhibit E attached hereto with respect to each county in Georgia in which the Timberlands are located (the “Timber Rights Deeds”; the Timberland Deeds and the Timber Rights Deeds, collectively, the “Deeds”) executed by Forestar (USA), conveying the Timber Rights to Purchaser, subject only to the Permitted Encumbrances (as defined below);

(ii)[Intentionally Omitted]

(iii)[Intentionally Omitted]

(iv)an executed affidavit from Forestar (USA) as to its non-foreign status;

(v)an affidavit sufficient under O.C.G.A. Section 48-7-128 to establish that Forestar (USA) is not a “non-resident” of Georgia; 

(vi)[Intentionally Omitted]

(vii)[Intentionally Omitted]

(viii)an executed counterpart of the Closing Statement;

(ix)a notice of assignment of the Forestar (USA) Contracts executed by Forestar (USA); and

(x) such other certificates, affidavits, evidence of authority and instruments as may be reasonably necessary or desirable to consummate the purchase and sale contemplated hereby and to enable Purchaser to obtain a title insurance policy insuring title to the Real Property, subject to the Permitted Encumbrances.

(d)At the Closing, Purchaser shall deliver the following items:

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(i)the Purchase Price (provided that Purchaser shall instruct Escrow Agent to withhold and deliver to the Georgia Department of Revenue any withholding required by applicable law in accordance with affidavits delivered by Sellers at Closing);

(ii)an executed counterpart of the Forestar Petroleum Assignment;

(iii)an executed counterpart of the Forestar (USA) Assignment;

(iv)a counterpart of the Forestar (USA) Claim Assignment;

(v)an executed counterpart of the Closing Statement; and

(vi)such other certificates, affidavits, evidence of authority and instruments as may be reasonably necessary or desirable to consummate the purchase and sale contemplated hereby and to enable Purchaser to obtain a title insurance policy insuring Purchaser’s title to the Real Property, subject to the Permitted Encumbrances.

5.Title.

(a)Forestar Petroleum agrees to convey to Purchaser fee simple title to the Timberlands by the Timberland Deeds, and Forestar (USA) agrees to convey to Purchaser title to the Timber Rights by the Timber Rights Deeds, free and clear of all liens, encumbrances, assessments, agreements, options and covenants, except for the encumbrances set forth on Exhibit G attached hereto (the “Permitted Encumbrances”).

(b)Purchaser acknowledges that, prior to the Effective Date, Purchaser has received from Metropolitan Title Agency, Inc. (the “Title Company”) commitments to insure Purchaser’s title to the Real Property upon the Closing, (each a “Title Commitment” and, collectively, the “Title Commitments”), which Title Commitments are more particularly identified on Schedule 7 attached hereto, together with copies of those documents, instruments, surveys and plats in the data room referenced in Section 8 below. Purchaser shall have until November 30, 2016 (the “Title Objection Period”) to deliver to Sellers written notice of any objection to matters reflected in the Title Commitments that would render title to the Real Property or a portion thereof unmarketable or which would materially interfere with the use of the Real Property for commercial forestry purposes (each, a “Title Objection” and collectively, the “Title Objections”). Purchaser shall have the option to deliver a Title Objection with respect to parcels of the Property that lack legal access; provided, however, that such Title Objection shall not concern parcels that lack legal access as disclosed by Sellers on Schedule 11 attached hereto. Purchaser shall also have the option to object to all Title Failures affecting the Property. For the purposes of this Agreement, the term “Title Failure” shall mean any portion of the Property described in this Agreement, the Commitments or represented on the Sellers’ compartment maps that the Title Company will not insure because such portion of the Property is not or will not be owned by Purchaser free and clear of any monetary liens at the Closing (the “Title Failure Property”). Failure of Purchaser to deliver Title Objections within the Title Objection Period shall be deemed a waiver by Purchaser of its right to make such Title Objections.

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(c)Upon receipt of the Title Objections, each of Forestar Petroleum and Forestar (USA) may elect (but shall not be obligated) to cure or cause to be cured any such Title Objection, and such Party shall notify Purchaser in writing whether it elects to cure the same by the date that is ten (10) business days after receipt of such Title Objections (“Sellers’ Response Period”). Failure of Forestar Petroleum or Forestar (USA), as applicable, to respond in writing within Sellers’ Response Period shall be deemed an election by such Party not to cure such Title Objections. Any Title Objection, other than Title Failures, shall be deemed to be cured if a Seller causes the Title Company to issue a title insurance policy or marked-up binder at Closing to Purchaser for the affected Real Property affirmatively insuring over, or not raising as an exception to the title policy, such Title Objection. Notwithstanding the foregoing, Forestar Petroleum and Forestar (USA) shall be obligated to cure, on or before the Closing Date, all liens, mortgages or financing statements encumbering the Timberlands or the Timber Rights, respectively, and securing a monetary obligation which was created or suffered by Forestar Petroleum or Forestar (USA), respectively, or any party claiming by, through or under such Seller (other than liens for non-delinquent real estate taxes or assessments) (each, a “Monetary Lien”).

(d)If Forestar Petroleum or Forestar (USA), as applicable, does not elect to cure such matter by written notice to Purchaser within Sellers’ Response Period, then Purchaser must elect by delivering written notice to Sellers either (i) to waive such Title Objection and proceed to the Closing, accepting title to those portions of the Timberlands or Timber Rights, as applicable, that are subject to such uncured Title Objection (which Title Objection shall become a Permitted Encumbrance) without adjustment to the Purchase Price; or (ii) to identify those portions of the Timberlands or Timber Rights (other than Title Failures) that are subject to such uncured Title Objection (a “Title Objection Property”) in which event the Purchase Price shall be reduced by the reduction in value of the Title Objection Property due to such Title Objection, to the extent such value exceeds two percent (2%) of the Purchase Price (the “Title Basket”), as determined by reference to (A) the value of such Title Objection Property encumbered by such Title Objection compared to its value if unencumbered by such Title Objection and (B) the value table attached hereto as Schedule 8 (the “Value Table”) (provided that any disputes regarding the value of any Title Objection Property shall be resolved in accordance with Section 29); provided, however, that in the event that Purchaser elects (y) Section 5(d)(i), then any such Title Objection Property shall remain part of the Property for purposes of the transaction contemplated by this Agreement and such Timberland or Timber Rights shall be conveyed to Purchaser at Closing or (z) Section 5(d)(ii), then Seller or Purchaser shall have the option to remove such Title Objection Property from the Property for purposes of the transaction contemplated by this Agreement and the Purchase Price shall be reduced by the value of such Title Objection Property by reference to the Value Table (provided that any disputes regarding the value of any such Title Objection Property shall be resolved in accordance with Section 29); provided, however, that with respect to Section 5(d)(z) immediately above, that any such removed Title Objection Property shall contain a minimum of thirty (30) acres and, to the extent necessary, Purchaser and Forestar Petroleum shall enter into customary access easements for the benefit of the appropriate parties. For the avoidance of doubt, any objections arising from Title Failures shall not be subject to the Title Basket, shall not count towards the Title Objection Property and shall be governed by Section 5(i). Failure of Purchaser to deliver to Sellers such written notice within five (5) business days following Sellers’ affirmative response shall be deemed an election of clause (i).

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(e)In the event any title matter that would render title to the Real Property or a portion thereof unmarketable or which would materially interfere with the use of the Real Property for commercial forestry purposes first arises or is first disclosed to Purchaser after the expiration of the Title Objection Period, and such title matter was not reflected on the Title Commitments and is not attributable in whole or in part to any action or inaction of Sellers or not permitted by Sellers, then the following provisions will apply, provided, that in no case shall the Closing Date be extended beyond December 30, 2016 in connection with this Section 5(e):

(i)Purchaser shall notify Sellers of such matter in writing within five (5) business days after the earlier to occur of (A) Purchaser receiving written notice of such matter and (B) Purchaser discovering such matter, and if Seller is materially prejudiced by any delay in receiving such notice, failure by Purchaser to deliver such notice within such time period shall be deemed a waiver of any objection right with respect to such matter, which shall become a Permitted Encumbrance.

(ii)If such Title Objection is a Monetary Lien, or if such Title Objection arose by reason of an act or omission of Forestar Petroleum or Forestar (USA) in breach of such Party’s obligations under this Agreement, such breaching Party shall be obligated to cure such Title Objection on or before the Closing Date.

(iii)If such Title Objection is not described in Section 5(e)(ii), and Forestar Petroleum or Forestar (USA), as applicable, does not elect to cure such matter by written notice to Purchaser within Sellers’ Supplemental Response Period (as hereinafter defined), then Purchaser must elect by delivering written notice to Sellers either (A) to waive such Title Objection and proceed to the Closing, accepting title to those portions of the Real Property that are subject to such uncured Title Objection (which Title Objection shall become a Permitted Encumbrance) without adjustment to the Purchase Price; or (B) to identify those portions of the Timberlands or Timber Rights that are subject to such uncured Title Objection, which excluded portion shall be a Title Objection Property, in which event the Purchase Price shall be reduced by the value of the Title Objection Property, to the extent such value exceeds two percent (2%) of the Purchase Price, as determined by reference to (y) the value of such Title Objection Property encumbered by such Title Objection compared to its value if unencumbered by such Title Objection and (z) the Value Table (provided that any disputes regarding the value of any Title Objection Property shall be resolved in accordance with Section 29); provided, however, that in the event that Purchaser elects (1) Section 5(e)(iii)(A), then any Title Objection Property shall remain part of the Property for purposes of the transaction contemplated by this Agreement and such Timberland or Timber Rights shall be conveyed to Purchaser at Closing or (2) Section 5(e)(iii)(B), then Seller or Purchaser shall have the option to remove such Title Objection Property from the Property for purposes of the transaction contemplated by this Agreement and the Purchase Price shall be reduced by the value of such Title Objection Property by reference to the Value Table (provided that any disputes regarding the value of any such Title Objection Property shall be resolved in accordance with Section 29); provided, however, that with respect to Section 5(e)(iii)(2) immediately above, that any such removed Title Objection Property shall contain a minimum of thirty (30) acres and, to the extent necessary, Purchaser and Forestar Petroleum shall enter

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into customary access easements for the benefit of the appropriate parties. Failure of Purchaser to deliver to Sellers such written notice within three (3) business days following Purchaser’s receipt of Sellers’ written response shall be deemed an election of clause (A).

(f)In the event that any title matter that would render title to the Real Property or a portion thereof unmarketable or which would materially interfere with the use of the Real Property for commercial forestry purposes first arises or is first disclosed to Purchaser after the expiration of the Title Objection Period, and such title matter was not reflected on the Title Commitments and is attributable in whole or in part to any action or inaction of Sellers or permitted by Sellers, then the following provisions will apply, provided, that in no case shall the Closing Date be extended beyond December 30, 2016 in connection with this Section 5(f):

(i)Purchaser shall notify Sellers of such matter in writing.

(ii)If such Title Objection is a Monetary Lien, or if such Title Objection arose by reason of an act or omission of Forestar Petroleum or Forestar (USA), such Party shall be obligated to cure such Title Objection on or before the Closing Date.

(iii)If such Title Objection is not described in Section 5(f)(ii), and Forestar Petroleum or Forestar (USA), as applicable, does not elect to cure such matter by written notice to Purchaser within Sellers’ Supplemental Response Period, then Purchaser must elect by delivering written notice to Sellers either (A) to waive such Title Objection and proceed to the Closing, accepting title to those portions of the Real Property that are subject to such uncured Title Objection (which Title Objection shall become a Permitted Encumbrance) without adjustment to the Purchase Price; or (B) to identify those portions of the Timberlands or Timber Rights that are subject to such uncured Title Objection, which excluded portion shall be a Title Objection Property, in which event either (I) Purchaser shall have the option to remove such Title Objection Property from the Property for purposes of the transaction contemplated by this Agreement and the Purchase Price shall be reduced by the reduction in the value of such Title Objection Property by reference to the Value Table (provided that any disputes regarding the value of any such Title Objection Property shall be resolved in accordance with Section 29) or (II) the Purchase Price shall be reduced by the value of the Title Objection Property as determined by reference to (y) the value of such Title Objection Property encumbered by such Title Objection compared to its value if unencumbered by such Title Objection and (z) the Value Table (provided that any disputes regarding the value of any Title Objection Property shall be resolved in accordance with Section 29), in which event any Title Objection Property shall remain part of the Property for purposes of the transaction contemplated by this Agreement and such Timberland or Timber Rights shall be conveyed to Purchaser at Closing. In the event of Section 5(f)(iii)(I) immediately above, any such removed Title Objection Property shall contain a minimum of thirty (30) acres and, to the extent necessary, Purchaser and Forestar Petroleum shall enter into customary access easements for the benefit of the appropriate parties. Failure of Purchaser to deliver to Sellers such written notice within three (3) business days following Purchaser’s receipt of Sellers’ written response shall be deemed an election of clause (A).

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(iv)As used in Section 5(e)(iii) and Section 5(f)(iii), “Seller’s Supplemental Response Period” shall mean the three (3) business day period following Sellers’ receipt of Purchaser’s notice under Section 5(e)(i) or Section 5(f)(i), as applicable.

(g)So long as this Agreement remains in force, neither Forestar Petroleum nor Forestar (USA) shall, without the prior written consent of Purchaser, (i) lease, encumber or convey all or part of the Property or any interest therein, or (ii) enter into any agreement granting to any person any right with respect to the Property or any portion thereof; provided, however, Forestar Petroleum shall have the right, in the ordinary course of business, to (x) renew the Forestar Petroleum Contracts, (y) enter into new recreational leases substantially in the form of the existing recreational leases included in the Forestar Petroleum Contracts, and (z) enter into new, customary temporary access agreements, provided that any such renewal or new recreational lease or temporary access agreements (A) shall be for a term of not more than twelve (12) months, and (B) shall be terminable by the lessor thereunder upon no more than sixty (60) days’ prior notice.

(h)The Parties acknowledge that (i) the Property has not been surveyed and (ii) the estimated acreage of the Property is 20,142.99 acres based on GIS data provided by Sellers. To the extent that Purchaser determines, prior to December 9, 2016, that material discrepancies exist between the legal description of the Timberlands and Sellers’ GIS data (taking into account the rural nature of the Timberlands and unsurveyed legal descriptions customary for such parcels), then Purchaser shall have the right to deliver notice of a Title Failure with respect to the acreage discrepancy in accordance with Section 5(b), as modified by this Section 5(h). In connection with Sellers’ response to such Title Failures, Purchaser and Seller agree to negotiate in good faith to determine the materiality and accuracy of each such Title Failure, whether and how the applicable legal description may be corrected, and the net effect of all such Title Failures (utilizing the acreage per tract contained in diligence materials provided by the Sellers to Purchaser, taking into consideration any tracts that are reasonably determined to be less than the acreage set forth in such materials as well as any tracts whose acreage is reasonably determined to be in excess of the acreage set forth in such materials).

(i)Purchaser may object to any Title Failures no later than November 30, 2016. Title Failure objections shall not be subject to the Title Basket, but rather the Purchase Price will be reduced by the value of the Title Failure Property as determined by reference to the Value Table, provided that any disputes regarding the value of any Title Failure Property shall be resolved in accordance with the dispute resolution process of Section 29. The Title Failure Property shall be excluded from the transaction and shall not be conveyed to Purchaser at Closing; provided, however, that (A) Sellers also shall have the right to exclude portions of the Property adjacent to the Title Failure Property from the transaction contemplated by this Agreement, if necessary, to achieve a thirty (30) acre minimum if Sellers have colorable title to such Title Failure Property or a sufficient period of time has passed that would allow Sellers to establish an adverse possession claim with respect to such Title Failure Property, and (B) Forestar Petroleum and Purchaser shall enter into customary access easements, for the benefit of the appropriate parties.

6.Inspection; Timber Inventory Verification and Post Closing Adjustment.

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(a)Purchaser and its agents, representatives, employees, engineers and contractors shall have the right during the term of this Agreement to enter upon the Real Property to inspect, examine, survey and make timber cruises and other tests or surveys which it may deem necessary or advisable and to verify the accuracy of all data and information, if any, provided by any Seller to Purchaser in connection with the Real Property; provided, however, that Purchaser shall obtain the written consent of the applicable Seller prior to conducting any core sampling, test borings or other invasive testing. Purchaser and the contractors, representatives and agents of Purchaser who enter upon the Real Property shall maintain commercial general liability insurance, naming each Seller as an additional insured, in an amount not less than One Million and 00/100 Dollars ($1,000,000.00) per occurrence and Two Million and 00/100 Dollars ($2,000,000.00) in the aggregate for personal injury and/or property damage and products/completed operations coverage. Purchaser shall forward to Sellers a certificate of insurance (a “Certificate”) for such policy, together with evidence of Purchaser’s worker’s compensation coverage and automobile liability insurance prior to any entry upon the Real Property, but in no event later than one (1) business days prior to any physical entry onto the Property, which Certificate shall name Sellers as an “additional insured” on such commercial general liability policy. Such commercial general liability coverage maintained by Purchaser shall be primary and non-contributory to any insurance carried by a Seller. Purchaser hereby agrees to indemnify and hold Forestar Petroleum and Forestar (USA) harmless for any and all cost and expense resulting from claims or damages caused by said inspections, examinations and tests. The foregoing indemnification shall survive any termination, cancellation or expiration of this Agreement or the Closing.

(b)Notwithstanding the inspection rights provided in Section 6(a), Purchaser expressly acknowledges and agrees that Purchaser will have the opportunity, prior to 11:59 p.m. on December 9, 2016 (the “Physical Inspection Deadline”), to fully and carefully investigate and inspect the physical, structural and environmental condition of the Real Property and the volume of timber located thereon and to review and analyze documents and records related to the Property, all laws, statutes, rules, regulations, ordinances and orders affecting the Property, and all other materials and information affecting or in any manner relating to the Property and the ownership, use, occupancy, management, operation and maintenance thereof, and that certain Phase I Environmental Site Assessment Report dated September 2016 (SLR Project No. 110.01667.00001) prepared by Sellers’ Environmental Consultant with respect to the Property (the “Phase I Report”).

(c)In the event that Purchaser’s environmental consultant, Geo-Source, Inc. (“Purchaser’s Environmental Consultant”), discovers that there are recognized environmental conditions under ASTM Practice E 2247-08 standards (“RECs”) affecting a portion of the Property (the “Environmental Property”), Purchaser shall deliver written notice to Sellers of such findings with supporting evidence prepared by Purchaser’s Environmental Consultant, including, but not limited to, applicable supplemental reports, by the Physical Inspection Deadline (the “Environmental Notice”) and failure to deliver the Environmental Notice shall be deemed a waiver of Purchaser’s right to deliver the Environmental Notice. Within ten (10) days following Sellers’ receipt of the Environmental Notice from Purchaser, Sellers shall deliver to Purchaser written notice indicating whether Sellers (i) disagree with such findings and whether Sellers desire, at Sellers’ option, to conduct testing on the Environmental Property to establish that there are no RECs on the Environmental Property or (ii) agrees with such findings and intends to cure such RECs before

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Closing. In the event of subsection (i) immediately above, within five (5) business days following the delivery of Sellers’ written notice, Sellers and Purchaser shall cause Sellers’ Environmental Consultant and Purchaser’s Environmental Consultant to discuss, in good faith, each consultant’s findings to reach a final determination as to whether any RECs exist on the Environmental Property. If Purchaser’s Environmental Consultant and Seller’s Environmental Consultant are unable to agree whether any RECs exist on the Environmental Property within such five (5) business day period, Purchaser’s Environmental Consultant and Seller’s Environmental Consultant will in turn select a third environmental consultant within five (5) days to make a final determination regarding the existence of any RECs on the Environmental Property. The third environmental consultant shall reach a final, binding decision within fifteen (15) days following the selection of the third environmental consultant; provided, however, that if the Closing Date is extended to resolve a dispute in accordance with this Section 6(b), in no event shall Closing occur after December 30, 2016. If the third environmental consultant has not given its final determination by the Closing Date, then Purchaser shall deposit with the Escrow Agent an amount equal to the portion of the Purchase Price due with respect to the Environmental Property as determined by reference to the Value Table and the Environmental Property shall be removed from the Property for purposes of the Closing on the remaining portion of the Property by the Closing Date. Within fifteen (15) days after the final determination by the third environmental consultant, any Environmental Property determined by the third environmental consultant to be unaffected by RECs shall be conveyed to Purchaser and the Purchase Price due with respect to such Environmental Property shall be delivered to Sellers. Any Environmental Property determined by the third environmental consultant to contain RECs shall not be conveyed to Purchaser and the portion of the Purchase Price escrowed with respect to such Environmental Property shall be returned to Purchaser within two (2) business day after Purchaser notifies the Escrow Agent of such final determination. Purchaser will bear the cost of Purchaser’s Environmental Consultant and one-half (1/2) of the cost of the third environmental consultant, and Sellers will bear the cost of Seller’s Environmental Consultant and one-half (1/2) of the cost of the third environmental consultant.

(d)Except with respect to a breach of any of Sellers’ representations and warranties set forth in this Agreement, Purchaser, on behalf of itself and all of its officers, directors, shareholders, employees, partners, members, subsidiaries and other affiliated or related entities, representatives, consultants and agents, and Purchaser’s and each of the foregoing parties’ successors and assigns (collectively, the “Purchaser Parties”) hereby expressly waives, relinquishes and releases any and all rights, remedies and claims any of the Purchaser Parties may now or hereafter have, against each Seller, and all the Sellers’ respective officers, directors, shareholders, employees, partners, members, subsidiaries and other affiliated or related entities, representatives, consultants and agents, and the Sellers and each of the foregoing parties’ successors and assigns, whether known or unknown, arising from or related to (x) the physical condition, quality, quantity and state of repair of the Property and the prior management and operation thereof; (y) the Property’s failure to comply with any federal, state or local laws, regulations, ordinances or orders, including, without limitation, those relating to health, safety, zoning, and the environment; or (z) any past, present or future presence, alleged presence, release or alleged release of any Hazardous Substance (as hereinafter defined) in, on, under or about, or otherwise migrating to, from, across or under, the Property; provided, however, such waiver and release shall not apply to a breach of any representation, warranty or covenant made by Seller under this Agreement or any of the closing documents delivered

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at Closing that expressly survives the closing under, or termination of, this Agreement. “Hazardous Substance” means any chemical, compound, constituent, material, waste, contaminant (including petroleum, crude oil or any fraction thereof) or other substance, defined as hazardous or toxic, or otherwise regulated by any of the following laws and regulations promulgated thereunder as amended from time to time prior to the Effective Date: (1) the Comprehensive Environmental Response, Compensation and Liability Act (as amended by the Superfund Amendments and Reauthorization Act), 42 U.S.C. § 9601 et seq.; (2) the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq.; (3) the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq.; (4) the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq.; (5) the Clean Water Act, 33 U.S.C. § 1251 et seq.; (6) the Clean Air Act, 42 U.S.C. § 1857 et seq.; and (7) all laws of the states in which the Real Property is located that are based on, or substantially similar to, the federal statutes listed in clauses (1) through (6) of this sentence. The foregoing release shall survive any termination, cancellation or expiration of this Agreement or the Closing.

(e)Forestar (USA) and Purchaser acknowledge that Purchaser has engaged American Forest Management an independent third party consultant hired by Purchaser and reasonably acceptable to Forestar (USA) (a “Cruise Consultant”) to perform a timber cruise of the Property (a “Timber Cruise”) and determine the Verified Value (as hereinafter defined) with volumes to be determined as of the Effective Date (the “Timber Cruise Determinations”) and that such Timber Cruise Determinations may not be complete prior to Closing. The Timber Cruise Determinations shall be completed no later than April 1, 2017 (the “Determinations Deadline”). Neither Purchaser nor Sellers shall undertake any harvesting activities on the Property until the expiration of the Determinations Deadline. If Purchaser fails to have the Timber Cruise Determinations completed by the Determinations Deadline, then this subsection (c) shall become null and void. As used herein, “Verified Value” shall mean the value of the Merchantable Timber located on the Timberlands based on the volume by species and product of the Merchantable Timber on the Property based on the Value Table. Purchaser shall deliver to Forestar (USA) the final Timber Cruise Determinations or any incomplete Timber Cruise Determinations no later than two (2) business days after receipt with respect to the final Timber Cruise Determinations or the Determinations Deadline with respect to any incomplete Timber Cruise Determinations. If Purchaser determines, prior to the completion of the Timber Cruise, that the Timber Cruise Determinations will be satisfactory to Purchaser, then Purchaser shall have the option to waive the right to adjust the Forestar (USA) Purchase Price pursuant to this Section 6(c) by delivering written notice to Sellers of its satisfaction with the Timber Cruise accompanied by the incomplete Timber Cruise Determinations. Within five (5) business days following the receipt of the Timber Cruise Determinations (the “Review Deadline”), Forestar (USA) and Purchaser shall review the Timber Cruise Determinations and notify the other party, in writing, whether it agrees or disagrees with the Timber Cruise Determinations. In the event that Forestar (USA) disagrees with the Timber Cruise Determinations, then (x) Forestar (USA) shall have the option to conduct its own audit timber cruise (the “Audit Cruise”) of the Property within thirty (30) days following Forestar (USA)’s receipt of the Timber Cruise Determinations (the “Initial Audit Period”) and Purchaser shall grant Forestar (USA) access to the Property to conduct such timber cruise in the event that such cruise must occur after Closing, (y) Purchaser shall not commence any harvesting activities until the disagreement is resolved, and (z) such disagreement shall be resolved in accordance with Section 29, taking into account the timber cruise completed by Forestar (USA), if at all. If Forestar (USA), after exercising commercially reasonable efforts, has not

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completed the Audit Cruise prior to the expiration of the Initial Audit Period, then Forestar (USA) shall have the option, by delivery of written notice to Purchaser prior to the expiration of the Initial Audit Period, to receive an additional thirty (30) days to complete the Audit Cruise (such additional thirty (30) day period being the “Final Audit Period”), commencing on the day immediately following the expiration of the Initial Audit Period; provided, however, that both of the following provisions shall apply: (1) the Audit Cruise during the Final Audit Period shall be limited to the compartments of the Property for which Forestar (USA) has not completed its Audit Cruise (the “Review Property”) and (2) from and after the day immediately following the expiration of the Initial Audit Period, Purchaser shall have the option to conduct harvesting activities on all Property except the Review Property. If Forestar (USA) fails to complete the Audit Cruise or otherwise does not deliver any objections to the Timber Cruise Determinations prior to the expiration of the Final Audit Period, Forestar (USA) shall be deemed to have waived such right and to have accepted the Timber Cruise Determinations. If, however, Forestar (USA) and Purchaser agree with the Timber Cruise Determinations, then within two (2) business days following the Review Deadline, Forestar (USA) and Purchaser shall adjust the Forestar (USA) Purchase Price after the Closing in accordance with the following provisions. If the Verified Value of the Merchantable Timber, as finally determined by the parties, is less than FOURTEEN MILLION FOUR HUNDRED THIRTY-THREE THOUSAND EIGHT HUNDRED EIGHTEEN AND 00/100THS DOLLARS ($14,433,818.00) (the “Target Threshold”) and (A) such determination is completed at or prior to Closing, the Forestar (USA) Purchase Price shall be reduced at Closing by the amount of the deficiency below the Target Threshold (the “Timber Inventory Credit”) or (B) such determination is made after Closing, within two (2) business days after such determination, Forestar (USA) shall pay the Timber Inventory Credit in cash by wire transfer of immediately available funds to the bank account or accounts designated by Purchaser. The terms of this Section 6(e) shall survive Closing.

7.Intentionally Deleted.

8.Deliveries; No Contact. Sellers have delivered to Purchaser and Purchaser is in receipt of, (i) Sellers’ current compartment maps for each tract within the Real Property, (ii) copies of the Contracts, and (iii) copies of other items related to the ownership, development and management of the Property and posted to the “Forestar Timberlands” data room managed by LandVest, Inc. and available at www.dataroom.ansarada.com (Ansarada). Prior to the Closing, Purchaser shall not contact or communicate with any counterparty to any Contract without the prior written consent of the applicable Seller. Purchaser acknowledges that all information with respect to the Property delivered by either Seller to Purchaser under this Agreement is for informational purposes only and, except as expressly set forth to the contrary in this Agreement, is given without representation or warranty of any kind. If this Agreement is terminated or if Closing does not occur, Purchaser shall promptly return to Forestar Petroleum and Forestar (USA) all information delivered to Purchaser pursuant to this Agreement, provided that, to the extent such information is in electronic format, Purchaser shall delete or destroy all such information and promptly deliver to Sellers written certification of such destruction; provided, however, Purchaser shall be entitled to retain copies if required by any applicable law or regulation, but shall keep confidential any non-public information that either Seller has identified as confidential. The provisions of this Section 8 shall survive any termination, cancellation or expiration of this Agreement or the Closing.

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9.Condition of Property; Damage; Condemnation.

(a)Each Seller agrees that at the Closing, the Forestar Petroleum Property and the Forestar (USA) Property, as applicable, shall be in substantially the same condition as exists on the Effective Date, subject to Sellers’ operation on the Property in accordance with usual and customary timberland operations (but specifically excluding the harvesting of timber from the Property, Seller hereby agreeing not to conduct any harvesting activities on the Property so long as this Agreement is in effect), natural wear and tear, the Permitted Encumbrances, condemnation, and casualties beyond Sellers’ control. Subject to the provisions of this Section 9, all risk of loss to the Property or any part thereof prior to the Closing shall be borne by the applicable Seller.

(b)If at any time prior to the Closing, the Property or any material part thereof (including, but not limited to, any timber thereon) is destroyed or damaged by fire or other casualty (the “Damaged Property”), Sellers shall deliver to Purchaser prompt written notice of such damage along with the amount of such damage (calculated as the value of the destroyed or damaged Property less the salvage value of such destroyed or damaged Property) (the “Casualty Damage Value”). If Purchaser, by delivering written notice to Sellers within ten (10) days following Sellers’ delivery of written notice of the damage, disputes the Casualty Damage Value reported by Sellers, Purchaser and Sellers shall attempt in good faith to resolve such dispute and agree upon the Casualty Damage Value. If Purchaser and Sellers are unable to agree as to the Casualty Damage Value on or before ten (10) days after Purchaser delivers to Sellers written notice of its dispute, then such dispute shall be resolved in accordance with Section 29. The Closing Date shall be extended to the extent necessary, but in no event beyond December 30, 2016, to allow for the completion of all procedures set forth in this Section 9(b), including the resolution of any such dispute. Notwithstanding such casualty, if the Casualty Damage Value exceeds SEVEN HUNDRED FORTY-TWO THOUSAND AND NO/100THS DOLLARS ($742,000.00) (the “Casualty Threshold”), the Purchase Price shall be reduced by the Casualty Damage Value. Notwithstanding the immediately preceding sentence, Seller or Purchaser shall have the option to remove the Damaged Property from the Property and the transaction contemplated by this Agreement if the Casualty Damage Value exceeds the Casualty Threshold; provided, however, that with respect to the immediately preceding clause, any such removed Damaged Property shall contain a minimum of thirty (30) acres and, to the extent necessary, Purchaser and Forestar Petroleum shall enter into customary access easements for the benefit of the appropriate parties. If Seller elects to remove the Damaged Property from the Property and the transaction contemplated by this Agreement, the Forestar (USA) Purchase Price shall be reduced by the value of the Damaged Property as determined by reference to the Value Table based on condition of Damaged Property immediately before the Closing, provided that any disputes regarding the value of any Damaged Property shall be resolved in accordance with the dispute resolution process of Section 29. The terms of this subsection (b) shall survive closing.

(c)If at any time prior to the Closing, any action or proceeding is filed or threatened under which any portion of the Property may be taken pursuant to any law, ordinance or regulation by condemnation or the right of eminent domain, Sellers shall deliver to Purchaser prompt written notice thereof. In such event, Purchaser and Sellers shall be required to consummate the transactions contemplated by this Agreement, and Purchaser shall receive a credit against the Purchase Price in the amount of all proceeds of any awards payable with respect to the Property,

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or, if such amount is not known at the time of the Closing, the Purchase Price shall not be reduced and Sellers shall assign to Purchaser at the Closing all of Sellers’ right to such proceeds from such action or proceeding. Notwithstanding the foregoing, in the event that more than fifteen percent (15%) of the gross acres of the Property are subject to an actual or written threat of condemnation or eminent domain at any time before Closing, Purchaser shall have the right to terminate this Agreement by providing written notice to Seller within five (5) days after Purchaser’s receipt of Seller’s notice, whereupon Escrow Agent will return the Earnest Money to Purchaser, and the Parties will have no further rights or obligations hereunder (except as otherwise expressly provided herein). Failure of Purchaser to provide written notice as provided herein shall be deemed an election by Purchaser to waive its right to terminate the Agreement.

10.Warranties, Representations, and Disclaimers.

(a)Forestar (USA) hereby warrants and represents to Purchaser, as of the Effective Date and as of the Closing Date, that:

(i)Forestar (USA) is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business in the State of Georgia and has all requisite corporate power and authority to: (A) own, lease and operate the Forestar (USA) Property and to carry on its business as now being conducted; (B) execute this Agreement and all other agreements, instruments and documents to be executed by it in connection with the consummation of the transactions contemplated by this Agreement; and (C) perform its obligations and consummate the transactions contemplated hereby.

(ii)The execution, delivery and performance of this Agreement and the consummation of transactions contemplated hereby by Forestar (USA) have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Forestar (USA) are necessary for it to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Forestar (USA) and, assuming due authorization, execution and delivery by Forestar Petroleum and Purchaser, is a legal, valid and binding obligation of Forestar (USA), enforceable against Forestar (USA) in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(iii)The execution, delivery or performance of this Agreement by Forestar (USA) will not result in a breach or violation of, or default under, (A) the terms, conditions or provisions of Forestar (USA)’s certificate of incorporation, bylaws or any standing resolution of its board of directors; (B) any Forestar (USA) Contract; (C) any law applicable to Forestar (USA) or any portion of the Forestar (USA) Property; or (D) any permit, license, order, judgment or decree of any governmental authority by which Forestar (USA) or the Forestar (USA) Property is or may be bound, excluding from the foregoing clauses (B), (C) and (D) such breaches, violations or defaults that would not, individually or in the aggregate, have a material adverse effect on the Forestar (USA) Property or on Forestar (USA)’s ability to perform its obligations under this Agreement.

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(iv)There are no approvals, consents or registration requirements with respect to any governmental authority that are or will be necessary for the valid execution and delivery by Forestar (USA) of this Agreement, or the consummation of the transactions contemplated hereby and thereby, other than those which (A) have been obtained, or (B) are of a routine nature and not customarily obtained or made prior to execution of purchase and sale agreements in transactions similar in nature and size to those contemplated hereby and where the failure to obtain the same would not, individually or in the aggregate, have a material adverse effect on the Forestar (USA) Property or on Forestar (USA)’s ability to perform its obligations under this Agreement.

(v)Except as set forth on Schedule 9 (the “Forestar (USA) Claim”), there is no pending or, to Forestar (USA)’s knowledge, threatened action or proceeding (including, but not limited to, any condemnation or eminent domain action or proceeding) before any court, governmental agency or arbitrator which may affectForestar (USA)’s ability to perform this Agreement or which may affect title to the Forestar (USA) Property. For purposes of this Section 10(a)(v), “Forestar (USA)’s knowledge” shall mean the actual knowledge, without any duty on the part of such individuals to investigate or inquire into any particular matter, of either of (A) Michael Quinley, and (B) Kenneth B. Gibson, Jr.

(vi)Schedule 5 contains a complete list, and Forestar (USA) will make available to Purchaser true and complete copies, of the Forestar (USA) Contracts in effect as of the Effective Date and each amendment, supplement, and modification in respect of any of the foregoing. To Forestar (USA)’s Knowledge each of the Forestar (USA) Contracts (1) are in full force and effect, and (2) have no defaults or events that with the passage of time or giving of notice, or both, could become a default thereunder. Forestar (USA) is not a party to, and the Timber Rights are not subject to, any contract or agreement of any kind whatsoever, written or oral, formal or informal, with respect to the Timber Rights that would be binding upon the Timber Rights or Purchaser after Closing, other than the Permitted Exceptions and the Forestar (USA) Contracts.

(vii)To Forestar (USA)’s Knowledge, Forestar (USA)’s use of the Timber Rights is in material compliance with all statutes, ordinances, rules, regulations, orders and requirements of all federal and local authorities and any other governmental entity having jurisdiction over the Timber Rights. Forestar (USA) has not received any written notice from any governmental entity having jurisdiction over the Forestar (USA) Property of any violation of any statutes, ordinances, rules, regulations, orders or requirements applicable to the Forestar (USA) Property, which violation is continuing as of the Effective Date.

(viii)Except as set forth in the Phase I Report, Forestar (USA) has not received notice from any public authority or from any other source and has no actual knowledge that (A) any portion of the land underlying the Timber Rights has been used as a land fill or as a dump to receive garbage, refuse, or waste, whether or not hazardous, or (B) any Hazardous Substance has been disposed of or released in, on or about any portion of the land underlying the Timber Rights in violation of applicable law.

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(ix)None of the Timber Rights is subject to any rollback, greenbelt or change of use taxes or other increased taxes resulting from any change in the use of the Timber Rights prior to the Closing that has not been paid.

(x)Between the Effective Date and the Closing Date, Forestar (USA) shall (i) operate and maintain the Timber Rights in substantially the same condition as existed on the Effective Date, (ii) not remove nor permit the removal of any timber, harvestable crop, improvements, or other items from the Timberlands, (iii) not lease, encumber or convey any of the Timber Rights without the prior written consent of Purchaser, which consent may be withheld in Purchaser’s sole discretion (subject to Section 5(g)); and (iv) maintain the current tax status of the Timber Rights.

(xi)To Forestar (USA)’s knowledge, except as described in Schedule 11 attached hereto, Forestar (USA) has legal access to all of the Timber Rights.

(xii)Forestar (USA) has no rights to the timber growing, standing or lying on the Timberlands other than those reserved in the deeds described on Schedule 4, and Forestar (USA) has not conveyed any such timber rights to any third party since the reservation of the timber in the deeds described on Schedule 4.

(b)Forestar Petroleum hereby warrants and represents to Purchaser, as of the Effective Date and as of the Closing Date, that:

(i)Forestar Petroleum is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Delaware, is qualified to do business in the State of Georgia and has all requisite corporate power and authority to: (A) own, lease and operate the Forestar Petroleum Property and to carry on its business as now being conducted; (B) execute this Agreement and all other agreements, instruments and documents to be executed by it in connection with the consummation of the transactions contemplated by this Agreement; and (C) perform its obligations and consummate the transactions contemplated hereby.

(ii)The execution, delivery and performance of this Agreement and the consummation of transactions contemplated hereby by Forestar Petroleum have been duly and validly authorized by all necessary corporate action, and no other corporate proceedings on the part of Forestar Petroleum are necessary for it to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly and validly executed and delivered by Forestar Petroleum and, assuming due authorization, execution and delivery by Forestar (USA) and Purchaser, is a legal, valid and binding obligation of Forestar Petroleum, enforceable against Forestar Petroleum in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(iii)The execution, delivery or performance of this Agreement by Forestar Petroleum will not result in a breach or violation of, or default under, (A) the terms, conditions

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or provisions of Forestar Petroleum’s certificate of incorporation, bylaws or any standing resolution of its board of directors; (B) any Forestar Petroleum Contract; (C) any law applicable to Forestar Petroleum or any portion of the Forestar Petroleum Property; or (D) any permit, license, order, judgment or decree of any governmental authority by which Forestar Petroleum or the Forestar Petroleum Property is or may be bound, excluding from the foregoing clauses (B), (C) and (D) such breaches, violations or defaults that would not be reasonably likely, individually or in the aggregate, to have a material adverse effect on the Forestar Petroleum Property or on Forestar Petroleum’s ability to perform its obligations under this Agreement.

(iv)There are no approvals, consents or registration requirements with respect to any governmental authority that are or will be necessary for the valid execution and delivery by Forestar Petroleum of this Agreement, or the consummation of the transactions contemplated hereby and thereby, other than those which (A) have been obtained, or (B) are of a routine nature and not customarily obtained or made prior to execution of purchase and sale agreements in transactions similar in nature and size to those contemplated hereby and where the failure to obtain the same would not, individually or in the aggregate, have a material adverse effect on the Forestar Petroleum Property or on Forestar Petroleum’s ability to perform its obligations under this Agreement.

(v)Except as set forth on Schedule 10 (the “Forestar Petroleum Litigation”), there is no pending or, to Forestar Petroleum’s knowledge, threatened action or proceeding (including, but not limited to, any condemnation or eminent domain action or proceeding) before any court, governmental agency or arbitrator which may materially adversely affectForestar Petroleum’s ability to perform this Agreement or which may materially adversely affect title tothe Forestar Petroleum Property. For purposes of this Section 10(b)(v), “Forestar Petroleum’s knowledge” shall mean the actual knowledge, without any duty on the part of such individuals to investigate or inquire into any particular matter, of either of (A) Michael Quinley, and (B) Kenneth B. Gibson, Jr.

(vi)Schedule 2 contains a list, and Forestar Petroleum has made available to Purchaser copies, of the Forestar Petroleum Contracts in effect as of the Effective Date and each material amendment, supplement, and modification in respect of any of the foregoing. To Forestar Petroleum’s Knowledge each of the Forestar Petroleum Contracts set forth on Schedule 3 (1) are in full force and effect, (2) have no defaults or events that with the passage of time or giving of notice, or both, could become a default thereunder, and (3) with respect to the hunting licenses listed as Forestar Petroleum Contracts only, all such hunting licenses are on the form of one of two of the recreational use agreement forms, copies of which Forestar Petroleum has previously provided to Purchaser. Forestar Petroleum is not a party to, and the Timberlands are not subject to, any contract or agreement of any kind whatsoever, written or oral, formal or informal, with respect to the Timberlands that would be binding upon the Timberlands or Purchaser after Closing, other than the Permitted Exceptions, the Forestar Petroleum Contracts, and the Development Rights.

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(vii)To Forestar Petroleum’s Knowledge, Forestar Petroleum’s use of the Timberlands is in material compliance with all statutes, ordinances, rules, regulations, orders and requirements of all federal and local authorities and any other governmental entity having jurisdiction over the Timberlands. Forestar Petroleum has not received any written notice from any governmental entity having jurisdiction over the Forestar Petroleum Property of any violation of any statutes, ordinances, rules, regulations, orders or requirements applicable to the Forestar Petroleum Property, which violation is continuing as of the Effective Date.

(viii)Except as set forth in the Phase I Report, Forestar Petroleum has not received notice from any public authority or from any other source and has no actual knowledge that (A) any portion of the Timberlands has been used as a land fill or as a dump to receive garbage, refuse, or waste, whether or not hazardous, or (B) any Hazardous Substance has been disposed of or released in, on or about any portion of the land underlying the Timber Rights in violation of applicable law.

(ix)None of the Timberlands is subject to any rollback, greenbelt or change of use taxes or other increased taxes resulting from any change in the use of the Timberlands prior to the Closing that has not been paid.

(x)Between the Effective Date and the Closing Date, Forestar Petroleum shall (i) operate and maintain the Timberlands in substantially the same condition as existed on the Effective Date, (ii) not remove nor permit the removal of any timber, harvestable crop, improvements, or other items from the Timberlands, (iii) not lease, encumber or convey any of the Timberlands without the prior written consent of Purchaser, which consent may be withheld in Purchaser’s sole discretion (subject to Section 5(g)); and (iv) maintain the current tax status of the Timberlands. The terms of this subsection (x) shall not apply to any agreements entered into by Forestar Petroleum in accordance with the terms of Section 5(g).

(xi)To Forestar Petroleum’s knowledge, except as described in Schedule 11 attached hereto, Forestar Petroleum has legal access to all of the Timberlands.

(xii)Forestar Petroleum has no rights to the timber growing, standing or lying on the Timberlands other than the reversionary rights set forth in the deeds described on Schedule 4.

(c)Purchaser hereby warrants and represents to each Seller, as of the Effective Date and as of the Closing Date, that:

(i)Purchaser is an investment fund organized under the laws of the Grand Duchy of Luxembourg as a société en commandite par actions (SCA).

(ii)This Agreement has been duly and validly executed and delivered by Purchaser and, assuming due authorization, execution and delivery by Sellers, is a legal, valid and binding obligation of Purchaser, enforceable against Purchaser in accordance with

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its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors’ rights and to general equity principles.

(iii)The execution, delivery, and performance by Purchaser of this Agreement have been duly and validly authorized and will not result in a breach or violation of, or default under, the terms, conditions or provisions of its organizational documents.

(iv)There are no approvals, consents or registration requirements with respect to any governmental authority that are or will be necessary for the valid execution and delivery by Purchaser of this Agreement, or the consummation of the transactions contemplated hereby and thereby, other than those which (A) have been obtained, or (B) are of a routine nature and not customarily obtained or made prior to execution of purchase and sale agreements in transactions similar in nature and size to those contemplated hereby and where the failure to obtain the same would not, individually or in the aggregate, have a material adverse effect on Purchaser’s ability to perform its obligations under this Agreement.

(v)There is no pending or, to Purchaser’s knowledge, threatened action or proceeding before any court, governmental agency or arbitrator which may materially adversely affectPurchaser’s ability to perform this Agreement.

(vi)Purchaser has the financial capacity, or has sufficient binding subscriptions from its investors, to pay the Purchase Price at Closing and all expenses and fees incurred by Purchaser pursuant to or in connection with the transactions contemplated by this Agreement.

(vii)The Confidentiality and Non-Disclosure Agreement, Land Entry Permit, and Release entered into between Forestar (USA) and Timberland Investment Resources LLC (“TIR”) dated May 6, 2016 (the “Confidentiality Agreement”), is in full force and effect, and neither TIR nor Purchaser has taken any action or omission that would constitute a default thereunder.  Purchaser acknowledges that it is subject to the Confidentiality Agreement and shall execute such reasonably requested documentation as needed to evidence the same.

(viii)Purchaser (which for this purpose includes Purchaser’s partners, members, principal stockholders and any other constituent entities) (x) has not been designated as a “specifically designated national and blocked person” on the most current list published by the U.S. Treasury Department Office of Foreign Assets Control at its official website, <http://www.treas.gov/ofac/t11sdn.pdf> or at any replacement website or other replacement official publication of such list and (y) is currently in compliance with and will at all times during the term of this Agreement remain in compliance with the regulations of the Office of Foreign Asset Control of the Department of the Treasury and any statute, executive order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism), or other governmental action relating thereto.

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(ix)Purchaser is a party to a valid, binding and enforceable subscription agreement with each of its investors that enables Purchaser, upon proper notice, to require capital contributions from each investor up to the amount of the investor’s subscription amount; (B) the aggregate amount of capital available to Purchaser pursuant to such subscription agreements is sufficient to enable Purchaser to perform its financial obligations under this Agreement; and (C) Purchaser will exercise its rights under the subscription agreements to obtain adequate capital to permit Purchaser and its affiliates to consummate the transactions contemplated herein in a timely manner.

(d)EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT AND AS SET FORTH BELOW, PURCHASER ACKNOWLEDGES THAT: (i) NO REPRESENTATIONS, WARRANTIES OR PROMISES, EXPRESS OR IMPLIED, HAVE BEEN OR ARE BEING MADE BY OR ON BEHALF OF SELLERS OR ANY OTHER PERSON WITH RESPECT TO THE PROPERTY, INCLUDING WITH RESPECT TO THE PHYSICAL OR ENVIRONMENTAL CONDITION (WHETHER PATENT OR LATENT), HABITABILITY, QUANTITY OR QUALITY OF TIMBER, NURSERY STOCK OR SEEDLINGS, FUTURE FIBER GROWTH OR HARVEST, FUTURE FINANCIAL RESULTS FROM THE SALE OF FIBER GROWN ON THE PROPERTY OR FROM THE SALE OF THE PROPERTY, MERCHANTABILITY, SUITABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ZONING, TAX CONSEQUENCES, GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS, AND SELLERS HEREBY EXPRESSLY DISCLAIMS ALL WARRANTIES, EITHER EXPRESS OR IMPLIED RELATING TO ANY OF THE FOREGOING MATTERS, AND (ii) IN ENTERING INTO THIS AGREEMENT, PURCHASER HAS NOT RELIED AND DOES NOT RELY ON ANY SUCH REPRESENTATION, WARRANTY OR PROMISE, EXPRESS OR IMPLIED, BY OR ON BEHALF OF SELLERS OR ANY OTHER PERSON. PURCHASER ACKNOWLEDGES AND AGREES THAT PURCHASER SHALL TAKE THE PROPERTY IN “AS IS, WHERE IS, AND WITH ALL FAULTS” CONDITION ON THE CLOSING DATE, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT OR IN THE DOCUMENTS TO BE DELIVERED AT THE CLOSING. THIS SECTION 10(d) SHALL SURVIVE THE CLOSING.

(e)UPON THE CLOSING, PURCHASER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING ADVERSE ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY SELLERS’ OR PURCHASER’S INVESTIGATION, AND UPON THE CLOSING, PURCHASER SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLERS FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED AGAINST SELLERS AT ANY TIME BY REASON OF OR ARISING OUT OF PHYSICAL CONDITIONS, VIOLATIONS OF ANY APPLICABLE LAWS (INCLUDING ANY ENVIRONMENTAL LAWS) AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR

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MATTERS REGARDING THE PROPERTY. PURCHASER AGREES THAT, SHOULD ANY INVESTIGATION, CLEAN-UP, REMEDIATION, CORRECTIVE ACTION OR REMOVAL OF HAZARDOUS SUBSTANCES OR OTHER ADVERSE ENVIRONMENTAL CONDITIONS ON THE PROPERTY BE REQUIRED AFTER THE CLOSING, SUCH INVESTIGATION, CLEAN-UP, REMOVAL, CORRECTIVE ACTION OR REMEDIATION SHALL BE THE RESPONSIBILITY OF AND SHALL BE PERFORMED AT THE SOLE COST AND EXPENSE OF PURCHASER; PROVIDED, HOWEVER THAT IN THE EVENT ANY REQUIRED ACTION ARISES FROM THE BREACH OF A SELLER REPRESENTATION OR WARRANTY UNDER THIS AGREEMENT, THEN SELLER SHALL BE RESPONSIBLE FOR SUCH REQUIRED ACTION AT SELLER’S SOLE COST AND EXPENSE. NOTWITHSTANDING THE FOREGOING, PURCHASER SHALL HAVE NO LIABILITY OR RESPONSIBILITY TO SELLER FOR PRE-EXISTING CONDITIONS IN THE EVENT SELLER IS INDEPENDENTLY NAMED IN ANY ACTION OR PROCEEDING REGARDING ENVIRONMENTAL CONDITIONS ON THE PROPERTY. THIS SECTION 10(e) SHALL SURVIVE THE CLOSING.

11.Survival; Indemnification.

(a)Survival. Notwithstanding anything herein to the contrary, all representations and warranties made in this Agreement shall survive the Closing and the delivery of the conveyance instruments to Purchaser for a period of nine (9) months after the Closing Date (the “Indemnity Period”). After the Indemnity Period, the Parties agree that no claims or causes of action may be brought against any Party or any of its directors, managers, officers, employees, affiliates, controlling persons, agents or representatives based upon, directly or indirectly, any of the representations and warranties contained in this Agreement. This Section 11(a) shall not limit any covenant or agreement of the Parties that contemplates performance after the Closing. All provisions of this Agreement that contemplate performance after the Closing Date, the waiver and indemnity provisions set forth in this Agreement, and any other provisions that expressly survive the Closing shall survive the Closing and be fully enforceable thereafter, but subject to the specific time limitations set forth in this Section 11(a) as to the representations of Sellers and Purchaser.

(b)Indemnification by Forestar Petroleum. From and after the Closing Date, Forestar Petroleum ‎shall, subject to the other terms and conditions of this Section 11(b), indemnify, defend and hold ‎Purchaser, and any of its respective agents, employees, officers and directors, and each of the heirs, executors, successors and assigns thereof (collectively, the “Purchaser Indemnitees”) harmless from any and all ‎claims, actions, demands, liabilities, losses, fines, costs, expenses (including reasonable attorneys’ ‎fees), and compensatory damages only, and not including any punitive, consequential, incidental or special damages, whether or not resulting from third-party claims (each of the foregoing, a “Loss”) to ‎Purchaser, arising out of or with respect to any breach of any representation or warranty of Forestar Petroleum in this ‎Agreement.‎ For the purposes of determining Losses, all qualifications based on the word material or ‎similar phrases shall be disregarded.

(c)Indemnification by Forestar (USA). From and after the Closing Date, Forestar (USA) ‎shall, subject to the other terms and conditions of this Section 11(c), indemnify, defend and hold the ‎Purchaser Indemnitees harmless from any and all Losses to ‎Purchaser, arising

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out of or with respect to any breach of any representation or warranty of Forestar (USA) in this ‎Agreement.‎ For the purposes of determining Losses, all qualifications based on the word material or ‎similar phrases shall be disregarded.

(d)Indemnification by Purchaser. From and after the Closing Date, Purchaser ‎shall, subject to the other terms and conditions of this Section 11(d), indemnify, defend and hold Forestar Petroleum and any of its respective agents, employees, officers and directors, and each of the heirs, executors, successors and assigns thereof (collectively, the “Forestar Petroleum Indemnitees”) and Forestar (USA) and any of its respective agents, employees, officers and directors, and each of the heirs, executors, successors and assigns thereof (collectively, the “Forestar (USA) Indemnitees” and, together with the Forestar Petroleum Indemnitees, the “Sellers Indemnitees”) harmless from any and all ‎Losses to ‎the applicable Sellers Indemnitees, arising out of or with respect to any breach of any representation or warranty of Purchaser in this ‎Agreement.‎ For the purposes of determining Losses, all qualifications based on the word material or ‎similar phrases shall be disregarded.

(e)Certain Limitations and Rules. With respect to the indemnification obligations in Sections 11(b), 11(c) and 11(d) above:

(i)Time Limitations. Forestar Petroleum and Forestar (USA) shall be obligated to indemnify the Purchaser Indemnitees and Purchaser shall be obligated to indemnify the Sellers Indemnitees only for those claims giving rise to any Loss as to which the person claiming the right to be indemnified (the “Indemnified Party”) has given the Party from whom it is claiming indemnification (the “Indemnifying Party”) written notice prior to the end of the Indemnity Period.

(ii)Basket. No indemnification shall be made by either Forestar Petroleum, Forestar (USA) or Purchaser with respect to any claim made pursuant to Section 11(b), Section 11(c) or Section 11(d) unless the aggregate amount of Losses incurred or suffered by all Purchaser Indemnitees or all Sellers Indemnitees, as the case may be, under all claims exceeds $250,000 .

(iii)Cap. In no event shall Purchaser’s aggregate obligation to indemnify the Sellers Indemnitees pursuant to this Section 11 exceed an amount equal to seven percent (7%) of the Purchase Price. In no event shall Forestar Petroleum’s aggregate obligation to indemnify the Purchaser Indemnitees pursuant to this Section 11 exceed an amount equal to seven percent (7%) of the Forestar Petroleum Purchase Price. In no event shall Forestar (USA)’s aggregate obligation to indemnify the Purchaser Indemnitees pursuant to this Section 11 exceed an amount equal to seven percent (7%) of the Forestar (USA) Purchase Price.

(iv)Knowledge. If on or prior to the Closing, Purchaser, Forestar Petroleum or Forestar (USA) has actual knowledge of any information that would cause one or more of the representations and warranties made by Forestar Petroleum or Forestar (USA) (in the case of Purchaser) or Purchaser (in the case of Sellers) to be inaccurate as of the date made or as of the Closing Date and (A) such party closes the transactions

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contemplated by this Agreement, and (B) such party had the right under this Agreement to terminate this Agreement, the Purchaser Indemnitees, the Forestar Petroleum Indemnitees or the Forestar (USA) Indemnitees, as the case may be, shall not have any right or remedy after the Closing with respect to such inaccuracy and shall be deemed to have waived its rights to indemnification in respect thereof.

(v)Adjustment to Purchase Price. There shall be no indemnification under any provision of this Section 11 for a breach of any representation or warranty to the extent an adjustment to the Purchase Price has been made pursuant to this Agreement with respect to such breach.

(f)Indemnification Procedure. All claims for indemnification under this Section 11 shall be resolved in accordance with the following procedures:

(i)Notice of Claim. The Indemnified Party will give the Indemnifying Party prompt notice of any such Loss, and the Indemnifying Party will undertake the defense thereof by counsel chosen by it. The failure to promptly notify the Indemnifying Party shall not relieve such party of its obligations hereunder except to the extent the failure to so notify has materially and adversely prejudiced the Indemnified Party. Any written notice delivered by an Indemnified Party to the Indemnifying Party with respect to a Loss shall set forth, with as much specificity as is reasonably practicable, the facts that are the basis of the claim for such Loss and, to the extent reasonably practicable, a reasonable estimate of the amount thereof.

(ii)Contest. If any Loss is asserted and the Indemnifying Party fails to resolve such Loss before the earlier to occur of (i) thirty (30) days after receipt of notice of the Loss, or (ii) ten (10) days before the deadline to file an answer in the event that a complaint is filed in connection with a Loss, the Indemnified Party may take such action in connection therewith as the Indemnified Party deems necessary or desirable, including retention of reputable counsel with appropriate experience in the relevant subject matter, and the Indemnified Party shall be entitled to indemnification for costs incurred in connection with such defense. The Indemnified Party shall provide prompt notice to the Indemnifying Party of any such complaint described in the immediately preceding sentence. The Indemnifying Party may, at its election and its cost, retain its own legal counsel.

(iii)Cooperation and Access. If requested by the Indemnifying Party, the Indemnified Party agrees to reasonably cooperate with the Indemnifying Party and its counsel, including permitting reasonable access to books, records, files, data, property and personnel in contesting any Loss that the Indemnifying Party elects to contest or, if appropriate, in making any counterclaim against the person asserting the Loss, or any cross-complaint against any person, but the Indemnifying Party will reimburse the Indemnified Party for reasonable out-of-pocket costs (but not the cost of employee time expended) incurred by the Indemnified Party in so cooperating. The Indemnified Party shall permit such access only after advance written notice and during regular business hours, and the Indemnifying Party agrees not to unreasonably interfere with the Indemnified Party’s business operations. The Indemnified Party will take steps necessary to ensure that, upon

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request, the Indemnifying Party is provided copies of requested documents which may relate to its indemnification obligations; provided, however, that the Indemnified Party shall not be required, as a result of this Agreement, to provide the Indemnifying Party with (i) any document or information that would be subject to protection under the attorney work product doctrine, attorney-client privilege, or other legal privilege, (ii) any information regarding the pricing of timber, timber harvest records, internal appraisals of the Property, other valuations or similar pricing or financial records, or any other information that is confidential and proprietary to the Indemnified Party or (iii) any document or item that the Indemnified Party is contractually or otherwise bound to keep confidential.

(iv)Participation and Settlement. The Indemnifying Party agrees to afford the Indemnified Party and its counsel the opportunity to be present at, and to participate in, conferences with all persons, including governmental authorities, asserting any Loss against the Indemnified Party or conferences with representatives of or counsel for such persons.

(v)Insurance Recoveries. The amount of any Loss shall be reduced by any amount received by the Indemnified Party (or an affiliate) with respect thereto under any third party insurance coverage or from any other person (excluding an affiliate of the Indemnified Party) alleged to be responsible therefor, net of any expense incurred by the Indemnified Party in collecting such amount. Any Indemnified Party that makes a claim for indemnification under this Section 11 shall use commercially reasonable efforts to collect any amount available under any such insurance coverage and from any such other person alleged to have responsibility. If an Indemnified Party (or an affiliate) receives an amount under insurance coverage or from such other person with respect to a Loss at any time subsequent to any indemnification provided the Indemnifying Party pursuant to this Section 11, then such Indemnified Party shall promptly reimburse the Indemnifying Party for any payment made or expense incurred by the Indemnifying Party in connection with providing such indemnification up to such amount received by the Indemnified Party (or affiliate), net of any expense incurred by the Indemnified Party in collecting such amount.

(g)Exclusive Remedy. Each of the Parties agrees that if the Closing occurs, the indemnification provided in this Section 11 is the exclusive remedy for a breach by any Party of any representation or warranty contained in this Agreement and is in lieu of an and all other rights and remedies that any other Party may have under this Agreement or otherwise for monetary relief or equitable relief with respect to the matters described in this Section 11. For the avoidance of doubt, Sections 11(b) and 11(c) shall not be Purchaser’s exclusive remedies for any covenants to be fulfilled after Closing as described in this Agreement.

12.No Brokerage Commission. Other than with respect to the services of LandVest, Inc., each of Forestar Petroleum and Forestar (USA) warrants and represents to Purchaser that it has not incurred any liability for any brokerage fee or commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, and the payment of LandVest, Inc. shall be the sole obligation of Forestar Petroleum and Forestar (USA). Purchaser warrants and represents to each Seller that Purchaser has not incurred any liability for

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any brokerage fee or commission in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby. Each Seller and Purchaser each agree to indemnify and hold harmless the others from any and all damage, loss, liability, expense and claim (including but not limited to attorneys’ fees and court costs) arising with respect to any such fee or commission which may be suffered by the indemnified Party by reason of any action or agreement of the indemnifying Party. This Section 12 shall survive the termination, cancellation or expiration of this Agreement.

13.Taxes; Expenses; Forestar (USA) Claim.

(a)Taxes. Ad valorem real property taxes on the Real Property and special assessments, as well as revenue under the Contracts, shall be prorated as of the Closing Date. If actual tax bills for the taxable year of the Closing are not available, said taxes shall be prorated based on tax bills for the previous taxable year and the Parties agree to cause a reproration of said taxes upon the receipt of tax bills for the taxable year of the Closing. If the Real Property is not designated a separate tax parcel, said taxes shall be adjusted to an amount bearing the same relationship to the total tax bill which the acreage contained within the applicable portion of the Real Property bears to the acreage contained within the property included within said tax bill. Purchaser and Sellers shall reasonably cooperate in good faith to cause all real property taxes on the Property and Sellers’ retained property to be paid (and to reimburse the appropriate Party making such payments, as applicable), to the extent subdivisions or changes of ownership are not reflected on future real property tax bills. Any deferred or “rollback” taxes assessed against the Property as a result of Purchaser’s acquisition of the Property, change in the use of the Property or failure to maintain the Property in any property tax reduction program shall be paid by Purchaser within thirty (30) days of final determination thereof. Any deferred or “rollback” taxes assessed against the Property as a result of change in the use of the Property by Sellers or failure by Sellers to maintain the Property in any property tax reduction program before the Closing shall be paid by Seller within thirty (30) days of final determination thereof. The obligations of this Section 13(a) shall survive the Closing.

(b)Expenses and Transfer Taxes.

(i)Purchaser shall pay all costs in connection with the recording of the Deeds, all costs of obtaining updates of the Title Commitments, all costs of purchasing a base title insurance policy and all costs of any endorsements thereto, all costs of Purchaser’s due diligence, all costs of Purchaser’s legal representation, one-half (1/2) of all transfer taxes, and one-half (1/2) of all escrow expenses of Escrow Agent.

(ii)Forestar Petroleum and Forestar (USA) shall pay, in proportion to their respective shares of the Purchase Price, all costs of initially producing the Title Commitments, including the preliminary search and examination fees incurred to initially produce the Title Commitments, one-half (1/2) of all transfer taxes, all costs of the Phase I Report, all costs of Sellers’ legal representation and one-half (1/2) of all escrow expenses of Escrow Agent.

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(iii)Except as set forth in this Agreement, all other costs shall be borne by the Party incurring them.

(c)[Intentionally Omitted]

14.Conditions.

(a)The obligations of Sellers and Purchaser to consummate the transactions contemplated by this Agreement shall be subject to the satisfaction or waiver, on or before the Closing Date, of the following conditions:

(i)All waiting periods (and any extension thereof) under laws applicable to the transactions contemplated by this Agreement shall have expired or been earlier terminated.

(ii)There shall be no injunction, restraining order or decree of any nature of any court or governmental authority that is in effect that restrains or prohibits the consummation of the transactions contemplated by this Agreement or imposes conditions on such consummation not otherwise provided for herein.

(iii)Neither Purchaser nor any Seller shall have been advised by any United States federal government agency (which advisory has not been officially withdrawn on or prior to the Closing Date) that such government agency is investigating the transactions contemplated by this Agreement to determine whether to file or commence any litigation that seeks or would seek to enjoin, restrain or prohibit the consummation of the transactions contemplated by this Agreement.

In the event any of the above conditions is not satisfied on or before the Closing, either Forestar Petroleum, Forestar (USA) or Purchaser will have the right, exercisable at its sole election, to terminate this Agreement by delivering written notice to the other Parties before the Closing, whereupon Escrow Agent will return the Earnest Money to Purchaser, and the Parties will have no further rights or obligations hereunder (except as otherwise expressly provided herein).

(b)Unless waived by Purchaser, in addition to any other conditions set forth in this Agreement, the obligations of Purchaser under this Agreement are expressly made subject to the fulfillment in all respects of the following conditions precedent:

(i)the truth and accuracy as of the Closing Date, in all material respects, of each and every warranty and representation herein made by any Seller;

(ii)Each Seller’s timely performance of and compliance with, in all material respects, each and every term, condition, agreement, restriction and obligation to be performed and complied with by such Seller under this Agreement;

(iii)The aggregate acreage of all Title Objection Property, Title Failure Property and Environmental Property shall not exceed twenty percent (20%) of the acreage of the Timberlands;

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(iv)Purchaser’s receipt of a binding commitment from the Title Company to issue a title insurance policy insuring Purchaser’s title to the Property following the Closing, subject only to the Permitted Encumbrances; and

(v)Sellers’ obtaining of all corporate approvals, consents and authorizations as may be required for Sellers to consummate the transaction contemplated by this Agreement.

In the event any of the above conditions is not satisfied on or before the Closing, Purchaser will have the right, exercisable at Purchaser’s sole election, to exercise the remedies described in Section 15(b). Notwithstanding the foregoing sentence, in the event of either Seller’s failure to fulfill any condition precedent set forth in Section 14(b)(ii), Purchaser shall provide written notice to such Seller and such Seller shall have seven (7) days from receipt of such notice to fulfill the condition precedent before Purchaser may exercise any remedies described in Section 15(b).

(c)Unless waived by a Seller, the obligations of such Seller under this Agreement are expressly made subject to the fulfillment in all respects of the following conditions precedent:

(i)the truth and accuracy as of the Closing Date, in all material respects, of each and every warranty and representation herein made by Purchaser; and

(ii)Purchaser’s timely performance of and compliance with, in all material respects, each and every term, condition, agreement, restriction and obligation to be performed and complied with by Purchaser under this Agreement.

(iii)The aggregate acreage of all Title Objection Property shall not exceed ten percent (10%)of the acreage of the Timberlands

In the event any of the above conditions is not satisfied on or before the Closing, either Seller will have the right, exercisable at such Party’s sole election, to exercise the remedies described in Section 15(a), provided that if either Seller elects to exercise such remedy, the other Seller shall be deemed to have made an identical election. Notwithstanding the foregoing sentence, in the event of Purchaser’s failure to fulfill any condition precedent set forth in Section 14(c)(i) or (ii), Sellers shall provide written notice to Purchaser and Purchaser shall have seven (7) days from receipt of such notice to fulfill the condition precedent before Sellers may exercise any remedies described in Section 15(c).

15.Earnest Money; Default; Remedies.

(a)If the purchase and sale of any portion of the Property contemplated hereby is not consummated because of a default by Purchaser under this Agreement, then Sellers shall require Escrow Agent to pay the entire Forestar Petroleum Earnest Money to Forestar Petroleum and the entire Forestar (USA) Earnest Money to Forestar (USA) as full liquidated damages and not as a penalty and as Sellers’ sole and exclusive remedy against Purchaser for a failure by Purchaser in breach of this Agreement to consummate the purchase and sale of the Property (the Parties acknowledging that Sellers’ damages as a result of such default are not capable of exact ascertainment

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and that said liquidated damages are fair and reasonable). Notwithstanding any other provision of this Agreement, if Purchaser does not timely and completely perform its obligations under Section 3, then Sellers shall retain all rights in law and in equity to seek remedy for such breach.

(b)If the purchase and sale of any portion of the Property contemplated hereby is not consummated because of a default by either Seller under this Agreement, then Purchaser’s sole remedies shall be limited to either of the following as selected by Purchaser in Purchaser’s sole discretion: (i) termination of this Agreement, whereupon Escrow Agent shall promptly return the Earnest Money to Purchaser (after the notice requirements and following the procedures in Section 15.(c)(ii) below), and Sellers shall reimburse Purchaser for all of Purchaser’s reasonable out-of-pocket costs and expenses actually incurred in connection with the transaction contemplated by this Agreement, including, without limitation, legal fees and expenses, due diligence expenses, third party inspection costs and travel expenses, not to exceed $100,000 in the aggregate, whereupon the Parties will have no further rights or obligations hereunder (except as otherwise expressly provided herein), or (ii) shall be entitled to sue Sellers for specific performance; provided, however, should specific performance not be available because Sellers have deeded or mortgaged the Property to a third party prior to Closing (and if a mortgage, such mortgage is not capable of being repaid in full from the Closing proceeds payable to Sellers), then Purchaser may pursue the recovery of its actual damages. Purchaser acknowledges that the foregoing shall be its sole remedies against Seller for a default by Sellers under this Agreement.

(c)The duties of Escrow Agent shall be as follows:

(i)During the term of this Agreement, Escrow Agent shall hold and deliver the Earnest Money in accordance with the terms and provisions of this Agreement.

(ii)If this Agreement is terminated by the mutual written agreement of Sellers and Purchaser, or if Escrow Agent is unable to determine at any time to whom the Earnest Money should be delivered, or if a dispute develops between Sellers and Purchaser concerning to whom the Earnest Money should be delivered, then in any such event, Escrow Agent shall request joint written instructions from Sellers and Purchaser and shall deliver the Earnest Money in accordance with such joint written instructions. In the event that such written instructions are not received by Escrow Agent within ten (10) days after Escrow Agent has served a written request for instructions upon Sellers and Purchaser, Escrow Agent shall have the right to pay the Earnest Money into a court of competent jurisdiction and interplead Sellers and Purchaser in respect thereof, and thereafter Escrow Agent shall be discharged of any obligations in connection with this Agreement.

(iii)If costs or expenses are incurred by Escrow Agent because of litigation or a dispute between Sellers and Purchaser arising out of the holding of the Earnest Money in escrow, Sellers and Purchaser shall each pay Escrow Agent one-half of such costs and expenses (with each Seller responsible for such Seller’s one-half in proportion to their respective shares of the Purchase Price). Except for such costs and expenses, no fee or charge shall be due or payable to Escrow Agent for its services as escrow holder.

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(iv)By joining herein, Escrow Agent undertakes only to perform the duties and obligations imposed upon it under the terms of this Agreement and expressly does not undertake to perform any of the other covenants, terms and provisions incumbent upon Sellers and Purchaser hereunder.

(v)Purchaser and Sellers hereby agree and acknowledge that Escrow Agent assumes no liability in connection herewith except for any loss, costs or damage arising out of Escrow Agent’s own negligence or willful misconduct; that Escrow Agent shall never be responsible for the validity, correctness or genuineness of any document or notice referred to under this Agreement; that Escrow Agent shall not be liable or responsible for any loss occurring which arises from bank failure or error, insolvency or suspension, or a situation or event which falls under the Federal Deposit Insurance Corporation (FDIC) coverage (Sellers and Purchaser are aware that FDIC coverage applies to a maximum amount of $250,000 per depositor, as may be modified by the FDIC from time to time); and that Escrow Agent may seek advice from its own counsel and shall be fully protected in any action taken by it or omitted to be taken by it in good faith in accordance with the opinion of its counsel.

16.Assignment. Except as otherwise expressly contemplated by this Agreement, no Party shall assign its rights or obligations hereunder, in whole or in part, without the prior written consent of the other Parties, given or withheld in the sole discretion of each Party. Notwithstanding the foregoing, Purchaser shall have the right to assign its rights and obligations in whole, but not in part, under this Agreement to any party controlling, controlled by, or under common control with Purchaser or managed directly or indirectly by Timberland Investment Resources, LLC, provided that no such assignment shall relieve Purchaser of any liability hereunder unless such assignment takes place concurrently with the Closing.

17.No Waiver. Except as specifically set forth herein, no action or failure to act by any Party shall constitute a waiver of any right or duty afforded to such Party under this Agreement, nor shall any such action or failure to act constitute an approval of or acquiescence in any breach of this Agreement except as may be specifically agreed in writing.

18.GoverningLaw. This Agreement shall be governed in all respects, including validity, construction, interpretation and effect, by the laws of the State of Georgia, without giving effect to its principles or rules of conflicts of law to the extent such principles or rules would require or permit the application of the laws of another jurisdiction. Any and all actions concerning any dispute arising hereunder shall be filed and maintained in the state courts of Georgia in Fulton County, Georgia, or the federal courts for and in the Northern District of Georgia located in Atlanta, Georgia. The parties specifically consent and submit to the jurisdiction and venue of such state or federal court, and irrevocably waive any objections either may have based on improper venue or forum non conveniens to the conducting of any proceeding in any such court.

19.Notice. Any and all notices required or permitted under this Agreement shall be made or given in writing and shall be delivered in person or sent by postage, pre-paid, United States Mail, certified or registered, return receipt requested, or by a recognized overnight carrier, or by facsimile or e-mail, to the other Parties or Escrow Agent at the addresses set forth below, and such

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address as may be furnished by notice in accordance with this Section 19; provided, however, if any delivery is made by facsimile or e-mail, such delivery shall be deemed delivered only if the Party (or Escrow Agent) giving such notice obtains a confirmation of receipt and delivers such notice by hand delivery, United States mail or recognized overnight carrier for next day delivery. All notices shall be deemed given and effective upon the earliest to occur of: (i) the confirmed facsimile or e-mail transmission or hand delivery of such notice to the address for notices; (ii) one business day after the deposit of such notice with an overnight courier service by the time deadline for next day delivery addressed to the address for notices; or (iii) three business days after depositing the notice in the United States mail.

Sellers:            Forestar (USA) Real Estate Group Inc.

6300 Bee Cave Road

Building II, Suite 500

Austin, TX 78746

Attention: Mr. David M. Grimm, Esq.

Phone: 512-433-5223

Fax: 512-433-5203

Email: davidgrimm@forestargroup.com

And to:        Forestar Petroleum Corporation

6300 Bee Cave Road

Building II, Suite 500

Austin, TX 78746

Attention: Mr. David M. Grimm, Esq.

Phone: 512-433-5223

Fax: 512-433-5203

Email: davidgrimm@forestargroup.com

with a copy to:     Sutherland Asbill & Brennan LLP

999 Peachtree Street, N.E.

Suite 2300

Atlanta, Georgia 30309

Attention: Daniel R. McKeithen

Phone: 404-853-8342

Fax: 404-853-8806

Email:    daniel.mckeithen@sutherland.com

Purchaser:        Timberland Investment Resources GP, S.á. r.l.

5 Allée Scheffer

L-2520 Luxembourg,

Grand Duchy of Luxembourg

with a copy to:     Blenheim Timber, LLC

c/o Timberland Investment Resources, LLC

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115 Perimeter Center Place, Suite 940

Atlanta, GA 30346

Attention: Mark Seaman and Gary Allred

Phone:    404-848-2000

Email: seaman@tirllc.com and allred@tirllc.com     

with a copy to:     Schreeder, Wheeler & Flint, LLP

1100 Peachtree St., Suite 800

Atlanta, GA 30309

Attention: Leo Rose, Esq.

Phone:404-954-9823

Email:lrose@swfllp.com

Escrow Agent:        Metropolitan Title Agency, Inc.,

on behalf of Chicago Title Insurance Company

1820 The Exchange

Suite 550

Atlanta, Georgia 30339

Attention: John Cripe

Phone: 770-933-0073

Fax: 770-933-0233

Email: jcripe@mtaga.com

20.Entire Agreement. This Agreement contains the entire agreement among the Parties and Escrow Agent with respect to the subject matter hereof and cannot be amended or supplemented except by a written agreement signed by the Parties.

21.Captions. The captions of sections in this Agreement are for convenience and reference only and are not part of the substance hereof.

22.Severability. In the event that any one or more of the provisions, sections, words, clauses, phrases or sentences contained in this Agreement, or the application thereof in any circumstance is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision, section, word, clause, phrase or sentence in every other respect and of the remaining provisions, sections, words, clauses, phrases or sentences of this Agreement, shall not be in any way impaired, it being the intention of the Parties and Escrow Agent that this Agreement shall be enforceable to the fullest extent permitted by law.

23.Counterparts. This Agreement may be executed in several counterparts, each of which may be deemed an original, and all of such counterparts together shall constitute one and the same Agreement. This Agreement may be executed by each Party and Escrow Agent upon a separate copy and attached to another copy in order to form on or more counterparts. Signatures of either party delivered in an electronic format, such as an attachment to an e-mail or by telecopy, shall be acceptable and shall be as valid as an original signature.

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24.Binding Effect. This Agreement shall bind the Parties (and Escrow Agent, to the extent applicable) and their respective heirs, legal representatives, successors and assigns.

25.Time of Essence. Time is of the essence of this Agreement.

26.No Survival. Except as may otherwise expressly be provided herein, the provisions of this Agreement shall not survive the Closing and shall be merged into the delivery of the Deeds and other documents and the payment of all monies pursuant hereto at the Closing.

27.Incorporation of Exhibits. All exhibits referred to in this Agreement are hereby incorporated herein by this reference.

28.Confidentiality; Public Announcements. Purchaser and Sellers agree that the terms and conditions of the transactions contemplated in this Agreement are to remain confidential for a period of five (5) days after the Closing, except that either Party and its affiliates may disclose the terms and provisions of this Agreement (i) to the extent that such Party or any of its affiliates is required by applicable law (including the rules and regulations promulgated by the SEC or any stock exchange) to make public disclosure, (ii) in any legal proceeding, including any audit, to the extent necessary to enforce any rights under this Agreement, provided that, in either case, the disclosing Party shall provide the other Parties with prior notice of such disclosure and the content thereof and (iii) to any party assisting with Purchaser’s due diligence or the Closing of this Agreement. Notwithstanding the foregoing, the Confidentiality Agreement shall remain applicable following the Closing to all portions of the property of Sellers and information related thereto that is not the subject of this Agreement. This Section 28 shall survive the Closing.

29.Dispute Resolution. If Purchaser and either or both of Forestar (USA) and Forestar Petroleum are unable to agree as to the value of a Title Objection Property under Section 5, the value of an Environmental Property under section 6(b), the Timber Cruise Determinations under Section 6(c), the Casualty Damage Value under Section 9, or the value of a Damaged Property under Section 9(b), then any such disagreeing Party shall have the right to invoke the procedures of this Section 29 by delivering written notice to the other Parties. The applicable Seller (or, if both Sellers are participants to the dispute, the Sellers acting jointly) and Purchaser each shall appoint an independent forestry consultant within five (5) days following the delivery of such written notice, each of which may be a consultant previously engaged by the appointing Party, and such two consultants will in turn select a third independent forestry consultant within five (5) days to act with them in a panel to determine the appropriate value. A majority of the panel of consultants will reach a binding decision within thirty (30) days following the selection of the third consultant, and the decision of the panel of consultants will be final. Purchaser will bear the cost of its consultant and one-half (1/2) of the cost of the third consultant, and the applicable Seller (or, if both Sellers are participants to the dispute, the Sellers acting jointly in proportion to their share of the Purchase Price) will bear the cost of its consultant and one-half (1/2) of the cost of the third consultant. If the Closing Date is extended to resolve a dispute in accordance with this Section 29, in no event shall Closing occur after December 30, 2016. If any such dispute regarding the value of an Environmental Property remains unresolved as of the Closing, then such dispute shall be resolved in accordance with the terms of Section 6(c). With respect to any other such disputes described in the first sentence of this Section 29 remaining unresolved as of the Closing, then (a) the Purchase Price shall be

33

adjusted, if applicable, after Closing in accordance with the decision of the panel; and (b) if the disputed amounts, based on the Value Table, exceed ONE MILLION AND NO/100THS DOLLARS ($1,000,000.00) in the aggregate, then (i) the Purchase Price shall be reduced at Closing by the lesser of the amounts claimed by the parties (or by zero if the full amount is in dispute), (ii) the portion of the Purchase Price paid to Sellers shall be reduced by the disputed amounts, and (iii) Purchaser shall deposit with Escrow Agent the full disputed amount and such escrowed funds shall be disbursed after Closing pursuant to the final resolution of the dispute. The terms of this Section 29 shall survive Closing.

30.Business Days. If any date set forth in this Agreement for the performance of any obligation by any Party or Escrow Agent, or for the delivery of any instrument or notice as herein provided, should be a Saturday, Sunday or legal holiday, the compliance with such obligation or delivery shall be deemed acceptable on the next day which is not a Saturday, Sunday or legal holiday. As used herein, the term “legal holiday” means any state or federal holiday for which financial institutions or post offices are generally closed in the State of Georgia for observance thereof, and the term “business day” means any day other than a Saturday, Sunday or legal holiday.

[remainder of page intentionally left blank; signatures appear on following pages]

34

IN WITNESS WHEREOF, this Agreement has been duly executed, sealed and delivered by the Parties and Escrow Agent as of the Effective Date.

SELLERS:

FORESTAR (USA) REAL ESTATE GROUP INC., a Delaware corporation

By:    /s/ Michael Quinley                                        Name:    Michael Quinley                                        Its:    President – Community Development    

FORESTAR PETROLEUM CORPORATION, a Delaware corporation

By:    /s/ Michael Quinley                                        Name:    Michael Quinley                                        Its:    President – Community Development    

[Signatures Continue on Following Pages]

(Purchaser’s Signature Page to Purchase and Sale Agreement)

PURCHASER:

TIR EUROPE FORESTRY FUND S.C.A. SICAV-SIF

acting by its general partner

TIMBERLAND INVESTMENT RESOURCES GP, S.À. R.L.,

Represented by:     /s/ Mark T. Seaman        

Name: Mark T. Seaman

Title: Manager

Represented by:     /s/ Tom E. Johnson        

Name: Tom E. Johnson

Title: Manager

[Signatures Continue on Following Page]

(Escrow Agent’s Signature Page to Purchase and Sale Agreement)

ESCROW AGENT:

METROPOLITAN TITLE AGENCY, INC.

By: /s/ John Perry Cripe    

Name:    John Perry Cripe                

Title:    President                    

EX-21.1

Exhibit 21.1

FORESTAR GROUP INC.

SUBSIDIARIES

Legal Entity	Jurisdiction	% Ownership
Forestar (USA) Real Estate Group Inc.	Delaware	100%
242, LLC	Texas	50%
360 Development LLC	Delaware	100%
4S/RPG Land Company LP	Texas	100%
Arrowhead Ranch Utility Company LLC	Texas	100%
Bandera/Lantana, LP	Texas	100%
Bandera/Lantana II, LP	Texas	100%
Bandera/Lantana III, LP	Texas	100%
Bandera IV/Kendall III, LP	Texas	100%
Bellaire/Lantana II LP	Texas	100%
Blackberry Island, LP	Texas	74%
Canyon Land Holdings LLC	Delaware	100%
Carlisle/Lantana III LP	Texas	100%
CL Ashton Woods, LP	Texas	80%
CL Realty, LLC	Delaware	50%
CL Texas I GP, L.L.C.	Georgia	100%
CL Waterford, LLC	Texas	100%
CL Westpark, LLC	Georgia	100%
CL/RPG Land Company, LP	Texas	100%
CREA FMF Nashville LLC	Delaware	30%
Dewberry Island LP	Texas	75%
Elan 99, LLC	Delaware	90%
FirstLand Investment Corporation	Texas	100%
FMF Construction LLC	Delaware	100%
FMF Development LLC	Delaware	100%
FMF Littleton LLC	Delaware	25%
FMF Morehead LLC	Delaware	100%
FMF MSW LLC	Delaware	100%
FMF Peakview Manager LLC	Delaware	100%
FMF Pressler Park LLC	Delaware	100%
FMF Robertson Hill LLC	Delaware	100%
Forestar Capital Inc.	Delaware	100%
Forestar Hotel Holding Company Inc.	Nevada	100%
Capitol of Texas Insurance Group Inc.	Delaware	100%
Top of Westgate Corporation	Texas	100%
CCA Hospitality, Inc.	Texas	100%
Forestar Minerals LP	Delaware	100%
Forestar Mountain Investments LLC	Delaware	100%
Forestar Multifamily Fund GP LLC	Delaware	100%
Forestar Multifamily Fund LP	Delaware	100%
Forestar Oil & Gas LLC	Delaware	100%
Forestar Petroleum Corporation	Delaware	100%
SECO Energy Corporation	Nevada	100%
United Oil Corporation	Oklahoma	100%
CREDO Exploration Program Ltd 1979	Colorado	59%
Fortuna Energy LLC	Colorado	75%
Forestar Real Estate Group Inc.	Delaware	100%
Forestar Realty Inc.	Delaware	100%

Legal Entity	Jurisdiction	% Ownership
TEMCO Associates, LLC	Georgia	50%
FORCO Real Estate Inc.	Delaware	100%
Forestar/MWC WCF LLC	Delaware	90%
FOR/SR Forsyth LLC	Delaware	90%
Gaillardia/Lantana, LP	Texas	100%
GBF/LIC 288, Ltd.	Texas	75%
Hickory Hill Development, LP	Texas	100%
HM Stonewall Estates, Ltd.	Texas	50%
Isabel/Lantana, LP	Texas	100%
Johnstown Farms, LLC	Delaware	100%
Juniper/Lantana, LP	Texas	100%
Kendall/Lantana, LP	Texas	100%
Kendall/Lantana II, LP	Texas	100%
LIC Ventures Inc.	Delaware	100%
LM Land Holdings, LP	Texas	38%
Madison/Lantana, LP	Texas	100%
Madison/Lantana II, LP	Texas	100%
Madison/Lantana III, LP	Texas	100%
Magnolia/Lantana IV, LP	Texas	100%
Magnolia/Lantana V, LP	Texas	100%
Magnolia/Lantana VI, LP	Texas	100%
Miramonte Boulder Pass LLC	Delaware	50%
Olympia Joint Venture (general partnership)	Texas	100%
Palmetto/Lantana, LP	Texas	100%
Preserve at Mustang Island LLC, (The)	Delaware	85%
Sabine Real Estate Company	Delaware	100%
San Jacinto I LLC	Texas	100%
Stoney Creek Properties LLC	Delaware	100%
SWR Holdings LLC	Delaware	100%
Sustainable Water Resources LLC	Texas	100%
Timber Creek Properties LLC	Delaware	88%
Westlake Acquisition Partners LLC	Delaware	100%

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the following Registration Statements:

1) Registration Statement (Form S-8 No. 333-148375) of Forestar Group Inc.

2) Registration Statement (Form S-8 No. 333-159214) of Forestar Group Inc.

3) Registration Statement (Form S-3 No. 333-179612) of Forestar Group Inc., and

4) Registration Statement (Form S-3ASR No. 333-192442) of Forestar Group Inc.

of our reports dated March 3, 2017, with respect to the consolidated financial statements and schedule of Forestar Group Inc. and the effectiveness of internal control over financial reporting of Forestar Group Inc. included in this Annual Report (Form 10-K) of Forestar Group Inc. for the year ended December 31, 2016.

/s/ Ernst & Young LLP

Austin, Texas

March 3, 2017

EX-23.2

Exhibit 23.2

CONSENT OF INDEPENDENT PETROLEUM ENGINEERS AND GEOLOGISTS

We hereby consent to the reference of our firm and to the use of our reports effective as of December 31, 2016; December 31, 2015; and December 31, 2014, dated February 3, 2017, February 24, 2016, February 12, 2015, respectively, in this Forestar Group Inc. Annual Report on Form 10-K for the year ended December 31, 2016, and to the incorporation by reference of our name and our reports into Forestar Group Inc.’s Registration Statements on Form S-3 (file no. 333-179612), Form S3ASR (file no. 333-192442), and on Form S-8 (files nos. 333-148375 and 333-159214).

NETHERLAND, SEWELL & ASSOCIATES, INC.

By:	/s/ C.H. (Scott) Rees III
	C.H. (Scott) Rees III, P.E.
	Chairman and Chief Executive Officer

Dallas, Texas

March 3, 2017

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)

I, Phillip J. Weber, certify that:

1. I have reviewed this Annual Report on Form 10-K of Forestar Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Phillip J. Weber

Phillip J. Weber

Chief Executive Officer

Date: March 3, 2017

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO EXCHANGE ACT RULE 13a-14(a)

I, Charles D. Jehl, certify that:

1. I have reviewed this Annual Report on Form 10-K of Forestar Group Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Charles D. Jehl

Charles D. Jehl

Chief Financial Officer

Date: March 3, 2017

EX-32.1

Exhibit 32.1

Certification of Chief Executive Officer

Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Phillip J. Weber, Chief Executive Officer of Forestar Group Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, this Annual Report on Form 10-K fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Forestar Group Inc.

/s/ Phillip J. Weber

Phillip J. Weber

March 3, 2017

EX-32.2

Exhibit 32.2

Certification of Chief Financial Officer

Pursuant to 18 U.S.C. Section 1350, as Adopted

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

I, Charles D. Jehl, Chief Financial Officer of Forestar Group Inc., hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge, this Annual Report on Form 10-K fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that the information contained in this Annual Report on Form 10-K fairly presents, in all material respects, the financial condition and results of operations of Forestar Group Inc.

/s/ Charles D. Jehl

Charles D. Jehl

March 3, 2017

EX-99.1

Exhibit 99.1

February 3, 2017

Mr. Charles D. Jehl

Forestar Group Inc.

Building Two, Suite 500

6300 Bee Cave Road

Austin, Texas 78746-5149

Dear Mr. Jehl:

In accordance with your request, we have estimated the proved developed producing reserves and future revenue, as of December 31, 2016, to the Forestar Group Inc. (Forestar) interest in certain oil and gas properties located in Colorado, Louisiana, and Texas. We completed our evaluation on or about the date of this letter. It is our understanding that the reserves estimated in this report constitute all of the proved developed producing reserves owned by Forestar. The estimates in this report have been prepared in accordance with the definitions and regulations of the U.S. Securities and Exchange Commission (SEC) and, with the exception of the exclusion of future income taxes, conform to the FASB Accounting Standards Codification Topic 932, Extractive Activities—Oil and Gas. Definitions are presented immediately following this letter. This report has been prepared for Forestar's use in filing with the SEC; in our opinion the assumptions, data, methods, and procedures used in the preparation of this report are appropriate for such purpose.

We estimate the net reserves and future net revenue to the Forestar interest in these properties, as of December 31, 2016, to be:

	Net Reserves			Future Net Revenue (M$)
	Oil	NGL	Gas		Present Worth
Category	(MBBL)	(MBBL)	(MMCF)	Total	at 10%
Proved Developed Producing	371.9	73.6	5,034.9	23,110.6	13,019.6

The oil volumes shown include crude oil and condensate. Oil and natural gas liquids (NGL) volumes are expressed in thousands of barrels (MBBL); a barrel is equivalent to 42 United States gallons. Gas volumes are expressed in millions of cubic feet (MMCF) at standard temperature and pressure bases.

The estimates shown in this report are for proved developed producing reserves. No study was made to determine whether proved developed non-producing, proved undeveloped, probable, or possible reserves might be established for these properties. This report does not include any value that could be attributed to interests in undeveloped acreage. Reserves categorization conveys the relative degree of certainty; reserves subcategorization is based on development and production status. The estimates of reserves and future revenue included herein have not been adjusted for risk.

Gross revenue is Forestar's share of the gross (100 percent) revenue from the properties prior to any deductions. Future net revenue is after deductions for Forestar's share of production taxes, ad valorem taxes, and operating expenses but before consideration of any income taxes. The future net revenue has been discounted at an annual rate of 10 percent to determine its present worth, which is shown to indicate the effect of time on the value of money. Future net revenue presented in this report, whether discounted or undiscounted, should not be construed as being the fair market value of the properties.

Prices used in this report are based on the 12-month unweighted arithmetic average of the first-day-of-the-month price for each month in the period January through December 2016. For oil and NGL volumes, the average West Texas Intermediate spot price of $42.75 per barrel is adjusted by lease for quality, transportation fees, and market differentials. For gas volumes, the average Henry Hub spot price of $2.481 per MMBTU is adjusted by lease for energy content, transportation fees, and market differentials. All prices are held constant throughout the lives of the properties. The average adjusted product prices weighted by production over the remaining lives of the properties are $40.65 per barrel of oil, $14.43 per barrel of NGL, and $2.012 per MCF of gas.

For the properties in which Forestar owns a working interest, operating costs used in this report are based on operating expense records of Forestar. These costs include the per-well overhead expenses allowed under joint operating agreements along with estimates of costs to be incurred at and below the district and field levels. Operating costs have been divided into field-level costs, per-well costs, and per-unit-of-production costs. Since these properties are nonoperated, headquarters general and administrative overhead expenses are not included. Operating costs are not escalated for inflation. As requested, our estimates do not include any salvage value for the lease and well equipment or the cost of abandoning these properties.

For the properties in which Forestar owns no working interest, no operating costs would be incurred. However, estimated operating costs have been used to confirm economic producibility and determine economic limits for the properties. These cost estimates are based on our knowledge of similar wells in the area. Operating costs are not escalated for inflation. For these properties, Forestar would not incur any costs due to abandonment, nor would it realize any salvage value for the lease and well equipment.

For the purposes of this report, we did not perform any field inspection of the properties, nor did we examine the mechanical operation or condition of the wells and facilities. We have not investigated possible environmental liability related to the properties; therefore, our estimates do not include any costs due to such possible liability.

We have made no investigation of potential volume and value imbalances resulting from overdelivery or underdelivery to the Forestar interest. Therefore, our estimates of reserves and future revenue do not include adjustments for the settlement of any such imbalances; our projections are based on Forestar receiving its net revenue interest share of estimated future gross production. Additionally, we have made no investigation of any firm transportation contracts that may be in place for these properties; no adjustments have been made to our estimates of future revenue to account for such contracts.

The reserves shown in this report are estimates only and should not be construed as exact quantities. Proved reserves are those quantities of oil and gas which, by analysis of engineering and geoscience data, can be estimated with reasonable certainty to be economically producible; probable and possible reserves are those additional reserves which are sequentially less certain to be recovered than proved reserves. Estimates of reserves may increase or decrease as a result of market conditions, future operations, changes in regulations, or actual reservoir performance. In addition to the primary economic assumptions discussed herein, our estimates are based on certain assumptions including, but not limited to, that the properties will be operated in a prudent manner, that no governmental regulations or controls will be put in place that would impact the ability of the interest owner to recover the reserves, and that our projections of future production will prove consistent with actual performance. If the reserves are recovered, the revenues therefrom and the costs related thereto could be more or less than the estimated amounts. Because of governmental policies and uncertainties of supply and demand, the sales rates, prices received for the reserves, and costs incurred in recovering such reserves may vary from assumptions made while preparing this report.

For the purposes of this report, we used technical and economic data including, but not limited to, well logs, geologic maps, seismic data, well test data, production data, historical price and cost information, and property ownership interests. The reserves in this report have been estimated using deterministic methods; these estimates have been prepared in accordance with the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves

Information promulgated by the Society of Petroleum Engineers (SPE Standards). We used standard engineering and geoscience methods, or a combination of methods, including performance analysis, volumetric analysis, and analogy, that we considered to be appropriate and necessary to categorize and estimate reserves in accordance with SEC definitions and regulations. As in all aspects of oil and gas evaluation, there are uncertainties inherent in the interpretation of engineering and geoscience data; therefore, our conclusions necessarily represent only informed professional judgment.

The data used in our estimates were obtained from Forestar, public data sources, and the nonconfidential files of Netherland, Sewell & Associates, Inc. (NSAI) and were accepted as accurate. Supporting work data are on file in our office. We have not examined the titles to the properties or independently confirmed the actual degree or type of interest owned. The technical persons primarily responsible for preparing the estimates presented herein meet the requirements regarding qualifications, independence, objectivity, and confidentiality set forth in the SPE Standards. Gregory S. Cohen, a Licensed Professional Engineer in the State of Texas, has been practicing consulting petroleum engineering at NSAI since 2013 and has over 14 years of prior industry experience. John G. Hattner, a Licensed Professional Geoscientist in the State of Texas, has been practicing consulting petroleum geoscience at NSAI since 1991 and has over 11 years of prior industry experience. We are independent petroleum engineers, geologists, geophysicists, and petrophysicists; we do not own an interest in these properties nor are we employed on a contingent basis.

Sincerely,

NETHERLAND, SEWELL & ASSOCIATES, INC.

Texas Registered Engineering Firm F-2699

/s/ C.H. (Scott) Rees III

By:        

C.H. (Scott) Rees III, P.E.

Chairman and Chief Executive Officer

/s/ Gregory S. Cohen        /s/ John G. Hattner

By:            By:        

Gregory S. Cohen, P.E. 117412        John G. Hattner, P.G. 559

Petroleum Engineer        Senior Vice President

Date Signed: February 3, 2017    Date Signed: February 3, 2017

GSC:TNU

Please be advised that the digital document you are viewing is provided by Netherland, Sewell & Associates, Inc. (NSAI) as a convenience to our clients. The digital document is intended to be substantively the same as the original signed document maintained by NSAI. The digital document is subject to the parameters, limitations, and conditions stated in the original document. In the event of any differences between the digital document and the original document, the original document shall control and supersede the digital document.

DEFINITIONS OF OIL AND GAS RESERVES

Adapted from U.S. Securities and Exchange Commission Regulation S-X Section 210.4-10(a)

The following definitions are set forth in U.S. Securities and Exchange Commission (SEC) Regulation S-X Section 210.4‑10(a). Also included is supplemental information from (1) the 2007 Petroleum Resources Management System approved by the Society of Petroleum Engineers, (2) the FASB Accounting Standards Codification Topic 932, Extractive Activities—Oil and Gas, and (3) the SEC's Compliance and Disclosure Interpretations.

(1) Acquisition of properties. Costs incurred to purchase, lease or otherwise acquire a property, including costs of lease bonuses and options to purchase or lease properties, the portion of costs applicable to minerals when land including mineral rights is purchased in fee, brokers' fees, recording fees, legal costs, and other costs incurred in acquiring properties.

(2) Analogous reservoir. Analogous reservoirs, as used in resources assessments, have similar rock and fluid properties, reservoir conditions (depth, temperature, and pressure) and drive mechanisms, but are typically at a more advanced stage of development than the reservoir of interest and thus may provide concepts to assist in the interpretation of more limited data and estimation of recovery. When used to support proved reserves, an "analogous reservoir" refers to a reservoir that shares the following characteristics with the reservoir of interest:

(i) Same geological formation (but not necessarily in pressure communication with the reservoir of interest);

(ii) Same environment of deposition;

(iii) Similar geological structure; and

(iv) Same drive mechanism.

Instruction to paragraph (a)(2): Reservoir properties must, in the aggregate, be no more favorable in the analog than in the reservoir of interest.

(3) Bitumen. Bitumen, sometimes referred to as natural bitumen, is petroleum in a solid or semi-solid state in natural deposits with a viscosity greater than 10,000 centipoise measured at original temperature in the deposit and atmospheric pressure, on a gas free basis. In its natural state it usually contains sulfur, metals, and other non-hydrocarbons.

(4) Condensate. Condensate is a mixture of hydrocarbons that exists in the gaseous phase at original reservoir temperature and pressure, but that, when produced, is in the liquid phase at surface pressure and temperature.

(5) Deterministic estimate. The method of estimating reserves or resources is called deterministic when a single value for each parameter (from the geoscience, engineering, or economic data) in the reserves calculation is used in the reserves estimation procedure.

(6) Developed oil and gas reserves. Developed oil and gas reserves are reserves of any category that can be expected to be recovered:

(i) Through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and

(ii) Through installed extraction equipment and infrastructure operational at the time of the reserves estimate if the extraction is by means not involving a well.

Supplemental definitions from the 2007 Petroleum Resources Management System:

Developed Producing Reserves – Developed Producing Reserves are expected to be recovered from completion intervals that are open and producing at the time of the estimate. Improved recovery reserves are considered producing only after the improved recovery project is in operation.

Developed Non-Producing Reserves – Developed Non-Producing Reserves include shut-in and behind-pipe Reserves. Shut-in Reserves are expected to be recovered from (1) completion intervals which are open at the time of the estimate but which have not yet started producing, (2) wells which were shut-in for market conditions or pipeline connections, or (3) wells not capable of production for mechanical reasons. Behind-pipe Reserves are expected to be recovered from zones in existing wells which will require additional completion work or future recompletion prior to start of production. In all cases, production can be initiated or restored with relatively low expenditure compared to the cost of drilling a new well.

Definitions - Page 1 of 8

DEFINITIONS OF OIL AND GAS RESERVES

Adapted from U.S. Securities and Exchange Commission Regulation S-X Section 210.4-10(a)

(7) Development costs. Costs incurred to obtain access to proved reserves and to provide facilities for extracting, treating, gathering and storing the oil and gas. More specifically, development costs, including depreciation and applicable operating costs of support equipment and facilities and other costs of development activities, are costs incurred to:

(i) Gain access to and prepare well locations for drilling, including surveying well locations for the purpose of determining specific development drilling sites, clearing ground, draining, road building, and relocating public roads, gas lines, and power lines, to the extent necessary in developing the proved reserves.

(ii) Drill and equip development wells, development-type stratigraphic test wells, and service wells, including the costs of platforms and of well equipment such as casing, tubing, pumping equipment, and the wellhead assembly.

(iii) Acquire, construct, and install production facilities such as lease flow lines, separators, treaters, heaters, manifolds, measuring devices, and production storage tanks, natural gas cycling and processing plants, and central utility and waste disposal systems.

(iv) Provide improved recovery systems.

(8) Development project. A development project is the means by which petroleum resources are brought to the status of economically producible. As examples, the development of a single reservoir or field, an incremental development in a producing field, or the integrated development of a group of several fields and associated facilities with a common ownership may constitute a development project.

(9) Development well. A well drilled within the proved area of an oil or gas reservoir to the depth of a stratigraphic horizon known to be productive.

(10) Economically producible. The term economically producible, as it relates to a resource, means a resource which generates revenue that exceeds, or is reasonably expected to exceed, the costs of the operation. The value of the products that generate revenue shall be determined at the terminal point of oil and gas producing activities as defined in paragraph (a)(16) of this section.

(11) Estimated ultimate recovery (EUR). Estimated ultimate recovery is the sum of reserves remaining as of a given date and cumulative production as of that date.

(12) Exploration costs. Costs incurred in identifying areas that may warrant examination and in examining specific areas that are considered to have prospects of containing oil and gas reserves, including costs of drilling exploratory wells and exploratory-type stratigraphic test wells. Exploration costs may be incurred both before acquiring the related property (sometimes referred to in part as prospecting costs) and after acquiring the property. Principal types of exploration costs, which include depreciation and applicable operating costs of support equipment and facilities and other costs of exploration activities, are:

(i) Costs of topographical, geographical and geophysical studies, rights of access to properties to conduct those studies, and salaries and other expenses of geologists, geophysical crews, and others conducting those studies. Collectively, these are sometimes referred to as geological and geophysical or "G&G" costs.

(ii) Costs of carrying and retaining undeveloped properties, such as delay rentals, ad valorem taxes on properties, legal costs for title defense, and the maintenance of land and lease records.

(iii) Dry hole contributions and bottom hole contributions.

(iv) Costs of drilling and equipping exploratory wells.

(v) Costs of drilling exploratory-type stratigraphic test wells.

(13) Exploratory well. An exploratory well is a well drilled to find a new field or to find a new reservoir in a field previously found to be productive of oil or gas in another reservoir. Generally, an exploratory well is any well that is not a development well, an extension well, a service well, or a stratigraphic test well as those items are defined in this section.

(14) Extension well. An extension well is a well drilled to extend the limits of a known reservoir.

Definitions - Page 2 of 8

DEFINITIONS OF OIL AND GAS RESERVES

Adapted from U.S. Securities and Exchange Commission Regulation S-X Section 210.4-10(a)

(15) Field. An area consisting of a single reservoir or multiple reservoirs all grouped on or related to the same individual geological structural feature and/or stratigraphic condition. There may be two or more reservoirs in a field which are separated vertically by intervening impervious strata, or laterally by local geologic barriers, or by both. Reservoirs that are associated by being in overlapping or adjacent fields may be treated as a single or common operational field. The geological terms "structural feature" and "stratigraphic condition" are intended to identify localized geological features as opposed to the broader terms of basins, trends, provinces, plays, areas-of-interest, etc.

(16) Oil and gas producing activities.

(i) Oil and gas producing activities include:

(A) The search for crude oil, including condensate and natural gas liquids, or natural gas ("oil and gas") in their natural states and original locations;

(B) The acquisition of property rights or properties for the purpose of further exploration or for the purpose of removing the oil or gas from such properties;

(C) The construction, drilling, and production activities necessary to retrieve oil and gas from their natural reservoirs, including the acquisition, construction, installation, and maintenance of field gathering and storage systems, such as:

(1) Lifting the oil and gas to the surface; and

(2) Gathering, treating, and field processing (as in the case of processing gas to extract liquid hydrocarbons); and

(D) Extraction of saleable hydrocarbons, in the solid, liquid, or gaseous state, from oil sands, shale, coalbeds, or other nonrenewable natural resources which are intended to be upgraded into synthetic oil or gas, and activities undertaken with a view to such extraction.

Instruction 1 to paragraph (a)(16)(i): The oil and gas production function shall be regarded as ending at a "terminal point", which is the outlet valve on the lease or field storage tank. If unusual physical or operational circumstances exist, it may be appropriate to regard the terminal point for the production function as:

a. The first point at which oil, gas, or gas liquids, natural or synthetic, are delivered to a main pipeline, a common carrier, a refinery, or a marine terminal; and

b. In the case of natural resources that are intended to be upgraded into synthetic oil or gas, if those natural resources are delivered to a purchaser prior to upgrading, the first point at which the natural resources are delivered to a main pipeline, a common carrier, a refinery, a marine terminal, or a facility which upgrades such natural resources into synthetic oil or gas.

Instruction 2 to paragraph (a)(16)(i): For purposes of this paragraph (a)(16), the term saleable hydrocarbons means hydrocarbons that are saleable in the state in which the hydrocarbons are delivered.

(ii) Oil and gas producing activities do not include:

(A) Transporting, refining, or marketing oil and gas;

(B) Processing of produced oil, gas, or natural resources that can be upgraded into synthetic oil or gas by a registrant that does not have the legal right to produce or a revenue interest in such production;

(C) Activities relating to the production of natural resources other than oil, gas, or natural resources from which synthetic oil and gas can be extracted; or

(D) Production of geothermal steam.

(17) Possible reserves. Possible reserves are those additional reserves that are less certain to be recovered than probable reserves.

(i) When deterministic methods are used, the total quantities ultimately recovered from a project have a low probability of exceeding proved plus probable plus possible reserves. When probabilistic methods

Definitions - Page 3 of 8

DEFINITIONS OF OIL AND GAS RESERVES

Adapted from U.S. Securities and Exchange Commission Regulation S-X Section 210.4-10(a)

are used, there should be at least a 10% probability that the total quantities ultimately recovered will equal or exceed the proved plus probable plus possible reserves estimates.

(ii) Possible reserves may be assigned to areas of a reservoir adjacent to probable reserves where data control and interpretations of available data are progressively less certain. Frequently, this will be in areas where geoscience and engineering data are unable to define clearly the area and vertical limits of commercial production from the reservoir by a defined project.

(iii) Possible reserves also include incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than the recovery quantities assumed for probable reserves.

(iv) The proved plus probable and proved plus probable plus possible reserves estimates must be based on reasonable alternative technical and commercial interpretations within the reservoir or subject project that are clearly documented, including comparisons to results in successful similar projects.

(v) Possible reserves may be assigned where geoscience and engineering data identify directly adjacent portions of a reservoir within the same accumulation that may be separated from proved areas by faults with displacement less than formation thickness or other geological discontinuities and that have not been penetrated by a wellbore, and the registrant believes that such adjacent portions are in communication with the known (proved) reservoir. Possible reserves may be assigned to areas that are structurally higher or lower than the proved area if these areas are in communication with the proved reservoir.

(vi) Pursuant to paragraph (a)(22)(iii) of this section, where direct observation has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves should be assigned in the structurally higher portions of the reservoir above the HKO only if the higher contact can be established with reasonable certainty through reliable technology. Portions of the reservoir that do not meet this reasonable certainty criterion may be assigned as probable and possible oil or gas based on reservoir fluid properties and pressure gradient interpretations.

(18) Probable reserves. Probable reserves are those additional reserves that are less certain to be recovered than proved reserves but which, together with proved reserves, are as likely as not to be recovered.

(i) When deterministic methods are used, it is as likely as not that actual remaining quantities recovered will exceed the sum of estimated proved plus probable reserves. When probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the proved plus probable reserves estimates.

(ii) Probable reserves may be assigned to areas of a reservoir adjacent to proved reserves where data control or interpretations of available data are less certain, even if the interpreted reservoir continuity of structure or productivity does not meet the reasonable certainty criterion. Probable reserves may be assigned to areas that are structurally higher than the proved area if these areas are in communication with the proved reservoir.

(iii) Probable reserves estimates also include potential incremental quantities associated with a greater percentage recovery of the hydrocarbons in place than assumed for proved reserves.

(iv) See also guidelines in paragraphs (a)(17)(iv) and (a)(17)(vi) of this section.

(19) Probabilistic estimate. The method of estimation of reserves or resources is called probabilistic when the full range of values that could reasonably occur for each unknown parameter (from the geoscience and engineering data) is used to generate a full range of possible outcomes and their associated probabilities of occurrence.

(20) Production costs.

(i) Costs incurred to operate and maintain wells and related equipment and facilities, including depreciation and applicable operating costs of support equipment and facilities and other costs of operating and maintaining those wells and related equipment and facilities. They become part of the cost of oil and gas produced. Examples of production costs (sometimes called lifting costs) are:

(A) Costs of labor to operate the wells and related equipment and facilities.

(B) Repairs and maintenance.

Definitions - Page 4 of 8

DEFINITIONS OF OIL AND GAS RESERVES

Adapted from U.S. Securities and Exchange Commission Regulation S-X Section 210.4-10(a)

(C) Materials, supplies, and fuel consumed and supplies utilized in operating the wells and related equipment and facilities.

(D) Property taxes and insurance applicable to proved properties and wells and related equipment and facilities.

(E) Severance taxes.

(ii) Some support equipment or facilities may serve two or more oil and gas producing activities and may also serve transportation, refining, and marketing activities. To the extent that the support equipment and facilities are used in oil and gas producing activities, their depreciation and applicable operating costs become exploration, development or production costs, as appropriate. Depreciation, depletion, and amortization of capitalized acquisition, exploration, and development costs are not production costs but also become part of the cost of oil and gas produced along with production (lifting) costs identified above.

(21) Proved area. The part of a property to which proved reserves have been specifically attributed.

(22) Proved oil and gas reserves. Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.

(i) The area of the reservoir considered as proved includes:

(A) The area identified by drilling and limited by fluid contacts, if any, and

(B) Adjacent undrilled portions of the reservoir that can, with reasonable certainty, be judged to be continuous with it and to contain economically producible oil or gas on the basis of available geoscience and engineering data.

(ii) In the absence of data on fluid contacts, proved quantities in a reservoir are limited by the lowest known hydrocarbons (LKH) as seen in a well penetration unless geoscience, engineering, or performance data and reliable technology establishes a lower contact with reasonable certainty.

(iii) Where direct observation from well penetrations has defined a highest known oil (HKO) elevation and the potential exists for an associated gas cap, proved oil reserves may be assigned in the structurally higher portions of the reservoir only if geoscience, engineering, or performance data and reliable technology establish the higher contact with reasonable certainty.

(iv) Reserves which can be produced economically through application of improved recovery techniques (including, but not limited to, fluid injection) are included in the proved classification when:

(A) Successful testing by a pilot project in an area of the reservoir with properties no more favorable than in the reservoir as a whole, the operation of an installed program in the reservoir or an analogous reservoir, or other evidence using reliable technology establishes the reasonable certainty of the engineering analysis on which the project or program was based; and

(B) The project has been approved for development by all necessary parties and entities, including governmental entities.

(v) Existing economic conditions include prices and costs at which economic producibility from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.

(23) Proved properties. Properties with proved reserves.

Definitions - Page 5 of 8

DEFINITIONS OF OIL AND GAS RESERVES

Adapted from U.S. Securities and Exchange Commission Regulation S-X Section 210.4-10(a)

(24) Reasonable certainty. If deterministic methods are used, reasonable certainty means a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. A high degree of confidence exists if the quantity is much more likely to be achieved than not, and, as changes due to increased availability of geoscience (geological, geophysical, and geochemical), engineering, and economic data are made to estimated ultimate recovery (EUR) with time, reasonably certain EUR is much more likely to increase or remain constant than to decrease.

(25) Reliable technology. Reliable technology is a grouping of one or more technologies (including computational methods) that has been field tested and has been demonstrated to provide reasonably certain results with consistency and repeatability in the formation being evaluated or in an analogous formation.

(26) Reserves. Reserves are estimated remaining quantities of oil and gas and related substances anticipated to be economically producible, as of a given date, by application of development projects to known accumulations. In addition, there must exist, or there must be a reasonable expectation that there will exist, the legal right to produce or a revenue interest in the production, installed means of delivering oil and gas or related substances to market, and all permits and financing required to implement the project.

Note to paragraph (a)(26): Reserves should not be assigned to adjacent reservoirs isolated by major, potentially sealing, faults until those reservoirs are penetrated and evaluated as economically producible. Reserves should not be assigned to areas that are clearly separated from a known accumulation by a non-productive reservoir (i.e., absence of reservoir, structurally low reservoir, or negative test results). Such areas may contain prospective resources (i.e., potentially recoverable resources from undiscovered accumulations).

Excerpted from the FASB Accounting Standards Codification Topic 932, Extractive Activities—Oil and Gas:

932-235-50-30 A standardized measure of discounted future net cash flows relating to an entity's interests in both of the following shall be disclosed as of the end of the year:

a.    Proved oil and gas reserves (see paragraphs 932-235-50-3 through 50-11B)

b.    Oil and gas subject to purchase under long-term supply, purchase, or similar agreements and contracts in which the entity participates in the operation of the properties on which the oil or gas is located or otherwise serves as the producer of those reserves (see paragraph 932-235-50-7).

The standardized measure of discounted future net cash flows relating to those two types of interests in reserves may be combined for reporting purposes.

932-235-50-31 All of the following information shall be disclosed in the aggregate and for each geographic area for which reserve quantities are disclosed in accordance with paragraphs 932-235-50-3 through 50-11B:

a.    Future cash inflows. These shall be computed by applying prices used in estimating the entity's proved oil and gas reserves to the year-end quantities of those reserves. Future price changes shall be considered only to the extent provided by contractual arrangements in existence at year-end.

b.    Future development and production costs. These costs shall be computed by estimating the expenditures to be incurred in developing and producing the proved oil and gas reserves at the end of the year, based on year-end costs and assuming continuation of existing economic conditions. If estimated development expenditures are significant, they shall be presented separately from estimated production costs.

c.    Future income tax expenses. These expenses shall be computed by applying the appropriate year-end statutory tax rates, with consideration of future tax rates already legislated, to the future pretax net cash flows relating to the entity's proved oil and gas reserves, less the tax basis of the properties involved. The future income tax expenses shall give effect to tax deductions and tax credits and allowances relating to the entity's proved oil and gas reserves.

d.    Future net cash flows. These amounts are the result of subtracting future development and production costs and future income tax expenses from future cash inflows.

e.    Discount. This amount shall be derived from using a discount rate of 10 percent a year to reflect the timing of the future net cash flows relating to proved oil and gas reserves.

f.    Standardized measure of discounted future net cash flows. This amount is the future net cash flows less the computed discount.

Definitions - Page 6 of 8

DEFINITIONS OF OIL AND GAS RESERVES

Adapted from U.S. Securities and Exchange Commission Regulation S-X Section 210.4-10(a)

(27) Reservoir. A porous and permeable underground formation containing a natural accumulation of producible oil and/or gas that is confined by impermeable rock or water barriers and is individual and separate from other reservoirs.

(28) Resources. Resources are quantities of oil and gas estimated to exist in naturally occurring accumulations. A portion of the resources may be estimated to be recoverable, and another portion may be considered to be unrecoverable. Resources include both discovered and undiscovered accumulations.

(29) Service well. A well drilled or completed for the purpose of supporting production in an existing field. Specific purposes of service wells include gas injection, water injection, steam injection, air injection, salt-water disposal, water supply for injection, observation, or injection for in-situ combustion.

(30) Stratigraphic test well. A stratigraphic test well is a drilling effort, geologically directed, to obtain information pertaining to a specific geologic condition. Such wells customarily are drilled without the intent of being completed for hydrocarbon production. The classification also includes tests identified as core tests and all types of expendable holes related to hydrocarbon exploration. Stratigraphic tests are classified as "exploratory type" if not drilled in a known area or "development type" if drilled in a known area.

(31) Undeveloped oil and gas reserves. Undeveloped oil and gas reserves are reserves of any category that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion.

(i) Reserves on undrilled acreage shall be limited to those directly offsetting development spacing areas that are reasonably certain of production when drilled, unless evidence using reliable technology exists that establishes reasonable certainty of economic producibility at greater distances.

(ii) Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time.

From the SEC's Compliance and Disclosure Interpretations (October 26, 2009):

Although several types of projects — such as constructing offshore platforms and development in urban areas, remote locations or environmentally sensitive locations — by their nature customarily take a longer time to develop and therefore often do justify longer time periods, this determination must always take into consideration all of the facts and circumstances. No particular type of project per se justifies a longer time period, and any extension beyond five years should be the exception, and not the rule.

Factors that a company should consider in determining whether or not circumstances justify recognizing reserves even though development may extend past five years include, but are not limited to, the following:

Ÿ    The company's level of ongoing significant development activities in the area to be developed (for example, drilling only the minimum number of wells necessary to maintain the lease generally would not constitute significant development activities);

Ÿ    The company's historical record at completing development of comparable long-term projects;

Ÿ    The amount of time in which the company has maintained the leases, or booked the reserves, without significant development activities;

Ÿ    The extent to which the company has followed a previously adopted development plan (for example, if a company has changed its development plan several times without taking significant steps to implement any of those plans, recognizing proved undeveloped reserves typically would not be appropriate); and

Ÿ    The extent to which delays in development are caused by external factors related to the physical operating environment (for example, restrictions on development on Federal lands, but not obtaining government permits), rather than by internal factors (for example, shifting resources to develop properties with higher priority).

(iii) Under no circumstances shall estimates for undeveloped reserves be attributable to any acreage for which an application of fluid injection or other improved recovery technique is contemplated, unless such techniques have been proved effective by actual projects in the same reservoir or an analogous reservoir, as defined in paragraph (a)(2) of this section, or by other evidence using reliable technology establishing reasonable certainty.

Definitions - Page 7 of 8

DEFINITIONS OF OIL AND GAS RESERVES

Adapted from U.S. Securities and Exchange Commission Regulation S-X Section 210.4-10(a)

(32) Unproved properties. Properties with no proved reserves.

Definitions - Page 8 of 8

XML

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2016	Feb. 27, 2017	Jun. 30, 2016
Entity Information [Line Items]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2016
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Trading Symbol	FOR
Entity Registrant Name	FORESTAR GROUP INC.
Entity Central Index Key	0001406587
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		41,694,432
Entity Public Float			$ 210

XML

CONSOLIDATED BALANCE SHEET - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
ASSETS
Cash and cash equivalents	$ 265,798	$ 96,442
Real estate, net	293,003	586,715
Assets of discontinued operations	14	104,967
Assets held for sale	30,377	0
Investment in unconsolidated ventures	77,611	82,453
Timber	0	7,683
Receivables, net	8,931	19,025
Income taxes receivable	10,867	12,056
Prepaid expenses	2,000	3,116
Property and equipment, net	3,116	10,732
Deferred tax asset, net	323	0
Goodwill and other intangible assets	37,900	43,455
Other assets	3,268	5,602
TOTAL ASSETS	733,208	972,246
LIABILITIES AND EQUITY
Accounts payable	4,804	11,617
Accrued employee compensation and benefits	4,126	5,547
Accrued property taxes	2,008	4,529
Accrued interest	1,585	3,267
Deferred tax liability, net	0	1,037
Earnest money deposits	10,511	10,214
Other accrued expenses	12,598	14,556
Liabilities of discontinued operations	5,295	11,192
Liabilities held for sale	103	0
Other liabilities	19,702	24,657
Debt, net	110,358	381,515
TOTAL LIABILITIES	171,090	468,131
COMMITMENTS AND CONTINGENCIES
Forestar Group Inc. shareholders’ equity:
Common stock, par value $1.00 per share, 200,000,000 authorized shares, 44,803,603 issued at December 31, 2016 and 36,946,603 issued at December 31, 2015	44,804	36,947
Additional paid-in capital	553,005	561,850
Retained earnings (Accumulated deficit)	12,602	(46,046)
Treasury stock, at cost, 3,187,253 shares at December 31, 2016 and 3,203,768 shares at December 31, 2015	(49,760)	(51,151)
Total Forestar Group Inc. shareholders’ equity	560,651	501,600
Noncontrolling interests	1,467	2,515
TOTAL EQUITY	562,118	504,115
TOTAL LIABILITIES AND EQUITY	$ 733,208	$ 972,246

XML

CONSOLIDATED BALANCE SHEET (Parenthetical) - $ / shares	Dec. 31, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Common stock, par value	$ 1.00	$ 1.00
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	44,803,603	36,946,603
Treasury stock, common shares	3,187,253	3,203,768

XML

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
REVENUES
Real estate sales and other	$ 176,535	$ 120,022	$ 171,672
Commercial and income producing properties	13,738	82,808	41,440
Real estate	190,273	202,830	213,112
Mineral resources	5,076	9,094	15,690
Other	1,965	6,652	9,362
Total revenues	197,314	218,576	238,164
COST AND EXPENSES
Cost of real estate sales and other	(147,653)	(52,640)	(86,432)
Cost of commercial and income producing properties	(15,442)	(61,251)	(37,332)
Cost of mineral resources	(763)	(2,998)	(3,790)
Cost of other	(5,075)	(3,081)	(3,006)
Other operating	(33,177)	(48,996)	(44,326)
General and administrative	(21,597)	(27,253)	(22,230)
Total expenses	(223,707)	(196,219)	(197,116)
GAIN ON SALE OF ASSETS	166,747	1,585	29,512
OPERATING INCOME	140,354	23,942	70,560
Equity in earnings of unconsolidated ventures	6,123	16,008	8,685
Interest expense	(19,985)	(34,066)	(30,286)
Loss on extinguishment of debt, net	(35,864)	0	0
Other non-operating income	1,718	3,006	8,588
INCOME FROM CONTINUING OPERATIONS BEFORE TAXES	92,346	8,890	57,547
Income tax expense	(15,302)	(35,131)	(20,850)
NET INCOME (LOSS) FROM CONTINUING OPERATIONS	77,044	(26,241)	36,697
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAXES	(16,865)	(186,130)	(19,609)
Net income	60,179	(212,371)	17,088
Less: Net (income) attributable to noncontrolling interests	(1,531)	(676)	(505)
NET INCOME (LOSS) ATTRIBUTABLE TO FORESTAR GROUP INC.	$ 58,648	$ (213,047)	$ 16,583
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic (shares)	34,546	34,266	35,317
Diluted (shares)	42,334	34,266	43,596
NET INCOME (LOSS) PER BASIC SHARE
Continuing operations, basic (usd per share)	$ 1.80	$ (0.79)	$ 0.84
Discontinued operations, basic (usd per share)	(0.40)	(5.43)	(0.46)
Basic (usd per share)	1.40	(6.22)	0.38
NET INCOME (LOSS) PER DILUTED SHARE
Continuing operations, diluted (usd per share)	1.78	(0.79)	0.83
Discontinued operations, diluted (usd per share)	(0.40)	(5.43)	(0.45)
Diluted (usd per share)	$ 1.38	$ (6.22)	$ 0.38
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO FORESTAR GROUP INC.	$ 58,648	$ (213,047)	$ 16,583

XML

CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Treasury Stock	Retained Earnings	Noncontrolling Interest	Stock Options	Former Affiliated Entity Additional Paid-in Capital	Former Affiliated Entity Treasury Stock	Former Affiliated Entity Stock Options
Beginning Balances at Dec. 31, 2013	$ 715,397	$ 36,947	$ 556,676	$ (34,196)	$ 150,418	$ 5,552
Beginning Balances, Shares at Dec. 31, 2013		36,946,603		(2,199,666)
Net income	17,088				16,583	505
Distributions to noncontrolling interest	(4,171)					(4,171)
Contributions from noncontrolling interest	2,585					2,585
Dissolution of noncontrolling interests	1,342					1,342
Purchase of noncontrolling interests, net	(6,242)		(2,969)			(3,273)
Issuances of common stock, Shares				164,914
Issuances of common stock, Value	(2,567)			$ 2,567
Issuances from exercises of stock options, net of swaps, shares				45,062					60,823
Issuances from exercises of stock options, net of swaps, Value	329		(333)	$ 662				$ (43)	$ 920	$ 877
Shares withheld for payroll taxes, Shares				(55,238)
Shares withheld for payroll taxes, Value	$ (1,043)		(4)	$ (1,039)
Shares repurchased, Shares	(1,491,187)			(1,491,187)
Shares repurchased, Value	$ (24,595)			$ (24,595)
Forfeitures of restricted stock, Shares				(9,986)
Forfeitures of restricted stock, Value	0		10	$ (10)
Share-based compensation	8,033		8,033
Tax benefit from exercise of restricted stock units and stock options and vested restricted stock	142		142
Ending Balances at Dec. 31, 2014	709,742	$ 36,947	558,945	$ (55,691)	167,001	2,540
Ending Balances, Shares at Dec. 31, 2014		36,946,603		(3,485,278)
Net income	(212,371)				(213,047)	676
Distributions to noncontrolling interest	(701)					(701)
Issuances of common stock, Shares				335,611
Issuances of common stock, Value	$ 0		(5,362)	$ 5,362
Issuances from exercises of stock options, net of swaps, shares									3,999
Issuances from exercises of stock options, net of swaps, Value								$ (33)	$ 64	$ 31
Shares withheld for payroll taxes, Shares	(51,521)			(51,521)
Shares withheld for payroll taxes, Value	$ (762)		(1)	$ (761)
Forfeitures of restricted stock, Shares				(6,579)
Forfeitures of restricted stock, Value	0		125	$ (125)
Share-based compensation	8,576		8,576
Tax benefit from exercise of restricted stock units and stock options and vested restricted stock	(400)		(400)
Ending Balances at Dec. 31, 2015	504,115	$ 36,947	561,850	$ (51,151)	(46,046)	2,515
Ending Balances, Shares at Dec. 31, 2015		36,946,603		(3,203,768)
Net income	60,179				58,648	1,531
Distributions to noncontrolling interest	(2,579)					(2,579)
Issuances of common stock, Shares				288,397
Issuances of common stock, Value	0		(4,570)	$ 4,570
Issuances from exercises of stock options, net of swaps, shares				35,406			35,000
Issuances from exercises of stock options, net of swaps, Value	$ 328		(224)	$ 552
Shares withheld for payroll taxes, Shares	(25,082)			(23,312)
Shares withheld for payroll taxes, Value	$ (222)		(28)	$ (194)
Shares repurchased, Shares	(283,976)			(283,976)
Shares repurchased, Value	$ (3,537)			$ (3,537)
Share-based compensation	4,045		4,045
Settlement of tangible equity units, Shares		7,857,000
Settlement of tangible equity units, Value		$ 7,857	(7,857)
Reacquisition of equity component related to convertible debt	(211)		(211)
Ending Balances at Dec. 31, 2016	$ 562,118	$ 44,804	$ 553,005	$ (49,760)	$ 12,602	$ 1,467
Ending Balances, Shares at Dec. 31, 2016		44,803,603		(3,187,253)

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income (loss)	$ 60,179	$ (212,371)	$ 17,088
Adjustments:
Depreciation, depletion and amortization	11,447	45,085	41,715
Change in deferred income taxes	(1,360)	41,261	1,645
Equity in earnings of unconsolidated ventures	(6,123)	(16,008)	(8,685)
Distributions of earnings of unconsolidated ventures	7,719	12,741	5,721
Share-based compensation	4,037	4,246	3,417
Real estate cost of sales	98,412	87,733	84,665
Dry hole and unproved leasehold impairment costs	0	67,639	29,528
Real estate development and acquisition expenditures, net	(81,179)	(107,988)	(114,694)
Reimbursements from utility and improvement districts	27,107	15,176	66,047
Asset impairments	60,939	108,184	15,934
Loss on debt extinguishment, net	35,864	0	0
Gain on sale of assets	(153,083)	(879)	(38,038)
Other	5,359	4,680	5,887
Changes in:
Notes and accounts receivables	13,214	(978)	10,704
Prepaid expenses and other	(133)	3,026	2,180
Accounts payable and other accrued liabilities	(16,711)	(11,868)	(4,653)
Income taxes	1,189	(4,553)	(11,379)
Net cash provided by operating activities	66,877	35,126	107,082
CASH FLOWS FROM INVESTING ACTIVITIES:
Property, equipment, software, reforestation and other	(6,138)	(14,690)	(16,398)
Oil and gas properties and equipment	(579)	(49,717)	(101,145)
Acquisition of partner's interest in unconsolidated multifamily venture, net of cash	0	0	(20,155)
Acquisition of oil and gas properties	0	0	(1,100)
Investment in unconsolidated ventures	(6,089)	(26,349)	(14,692)
Proceeds from sale of assets	427,849	18,260	21,962
Return of investment in unconsolidated ventures	5,700	12,168	1,797
Net cash provided by (used for) investing activities	420,743	(60,328)	(129,731)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of senior secured notes, net	0	0	241,947
Payments of debt	(315,229)	(58,220)	(225,481)
Additions to debt	3,184	11,463	22,593
Deferred financing fees	0	(295)	(3,217)
Distributions to noncontrolling interests, net	(2,579)	(701)	(3,146)
Purchase of noncontrolling interests	0	0	(7,971)
Repurchases of common stock	(3,537)	0	(24,595)
Other	(103)	(730)	339
Net cash (used for) provided by financing activities	(318,264)	(48,483)	469
Net increase (decrease) in cash and cash equivalents	169,356	(73,685)	(22,180)
Cash and cash equivalents at beginning of year	96,442	170,127	192,307
Cash and cash equivalents at year-end	265,798	96,442	170,127
Cash paid during the year for:
Interest	14,790	27,330	22,936
Income taxes paid (refunds)	10,205	(4,077)	18,322
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION:
Capitalized interest	2,838	2,938	1,154
Noncontrolling interests	$ 0	$ 0	$ 2,904

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation

Our consolidated financial statements include the accounts of Forestar Group Inc., all subsidiaries, ventures and other entities in which we have a controlling interest. We account for our investment in other entities in which we have significant influence over operations and financial policies using the equity method (we recognize our share of the entities’ income or loss and any preferential returns and treat distributions as a reduction of our investment). We eliminate all material intercompany accounts and transactions. Noncontrolling interests in consolidated pass-through entities are recognized before income taxes.

We prepare our financial statements in accordance with generally accepted accounting principles in the United States, which require us to make estimates and assumptions about future events. Actual results can, and probably will, differ from those we currently estimate. Examples of significant estimates include those related to allocating costs to real estate, measuring long-lived assets for impairment, oil and gas revenue accruals, capital expenditure and lease operating expense accruals associated with our oil and gas production activities, oil and gas reserves and depletion of our oil and gas properties.

At year-end 2016, we have divested substantially all of our oil and gas working interest properties. As a result of this significant change in our operations, we have reported the results of operations and financial position of these assets as discontinued operations within the consolidated statements of income (loss) and comprehensive income (loss) and consolidated balance sheets for all periods presented. In addition, in second quarter 2016, we changed the name of the oil and gas segment to mineral resources to reflect the strategic shift from oil and gas working interest investments to owned mineral interests. We also changed the name of the other natural resources segment to other.

Cash and Cash Equivalents

Cash and cash equivalents include cash and other short-term instruments with original maturities of three months or less. At year-end 2016 and 2015, restricted cash was $275,000 and $200,000 and is included in other assets.

Cash Flows

The consolidated statements of cash flows for 2016, 2015 and 2014 reflect cash flows from both continuing and discontinued operations. Expenditures for the acquisition and development of single-family and multifamily real estate that we intend to develop for sale are classified as operating activities. Expenditures for the acquisition and development of properties to be held and operated, investment in oil and gas properties and equipment, and business acquisitions are classified as investing activities. Our accrued capital expenditures for unproved leasehold acquisitions and drilling and completion costs at year-end 2016 and 2015 were $834,000 and $7,033,000 and are included in liabilities of discontinued operations in our consolidated balance sheets. These oil and gas property additions will be reflected as cash used for investing activities in the period the accrued payables are settled.

Capitalized Software

We capitalize purchased software costs as well as the direct internal and external costs associated with software we develop for our own use. We amortize these capitalized costs using the straight-line method over estimated useful lives generally ranging from three to five years. The carrying value of capitalized software was $52,000 at year-end 2016 and $237,000 at year-end 2015 and is included in other assets. The amortization of these capitalized costs was $155,000 in 2016, $996,000 in 2015 and $1,067,000 in 2014 and is included in general and administrative and operating expenses.

Environmental and Asset Retirement Obligations

We recognize environmental remediation liabilities on an undiscounted basis when environmental assessments or remediation are probable and we can reasonably estimate the cost. We adjust these liabilities as further information is obtained or circumstances change. Our asset retirement obligations are related to the abandonment and site restoration requirements that result from the acquisition, construction and development of oil and gas working interest properties, which we have divested substantially all at year-end 2016. We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. Accretion expense related to the asset retirement obligation and depletion expense related to capitalized asset retirement costs are included in cost of mineral resources and in discontinued operations on our consolidated statements of income (loss) and comprehensive income (loss). Our asset retirement obligations are recorded in liabilities held for sale at year-end 2016 and in other liabilities and liabilities of discontinued operations at year-end 2015.

The following summarizes the changes in asset retirement obligations:

	Year-End
	2016			2015
	(In thousands)
Beginning balance	$	1,758		$	1,807
Additions	6			65
Oil and gas working interest property dispositions	(1,610		)	(119		)
Liabilities settled	(107		)	(139		)
Accretion expense	56			144
	$	103		$	1,758

Fair Value Measurements

Financial instruments for which we did not elect the fair value option include cash and cash equivalents, accounts and notes receivables, other assets, long-term debt, accounts payable and other liabilities. With the exception of long-term notes receivable and debt, the carrying amounts of these financial instruments approximate their fair values due to their short-term nature or variable interest rates.

Goodwill and Other Intangible Assets

We record goodwill when the purchase price of a business acquisition exceeds the estimated fair value of net identified tangible and intangible assets acquired. We do not amortize goodwill or other indefinite lived intangible assets. Instead, we measure these assets for impairment based on the estimated fair values at least annually or more frequently if impairment indicators exist. We perform the annual impairment measurement in the fourth quarter of each year. Intangible assets with finite useful lives are amortized over their estimated useful lives.

In 2016, we performed our annual goodwill impairment evaluation and concluded that goodwill related to our mineral interest assets was not impaired at year-end 2016 as the estimated fair value exceeded the carrying value. On February 17, 2017, we sold substantially all of the Company's remaining oil and gas assets for $85,600,000. Please read Note 21—Subsequent Events for additional information about these items.

In addition, we performed our annual goodwill impairment evaluation and concluded that goodwill related to our central Texas water assets was impaired at year-end 2016 as the estimated fair value exceeded the carrying value. We recorded a $3,874,000 non-cash impairment charge as a result of entering into an agreement to sell these assets. At year-end 2016, our central Texas water assets are classified as held for sale.

Income Taxes

We provide deferred income taxes using current tax rates for temporary differences between the financial accounting carrying value of assets and liabilities and their tax accounting carrying values. We recognize and value income tax exposures for the various taxing jurisdictions where we operate based on laws, elections, commonly accepted tax positions, and management estimates. We include tax penalties and interest in income tax expense. We provide a valuation allowance for any deferred tax asset that is not likely to be recoverable in future periods.

When we believe a tax position is supportable but the outcome uncertain, we include the item in our tax return but do not recognize the related benefit in our provision for taxes. Instead, we record a reserve for unrecognized tax benefits, which represents our expectation of the most likely outcome considering the technical merits and specific facts of the position. Changes to liabilities are only made when an event occurs that changes the most likely outcome, such as settlement with the relevant tax authority, expiration of statutes of limitations, changes in tax law, or recent court rulings.

Owned Mineral Interests

When we lease our mineral interests to third-party exploration and production entities, we retain a royalty interest and may take an additional participation in production, including a working interest. At year-end 2016, mineral interests and any remaining oil and gas working interests are included in assets held for sale.

Oil and Gas Properties (Discontinued Operations)

We use the successful efforts method of accounting for our oil and gas producing activities. Costs to acquire mineral interests leased, costs to drill and complete development of oil and gas wells and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determination of whether the wells have proved reserves and if determined incapable of producing commercial quantities of oil and gas these costs are expensed as dry hole costs. At year-end 2016, we have no capitalized exploratory well costs pending determination of proved reserves. Exploration costs include dry hole costs, geological and geophysical costs, expired unproved leasehold costs and seismic studies, and are expensed as incurred. Production costs incurred to maintain wells and related equipment are charged to expense as incurred.

Depreciation and depletion of producing oil and gas properties is calculated using the units-of-production method. Proved developed reserves are used to compute unit rates for unamortized tangible and intangible drilling and completion costs. Proved reserves are used to compute unit rates for unamortized acquisition of proved leasehold costs. Unit-of-production amortization rates are revised whenever there is an indication of the need for revision but at least once a year and those revisions are accounted for prospectively as changes in accounting estimates.

Impairment of Oil and Gas Properties

We evaluate our oil and gas properties, including facilities and equipment, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We estimate the expected undiscounted future cash flows of our oil and gas properties and compare such undiscounted future cash flows to the carrying amount of the oil and gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, we will adjust the carrying amount of the oil and gas properties to fair value. The factors used to determine fair value are subject to our judgment and expertise and include, but are not limited to, recent sales prices of comparable properties, the present value of future cash flows, net of estimated operating and development costs using estimates of proved reserves, future commodity pricing, future production estimates, anticipated capital expenditures, and various discount rates commensurate with the risk and current market conditions associated with realizing the expected cash flows projected. Because of the uncertainty inherent in these factors, we cannot predict when or if future impairment charges for proved properties will be recorded.

The assessment of unproved leasehold properties to determine any possible impairment requires significant judgment. We assess our unproved leasehold properties periodically for impairment on a property-by-property basis based on remaining lease terms, drilling results or future plans to develop acreage. Impairment expense for proved and unproved oil and gas properties are included in cost of mineral resources and cost of oil and gas producing activities in discontinued operations.

Operating Leases

We occupy office space in various locations under operating leases. The lease agreements may contain rent escalation clauses, construction allowances and/or contingent rent provisions. We expense operating leases ratably over the shorter of the useful life or the lease term. For scheduled rent escalation clauses, we recognize the base rent expense on a straight-line basis and record the difference between the recognized rent expense and the amounts payable under the lease as deferred lease credits included in other liabilities in the consolidated balance sheets. Deferred lease credits are amortized over the lease term. For construction allowances, we record leasehold improvement assets included in property and equipment in the consolidated balance sheets amortized over the shorter of their economic lives or the lease term. The related deferred lease credits are amortized as a reduction of rent expense over the lease term.

Property and Equipment

We carry property and equipment at cost less accumulated depreciation. We capitalize the cost of significant additions and improvements, and we expense the cost of repairs and maintenance. We capitalize interest costs incurred on major construction projects. We depreciate these assets using the straight-line method over their estimated useful lives as follows:

	Estimated	Year-End
	Useful Lives	2016			2015
		(In thousands)
Buildings and building improvements	10 to 40 years	$	2,700		$	4,044
Property and equipment	2 to 10 years	4,957			12,230
		7,657			16,274
Less: accumulated depreciation		(4,541		)	(5,542		)
		$	3,116		$	10,732

Depreciation expense of property and equipment was $889,000 in 2016, $1,067,000 in 2015 and $903,000 in 2014.

Real Estate

We carry real estate at the lower of cost or fair value less cost to sell. We capitalize interest costs once development begins, and we continue to capitalize throughout the development period. We also capitalize infrastructure, improvements, amenities, and other development costs incurred during the development period. We determine the cost of real estate sold using the relative sales value method. When we sell real estate from projects that are not finished, we include in the cost of real estate sold estimates of future development costs through completion, allocated based on relative sales values. These estimates of future development costs are reevaluated at least annually, with any adjustments being allocated prospectively to the remaining units available for sale. We receive cash deposits from home builders for purchases of vacant developed lots from community development projects. These earnest money deposits are released to the home builders as lots are developed and sold.

Income producing properties are carried at cost less accumulated depreciation computed using the straight-line method over their estimated useful lives.

We have agreements with utility or improvement districts, principally in Texas, whereby we agree to convey to the districts water, sewer and other infrastructure-related assets we have constructed in connection with projects within their jurisdiction. The reimbursement for these assets ranges from 70 to 90 percent of allowable cost as defined by the district. The transfer is consummated and we receive payment when the districts have a sufficient tax base to support funding of their bonds. The cost we incur in constructing these assets is included in capitalized development costs, and upon collection, we remove the assets from capitalized development costs. We provide an allowance to reflect our past experiences related to claimed allowable development costs.

Impairment of Real Estate Long-Lived Assets

We review real estate long-lived assets held for use for impairment when events or circumstances indicate that their carrying value may not be recoverable. Impairment exists if the carrying amount of the long-lived asset is not recoverable from the undiscounted cash flows expected from its use and eventual disposition. We determine the amount of the impairment loss by comparing the carrying value of the long-lived asset to its estimated fair value. In the absence of quoted market prices, we determine estimated fair value generally based on the present value of future probability weighted cash flows expected from the sale of the long-lived asset. Non-cash impairment charges related to our owned and consolidated real estate assets are included in cost of real estate sales and other. In 2016, we recorded $56,453,000 in non-cash impairment charges related to six non-core community development projects and two multifamily sites.

Revenue

Real Estate

We recognize revenue from sales of real estate when a sale is consummated, the buyer’s initial investment is adequate, any receivables are probable of collection, the usual risks and rewards of ownership have been transferred to the buyer, and we do not have significant continuing involvement with the real estate sold. If we determine that the earnings process is not complete, we defer recognition of any gain until earned. We recognize revenue from hotel room sales and other guest services when rooms are occupied and other guest services have been rendered. We recognize rental revenues from our multifamily properties when earned in accordance with the terms of the respective leases on a straight-line basis for the period of occupancy.

We recognize construction revenues on multifamily projects that we develop as a general contractor. Construction revenues are recognized as costs are incurred plus fixed fee earned. We are reimbursed for costs paid to subcontractors plus we may earn a development and construction management fee on multifamily projects we develop, both of which are included in commercial and income producing properties revenue. On multifamily projects where our fee is based on a fixed fee plus guaranteed maximum price contract, any cost overruns incurred during construction, as compared to the original budget, will reduce the net fee generated on these projects. Any excess cost overruns estimated over the net fee generated are recognized in the period in which they become evident. At year-end 2016, we were not a general contractor on any of the multifamily projects currently under construction and we do not anticipate to be a general contractor on any new multifamily projects as we determined multifamily was non-core and we would not be making any new investments in this business.

We exclude from revenue amounts we collect from utility or improvement districts related to the conveyance of water, sewer and other infrastructure related assets. We also exclude from revenue amounts we collect for timber sold on land being developed. These proceeds reduce capitalized development costs. We exclude from revenue amounts we collect from customers that represent sales tax or other taxes that are based on the sale. These amounts are included in other accrued expenses until paid.

Oil and Gas Working Interest Revenues (Discontinued Operations)

We recognize revenue as oil and gas is produced and sold. There are a significant amount of oil and gas properties which we do not operate and, therefore, revenue is typically recorded in the month of production based on an estimate of our share of volumes produced and prices realized. We obtain the most current available production data from the operators and price indices for each well to estimate the accrual of revenue. Obtaining production data on a timely basis for some wells is not feasible; therefore we utilize past production receipts and estimated sales price information to estimate accrual of working interest revenue on all other non-operated wells each month. Revisions to such estimates are recorded as actual results become known. We review accounts receivable periodically and reduce the carrying amount by a valuation allowance that reflects our best estimate of the amount that may not be collectible.

A majority of our sales are made under contractual arrangements with terms that are considered to be usual and customary in the oil and gas industry. The contracts are for periods of up to five years with prices determined upon a percentage of pre-determined and published monthly index price. The terms of these contracts have not had an effect on how we recognize revenue.

Mineral Resources

We recognize revenue from mineral bonus payments when we have received an executed agreement with the exploration company transferring the rights to any oil or gas it may find and requiring drilling be done within a specified period, the payment has been collected, and we have no obligation to refund the payment. We recognize revenue from delay rentals received if drilling has not started within the specified period and when the payment has been collected. We recognize revenue from mineral royalties and non-working interests when the minerals have been delivered to the buyer, the value is determinable, and we are reasonably sure of collection.

Other

We recognize revenue from timber sales upon passage of title, which occurs at delivery; when the price is fixed and determinable; and we are reasonably sure of collection. We recognize revenue from recreational leases on the straight-line basis over the lease term. We recognize revenue from the sale of water rights or groundwater reservation agreements upon receipt of an executed agreement and payment has been collected and all conditions to the agreement have been met and we have no further performance obligations to meet. The water delivery revenues will be recognized as water is being delivered and metered at the delivery point.

Share-Based Compensation

We use the Black-Scholes option pricing model for stock options, Monte Carlo simulation pricing model for market-leveraged stock units and for stock options with market conditions, grant date fair value for equity-settled awards and period-end fair value for cash-settled awards. We expense share-based awards ratably over the vesting period or earlier based on retirement eligibility.

Timber

We carry timber at cost less the cost of timber cut. We expense the cost of timber cut based on the relationship of the timber carrying value to the estimated volume of recoverable timber multiplied by the amount of timber cut. We include the cost of timber cut in cost of other. We determine the estimated volume of recoverable timber using statistical information and other data related to growth rates and yields gathered from physical observations, models and other information gathering techniques. Changes in yields are generally due to adjustments in growth rates and similar matters and are accounted for prospectively as changes in estimates. We capitalize reforestation costs incurred in developing viable seedling plantations (up to two years from planting), such as site preparation, seedlings, planting, fertilization, insect and wildlife control, and herbicide application. We expense all other costs, such as property taxes and costs of forest management personnel, as incurred. Once the seedling plantation is viable, we expense all costs to maintain the viable plantations, such as fertilization, herbicide application, insect and wildlife control, and thinning, as incurred.

We own about 19,000 acres of non-core timberland and undeveloped land, in Georgia and Texas. The non-cash cost of timber cut and sold is $63,000 in 2016, $250,000 in 2015 and $371,000 in 2014 and is included in depreciation, depletion and amortization in our consolidated statements of cash flows.

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New and Pending Accounting Pronouncements

12 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

New and Pending Accounting Pronouncements

New and Pending Accounting Pronouncements

Adoption of New Accounting Standards

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, as part of its initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15, Interest-Imputation of Interest (Subtopic 835-30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update), which allows an entity to defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The updated standards are effective for financial statements issued for annual and interim periods beginning after December 15, 2015. We adopted ASU 2015-03 in first quarter 2016 and prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2015, $8,267,000 of debt issuance costs were reclassified in the consolidated balance sheets from other assets to debt. The adoption did not impact our consolidated financial position, results of operations or cash flows. As permitted under this guidance, we will continue to present debt issuance costs associated with revolving-debt agreements as other assets.

In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis (Topic 810), requiring entities to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The revised consolidation model: (1) modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, (2) eliminates the presumption that a general partner should consolidate a limited partnership, (3) affects the consolidation analysis of reporting entities that are involved with VIEs, and (4) provides a scope exception from consolidation guidance for reporting entities with interests in certain legal entities. The updated standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2015. The adoption of this guidance, which was applied retrospectively, had no impact to our consolidated financial statements.

In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items(Subtopic 225-20), which eliminates the concept of extraordinary items from U.S. GAAP. The updated standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of this guidance had no impact on our financial statements and related disclosures.

Pending Accounting Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for annual and interim periods beginning after December 15, 2017. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). We currently anticipate adopting the standard using the cumulative catch-up transition method. We anticipate this standard will not have a material impact on our consolidated financial statements. While we are continuing to assess all potential impacts of the standard, we expect revenue related to lot and tract sales to remain substantially unchanged. Due to the complexity of certain of our real estate sale transactions, the revenue recognition treatment required under the standard will be dependent on contract-specific terms, and may vary in some instances from recognition at the time of the sale closing.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner that is similar to today's accounting. This guidance also eliminates today's real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. This guidance is effective in 2019, and interim periods within that year. Early adoption is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the effect the updated standard will have on our financial position and disclosures.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, as part of its simplification initiative. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The updated standard becomes effective for annual and interim periods beginning after December 31, 2016. We are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures, but we do not expect it to have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), in order to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated standard is effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those fiscal years with early adoption permitted. We are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures, but we do not expect it to have a material effect on our consolidated financial statements.

In November, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230). This ASU requires that a statement of cash flow explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash investments. This standard is effective for fiscal years beginning after December 15, 2017. The adoption of ASU 2016-18 will modify our current disclosures and reclassifications relating to the consolidated statements of cash flows, but we do not expect it to have a material effect on our consolidated financial statements.

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Real Estate

12 Months Ended

Dec. 31, 2016

Real Estate [Abstract]

Real Estate

Real Estate

Real estate consists of:

	Year-End 2016						Year-End 2015
	Carrying Value		Accumulated Depreciation		Net Carrying Value		Carrying Value		Accumulated Depreciation			Net Carrying Value
	(In thousands)
Entitled, developed and under development projects	$	263,859	$	—	$	263,859	$	352,141	$	—		$	352,141
Undeveloped land (includes land in entitlement)	29,144		—		29,144		98,181		—			98,181
Commercial
Radisson Hotel & Suites (a)	—		—		—		62,889		(29,268		)	33,621
Income producing properties
Eleven (a)	—		—		—		53,896		(2,861		)	51,035
Dillon (a)	—		—		—		19,987		—			19,987
Music Row (a)	—		—		—		9,947		—			9,947
Downtown Edge (a)	—		—		—		12,706		—			12,706
West Austin (b)	—		—		—		9,097		—			9,097
	$	293,003	$	—	$	293,003	$	618,844	$	(32,129	)	$	586,715

 _________________________

^(a)  Sold in 2016.

^(b)  Classified as assets held for sale at year-end 2016.

In 2016, we recognized non-cash impairment charges of $56,453,000 related to six non-core community development projects and two multifamily sites. These impairments were a result of our key initiative to review our entire portfolio of assets which resulted in business plan changes, inclusive of cash tax savings considerations, to market these properties for sale, which resulted in adjustment of the carrying value to fair value.

In 2016, we sold the Radisson Hotel & Suites, a 413 room hotel in Austin, for $130,000,000, generating $128,764,000 in net proceeds before paying in full the associated debt of $15,400,000 and recognized a gain on sale of $95,336,000. We also sold Eleven, a wholly-owned 257-unit multifamily property in Austin, for $60,150,000, generating $59,719,000 in net proceeds before paying in full the associated debt of $23,936,000 and recognized a gain on sale of $9,116,000. In addition, we sold Dillon, a planned 379-unit multifamily property that was under construction in Charlotte, for $25,979,000, generating $25,428,000 in net proceeds and recognized a gain on sale of $1,223,000, and Music Row, a planned 230-unit multifamily property that was under construction in Nashville, for $15,025,000, generating $14,703,000 in net proceeds and recognized a gain on sale of $3,968,000 . We also sold Downtown Edge, a multifamily site in Austin, for $5,000,000, generating $4,975,000 in net proceeds and recognized a loss of $3,870,000.

In 2016, we sold over 58,300 acres of timber and timberland in Georgia and Alabama for $104,172,000 in three transactions generating combined net proceeds of $103,238,000. These transactions resulted in a combined gain on sale of assets of $48,891,000.

In 2015, we sold Midtown Cedar Hill, a 354-unit multifamily property we developed near Cedar, Hill, Texas for $42,880,000, generating segment earnings of $9,265,000 and generating $42,639,000 in net proceeds before paying in full the associated debt of $24,166,000.

Depreciation expense related to commercial and income producing properties was $816,000 in 2016, $6,810,000 in 2015 and $3,319,000 in 2014 and is included in other operating expense.

As a general contractor on guaranteed maximum price contracts associated with two multifamily venture properties, we recognized charges of $392,000 in 2016, $1,543,000 in 2015 and $5,111,000 in 2014 related to cost overruns.

Our estimated cost of assets for which we expect to be reimbursed by utility and improvement districts were $45,157,000 at year-end 2016 and $67,554,000 at year-end 2015, which included $14,749,000 at year-end 2016 and $22,302,000 at year-end 2015 related to our Cibolo Canyons project near San Antonio. In 2016, we collected $26,606,000 in reimbursements that were previously submitted to these districts. At year-end 2016, our inception to-date submitted and approved reimbursements for the Cibolo Canyons project were $54,376,000, of which we have collected $45,132,000. These costs are principally for water, sewer and other infrastructure assets that we have incurred and submitted or will submit to utility or improvement districts for approval and reimbursement. We expect to be reimbursed by utility and improvement districts when these districts achieve adequate tax basis or otherwise have funds available to support payment.

In 2014, we received $50,550,000 from Cibolo Canyons special improvement district (CCSID) and recognized a gain of $6,577,000 related to its issuance of $48,900,000 Hotel Occupancy Tax (HOT) and Sales and Use Tax Revenue Bonds. These bonds are obligations solely of CCSID and are payable from HOT and sales and use taxes levied on the Resort by CCSID. To facilitate the issuance of the bonds, we provided a $6,846,000 letter of credit to the bond trustee as security for certain debt service fund obligations in the event CCSID tax collections are not sufficient to support payment of the bonds in accordance with their terms. The letter of credit must be maintained until the earlier of redemption of the bonds or scheduled bond maturity in 2034. We also entered into an agreement with the owner of the Resort to assign its senior rights to us in exchange for consideration provided by us, including a surety bond to be drawn if CCSID tax collections are not sufficient to support ad valorem tax rebates payable. The surety bond has a balance of $6,631,000 at year-end 2016. The deferred gains related to the letter of credit and surety bond are included in other liabilities on our consolidated balance sheet. The surety bond decreases and gains are recognized as CCSID makes annual ad valorem tax rebate payments, which obligation is scheduled to be retired in full by 2020. All future receipts are expected to be recognized as gains in the period collected. We recorded gains of $1,219,000 and $1,160,000 in 2016 and 2015 associated with reduction of surety bond and gains of $501,000 and $425,000 in 2016 and 2015 associated with excess hotel occupancy and sales and use tax revenues from CCSID in 2015.

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Investment in Unconsolidated Ventures

12 Months Ended

Dec. 31, 2016

Equity Method Investments and Joint Ventures [Abstract]

Investment in Unconsolidated Ventures

Investment in Unconsolidated Ventures

We participate in real estate ventures for the purpose of acquiring and developing residential, multifamily and mixed-use communities in which we may or may not have a controlling financial interest. U.S. GAAP requires consolidation of Variable Interest Entities (VIEs) in which an enterprise has a controlling financial interest and is the primary beneficiary. A controlling financial interest will have both of the following characteristics: (a) the power to direct the VIE activities that most significantly impact economic performance and (b) the obligation to absorb the VIE losses and right to receive benefits that are significant to the VIE. We examine specific criteria and use judgment when determining whether a venture is a VIE and whether we are the primary beneficiary. We perform this review initially at the time we enter into venture agreements and reassess upon reconsideration events.

At year-end 2016, we had ownership interests in 16 ventures that we accounted for using the equity method, none of which are a VIE.

In 2016, we sold our interest in FMF Peakview LLC (360⁰), a 304-unit multifamily joint venture near Denver, generating $13,917,000 in net proceeds and recognized a gain of $10,363,000 which is included in gain on sale of assets.

Combined summarized balance sheet information for our ventures accounted for using the equity method follows:

	Venture Assets				Venture Borrowings (a)				Venture Equity				Our Investment
	At Year-End
	2016		2015		2016		2015		2016		2015		2016		2015
	(In thousands)
242, LLC (b)	$	26,503	$	26,687	$	1,107	$	—	$	23,136	$	24,877	$	10,934	$	11,766
CL Ashton Woods, LP (c)	2,653		7,654		—		—		2,198		6,084		1,107		3,615
CL Realty, LLC	8,048		7,872		—		—		7,899		7,662		3,950		3,831
CREA FMF Nashville LLC (b)	56,081		57,820		37,446		50,845		17,091		4,291		4,923		3,820
Elan 99, LLC	49,652		34,192		36,238		14,587		13,100		15,838		11,790		14,255
FMF Littleton LLC	70,282		52,376		44,446		22,347		23,798		24,370		6,128		6,270
FMF Peakview LLC	—		48,869		—		30,485		—		16,828		—		3,447
FOR/SR Forsyth LLC	10,672		6,500		1,568		—		8,990		6,500		8,091		5,850
HM Stonewall Estates, Ltd (c)	852		2,842		—		—		852		2,842		477		1,294
LM Land Holdings, LP (c)	25,538		31,984		3,477		7,728		20,945		22,751		9,685		9,664
MRECV DT Holdings LLC	4,155		4,215		—		—		4,144		4,215		3,729		3,807
MRECV Edelweiss LLC	3,484		2,237		—		—		3,484		2,237		3,358		2,029
MRECV Juniper Ridge LLC	4,156		3,006		—		—		4,156		3,006		3,741		2,730
MRECV Meadow Crossing II LLC	2,492		728		—		—		2,491		728		2,242		655
Miramonte Boulder Pass, LLC	10,738		12,627		4,006		5,869		5,265		5,474		5,330		5,349
Temco Associates, LLC	4,368		5,284		—		—		4,253		5,113		2,126		2,557
Other ventures (d)	—		4,174		—		2,242		—		1,922		—		1,514
	$	279,674	$	309,067	$	128,288	$	134,103	$	141,802	$	154,738	$	77,611	$	82,453

Combined summarized income statement information for our ventures accounted for using the equity method follows:

	Revenues						Earnings (Loss)									Our Share of Earnings (Loss)
	For the Year
	2016		2015		2014		2016			2015			2014			2016			2015			2014
	(In thousands)
242, LLC (b)	$	5,835	$	20,995	$	5,612	$	1,259		$	9,588		$	2,951		$	668		$	4,919		$	1,514
CL Ashton Woods, LP (c)	2,870		9,820		5,431		914			3,881			1,748			1,332			5,000			2,471
CL Realty, LLC	567		856		1,573		237			424			1,068			119			212			534
CREA FMF Nashville LLC (b) (d)	4,955		1,227		—		(1,420		)	(1,696		)	(163		)	1,103			(1,696		)	(163		)
Elan 99, LLC	1,392		—		—		(2,739		)	(49		)	(87		)	(2,465		)	(44		)	(78		)
FMF Littleton LLC	3,116		120		—		(571		)	(367		)	(239		)	(143		)	(92		)	(60		)
FMF Peakview LLC	939		2,057		4		(248		)	(1,116		)	(410		)	(50		)	(223		)	(83		)
FOR/SR Forsyth LLC	—		—				(65		)	—						(58		)	—
HM Stonewall Estates, Ltd. (c)	2,112		3,990		1,728		832			1,881			613			361			952			248
LM Land Holdings, LP (c)	10,001		10,956		21,980		7,288			8,251			15,520			2,458			3,342			4,827
MRECV DT Holdings LLC	495		—				477			167						429			—
MRECV Edelweiss LLC	416		—				409			151						368			137
MRECV Juniper Ridge LLC	379		—				380			106						342			—
MRECV Meadow Crossing II LLC	267		—		—		220			—			—			198			—			—
Miramonte Boulder Pass, LLC	4,923		—				(399		)	(250		)				(200		)	(125		)
PSW Communities, LP	—		29,986		—		—			2,688			(86		)	—			1,169			(76		)
TEMCO Associates, LLC	1,344		9,485		2,155		440			2,358			494			220			1,179			247
Other ventures	6,519		36,237		3,960		2,105			33,303			3,879			1,441			1,278			(696		)
	$	46,130	$	125,729	$	42,443	$	9,119		$	59,320		$	25,288		$	6,123		$	16,008		$	8,685

_____________________

^(a)  Total includes current maturities of $89,756,000 at year-end 2016, of which $78,557,000 is non-recourse to us, and $39,590,000 at year-end 2015, of which $29,691,000 is non-recourse to us.

^(b)  Includes unamortized deferred gains on real estate contributed by us to ventures. We recognize deferred gains as income as real estate is sold to third parties. Deferred gains of $1,457,000 are reflected as a reduction to our investment in unconsolidated ventures at year-end 2016.

^(c)  Includes unrecognized basis difference of $259,000 which is reflected as an increase of our investment in unconsolidated ventures at year-end 2016. This difference between estimated fair value of the equity investment and our capital account within the respective ventures at closing will be accreted as income or expense over the life of the investment and included in our share of earnings (loss) from the respective ventures.

^(d)  Our share of venture earnings in 2016 includes reallocation of prior year cumulative losses incurred by the venture as a result of equity contribution by the venture partner in 2016.

In 2016, we invested $6,089,000 in these ventures and received $13,419,000 in distributions; in 2015, we invested $26,349,000 in these ventures and received $24,909,000 in distributions; and in 2014, we invested $14,692,000 in these ventures and received $7,518,000 in distributions. Distributions include both return of investments and distributions of earnings.

We provide construction and development services for some of these ventures for which we receive fees. Fees for these services were $2,466,000 in 2016, $1,856,000 in 2015 and $2,275,000 in 2014, and are included in real estate revenues.

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Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

Carrying value of goodwill and other intangible assets follows:

	Year-End
	2016		2015
	(In thousands)
Goodwill	$	37,900	$	41,774
Identified intangibles, net	—		1,681
	$	37,900	$	43,455

Goodwill related to our mineral interests was $37,900,000 at year-end 2016 and 2015. Goodwill associated with our water resources initiatives was $0 and $3,874,000 at year-end 2016 and 2015. In 2016, we recognized a goodwill non-cash impairment charge of $3,874,000 related to interests in groundwater leases in central Texas as result of entering into an agreement to sell these assets. Impairment charges are included in cost of other on our consolidated statements of income (loss) and comprehensive income (loss).

Identified intangibles include $1,681,000 in indefinite lived groundwater leases associated with our water resources initiatives and is included in assets held for sale at year-end 2016.

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Held for Sale

12 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Held for Sale

Held for Sale

At year-end 2016, assets held for sale includes approximately 19,000 acres of timberland and undeveloped land and the related timber, a multifamily site in Austin, our owned mineral interest assets and central Texas groundwater assets.

The major classes of assets and liabilities of the properties held for sale at year-end 2016 are as follows:

	At Year-End
	2016
Assets Held for Sale:	(In thousands)
Real estate	$	19,931
Timber	1,682
Other intangible assets	1,681
Oil and gas properties and equipment, net	782
Property and equipment, net	6,301
	$	30,377
Liabilities Held for Sale:
Other liabilities	103
	$	103

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Discontinued Operations

12 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

Discontinued Operations

At year-end 2016, we have divested substantially all of our oil and gas working interest properties. As a result of this significant change in our operations, we have reported the results of operations and financial position of these assets as discontinued operations within the consolidated statements of income (loss) and comprehensive income (loss) and consolidated balance sheets for all periods presented. In addition, in second quarter 2016, we changed the name of the oil and gas segment to mineral resources to reflect the strategic shift from oil and gas working interest investments to owned mineral interests.

Summarized results from discontinued operations were as follows:

	For the Year
	2016			2015			2014
Revenues	$	5,862		$	43,845		$	68,610
Cost of oil and gas producing activities	(6,578		)	(221,402		)	(94,581		)
Other operating expenses	(7,754		)	(10,363		)	(14,357		)
Loss from discontinued operations before income taxes	$	(8,470	)	$	(187,920	)	$	(40,328	)
Gain (loss) on sale of assets before income taxes	(13,664		)	(706		)	8,526
Income tax benefit	5,269			2,496			12,193
Loss from discontinued operations, net of taxes	$	(16,865	)	$	(186,130	)	$	(19,609	)

In 2016, we recorded a net loss of $13,664,000 on the sale of 199,263 net mineral acres leased from others and 379 gross (95 net) producing oil and gas working interest wells in Nebraska, Kansas, Oklahoma and North Dakota for total net proceeds of $80,374,000, which includes $3,269,000 in reimbursement of capital costs incurred on in-progress wells that were assumed by the buyer. Other operating expenses in 2016 include loss contingency charges of $2,990,000 related to litigation and $1,155,000 related to potential environmental liabilities to plug and abandon certain oil and gas wells in Wyoming. Please read Note 14—Litigation and Environmental Contingencies for additional information about these items.

In 2015, we recorded a net loss of $706,000 on the sale of 109,000 net mineral acres leased from others and the disposition of 39 gross (7 net) producing oil and gas wells in Nebraska, Texas, Colorado, North Dakota and Oklahoma for total net proceeds of $17,800,000.

In 2014, we recorded a net gain of $8,526,000 on the sale of 650 net mineral acres leased from others and 124 gross (18 net) producing oil and gas working interest wells in Nebraska, Kansas, Oklahoma and North Dakota for total net proceeds of $17,660,000.

Cost of sales includes non-cash impairment charges of $612,000 in 2016, $163,029,000 in 2015 and $32,665,000 in 2014 related to our proved properties and unproved leasehold oil and gas working interests.

The major classes of assets and liabilities of discontinued operations at year-end 2016 and 2015 are as follows:

	At Year-End
	2016		2015
	(In thousands)
Assets of Discontinued Operations:
Receivables, net of allowance for bad debt	$	6	$	4,632
Oil and gas properties and equipment, net	—		79,733
Goodwill and other intangible assets	—		19,673
Prepaid expenses	8		96
Other assets	—		833
	$	14	$	104,967
Liabilities of Discontinued Operations:
Accounts payable	$	67	$	342
Accrued property taxes	—		259
Other accrued expenses	5,228		8,924
Other liabilities	—		1,667
	$	5,295	$	11,192

Significant operating activities and investing activities of discontinued operations are as follows:

	For the Year
	2016			2015			2014
	(In thousands)
Operating activities:
Asset impairments	$	612		$	105,337		$	15,535
Dry hole and unproved leasehold impairment charges	—			67,639			29,528
Loss (gain) on sale of assets	13,664			706			(8,526		)
Depreciation, depletion and amortization	2,202			28,391			28,758
	$	16,478		$	202,073		$	65,295
Investing activities:
Oil and gas properties and equipment	$	(579	)	$	(49,717	)	$	(101,145	)
Acquisition of oil and gas properties	—			—			(1,100		)
Proceeds from sales of assets	77,105			17,800			17,660
	$	76,526		$	(31,917	)	$	(84,585	)

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Receivables

12 Months Ended

Dec. 31, 2016

Receivables [Abstract]

Receivables

Receivables

Receivables consist of:

	At Year-End
	2016			2015
	(In thousands)
Funds held by qualified intermediary for potential 1031 like-kind exchange	$	—		$	14,703
Other receivables and accrued interest	1,505			2,218
Other loans secured by real estate, average interest rate of 5.86% at year-end 2016 and 11.31% at year-end 2015	7,452			2,130
	8,957			19,051
Allowance for bad debts	(26		)	(26		)
	$	8,931		$	19,025

In 2016, we received funds previously held by qualified intermediary because we did not complete an intended like-kind exchange related to a sale of 6,915 acres of undeveloped land.

Other loans secured by real estate generally are secured by a deed of trust and due within three to five years.

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Debt

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Debt

Debt

Debt consists of:

	At Year-End
	2016		2015
	(In thousands)
8.50% senior secured notes due 2022	5,200		224,647
3.75% convertible senior notes due 2020, net of discount	104,673		104,719
6.00% tangible equity units, net	—		8,666
Secured promissory notes — average interest rates of 3.42% at year-end 2015	—		15,400
Other indebtedness due through 2018 at variable and fixed interest rates ranging from 5.0% to 5.50%	485		28,083
	$	110,358	$	381,515

In 2016, we reduced the revolving commitment provided by our senior secured credit facility, which matures on May 15, 2017 (with twoone-year extension options), from $300,000,000 to $125,000,000, none of which was drawn at year-end 2016. The revolving line of credit may be prepaid at any time without penalty. The revolving line of credit includes a $100,000,000 sublimit for letters of credit, of which $14,850,000 was outstanding at year-end 2016. Total borrowings under our senior secured credit facility (including the face amount of letters of credit) may not exceed a borrowing base formula. At year-end 2016, we had $71,262,000 in net unused borrowing capacity under our senior credit facility.

Under the terms of our senior secured credit facility, at our option, we can borrow at LIBOR plus 4.0 percent or at the alternate base rate plus 3.0 percent. The alternate base rate is the highest of (i) KeyBank National Association’s base rate, (ii) the federal funds effective rate plus 0.5 percent or (iii) 30 day LIBOR plus 1 percent. Borrowings under the senior secured credit facility are or may be secured by (a) mortgages on the timberland, high value timberland and portions of raw entitled land, as well as pledges of other rights including certain oil and gas operating properties, (b) assignments of current and future leases, rents and contracts, (c) a security interest in our primary operating account, (d) a pledge of the equity interests in current and future material operating subsidiaries and most of our majority-owned joint venture interests, or if such pledge is not permitted, a pledge of the right to distributions from such entities, and (e) a pledge of certain reimbursements payable to us from special improvement district tax collections in connection with our Cibolo Canyons project. The senior secured credit facility provides for releases of real estate and other collateral provided that borrowing base compliance is maintained.

Our debt agreements contain financial covenants customary for such agreements including minimum levels of interest coverage and limitations on coverage. At year-end 2016, our tangible net worth requirement was $426,312,000 computed as: $379,044,000 plus 85 percent of the aggregate net proceeds received by us from any equity offering, plus 75 percent of all positive net income, on a cumulative basis since third quarter 2015. At year-end 2016, we were in compliance with the financial covenants of these agreements.

We may elect to make distributions to stockholders so long as the total leverage ratio is less than 40 percent, the interest coverage ratio is greater than 3.0:1.0 and available liquidity is not less than $125,000,000, all of which were satisfied at year-end 2016. Regardless of whether the foregoing conditions are satisfied, we may make distributions in an aggregate amount not to exceed $50,000,000 to be funded from up to 65% of the net proceeds from sales of multifamily properties and non-core assets, such as the Radisson Hotel & Suites in Austin, and any oil and gas properties.

In 2014, we issued $250,000,000aggregate principal of8.5% Senior Secured Notes due 2022 (Notes). The Notes will mature on June 1, 2022 and interest on the Notes is payable semiannually at a rate of 8.5 percent per annum in arrears. In 2016, we completed a cash tender offer for our Notes, pursuant to which we purchased $215,495,000 principal amount (representing approximately 97.6% outstanding) of the Notes. Total consideration paid was $245,604,000, which included $29,091,000 in premium at 113.5% and $1,018,000 in accrued and unpaid interest. In addition, we received consent from holders of the Notes to eliminate or modify certain covenants, events of default and other provisions contained in the indenture governing the Notes, and to release the subsidiary guarantees and collateral securing the Notes. We also purchased $9,750,000 principal amount of the Notes between 99% and 99.95% of face value in open market transactions. The 2016 tender offer and open market purchases resulted in a $35,681,000 loss on extinguishment of debt, which includes the premium paid to repurchase the Notes, write-off of unamortized debt issuance costs of $5,416,000 and $1,301,000 in other costs related to tender offer advisory services.

In 2015, we purchased $19,440,000 principal amount of Notes at 97% of face value, resulting in a gain of $589,000 on the early extinguishment of the retired Notes, offset by the write-off of unamortized debt issuance costs of $506,000 allocated to the retired Notes.

In 2013, we issued $125,000,000 aggregate principal amount of 3.75% convertible senior notes due 2020 (Convertible Notes). Interest on the Convertible Notes is payable semiannually at a rate of 3.75 percent per annum and they mature on March 1, 2020. The Convertible Notes have an initial conversion rate of 40.8351 per $1,000 principal amount. The initial conversion rate is subject to adjustment upon the occurrence of certain events. Prior to November 1, 2019, the Convertible Notes are convertible only upon certain circumstances, and thereafter are convertible at any time prior to the close of business on the second scheduled trading day prior to maturity. If converted, holders will receive cash, shares of our common stock or a combination thereof at our election. We intend to settle the principal amount of the Convertible Notes in cash upon conversion, with any excess conversion value to be settled in shares of our common stock. At year-end 2016, unamortized debt discount of our Convertible Notes was $13,809,000.

In 2016, we purchased $5,000,000 of 3.75% Convertible Senior Notes due 2020 at 93.25% of face value in open market transactions for $4,663,000 and we allocated $4,452,000 to extinguish the debt and $211,000 to reacquire the equity component within the convertible notes based on the fair value of the debt component. We recognized a $110,000 loss on extinguishment of debt based on the difference between the fair value of the debt component prior to conversion and the carrying value of the debt component. Total loss on extinguishment of debt including write-off of debt issuance costs allocated to the repurchased notes was $183,000.

In 2013, we issued $150,000,000 aggregate principal amount of 6.00% tangible equity units (Units). The total offering was 6,000,000 Units, including 600,000 exercised by the underwriters, each with a stated amount of $25.00. Each Unit is comprised of (i) a prepaid stock purchase contract to be settled by delivery of a number of shares of our common stock, par value $1.00 per share to be determined pursuant to a purchase contract agreement, and (ii) a senior amortizing note due December 15, 2016 that has an initial principal amount of $4.2522, bears interest at a rate of 4.50% per annum and has a final installment payment date of December 15, 2016. On December 15, 2016, we made the final installment payment of principal and accrued interest and issued 7,857,000 shares upon settlement of the stock purchase contract based on the applicable market value, as defined in the purchase contract agreement associated with issuance of the Units.

In 2016, a secured promissory note of $15,400,000 was paid in full in connection with sale of the Radisson Hotel & Suites, for $130,000,000.

In 2016, other indebtedness decreased principally as a result of selling Eleven, a 257-unit multifamily project in Austin, for $60,150,000 and paying in full the associated debt of $23,936,000.

At year-end 2016 and 2015, we have $1,633,000 and $8,267,000 in unamortized deferred fees which were deducted from our debt. In addition, at year-end 2016 and 2015, unamortized deferred financing fees related to our senior credit facility included in other assets were $314,000 and $2,768,000. Amortization of deferred financing fees was $3,598,000 in 2016, $4,002,000 in 2015 and $3,845,000 in 2014 and is included in interest expense.

Debt maturities during the next five years are: 2017 — $0; 2018 — $485,000; 2019 — $0; 2020 — $104,673,000; 2021 — $0 and thereafter — $5,200,000.

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Fair Value

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Fair Value

Fair Value

Fair value is the exchange price that would be the amount received for an asset or paid to transfer a liability in an orderly transaction between market participants. In arriving at a fair value measurement, we use a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable. The three levels of inputs used to establish fair value are the following:

• Level 1 — Quoted prices in active markets for identical assets or liabilities;

• Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and

• Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

We elected not to use the fair value option for cash and cash equivalents, accounts receivable, other current assets, variable debt, accounts payable and other current liabilities. The carrying amounts of these financial instruments approximate their fair values due to their short-term nature or variable interest rates. We determine the fair value of fixed rate financial instruments using quoted prices for similar instruments in active markets.

Information about our fixed rate financial instruments not measured at fair value follows:

	Year-End 2016						Year-End 2015
	Carrying Amount			Fair Value			Carrying Amount			Fair Value			Valuation Technique
	(In thousands)
Fixed rate debt	$	(111,506	)	$	(109,789	)	$	(346,090	)	$	(321,653	)	Level 2

Non-financial assets measured at fair value on a non-recurring basis principally include real estate assets, oil and gas properties, assets held for sale, goodwill and intangible assets, which are measured for impairment.

In 2016, we recognized non-cash impairment charges of $56,453,000 related to six non-core community development projects and two multifamily sites as a result of the review of our entire portfolio of assets and marketing these properties for sale, of which four non-core community development projects and one multifamily site were sold in 2016. We based our valuations primarily on executed purchase and sale agreements, current negotiations and letters of intent with expected buyers and third party broker price opinions. In 2016, we recognized non-cash impairment charges of $612,000 related to non-core oil and gas working interest properties that were sold in 2016.

In 2015, we recognized non-cash impairment charges of $107,140,000 related to non-core oil and gas working interest assets classified as discontinued operations in 2016. These properties were primarily located in North Dakota, Nebraska and Kansas and were impaired primarily due to a significant decline in oil and gas prices and the likelihood these assets will be sold. The fair value of these properties was determined using Level 3 inputs and income valuation method based on estimated future commodity prices and our various operational assumptions. In instances where a third party bid was received for a combination of proved and unproved properties, an estimate of the allocation of bid prices was performed and fair value was adjusted accordingly. Included in proved oil and gas non-cash impairments were impairments associated with properties that were sold in fourth quarter 2015. In addition, in 2015 we recognized impairments of $57,691,000 for unproved leasehold interests as a result of continued decline in oil prices and our current plans to only allocate capital to these non-core assets to preserve values and optionality for ultimate sale. Fair value of certain unproved leasehold interests that were impaired were based on market comparables or where a third party bid was received for a combination of proved and unproved properties, an estimate of the allocation of fair value was performed which reduced the carrying value of these leasehold interests.

In 2015, certain real estate assets were remeasured and reported at fair value due to events or circumstances that indicated the carrying value may not be recoverable. We determined estimated fair value based on the present value of future probability weighted cash flows expected from the sale of the long-lived asset or based on a third party appraisal of current value. As a result, we recognized non-cash asset impairment charges of $1,044,000 in 2015 associated with a residential development with golf course and country club property near Fort Worth which was sold in April 2015, one owned project near Atlanta where the remaining lots were sold in August 2015 and one owned entitled project in Atlanta.

Non-financial assets measured at fair value on a non-recurring basis are as follows:

	Year-End 2016								Year-End 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Non-financial Assets and Liabilities:
Real estate	$	—	$	—	$	—	$	—	$	—	$	—	$	641	$	641
Assets of discontinued operations	$	—	$	—	$	—	$	—	$	—	$	—	$	57,219	$	57,219

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Capital Stock

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Capital Stock

Capital Stock

In 2015, we accelerated the expiration date of our shareholder rights plan from December 11, 2017 to March 13, 2015, resulting in termination of the plan.

Please read Note 12 — Net Income (Loss) per Share for information about shares of common stock that could be issued under our 3.75% convertible senior notes due 2020.

Please read Note 17 — Share-Based and Long-Term Incentive Compensation for information about additional shares of common stock that could be issued under terms of our share-based compensation plans.

Please read Note 21 — Subsequent Events for information about preferred stock purchase rights pursuant to our tax benefits preservation plan.

At year-end 2016, personnel of former affiliates held options to purchase 234,764 shares of our common stock. The options have a weighted average exercise price of $30.56 and will expire in February 2017. At year-end 2016, the options have an aggregate intrinsic value of $0.

On December 15, 2016, we issued 7,857,000 shares of our common stock upon settlement of the stock purchase contract related to the 6.00% tangible equity units. In 2016, we repurchased 283,976 shares of our common stock for $3,537,000. In 2014, we repurchased 1,491,187 shares of our common stock for $24,595,000. We have repurchased 3,777,308 shares of our common stock for $57,696,000 since we announced our 2009 strategic initiative of repurchasing up to 20 percent or up to 7,000,000 shares of our common stock.

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Net Income (Loss) per Share

12 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Net Income (Loss) per Share

Net Income (Loss) per Share

Basic and diluted earnings (loss) per share are computed using the two-class method. The two-class method is an earnings allocation formula that determines net income per share for each class of common stock and participating security. We have determined that our 6.00% tangible equity units are participating securities. Per share amounts are computed by dividing earnings available to common shareholders by the weighted average shares outstanding during each period. In periods with a net loss, no such adjustment is made to earnings as the holders of the participating securities have no obligation to fund losses.

The computations of basic and diluted earnings (loss) per share are as follows:

	For the Year
	2016			2015			2014
	(In thousands)
Numerator:
Continuing operations
Net income (loss) from continuing operations	$	77,044		$	(26,241	)	$	36,697
Less: Net (income) attributable to noncontrolling interest	(1,531		)	(676		)	(505		)
Earnings (loss) available for diluted earnings per share	$	75,513		$	(26,917	)	$	36,192
Less: Undistributed net income from continuing operations allocated to participating securities	(13,493		)	—			(6,586		)
Earnings (loss) from continuing operations available to common shareholders for basic earnings per share	$	62,020		$	(26,917	)	$	29,606
Discontinued operations
Net income (loss) from discontinued operations available for diluted earnings per share	(16,865		)	(186,130		)	(19,609		)
Less: Undistributed net income from discontinued operations allocated to participating securities	3,014			—			3,569
Earnings (loss) from discontinued operations available to common shareholders for basic earnings per share	(13,851		)	(186,130		)	(16,040		)
Denominator:
Weighted average common shares outstanding — basic	34,546			34,266			35,317
Weighted average common shares upon conversion of participating securities (a)	7,515			—			7,857
Dilutive effect of stock options, restricted stock and equity-settled awards	273			—			422
Total weighted average shares outstanding — diluted	42,334			34,266			43,596
Anti-dilutive awards excluded from diluted weighted average shares outstanding	2,102			10,864			2,238

 _____________________

^(a) Our earnings per share calculation reflects the weighted average shares issuable upon settlement of the prepaid stock purchase contract component of our 6.00% tangible equity units, issued in 2013.

On December 15, 2016, we issued 7,857,000 shares of our common stock upon settlement of the stock purchase contract related to the 6.00% tangible equity units.

We intend to settle the principal amount of the Convertible Notes in cash upon conversion with any excess conversion value to be settled in shares of our common stock. Therefore, only the amount in excess of the par value of the Convertible Notes will be included in our calculation of diluted net income per share using the treasury stock method. As such, the Convertible Notes have no impact on diluted net income per share until the price of our common stock exceeds the conversion price of the Convertible Notes of $24.49. The average price of our common stock in 2016 did not exceed the conversion price which resulted in no additional diluted outstanding shares.

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Income Taxes

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

Income tax (expense) benefit from continuing operations consists of:

	For the Year
	2016			2015			2014
	(In thousands)
Current tax provision:
U.S. Federal	$	(15,089	)	$	6,740		$	(18,905	)
State and other	(1,520		)	(418		)	(2,182		)
	(16,609		)	6,322			(21,087		)
Deferred tax provision:
U.S. Federal	1,382			(38,262		)	184
State and other	(75		)	(3,191		)	53
	1,307			(41,453		)	237
Income tax (expense) benefit	$	(15,302	)	$	(35,131	)	$	(20,850	)

A reconciliation of the federal statutory rate to the effective income tax rate on continuing operations follows:

	For the Year
	2016		2015		2014
Federal statutory rate (benefit)	35	%	35	%	35	%
State, net of federal benefit	—		10		2
Valuation allowance	(19	)	348
Noncontrolling interests	(1	)	(3	)	—
Installment sale ace adjustment	2		—		—
Stock based compensation	—		5		—
Charitable contributions	—		—		(1	)
Oil and gas percentage depletion	—		(1	)	—
Other	—		1		—
Effective tax rate	17	%	395	%	36	%

Our 2016 effective tax rate includes a 19 percent benefit from a valuation allowance decrease due to a decrease in our deferred tax assets. Our 2015 effective tax rate includes a 348 percent detriment from the recording of a valuation allowance.

Significant components of deferred taxes are:

	At Year-End
	2016			2015
	(In thousands)
Deferred Tax Assets:
Real estate	$	50,759		$	69,594
Employee benefits	13,185			15,752
Net operating loss carryforwards	2,804			13,827
Oil and gas properties	1,672			5,510
AMT credits	5,900			3,620
Income producing properties	2,055			—
Oil and gas percentage depletion carryforwards	3,478			3,616
Accruals not deductible until paid	552			911
Other assets	—			139
Gross deferred tax assets	80,405			112,969
Valuation allowance	(73,405		)	(97,068		)
Deferred tax asset net of valuation allowance	7,000			15,901
Deferred Tax Liabilities:
Undeveloped land	(1,359		)	(7,588		)
Convertible debt	(5,035		)	(6,516		)
Income producing properties	—			(2,257		)
Timber	(283		)	(577		)
Gross deferred tax liabilities	(6,677		)	(16,938		)
Net Deferred Tax Asset (Liability)	$	323		$	(1,037	)

At year-end 2016, we had approximately $7,500,000 and $64,200,000 of federal and state net operating loss carryforwards. Approximately $7,500,000 of the federal and $2,400,000 of the state net operating loss carryforwards were from our acquisition of Credo at third quarter 2012 and are subject to certain limitations. If not utilized, the federal carryforwards will expire in 2031 and the state carryforwards will expire in 2017 to 2036. We had approximately $9,200,000 of oil and gas percentage depletion carryforwards of which approximately $9,200,000 were a result of our acquisition of Credo and are subject to certain limitations. We had approximately $5,900,000 of AMT credit carryforwards. The percentage depletion and AMT credit carryforwards do not expire.

Goodwill associated with our oil and gas and mineral resources enterprise are not deductible for income tax purposes.

At year-end 2016 and 2015, we have provided a valuation allowance for our deferred tax asset of $73,405,000 and $97,068,000 respectively for the portion of the deferred tax asset that is more likely than not to be unrealizable. The decrease in the valuation allowance for the year was $23,663,000.

In determining our valuation allowance, we assessed available positive and negative evidence to estimate whether sufficient future taxable income would be generated to permit use of the existing deferred tax asset. A significant piece of objective evidence was the cumulative loss incurred over the three-year period ended December 31, 2016, principally driven by impairments of oil and gas and real estate assets. Such evidence limited our ability to consider other subjective evidence, such as our projected future taxable income.

The amount of deferred tax asset considered realizable could be adjusted if negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence, such as our projected future taxable income.

We file income tax returns in the U.S. federal jurisdiction and in various state jurisdictions. We are no longer subject to U.S. federal and state income tax examinations for years before 2012.

At year-end 2016, our unrecognized tax benefit for book purposes was $2,499,000 as a result of tax positions taken in the current year. We did not have any unrecognized tax benefits for the years 2015 and 2014. If the total amount of unrecognized tax benefits were recognized, it would result in a deferred tax asset and a corresponding increase in our valuation allowance. Therefore, such tax benefit would not affect the effective tax rate if recognized in the current year.

We recognize interest accrued related to unrecognized tax benefits in income tax expense. In 2016, 2015 and 2014, we recognized no interest expense. At year-end 2016 and 2015, we have no accrued interest or penalties.

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Litigation and Environmental Contingencies

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Litigation and Environmental Contingencies

Litigation and Environmental Contingencies

Litigation

We are involved in various legal proceedings that arise from time to time in the ordinary course of doing business and believe that adequate reserves have been established for any probable losses. We do not believe that the outcome of any of these proceedings should have a significant adverse effect on our financial position, long-term results of operations or cash flows. It is possible, however, that charges related to these matters could be significant to our results or cash flows in any one accounting period.

On October 4, 2014, James Huffman, a former director and CEO of CREDO Petroleum Corporation (Credo), which we acquired in 2012 and is now known as Forestar Petroleum Corporation, filed Huffman vs. Forestar Petroleum Corporation, Case Number 14CV33811, Civ. Div., Dist. Ct., City and County of Denver, Colorado, claiming entitlement to certain overriding royalty interests under a Credo compensation program. In third quarter 2016, we settled a portion of the case for $150,000 and accrued an additional $1,100,000 following an adverse jury verdict in Huffman's favor in regard to the portion of his claim related to past damages. In fourth quarter 2016, following additional rulings by the court, we accrued an additional $1,890,000 representing our estimate of future damages to which Huffman is entitled plus interest and costs, resulting in a total accrual of $2,990,000 at year-end 2016. The case was settled for the amount of accrual.

Environmental

Environmental remediation liabilities arise from time to time in the ordinary course of doing business, and we believe we have established adequate reserves for any probable losses that we can reasonably estimate. In 2016, we sold all but 25 of our 289 acres near Antioch, California, approximately 80 acres of which had not yet received a certificate of completion under the voluntary remediation program in which we were participating. The buyer of the former paper manufacturing sites assumed responsibility for environmental, remediation and monitoring activities, subject to limited exclusions, and obtained a $20,000,000, ten year pollution legal liability insurance policy naming us as an additional insured.

We have asset retirement obligations related to the abandonment and site restoration requirements that result from the acquisition, construction and development of oil and gas properties. We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. Accretion expense related to the asset retirement obligation and depletion expense related to capitalized asset retirement cost are included in cost of mineral resources and cost of oil and gas producing activities in discontinued operations on our consolidated statements of income (loss) and comprehensive income (loss). At year-end 2016, our asset retirement obligation was $103,000, which is included in liabilities held for sale. In addition, at year-end 2016, we have accrued $1,155,000 related to potential environmental liabilities to plug and abandon certain oil and gas wells in Wyoming which is included in liabilities of discontinued operations.

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Commitments and Other Contingencies

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Commitments and Other Contingencies

Commitments and Other Contingencies

We lease facilities and equipment under non-cancelable long-term operating lease agreements. In addition, we have various obligations under other office space and equipment leases of less than one year. Rent expense on facilities and equipment was $1,923,000 in 2016, $3,872,000 in 2015 and $2,617,000 in 2014. Future minimum rental commitments under non-cancelable operating leases having a remaining term in excess of one year are: 2017 — $2,267,000; 2018 — $1,593,000; 2019 — $298,000; 2020 — $182,000; 2021 — $62,000; and thereafter —$0.

We have one year remaining on groundwater leases of about 20,000 acres. At year-end 2016, the remaining contractual obligation for these groundwater leases is $494,000.

We lease approximately 22,000 square feet of office space in Austin, Texas, which we occupy as our corporate headquarters. The remaining contractual obligation for this lease is $1,983,000. We also lease office space in other locations in support of our business operations. The total remaining contractual obligations for these leases is $1,925,000.

We may provide performance bonds and letters of credit on behalf of certain ventures that would be drawn on due to failure to satisfy construction obligations as general contractor or for failure to timely deliver streets and utilities in accordance with local codes and ordinances.

Unallocated Severance-related Costs

In connection with the departures of our former CEO and CFO in September 2015, we recorded severance-related charges of $3,314,000 which are included in general and administrative expense on our consolidated statements of income (loss) and comprehensive income (loss). We paid $2,732,000 of these severance-related charges in fourth quarter 2015 with the remainder paid in 2016.

Non-core Assets Restructuring Costs

In connection with key initiatives to reduce costs across our entire organization and divest non-core assets, in 2016, we incurred and paid severance costs related to workforce reductions of $1,422,000 in our real estate segment, $164,000 in our other segment and $486,000 in unallocated general and administrative expenses. In addition, we offered retention bonuses to certain key personnel provided they remained our employees through completion of sale transactions. We expensed retention bonus costs over the estimated retention periods. These restructuring costs are included in other operating expense.

The following table summarizes activity related to liabilities associated with our restructuring activities in 2016:

	Employee-Related Costs			Retention Bonuses			Total
	(In thousands)
Balance at year-end 2015	$	(1,049	)	$	—		$	(1,049	)
Additions	(2,072		)	(832		)	(2,904		)
Payments	3,121			832			3,953
Balance at year-end 2016	$	—		$	—		$	—

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Segment Information

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment Information

Segment Information

We manage our operations through three business segments: real estate, mineral resources and other. Real estate secures entitlements and develops infrastructure on our lands for single-family residential and mixed-use communities, and manages our undeveloped land, commercial and income producing properties, which consist of three projects and one multifamily site. Mineral resources manages our owned mineral interests. Other manages our timber, recreational leases and water resource initiatives.

At year-end 2016 we have divested substantially all of our oil and gas working interest properties. As a result of this significant change in our operations, we have reported the results of operations and financial position of these assets as discontinued operations for all periods presented. In addition, we changed the name of the oil and gas segment to mineral resources to reflect the strategic shift from oil and gas working interest investments to owned mineral interests. We also changed the name of the other natural resources segment to other.

We evaluate performance based on segment earnings (loss) before unallocated items and income taxes. Segment earnings (loss) consist of operating income, equity in earnings (loss) of unconsolidated ventures, gain on sales of assets, interest income on loans secured by real estate and net (income) loss attributable to noncontrolling interests. Items not allocated to our business segments consist of general and administrative expense, share-based and long-term incentive compensation, gain on sale of strategic timberland, interest expense, loss on extinguishment of debt and other corporate non-operating income and expense. The accounting policies of the segments are the same as those described in Note 1 — Summary of Significant Accounting Policies. Our revenues are derived from our U.S. operations and all of our assets are located in the U.S. In 2016, 2015 and 2014, no single customer accounted for more than 10 percent of our total revenues, other than the customer associated with the sale of our Midtown Cedar Hill multifamily project in 2015.

	Real Estate		Mineral Resources		Other			Items Not Allocated to Segments				Total
	(In thousands)
For the year or at year-end 2016
Revenues	$	190,273	$	5,076	$	1,965		$	—			$	197,314
Depreciation, depletion and amortization	976		145		352			7,772				9,245
Equity in earnings of unconsolidated ventures	5,778		173		172			—				6,123
Income (loss) before taxes from continuing operations attributable to Forestar Group Inc.	121,420		3,327		(4,625		)	(29,307		)	(a)	90,815
Total assets (b)	403,062		38,907		11,531			279,694				733,194
Investment in unconsolidated ventures	77,611		—		—			—				77,611
Capital expenditures	5,783		—		299			56				6,138
For the year or at year-end 2015
Revenues	$	202,830	$	9,094	$	6,652		$	—			$	218,576
Depreciation, depletion and amortization	7,605		383		540			8,166				16,694
Equity in earnings of unconsolidated ventures	15,582		275		151			—				16,008
Income (loss) before taxes from continuing operations attributable to Forestar Group Inc.	67,678		4,230		(608		)	(63,086		)	(a)	8,214
Total assets (b)	691,238		39,469		19,106			117,466				867,279
Investment in unconsolidated ventures	82,453		—		—			—				82,453
Capital expenditures	13,644		59		745			242				14,690
For the year or at year-end 2014
Revenues	$	213,112	$	15,690	$	9,362		$	—			$	238,164
Depreciation, depletion and amortization	3,741		684		497			8,035				12,957
Equity in earnings of unconsolidated ventures	8,068		586		31			—				8,685
Income (loss) before taxes from continuing operations attributable to Forestar Group Inc.	96,906		9,116		5,499			(54,479		)	(a)	57,042
Investment in unconsolidated ventures	65,005		—		—			—				65,005
Capital expenditures	28,980		2,240		5,817			616				37,653

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^(a)  Items not allocated to segments consist of:

	For the Year
	2016			2015			2014
	(In thousands)
General and administrative expense	$	(18,274	)	$	(24,802	)	$	(21,229	)
Share-based and long-term incentive compensation expense	(4,425		)	(4,474		)	(3,417		)
Gain on sale of assets	48,891			—			—
Interest expense	(19,985		)	(34,066		)	(30,286		)
Loss on extinguishment of debt, net	(35,864		)	—			—
Other corporate non-operating income	350			256			453
	$	(29,307	)	$	(63,086	)	$	(54,479	)

^(b)  Total assets excludes assets of discontinued operations of $14 and $104,967 in 2016 and 2015.

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Share-Based and Long-Term Incentive Compensation

12 Months Ended

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-Based and LongTerm incentive Compensation

Share-Based and Long-Term Incentive Compensation

Share-based and long-term incentive compensation expense consists of:

	For the Year
	2016		2015			2014
	(In thousands)
Cash-settled awards	$	717	$	(3,127	)	$	(3,710	)
Equity-settled awards	2,444		5,026			5,168
Restricted stock	22		(8		)	(25		)
Stock options	854		2,355			1,984
Total share-based compensation	$	4,037	$	4,246		$	3,417
Deferred cash	388		228			—
	$	4,425	$	4,474		$	3,417

Share-based and long-term incentive compensation expense is included in:

	For the Year
	2016		2015		2014
	(In thousands)
General and administrative	$	3,323	$	2,451	$	1,001
Other operating	1,102		2,023		2,416
	$	4,425	$	4,474	$	3,417

Excluded from share-based compensation expense in the table above are fees earned by directors in the amount of $725,000 for 2016, $1,203,000 for 2015 and $906,000 for 2014 for which they elected to defer payment until retirement in the form of share-settled units. These expenses are included in general and administrative expense on our consolidated statements of income (loss) and comprehensive income (loss).

Share-Based Compensation

The fair value of awards granted to retirement-eligible employees and expensed at the date of grant was $600,000 in 2016, $517,000 in 2015 and $760,000 in 2014. Unrecognized share-based compensation expense related to non-vested equity-settled awards and stock options was $1,878,000 at year-end 2016. The weighted average period over which this amount will be recognized is estimated to be one year. We did not capitalize any share-based compensation in 2016, 2015 or 2014.

In 2016 and 2015, we issued 300,491 and 288,089 shares out of our treasury stock associated with vesting of stock-based awards or exercise of stock options, net of 25,082 and 51,521 shares withheld having a value of $222,000 and $762,000 for payroll taxes in connection with vesting of stock-based awards or exercise of stock options which are reflected in financing activities in our consolidated statements of cash flows.

A summary of awards granted under our 2007 Stock Incentive Plan follows:

Cash-settled awards

Cash-settled awards granted to our employees in the form of restricted stock units or stock appreciation rights generally vest over three to four years from the date of grant and generally provide for accelerated vesting upon death, disability or if there is a change in control. Cash-settled stock appreciation rights have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, disability or if there is a change in control. Stock appreciation rights were granted with an exercise price equal to the market value of our stock on the date of grant.

Cash-settled awards granted to our directors in the form of restricted stock units are fully vested at the time of grant and payable upon retirement.

The following table summarizes the activity of cash-settled restricted stock unit awards in 2016:

	Equivalent Units		Weighted Average Grant Date Fair Value
	(In thousands)		(Per unit)
Non-vested at beginning of period	117		$16.00
Granted	—		—
Vested	(41	)	18.84
Forfeited	(34	)	13.83
Non-vested at end of period	42		14.98

The weighted average grant date fair value of cash-settled restricted stock unit awards was $13.26 per unit for 2015 and $18.96 per unit for 2014. The fair value of cash-settled restricted stock unit awards settled was $1,195,000 in 2016, $2,469,000 in 2015, and $2,286,000 in 2014. The aggregate current value of non-vested awards is $555,000 at year-end 2016 based on a year-end stock price of $13.30.

The following table summarizes the activity of cash-settled stock appreciation rights in 2016:

	Rights Outstanding		Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (Current Value Less Exercise Price)
	(In thousands)		(Per share)	(In years)	(In thousands)
Balance at beginning of period	487		$12.97	4	$404
Granted	—		—
Exercised	(52	)	9.29
Forfeited	(61	)	16.12
Balance at end of period	374		12.97	3	773
Exercisable at end of period	345		12.87	3	773

The intrinsic value of cash-settled stock appreciation rights settled was $154,000 in 2016, $206,000 in 2015 and $1,181,000 in 2014.

The fair value of accrued cash-settled awards at year-end 2016 and year-end 2015 were $1,758,000 and $3,757,000 and is included in other liabilities in our consolidated balance sheets.

Equity-settled awards

Equity-settled awards granted to our employees include restricted stock units (RSU), which vest after three years from the date of grant, market-leveraged stock units (MSU), which vest after three years from date of grant and performance stock units (PSU), which generally vest after three years from the date of grant if certain performance goals are met. Equity settled awards in the form of restricted stock units granted to our directors are fully vested at time of grant and settled upon retirement. The following table summarizes the activity of equity-settled awards in 2016:

	Equivalent Units		Weighted Average Grant Date Fair Value
	(In thousands)		(Per unit)
Non-vested at beginning of period	631		$	18.25
Granted	313		9.04
Vested	(281	)	15.12
Forfeited	(108	)	17.91
Non-vested at end of period	555		14.70

In 2016, we granted 313,000 RSU awards at market value of the stock on the date of the grant. In 2015 and 2014, we granted 234,000 and 86,000 MSU awards. These awards will be settled in common stock based upon our stock price performance over three years from the date of grant. The number of shares to be issued could range from a high of 351,000 shares if our stock price increases by 50 percent or more, to 117,000 shares if our stock price decreases by 50 percent, or could be zero if our stock price decreases by more than 50 percent, the minimum threshold performance. We estimate the grant date fair value of MSU awards using a Monte Carlo simulation pricing model and the following assumptions:

	For the Year
	2015			2014
Expected stock price volatility	32.9		%	42.2		%
Risk-free interest rate	1.0		%	0.7		%
Expected dividend yield	—		%	—		%
Weighted average grant date fair value of MSU awards (per unit)	$	15.11		$	20.38

The weighted average grant date fair value of equity-settled awards (RSU, MSU and PSU) per unit in 2016, 2015 and 2014 was $9.04, $12.99 and $19.18. The fair value of equity-settled awards settled was $2,884,478, $4,451,000 and $3,119,000 in 2016, 2015 and 2014.

Unrecognized share-based compensation expense related to non-vested equity-settled awards is $1,106,000 at year-end 2016. The weighted average period over which this amount will be recognized is estimated to be one year.

Restricted stock awards

Restricted stock awards generally vest over three years, typically if we achieve a minimum one percent annualized return on assets over such three-year period. The following table summarizes the activity of restricted stock awards in 2016:

	Restricted Shares		Weighted Average Grant Date Fair Value
	(In thousands)		(Per unit)
Non-vested at beginning of period	4		$	20.55
Granted	—		—
Vested	(4	)	20.55
Forfeited	—		—
Non-vested at end of period	—		—

The fair value of our restricted stock awards settled in 2016, 2015 and 2014 was $44,000, $88,000 and $341,000.

Stock options

Stock options have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, disability or if there is a change in control. In 2016 and 2015, options were granted with an exercise price equal to the market value of our stock on the date of grant. In the first quarter of 2016, stock options were issued to each of two new directors to acquire 20,000 shares of common stock of which 6,500 shares vest on the first and second anniversary of the date of grant and the remaining 7,000 shares vest on the third anniversary of the date of grant. Expense associated with annual restricted stock units and non-qualified stock options to our board of directors is included in share-based compensation expense. The following table summarizes the activity of stock option awards in 2016:

	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (Current Value Less Exercise Price)
	(In thousands)		(Per share)		(In years)	(In thousands)
Balance at beginning of period	2,171		$	19.56	5	$	156
Granted	53		9.98
Exercised	(35	)	9.29
Forfeited	(353	)	20.03
Balance at end of period	1,836		19.39		5	449
Exercisable at end of period	1,597		20.25		4	261

We estimate the grant date fair value of stock options that do not have a market condition using the Black-Scholes option pricing model and the following assumptions:

	For the Year
	2016			2015
Expected stock price volatility	39.5		%	45.6		%
Risk-free interest rate	1.5		%	1.8		%
Expected life of options (years)	6			6
Expected dividend yield	—		%	—		%
Weighted average grant date fair value of options (per share)	$	8.60		$	6.51

We determine the expected life using the simplified method which utilizes the midpoint between the vesting period and the contractual life of the awards. The expected stock price volatility assumption was determined using a blend of historical and implied volatility.

Stock option awards granted in third quarter 2015 in connection with management promotions have a ten-year term, vest ratably over three years and are exercisable only when our stock price exceeds $17.50 per share. We estimated the fair value of these options with market conditions using Monte Carlo simulation pricing model and the following assumptions:

Expected stock price volatility	61.4		%
Risk-free interest rate	2.2		%
Expected dividend yield	—		%
Weighted average grant date fair value of options (per share)	$	7.87

The fair value of vested stock options was $0 in 2016, $0 in 2015 and $21,000 in 2014. The intrinsic value of options exercised was $61,000 in 2016, $0 in 2015 and $568,000 in 2014. Unrecognized share-based compensation expense related to non-vested stock options is $772,000 at year-end 2016. The weighted average period over which this amount will be recognized is estimated to be two years.

Pre-Spin Awards

Certain of our employees participated in Temple-Inland’s share-based compensation plans. In conjunction with our 2007 spin-off, these awards were equitably adjusted into separate awards of the common stock of Temple-Inland and the spin-off entities. No pre-spin awards were exercised in 2016. The intrinsic value of pre-spin awards exercised was $0 in 2016, $24,000 in 2015 and $352,000 in 2014.

Pre-spin stock option awards to our employees to purchase our common stock have a ten-year term, generally become exercisable ratably over four years and provide for accelerated or continued vesting upon retirement, death, disability or if there is a change in control. At year-end 2016, there were 17,000 pre-spin awards outstanding and exercisable on our stock with a weighted average exercise price of $30.56 and weighted average remaining term of less than one year.

Long-Term Incentive Compensation

In 2016, we granted $620,000 of long-term incentive compensation in the form of deferred cash compensation. The 2016 deferred cash awards vest annually over two years, and the 2015 deferred cash awards vest after three years. Both awards provide for accelerated vesting upon retirement, disability, death, or if there is a change in control. Expense associated with deferred cash awards is recognized ratably over the vesting period or earlier based on retirement eligibility. The accrued liability was $539,000 at year-end 2016 and is included in other liabilities.

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Retirement Plans

12 Months Ended

Dec. 31, 2016

Compensation and Retirement Disclosure [Abstract]

Retirement Plans

Retirement Plans

Our defined contribution retirement plans include a 401(k) plan, which is funded, and a supplemental plan for certain employees, which is unfunded. The expense of our defined contribution retirement plans was $978,000 in 2016, $1,060,000 in 2015 and $1,338,000 in 2014. The unfunded liability for our supplemental plan was $334,000 at year-end 2016 and $802,000 at year-end 2015 and is included in other liabilities.

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Supplemental Oil and Gas Disclosures (Unaudited)

12 Months Ended

Dec. 31, 2016

Extractive Industries [Abstract]

Supplemental Oil and Gas Disclosures (Unaudited)

Supplemental Oil and Gas Disclosures (Unaudited)

The following unaudited information regarding our oil and gas reserves has been prepared and is presented pursuant to requirements of the Securities and Exchange Commission (SEC) and the Financial Accounting Standards Board (FASB).

As of year-end 2016, we have divested substantially all of our oil and gas working interest properties. As a result of this significant change in our operations, we have reported the results of operations and financial position of these assets as discontinued operations within our consolidated statements of income (loss) and comprehensive income (loss) and consolidated balance sheets for all periods presented. However, all information presented in this unaudited supplemental oil and gas disclosures footnote includes all oil and gas reserve estimates and results of operations.

We lease our mineral interests, principally in Texas and Louisiana, to third-party entities for the exploration and production of oil and gas. When we lease our mineral interests, we may negotiate a lease bonus payment and we retain a royalty interest and may take an additional participation in production, including a working interest in which we pay a share of the costs to drill, complete and operate a well and receive a proportionate share of the production revenues.

We engaged independent petroleum engineers, Netherland, Sewell & Associates, Inc., to assist in preparing estimates of our proved oil and gas reserves, all of which are located in the U.S., and future net cash flows as of year-end 2016, 2015 and 2014.

These estimates were based on the economic and operating conditions existing at year-end 2016, 2015 and 2014. Proved developed reserves are those quantities of petroleum from existing wells and facilities, which by analysis of geosciences and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward for known reservoirs and under defined economic conditions, operating methods and government regulations.

SEC rules require disclosure of proved reserves using the twelve-month average beginning-of-month price (which we refer to as the average price) for the year. These same average prices also are used in calculating the amount of (and changes in) future net cash inflows related to the standardized measure of discounted future net cash flows.

For 2016, 2015 and 2014, the average spot price per barrel of oil based on the West Texas Intermediate price is $42.75, $50.28 and $94.99 and the average price per MMBTU of gas based on the Henry Hub spot is $2.48, $2.59 and $4.35. All prices were then adjusted for quality, transportation fees and differentials.

The process of estimating proved reserves and future net cash flows is complex involving decisions and assumptions in evaluating the available engineering and geologic data and prices for oil and gas and the cost to produce these reserves and other factors, many of which are beyond our control. As a result, these estimates are imprecise and should be expected to change as future information becomes available. These changes could be significant. In addition, this information should not be construed as being the current fair market value of our proved reserves.

Estimated Quantities of Proved Oil and Gas Reserves

Estimated quantities of proved oil and gas reserves are summarized as follows:

	Reserves
	Oil (a) (Barrels)		Gas (Mcf)
	(In thousands)
Consolidated entities:
Year-end 2013	5,824		13,630
Revisions of previous estimates	608		293
Extensions and discoveries	2,191		774
Acquisitions	85		31
Sales	(105	)	(218	)
Production	(931	)	(1,861	)
Year-end 2014	7,672		12,649
Revisions of previous estimates	(855	)	(1,675	)
Extensions and discoveries	224		173
Acquisitions	—		—
Sales	(704	)	(1,223	)
Production	(1,158	)	(1,967	)
Year-end 2015	5,179		7,957
Revisions of previous estimates	(11	)	631
Extensions and discoveries	29		—
Acquisitions	—		—
Sales	(4,460	)	(3,756	)
Production	(291	)	(996	)
Year-end 2016	446		3,836
Our share of ventures accounted for using the equity method:
Year-end 2013	—		2,332
Revisions of previous estimates	—		(382	)
Production	—		(199	)
Year-end 2014	—		1,751
Revisions of previous estimates	—		(320	)
Production	—		(168	)
Year-end 2015	—		1,263
Revisions of previous estimates	—		79
Production	—		(143	)
Year-end 2016	—		1,199
Total consolidated and our share of equity method ventures:
Year-end 2014
Proved developed reserves	5,269		12,599
Proved undeveloped reserves	2,403		1,801
Total Year-end 2014	7,672		14,400
Year-end 2015
Proved developed reserves	5,179		9,220
Proved undeveloped reserves	—		—
Total Year-end 2015	5,179		9,220
Year-end 2016
Proved developed reserves	446		5,035
Proved undeveloped reserves	—		—
Total Year-end 2016	446		5,035

 _____________________

^(a)  Includes natural gas liquids (NGLs).

We do not have any estimated reserves of synthetic oil, synthetic gas or products of other non-renewable natural resources that are intended to be upgraded into synthetic oil and gas.

At year-end 2016, estimated quantities of proved oil and gas reserves are related to our owned mineral interests which are classified as assets held for sale.

In 2016, we sold oil and gas wells located primarily in Oklahoma, Kansas, Nebraska and North Dakota. Our net reserves for those properties as of year-end 2015 less our share of 2016 production were 4,155,000 barrels of oil, 305,000 barrels of NGL, and 3,756,000 Mcf of gas. Oklahoma properties sold were mainly mature gas wells. Kansas and Nebraska produce oil from the Lansing/Kansas City formation. The North Dakota oil wells produce from the Bakken/Three Forks formation.

In 2015, oil and gas properties having reserves consisting of approximately 704,000 barrels of oil and 1,223,000 Mcf of gas located primarily in the Texas Panhandle and Bakken/Three Forks formations were sold. Due to the significant decline in oil and gas prices during 2015, net negative revisions of previous estimates were 855,000 barrels of oil and 1,995,000 Mcf of gas. At year-end 2015, we had no barrels of oil equivalent (BOE) of proved undeveloped (PUD) reserves based on our plan to exit non-core oil and gas working interest assets compared with 2,703,000 BOE of PUD reserves at year-end 2014.

In 2014, increases in extensions and discoveries of 2,191,000 barrels were primarily associated with new reserves in the Bakken/Three Forks formations. An estimated 694,000 barrels of these extensions and discoveries were associated with new producing wells while a further 913,000 barrels of proved undeveloped reserves were added during 2014. Approximately 105,000 barrels of oil and 218,000 Mcf of gas reserves located primarily in Oklahoma were sold during the year. We realized a net positive revision of previous estimates of 608,000 barrels which is primarily driven by improved drilling results in the Bakken/Three Forks formation yielding higher average estimated ultimate recoverable quantities of proved reserves per well.

In 2015 and 2014, reserve additions from new wells drilled and completed during the year are shown for both consolidated entities and ventures accounted for using the equity method under extensions and discoveries. There were no new well additions in 2016, 36 new well additions in 2015 and 106 new well additions in 2014.

Capitalized Costs Relating to Oil and Gas Producing Activities

Capitalized costs related to our oil and gas producing activities classified as assets held for sale at year-end 2016 are as follows:

	At Year-End
	2016			2015
	(In thousands)
Consolidated entities:
Unproved oil and gas properties	$	374		$	19,441
Proved oil and gas properties	5,159			119,414
Total costs	5,533			138,855
Less accumulated depreciation, depletion and amortization	(4,751		)	(58,242		)
	$	782		$	80,613

We have not capitalized any costs for our share in ventures accounted for using the equity method.

Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development

Costs incurred in oil and gas property acquisition, exploration and development activities, whether capitalized or expensed, follows:

	For the Year
	2016		2015		2014
	(In thousands)
Consolidated entities:
Acquisition costs
Proved properties	$	—	$	—	$	2,001
Unproved properties	15		4,832		25,666
Exploration costs	21		17,922		39,399
Development costs	537		27,609		40,277
	$	573	$	50,363	$	107,343

We have not incurred any costs for our share in ventures accounted for using the equity method. In 2015, acquisition of leasehold interests, exploration expenses, and development costs have decreased as a result of our increased focus on exiting and selling our leasehold working interests.

Standardized Measure of Discounted Future Net Cash Flows

Estimates of future cash flows from proved oil and gas reserves are shown in the following table. Estimated income taxes are calculated by applying the appropriate tax rates to the estimated future pre-tax net cash flows less depreciation of the tax basis of properties and the statutory depletion allowance.

	At Year-End
	2016			2015			2014
	(In thousands)
Consolidated entities:
Future cash inflows	$	24,304		$	216,588		$	665,657
Future production and development costs	(2,988		)	(93,623		)	(271,735		)
Future income tax expenses	(3,926		)	(22,218		)	(106,002		)
Future net cash flows	17,390			100,747			287,920
10% annual discount for estimated timing of cash flows	(7,077		)	(33,951		)	(124,079		)
Standardized measure of discounted future net cash flows	$	10,313		$	66,796		$	163,841
Our share in ventures accounted for using the equity method:
Future cash inflows	$	2,010		$	2,283		$	6,186
Future production and development costs	(216		)	(245		)	(664		)
Future income tax expenses	(537		)	(774		)	(2,098		)
Future net cash flows	1,257			1,264			3,424
10% annual discount for estimated timing of cash flows	(585		)	(562		)	(1,649		)
Standardized measure of discounted future net cash flows	$	672		$	702		$	1,775
Total consolidated and our share of equity method ventures	$	10,985		$	67,498		$	165,616

Future net cash flows were computed using prices used in estimating proved oil and gas reserves, year-end costs, and statutory tax rates (adjusted for tax deductions) that relate to proved oil and gas reserves.

Changes in the standardized measure of discounted future net cash flow follows:

	For the Year
	Consolidated			Our Share of Equity Method Ventures			Total
	(In thousands)
Year-end 2013	$	135,553		$	1,300		$	136,853
Changes resulting from:
Net change in sales prices and production costs	(1,064		)	1,571			507
Net change in future development costs	1,308			—			1,308
Sales of oil and gas, net of production costs	(63,192		)	(787		)	(63,979		)
Net change due to extensions and discoveries	58,228			—			58,228
Net change due to acquisition of reserves	2,778			—			2,778
Net change due to divestitures of reserves	(5,804		)	—			(5,804		)
Net change due to revisions of quantity estimates	15,303			(343		)	14,960
Previously estimated development costs incurred	15,497			—			15,497
Accretion of discount	18,067			210			18,277
Net change in timing and other	4,198			115			4,313
Net change in income taxes	(17,031		)	(291		)	(17,322		)
Aggregate change for the year	28,288			475			28,763
Year-end 2014	163,841			1,775			165,616
Changes resulting from:
Net change in sales prices and production costs	(136,536		)	(1,112		)	(137,648		)
Net change in future development costs	92			—			92
Sales of oil and gas, net of production costs	(31,732		)	(428		)	(32,160		)
Net change due to extensions and discoveries	11,747			—			11,747
Net change due to acquisition of reserves	—			—			—
Net change due to divestitures of reserves	(15,855		)	—			(15,855		)
Net change due to revisions of quantity estimates	(15,164		)	(267		)	(15,431		)
Previously estimated development costs incurred	15,096			—			15,096
Accretion of discount	22,600			286			22,886
Net change in timing and other	4,018			(210		)	3,808
Net change in income taxes	48,689			658			49,347
Aggregate change for the year	(97,045		)	(1,073		)	(98,118		)
Year-end 2015	66,796			702			67,498
Changes resulting from:
Net change in sales prices and production costs	(3,585		)	(60		)	(3,645		)
Net change in future development costs	—			—			—
Sales of oil and gas, net of production costs	(5,663		)	(208		)	(5,871		)
Net change due to extensions and discoveries	410			—			410
Net change due to acquisition of reserves	—			—			—
Net change due to divestitures of reserves	(63,535		)				(63,535		)
Net change due to revisions of quantity estimates	1,304			63			1,367
Previously estimated development costs incurred	—			—			—
Accretion of discount	2,992			113			3,105
Net change in timing and other	(128		)	(80		)	(208		)
Net change in income taxes	11,722			142			11,864
Aggregate change for the year	(56,483		)	(30		)	(56,513		)
Year-end 2016	$	10,313		$	672		$	10,985

Results of Operations for Oil and Gas Producing Activities

Our royalty interests are contractually defined and based on a percentage of production at prevailing market prices. We receive our percentage of production in cash. Similarly, for operating properties our working interests and the associated net revenue interests are contractually defined and we pay our proportionate share of the capital and operating costs to develop and operate the well and we market our share of the production. Our revenues fluctuate based on changes in the market prices for oil and gas, the decline in production from existing wells, and other factors affecting oil and gas exploration and production activities, including the cost of development and production.

Information about the results of operations of our oil and gas interests follows:

	For the Year
	2016			2015			2014
	(In thousands)
Consolidated entities
Revenues	$	10,111		$	51,553		$	82,919
Production costs	(4,392		)	(19,820		)	(19,727		)
Exploration costs	(124		)	(11,864		)	(17,416		)
Depreciation, depletion, amortization	(2,157		)	(28,774		)	(29,442		)
Non-cash impairment of proved oil and gas properties and unproved leasehold interests	(612		)	(164,831		)	(32,665		)
Oil and gas administrative expenses	(8,700		)	(11,700		)	(17,000		)
Accretion expense	(56		)	(144		)	(121		)
Income tax (expense) benefit	(20		)	14,717			13,398
Results of operations	(5,950		)	(170,863		)	(20,054		)
Our share in ventures accounted for using the equity method:
Revenues	$	284		$	428		$	786
Production costs	(76		)	(102		)	(105		)
Oil and gas administrative expenses	(35		)	(51		)	(95		)
Income tax (expense) benefit	—			21			(235		)
Results of operations	$	173		$	296		$	351
Total results of operations	$	(5,777	)	$	(170,567	)	$	(19,703	)

Production costs represent our share of oil and gas production severance taxes, and lease operating expenses. Exploration costs principally represent exploratory dry hole costs, geological and geophysical and seismic study costs.

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Summary of Quarterly Results of Operations (Unaudited)

12 Months Ended

Dec. 31, 2016

Quarterly Financial Information Disclosure [Abstract]

Summary of Quarterly Results of Operations (Unaudited)

Summary of Quarterly Results of Operations (Unaudited)

Summarized quarterly financial results for 2016 and 2015 follows:

	First Quarter (a)			Second Quarter (a)			Third     Quarter (a)			Fourth     Quarter (a)
	(In thousands, except per share amounts)
2016
Total revenues	$	37,618		$	47,992		$	47,207		$	64,497
Gross profit (loss)	18,579			(24,953		)	17,403			17,352
Operating income (loss)	13,590			69,528			6,256			50,980
Equity in earnings of unconsolidated ventures	47			188			3,637			2,251
Income from continuing operations before taxes attributable to Forestar Group Inc.	5,992			26,591			7,163			51,069
Income (loss) from discontinued operations, net of taxes	(8,216		)	(2,048		)	(7,164		)	563
Net income (loss) attributable to Forestar Group Inc.	(4,376		)	9,614			9,665			43,745
Net income (loss) per share — basic
Continuing operations	$	0.11		$	0.28		$	0.40		$	1.03
Discontinued operations	$	(0.24	)	$	(0.05	)	$	(0.17	)	$	0.01
Net income (loss) per share — basic	$	(0.13	)	$	0.23		$	0.23		$	1.04
Net income (loss) per share — diluted
Continuing operations	$	0.09		0.28			0.40			$	1.02
Discontinued operations	$	(0.19	)	(0.05		)	(0.17		)	$	0.01
Net income (loss) per share — diluted	$	(0.10	)	0.23			0.23			$	1.03
2015
Total revenues	$	37,374		$	43,625		$	32,185		$	105,392
Gross profit (loss)	18,012			21,060			12,879			46,655
Operating income (loss)	(3,424		)	5,919			(8,482		)	29,929
Equity in earnings of unconsolidated ventures	3,045			5,584			2,909			4,470
Income from continuing operations before taxes attributable to Forestar Group Inc.	(8,204		)	3,382			(13,711		)	26,747
Income (loss) from discontinued operations, net of taxes	(2,719		)	(36,992		)	(106,937		)	(39,482		)
Net loss attributable to Forestar Group Inc.	(8,158		)	(34,507		)	(164,216		)	(6,166		)
Net income (loss) per share — basic
Continuing operations	$	(0.16	)	$	0.07		$	(1.67	)	$	0.97
Discontinued operations	$	(0.08	)	$	(1.08	)	$	(3.12	)	$	(1.15	)
Net income (loss) per share — basic	$	(0.24	)	$	(1.01	)	$	(4.79	)	$	(0.18	)
Net income (loss) per share — diluted
Continuing operations	$	(0.16	)	$	0.06		$	(1.67	)	$	0.79
Discontinued operations	$	(0.08	)	$	(0.87	)	$	(3.12	)	$	(0.93	)
Net income (loss) per share — diluted	$	(0.24	)	$	(0.81	)	$	(4.79	)	$	(0.14	)

 _____________________

^(a)Non-cash impairment charges related to real estate, water assets and unproved leasehold interests and proved oil and gas properties included in our quarterly financial results are as follows:

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(In thousands)
2016
Continuing operations	$	—	$	48,826	$	7,627	$	3,874
Discontinued operations	$	—	$	612	$	—	$	—
2015
Continuing operations	$	504	$	225	$	—	$	315
Discontinued operations	$	7	$	45,938	$	81,240	$	37,646

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Subsequent Events

12 Months Ended

Dec. 31, 2016

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

On January 5, 2017, we entered into a tax benefits preservation plan (the “Plan”) with Computershare Trust Company, N.A., as rights agent, and our Board of Directors declared a dividend distribution of one right (a “Right”) for each outstanding share of common stock, par value $1.00 per share, to stockholders of record at the close of business on January 17, 2017. Each Right is governed by the terms of the Plan and entitles the registered holder to purchase from the Company a unit consisting of one one-thousandth of a share of Series B Junior Participating Preferred Stock, par value $0.01 per share, at a purchase price of $50 per unit, subject to adjustment. The Plan is intended to help protect our tax attributes, such as built in losses and other tax attributes, by deterring any person from becoming a “5-percent shareholder” (as defined in Section 382 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations promulgated thereunder).

On February 17, 2017, we entered into a Purchase and Sale Agreement with Mineral Resource Partners, LLC, whereby we sold substantially all of our remaining oil and gas assets for $85,600,000, of which $75,000,000 was received at closing. The balance of the purchase price is being held in a third-party escrow account pending completion of (a) title review, and (b) transfer of certain mineral interests owned by a venture in which the Company is a member (Venture Minerals). Prorations of operating revenues and expenses will be made utilizing an effective date of January 1, 2017. This agreement also contains representations, warranties and indemnities customary for oil and gas industry entity and asset sale and purchase transactions, and includes purchase price adjustment provisions, within certain parameters, relating to title and failure or inability to transfer the Venture Minerals. In first quarter 2017, we expect to recognize a gain on sale of approximately $82,400,000, of which $10,600,000 will be deferred until verification of title for non-producing fee minerals in Texas and Louisiana, transfer of certain mineral interests owned by a venture in which the Company is a member and release of the escrowed funds. In addition, the Company expects to incur a non-cash charge of $37,900,000 related to oil and gas enterprise goodwill that is impaired due to the sale of substantially all of the Company's remaining oil and gas assets.

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Consolidated Real Estate and Accumulated Depreciation

12 Months Ended

Dec. 31, 2016

SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract]

Consolidated Real Estate and Accumulated Depreciation

Forestar Group Inc.

Schedule III — Consolidated Real Estate and Accumulated Depreciation

Year-End 2016

(In thousands)

		Initial Cost to Company			Costs Capitalized Subsequent to Acquisition					Gross Amount Carried at End of Period
Description	Encumbrances	Land		Buildings & Improvements	Improvements less Cost of Sales and Other			Carrying Costs(a)		Land & Land Improvements		Buildings & Improvements	Total		Accumulated Depreciation	Date of Construction	Date Acquired
Entitled, Developed, and Under Development Projects:
ARIZONA
Pima County
Dove Mountain		$	5,860		$	3				$	5,863		$	5,863			2015
CALIFORNIA
Contra Costa County
San Joaquin River		12,225			(10,558		)			1,667			1,667				(b)
COLORADO
Douglas County
Pinery West		7,308			3,791					11,099			11,099			2006	2006
Cielo		3,933			2,645					6,578			6,578				2016
Weld County
Buffalo Highlands		3,001			(295		)			2,706			2,706			2006	2005
Johnstown Farms		2,749			4,189			$	100	7,038			7,038			2002	2002
Stonebraker		3,878			(1,786		)			2,092			2,092			2005	2005
GEORGIA
Cobb County
West Oaks		1,669			1,543					3,212			3,212			2015	2015
Paulding County
Harris Place		265			(111		)			154			154				2012
Seven Hills		2,964			1,162			13		4,139			4,139				2012
NORTH CAROLINA
Cabbarrus County
Moss Creek		1,254			101					1,355			1,355				2016
Mecklenburg County
Walden		12,085			2,279			87		14,451			14,451			2016	2015
SOUTH CAROLINA
Lancaster County
Ansley Park		5,089			1,594					6,683			6,683				2015
York County
Habersham		3,877			1,128			421		5,426			5,426			2014	2013

		Initial Cost to Company			Costs Capitalized Subsequent to Acquisition					Gross Amount Carried at End of Period
Description	Encumbrances	Land		Buildings & Improvements	Improvements less Cost of Sales and Other			Carrying Costs(a)		Land & Land Improvements		Buildings & Improvements	Total		Accumulated Depreciation	Date of Construction	Date Acquired
TENNESEE
Williamson County
Morgan Farms		$	6,841		$	(1,808	)	$	88	$	5,121		$	5,121		2013	2013
Scales Farmstead		3,575			9,319			389		13,283			13,283				2015
Weatherford Estates		856			374			138		1,368			1,368			2015	2014
Wilson County
Beckwith Crossing		1,294			2,397			161		3,852			3,852			2015	2014
TEXAS
Bastrop County
Hunter’s Crossing		3,613			5,226					8,839			8,839			2001	2001
Bexar County
Cibolo Canyons		17,305			26,397			1,203		44,905			44,905			2004	1986
Calhoun County
Caracol		8,603			(8,025		)			578			578			2006	2006
Collin County
Lakes of Prosper		8,951			(3,005		)	348		6,294			6,294				2012
Parkside		2,177			(4		)	183		2,356			2,356			2014	2013
Timber Creek		7,282			9,862					17,144			17,144			2007	2007
Village Park		4,772			(4,720		)			52			52				2012
Comal County
Oak Creek Estates		1,921			685			22		2,628			2,628			2006	2005
Dallas County
Stoney Creek		12,822			327			443		13,592			13,592			2007	2007
Denton County
Lantana		27,673			(11,242		)	529		16,960			16,960			2000	1999
River's Edge		1,227			436					1,663			1,663				2014
The Preserve at Pecan Creek		5,855			(1,387		)	47		4,515			4,515			2006	2005
Fort Bend County
Summer Lakes		4,269			374			78		4,721			4,721			2013	2012
Summer Park		4,804			(2,557		)	17		2,264			2,264			2013	2012
Willow Creek Farms	486	3,479			(1,187		)			2,292			2,292			2012	2012
Harris County
Barrington		8,950			(7,483		)			1,467			1,467				2011
City Park		3,946			(2,243		)	229		1,932			1,932			2002	2001
Imperial Forest		5,345			(957		)	4		4,392			4,392			2015	2014

			Initial Cost to Company				Costs Capitalized Subsequent to Acquisition					Gross Amount Carried at End of Period
Description	Encumbrances		Land		Buildings & Improvements		Improvements less Cost of Sales and Other			Carrying Costs(a)		Land & Land Improvements		Buildings & Improvements		Total		Accumulated Depreciation		Date of Construction	Date Acquired
Hays County
Arrowhead Ranch			$	12,856			$	9,204		$	233	$	22,293			$	22,293			2015	2007
Tarrant County
Summer Creek Ranch			2,887				(1,377		)			1,510				1,510					2012
The Bar C Ranch			1,365				842			197		2,404				2,404					2012
Other			5,222				(276		)	25		4,971				4,971
Total Entitled, Developed, and Under Development Projects	$	486	$	234,047	$	—	$	24,857		$	4,955	$	263,859	$	—	$	263,859	$	—
Undeveloped Land and land in entitlement:
CALIFORNIA
Los Angeles County
Land In Entitlement Process			$	3,950			$	20,838				$	24,788			$	24,788				1997
GEORGIA
Cherokee County
Undeveloped Land			80									80				80					(b)
TEXAS
Bexar County
Undeveloped Land							2,548					2,548				2,548					(b)
Montgomery County
Undeveloped Land							5					5				5					(b)
Other
Undeveloped Land							1,723					1,723				1,723					(b)
Total Undeveloped Land and Land in Entitlement	$	—	$	4,030	$	—	$	25,114		$	—	$	29,144	$	—	$	29,144	$	—
Total	$	486	$	238,077	$	—	$	49,971		$	4,955	$	293,003	$	—	$	293,003	$	—

____________________

(a)We do not capitalize carrying costs until development begins.

(b)The acquisition date is not available.

Reconciliation of real estate:

	2016			2015			2014
	(In thousands)
Balance at beginning of year	$	618,844		$	607,133		$	547,530
Amounts capitalized	89,780			124,633			214,184
Amounts retired or adjusted	(415,621		)	(112,922		)	(154,581		)
Balance at close of period	$	293,003		$	618,844		$	607,133

Reconciliation of accumulated depreciation:

	2016			2015			2014
	(In thousands)
Balance at beginning of year	$	(32,129	)	$	(31,377	)	$	(28,066	)
Depreciation expense	(816		)	(6,810		)	(3,319		)
Amounts retired or adjusted	32,945			6,058			8
Balance at close of period	$	—		$	(32,129	)	$	(31,377	)

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

Our consolidated financial statements include the accounts of Forestar Group Inc., all subsidiaries, ventures and other entities in which we have a controlling interest. We account for our investment in other entities in which we have significant influence over operations and financial policies using the equity method (we recognize our share of the entities’ income or loss and any preferential returns and treat distributions as a reduction of our investment). We eliminate all material intercompany accounts and transactions. Noncontrolling interests in consolidated pass-through entities are recognized before income taxes.

We prepare our financial statements in accordance with generally accepted accounting principles in the United States, which require us to make estimates and assumptions about future events. Actual results can, and probably will, differ from those we currently estimate. Examples of significant estimates include those related to allocating costs to real estate, measuring long-lived assets for impairment, oil and gas revenue accruals, capital expenditure and lease operating expense accruals associated with our oil and gas production activities, oil and gas reserves and depletion of our oil and gas properties.

At year-end 2016, we have divested substantially all of our oil and gas working interest properties. As a result of this significant change in our operations, we have reported the results of operations and financial position of these assets as discontinued operations within the consolidated statements of income (loss) and comprehensive income (loss) and consolidated balance sheets for all periods presented. In addition, in second quarter 2016, we changed the name of the oil and gas segment to mineral resources to reflect the strategic shift from oil and gas working interest investments to owned mineral interests. We also changed the name of the other natural resources segment to other.

Cash and Cash Equivalents

Cash and Cash Equivalents

Cash and cash equivalents include cash and other short-term instruments with original maturities of three months or less. At year-end 2016 and 2015, restricted cash was $275,000 and $200,000 and is included in other assets.

Cash Flows

Cash Flows

The consolidated statements of cash flows for 2016, 2015 and 2014 reflect cash flows from both continuing and discontinued operations. Expenditures for the acquisition and development of single-family and multifamily real estate that we intend to develop for sale are classified as operating activities. Expenditures for the acquisition and development of properties to be held and operated, investment in oil and gas properties and equipment, and business acquisitions are classified as investing activities. Our accrued capital expenditures for unproved leasehold acquisitions and drilling and completion costs at year-end 2016 and 2015 were $834,000 and $7,033,000 and are included in liabilities of discontinued operations in our consolidated balance sheets. These oil and gas property additions will be reflected as cash used for investing activities in the period the accrued payables are settled.

Capitalized Software

Capitalized Software

We capitalize purchased software costs as well as the direct internal and external costs associated with software we develop for our own use. We amortize these capitalized costs using the straight-line method over estimated useful lives generally ranging from three to five years. The carrying value of capitalized software was $52,000 at year-end 2016 and $237,000 at year-end 2015 and is included in other assets. The amortization of these capitalized costs was $155,000 in 2016, $996,000 in 2015 and $1,067,000 in 2014 and is included in general and administrative and operating expenses.

Environmental and Asset Retirement Obligations

Environmental and Asset Retirement Obligations

We recognize environmental remediation liabilities on an undiscounted basis when environmental assessments or remediation are probable and we can reasonably estimate the cost. We adjust these liabilities as further information is obtained or circumstances change. Our asset retirement obligations are related to the abandonment and site restoration requirements that result from the acquisition, construction and development of oil and gas working interest properties, which we have divested substantially all at year-end 2016. We record the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding increase in the carrying amount of the related long-lived asset. Accretion expense related to the asset retirement obligation and depletion expense related to capitalized asset retirement costs are included in cost of mineral resources and in discontinued operations on our consolidated statements of income (loss) and comprehensive income (loss). Our asset retirement obligations are recorded in liabilities held for sale at year-end 2016 and in other liabilities and liabilities of discontinued operations at year-end 2015.

Fair Value Measurements

Fair Value Measurements

Financial instruments for which we did not elect the fair value option include cash and cash equivalents, accounts and notes receivables, other assets, long-term debt, accounts payable and other liabilities. With the exception of long-term notes receivable and debt, the carrying amounts of these financial instruments approximate their fair values due to their short-term nature or variable interest rates.

Goodwill and Other Intangible Assets

Goodwill and Other Intangible Assets

We record goodwill when the purchase price of a business acquisition exceeds the estimated fair value of net identified tangible and intangible assets acquired. We do not amortize goodwill or other indefinite lived intangible assets. Instead, we measure these assets for impairment based on the estimated fair values at least annually or more frequently if impairment indicators exist. We perform the annual impairment measurement in the fourth quarter of each year. Intangible assets with finite useful lives are amortized over their estimated useful lives.

In 2016, we performed our annual goodwill impairment evaluation and concluded that goodwill related to our mineral interest assets was not impaired at year-end 2016 as the estimated fair value exceeded the carrying value. On February 17, 2017, we sold substantially all of the Company's remaining oil and gas assets for $85,600,000. Please read Note 21—Subsequent Events for additional information about these items.

In addition, we performed our annual goodwill impairment evaluation and concluded that goodwill related to our central Texas water assets was impaired at year-end 2016 as the estimated fair value exceeded the carrying value. We recorded a $3,874,000 non-cash impairment charge as a result of entering into an agreement to sell these assets. At year-end 2016, our central Texas water assets are classified as held for sale.

Income Taxes

Income Taxes

We provide deferred income taxes using current tax rates for temporary differences between the financial accounting carrying value of assets and liabilities and their tax accounting carrying values. We recognize and value income tax exposures for the various taxing jurisdictions where we operate based on laws, elections, commonly accepted tax positions, and management estimates. We include tax penalties and interest in income tax expense. We provide a valuation allowance for any deferred tax asset that is not likely to be recoverable in future periods.

When we believe a tax position is supportable but the outcome uncertain, we include the item in our tax return but do not recognize the related benefit in our provision for taxes. Instead, we record a reserve for unrecognized tax benefits, which represents our expectation of the most likely outcome considering the technical merits and specific facts of the position. Changes to liabilities are only made when an event occurs that changes the most likely outcome, such as settlement with the relevant tax authority, expiration of statutes of limitations, changes in tax law, or recent court rulings.

Owned Mineral Interests

Owned Mineral Interests

When we lease our mineral interests to third-party exploration and production entities, we retain a royalty interest and may take an additional participation in production, including a working interest. At year-end 2016, mineral interests and any remaining oil and gas working interests are included in assets held for sale.

Oil and Gas Properties (Discontinued Operations)

Oil and Gas Properties (Discontinued Operations)

We use the successful efforts method of accounting for our oil and gas producing activities. Costs to acquire mineral interests leased, costs to drill and complete development of oil and gas wells and related asset retirement costs are capitalized. Costs to drill exploratory wells are capitalized pending determination of whether the wells have proved reserves and if determined incapable of producing commercial quantities of oil and gas these costs are expensed as dry hole costs. At year-end 2016, we have no capitalized exploratory well costs pending determination of proved reserves. Exploration costs include dry hole costs, geological and geophysical costs, expired unproved leasehold costs and seismic studies, and are expensed as incurred. Production costs incurred to maintain wells and related equipment are charged to expense as incurred.

Depreciation and depletion of producing oil and gas properties is calculated using the units-of-production method. Proved developed reserves are used to compute unit rates for unamortized tangible and intangible drilling and completion costs. Proved reserves are used to compute unit rates for unamortized acquisition of proved leasehold costs. Unit-of-production amortization rates are revised whenever there is an indication of the need for revision but at least once a year and those revisions are accounted for prospectively as changes in accounting estimates.

Impairment of Oil and Gas Properties

We evaluate our oil and gas properties, including facilities and equipment, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We estimate the expected undiscounted future cash flows of our oil and gas properties and compare such undiscounted future cash flows to the carrying amount of the oil and gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, we will adjust the carrying amount of the oil and gas properties to fair value. The factors used to determine fair value are subject to our judgment and expertise and include, but are not limited to, recent sales prices of comparable properties, the present value of future cash flows, net of estimated operating and development costs using estimates of proved reserves, future commodity pricing, future production estimates, anticipated capital expenditures, and various discount rates commensurate with the risk and current market conditions associated with realizing the expected cash flows projected. Because of the uncertainty inherent in these factors, we cannot predict when or if future impairment charges for proved properties will be recorded.

The assessment of unproved leasehold properties to determine any possible impairment requires significant judgment. We assess our unproved leasehold properties periodically for impairment on a property-by-property basis based on remaining lease terms, drilling results or future plans to develop acreage. Impairment expense for proved and unproved oil and gas properties are included in cost of mineral resources and cost of oil and gas producing activities in discontinued operations.

Operating Leases

Operating Leases

We occupy office space in various locations under operating leases. The lease agreements may contain rent escalation clauses, construction allowances and/or contingent rent provisions. We expense operating leases ratably over the shorter of the useful life or the lease term. For scheduled rent escalation clauses, we recognize the base rent expense on a straight-line basis and record the difference between the recognized rent expense and the amounts payable under the lease as deferred lease credits included in other liabilities in the consolidated balance sheets. Deferred lease credits are amortized over the lease term. For construction allowances, we record leasehold improvement assets included in property and equipment in the consolidated balance sheets amortized over the shorter of their economic lives or the lease term. The related deferred lease credits are amortized as a reduction of rent expense over the lease term.

Property and Equipment

Property and Equipment

We carry property and equipment at cost less accumulated depreciation. We capitalize the cost of significant additions and improvements, and we expense the cost of repairs and maintenance. We capitalize interest costs incurred on major construction projects. We depreciate these assets using the straight-line method over their estimated useful lives

Real Estate

Real Estate

We carry real estate at the lower of cost or fair value less cost to sell. We capitalize interest costs once development begins, and we continue to capitalize throughout the development period. We also capitalize infrastructure, improvements, amenities, and other development costs incurred during the development period. We determine the cost of real estate sold using the relative sales value method. When we sell real estate from projects that are not finished, we include in the cost of real estate sold estimates of future development costs through completion, allocated based on relative sales values. These estimates of future development costs are reevaluated at least annually, with any adjustments being allocated prospectively to the remaining units available for sale. We receive cash deposits from home builders for purchases of vacant developed lots from community development projects. These earnest money deposits are released to the home builders as lots are developed and sold.

Income producing properties are carried at cost less accumulated depreciation computed using the straight-line method over their estimated useful lives.

We have agreements with utility or improvement districts, principally in Texas, whereby we agree to convey to the districts water, sewer and other infrastructure-related assets we have constructed in connection with projects within their jurisdiction. The reimbursement for these assets ranges from 70 to 90 percent of allowable cost as defined by the district. The transfer is consummated and we receive payment when the districts have a sufficient tax base to support funding of their bonds. The cost we incur in constructing these assets is included in capitalized development costs, and upon collection, we remove the assets from capitalized development costs. We provide an allowance to reflect our past experiences related to claimed allowable development costs.

Impairment of Real Estate Long-Lived Assets

We review real estate long-lived assets held for use for impairment when events or circumstances indicate that their carrying value may not be recoverable. Impairment exists if the carrying amount of the long-lived asset is not recoverable from the undiscounted cash flows expected from its use and eventual disposition. We determine the amount of the impairment loss by comparing the carrying value of the long-lived asset to its estimated fair value. In the absence of quoted market prices, we determine estimated fair value generally based on the present value of future probability weighted cash flows expected from the sale of the long-lived asset. Non-cash impairment charges related to our owned and consolidated real estate assets are included in cost of real estate sales and other.

Revenue

Revenue

Real Estate

We recognize revenue from sales of real estate when a sale is consummated, the buyer’s initial investment is adequate, any receivables are probable of collection, the usual risks and rewards of ownership have been transferred to the buyer, and we do not have significant continuing involvement with the real estate sold. If we determine that the earnings process is not complete, we defer recognition of any gain until earned. We recognize revenue from hotel room sales and other guest services when rooms are occupied and other guest services have been rendered. We recognize rental revenues from our multifamily properties when earned in accordance with the terms of the respective leases on a straight-line basis for the period of occupancy.

We recognize construction revenues on multifamily projects that we develop as a general contractor. Construction revenues are recognized as costs are incurred plus fixed fee earned. We are reimbursed for costs paid to subcontractors plus we may earn a development and construction management fee on multifamily projects we develop, both of which are included in commercial and income producing properties revenue. On multifamily projects where our fee is based on a fixed fee plus guaranteed maximum price contract, any cost overruns incurred during construction, as compared to the original budget, will reduce the net fee generated on these projects. Any excess cost overruns estimated over the net fee generated are recognized in the period in which they become evident. At year-end 2016, we were not a general contractor on any of the multifamily projects currently under construction and we do not anticipate to be a general contractor on any new multifamily projects as we determined multifamily was non-core and we would not be making any new investments in this business.

We exclude from revenue amounts we collect from utility or improvement districts related to the conveyance of water, sewer and other infrastructure related assets. We also exclude from revenue amounts we collect for timber sold on land being developed. These proceeds reduce capitalized development costs. We exclude from revenue amounts we collect from customers that represent sales tax or other taxes that are based on the sale. These amounts are included in other accrued expenses until paid.

Oil and Gas Working Interest Revenues (Discontinued Operations)

We recognize revenue as oil and gas is produced and sold. There are a significant amount of oil and gas properties which we do not operate and, therefore, revenue is typically recorded in the month of production based on an estimate of our share of volumes produced and prices realized. We obtain the most current available production data from the operators and price indices for each well to estimate the accrual of revenue. Obtaining production data on a timely basis for some wells is not feasible; therefore we utilize past production receipts and estimated sales price information to estimate accrual of working interest revenue on all other non-operated wells each month. Revisions to such estimates are recorded as actual results become known. We review accounts receivable periodically and reduce the carrying amount by a valuation allowance that reflects our best estimate of the amount that may not be collectible.

A majority of our sales are made under contractual arrangements with terms that are considered to be usual and customary in the oil and gas industry. The contracts are for periods of up to five years with prices determined upon a percentage of pre-determined and published monthly index price. The terms of these contracts have not had an effect on how we recognize revenue.

Mineral Resources

We recognize revenue from mineral bonus payments when we have received an executed agreement with the exploration company transferring the rights to any oil or gas it may find and requiring drilling be done within a specified period, the payment has been collected, and we have no obligation to refund the payment. We recognize revenue from delay rentals received if drilling has not started within the specified period and when the payment has been collected. We recognize revenue from mineral royalties and non-working interests when the minerals have been delivered to the buyer, the value is determinable, and we are reasonably sure of collection.

Other

We recognize revenue from timber sales upon passage of title, which occurs at delivery; when the price is fixed and determinable; and we are reasonably sure of collection. We recognize revenue from recreational leases on the straight-line basis over the lease term. We recognize revenue from the sale of water rights or groundwater reservation agreements upon receipt of an executed agreement and payment has been collected and all conditions to the agreement have been met and we have no further performance obligations to meet. The water delivery revenues will be recognized as water is being delivered and metered at the delivery point.

Share-Based Compensation

Share-Based Compensation

We use the Black-Scholes option pricing model for stock options, Monte Carlo simulation pricing model for market-leveraged stock units and for stock options with market conditions, grant date fair value for equity-settled awards and period-end fair value for cash-settled awards. We expense share-based awards ratably over the vesting period or earlier based on retirement eligibility.

Timber

Timber

We carry timber at cost less the cost of timber cut. We expense the cost of timber cut based on the relationship of the timber carrying value to the estimated volume of recoverable timber multiplied by the amount of timber cut. We include the cost of timber cut in cost of other. We determine the estimated volume of recoverable timber using statistical information and other data related to growth rates and yields gathered from physical observations, models and other information gathering techniques. Changes in yields are generally due to adjustments in growth rates and similar matters and are accounted for prospectively as changes in estimates. We capitalize reforestation costs incurred in developing viable seedling plantations (up to two years from planting), such as site preparation, seedlings, planting, fertilization, insect and wildlife control, and herbicide application. We expense all other costs, such as property taxes and costs of forest management personnel, as incurred. Once the seedling plantation is viable, we expense all costs to maintain the viable plantations, such as fertilization, herbicide application, insect and wildlife control, and thinning, as incurred.

We own about 19,000 acres of non-core timberland and undeveloped land, in Georgia and Texas. The non-cash cost of timber cut and sold is $63,000 in 2016, $250,000 in 2015 and $371,000 in 2014 and is included in depreciation, depletion and amortization in our consolidated statements of cash flows.

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New and Pending Accounting Pronouncements (Policies)

12 Months Ended

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

New and Pending Accounting Pronouncements

New and Pending Accounting Pronouncements

Adoption of New Accounting Standards

In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2015-03, Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, as part of its initiative to reduce complexity in accounting standards. To simplify presentation of debt issuance costs, the amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. In August 2015, the FASB issued ASU 2015-15, Interest-Imputation of Interest (Subtopic 835-30), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements - Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (SEC Update), which allows an entity to defer and present debt issuance costs as an asset and subsequently amortize the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The updated standards are effective for financial statements issued for annual and interim periods beginning after December 15, 2015. We adopted ASU 2015-03 in first quarter 2016 and prior period amounts have been reclassified to conform to the current period presentation. As of December 31, 2015, $8,267,000 of debt issuance costs were reclassified in the consolidated balance sheets from other assets to debt. The adoption did not impact our consolidated financial position, results of operations or cash flows. As permitted under this guidance, we will continue to present debt issuance costs associated with revolving-debt agreements as other assets.

In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis (Topic 810), requiring entities to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The revised consolidation model: (1) modifies the evaluation of whether limited partnerships and similar legal entities are variable interest entities (VIEs) or voting interest entities, (2) eliminates the presumption that a general partner should consolidate a limited partnership, (3) affects the consolidation analysis of reporting entities that are involved with VIEs, and (4) provides a scope exception from consolidation guidance for reporting entities with interests in certain legal entities. The updated standard is effective for financial statements issued for annual and interim periods beginning after December 15, 2015. The adoption of this guidance, which was applied retrospectively, had no impact to our consolidated financial statements.

In January 2015, the FASB issued ASU 2015-01, Income Statement - Extraordinary and Unusual Items(Subtopic 225-20), which eliminates the concept of extraordinary items from U.S. GAAP. The updated standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted, provided that the guidance is applied from the beginning of the fiscal year of adoption. The adoption of this guidance had no impact on our financial statements and related disclosures.

Pending Accounting Standards

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The updated standard will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. Early adoption is not permitted. The updated standard becomes effective for annual and interim periods beginning after December 15, 2017. The guidance permits two methods of adoption: retrospectively to each prior reporting period presented (full retrospective method), or retrospectively with the cumulative effect initially applying the guidance recognized at the date of initial application (the cumulative catch-up transition method). We currently anticipate adopting the standard using the cumulative catch-up transition method. We anticipate this standard will not have a material impact on our consolidated financial statements. While we are continuing to assess all potential impacts of the standard, we expect revenue related to lot and tract sales to remain substantially unchanged. Due to the complexity of certain of our real estate sale transactions, the revenue recognition treatment required under the standard will be dependent on contract-specific terms, and may vary in some instances from recognition at the time of the sale closing.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires lessees to put most leases on their balance sheets but recognize expenses on their income statements in a manner that is similar to today's accounting. This guidance also eliminates today's real estate-specific provisions for all entities. For lessors, the guidance modifies the classification criteria and the accounting for sales-type and direct financing leases. This guidance is effective in 2019, and interim periods within that year. Early adoption is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. We are currently evaluating the effect the updated standard will have on our financial position and disclosures.

In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting, as part of its simplification initiative. The areas for simplification in this update involve several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and the classification on the statement of cash flows. The updated standard becomes effective for annual and interim periods beginning after December 31, 2016. We are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures, but we do not expect it to have a material impact on our consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230), in order to address eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated standard is effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those fiscal years with early adoption permitted. We are currently evaluating the effect that the updated standard will have on our earnings, financial position and disclosures, but we do not expect it to have a material effect on our consolidated financial statements.

In November, 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230). This ASU requires that a statement of cash flow explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash investments. This standard is effective for fiscal years beginning after December 15, 2017. The adoption of ASU 2016-18 will modify our current disclosures and reclassifications relating to the consolidated statements of cash flows, but we do not expect it to have a material effect on our consolidated financial statements.

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2016

Accounting Policies [Abstract]

Schedule of Change in Asset Retirement Obligation

The following summarizes the changes in asset retirement obligations:

	Year-End
	2016			2015
	(In thousands)
Beginning balance	$	1,758		$	1,807
Additions	6			65
Oil and gas working interest property dispositions	(1,610		)	(119		)
Liabilities settled	(107		)	(139		)
Accretion expense	56			144
	$	103		$	1,758

Schedule of Property, Plant and Equipment

We depreciate these assets using the straight-line method over their estimated useful lives as follows:

	Estimated	Year-End
	Useful Lives	2016			2015
		(In thousands)
Buildings and building improvements	10 to 40 years	$	2,700		$	4,044
Property and equipment	2 to 10 years	4,957			12,230
		7,657			16,274
Less: accumulated depreciation		(4,541		)	(5,542		)
		$	3,116		$	10,732

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Real Estate (Tables)

12 Months Ended

Dec. 31, 2016

Real Estate [Abstract]

Real Estate

Real estate consists of:

	Year-End 2016						Year-End 2015
	Carrying Value		Accumulated Depreciation		Net Carrying Value		Carrying Value		Accumulated Depreciation			Net Carrying Value
	(In thousands)
Entitled, developed and under development projects	$	263,859	$	—	$	263,859	$	352,141	$	—		$	352,141
Undeveloped land (includes land in entitlement)	29,144		—		29,144		98,181		—			98,181
Commercial
Radisson Hotel & Suites (a)	—		—		—		62,889		(29,268		)	33,621
Income producing properties
Eleven (a)	—		—		—		53,896		(2,861		)	51,035
Dillon (a)	—		—		—		19,987		—			19,987
Music Row (a)	—		—		—		9,947		—			9,947
Downtown Edge (a)	—		—		—		12,706		—			12,706
West Austin (b)	—		—		—		9,097		—			9,097
	$	293,003	$	—	$	293,003	$	618,844	$	(32,129	)	$	586,715

 _________________________

^(a)  Sold in 2016.

^(b)  Classified as assets held for sale at year-end 2016.

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Investment in Unconsolidated Ventures (Tables)

12 Months Ended

Dec. 31, 2016

Equity Method Investments and Joint Ventures [Abstract]

Summarized Balance Sheet Information

Combined summarized balance sheet information for our ventures accounted for using the equity method follows:

	Venture Assets				Venture Borrowings (a)				Venture Equity				Our Investment
	At Year-End
	2016		2015		2016		2015		2016		2015		2016		2015
	(In thousands)
242, LLC (b)	$	26,503	$	26,687	$	1,107	$	—	$	23,136	$	24,877	$	10,934	$	11,766
CL Ashton Woods, LP (c)	2,653		7,654		—		—		2,198		6,084		1,107		3,615
CL Realty, LLC	8,048		7,872		—		—		7,899		7,662		3,950		3,831
CREA FMF Nashville LLC (b)	56,081		57,820		37,446		50,845		17,091		4,291		4,923		3,820
Elan 99, LLC	49,652		34,192		36,238		14,587		13,100		15,838		11,790		14,255
FMF Littleton LLC	70,282		52,376		44,446		22,347		23,798		24,370		6,128		6,270
FMF Peakview LLC	—		48,869		—		30,485		—		16,828		—		3,447
FOR/SR Forsyth LLC	10,672		6,500		1,568		—		8,990		6,500		8,091		5,850
HM Stonewall Estates, Ltd (c)	852		2,842		—		—		852		2,842		477		1,294
LM Land Holdings, LP (c)	25,538		31,984		3,477		7,728		20,945		22,751		9,685		9,664
MRECV DT Holdings LLC	4,155		4,215		—		—		4,144		4,215		3,729		3,807
MRECV Edelweiss LLC	3,484		2,237		—		—		3,484		2,237		3,358		2,029
MRECV Juniper Ridge LLC	4,156		3,006		—		—		4,156		3,006		3,741		2,730
MRECV Meadow Crossing II LLC	2,492		728		—		—		2,491		728		2,242		655
Miramonte Boulder Pass, LLC	10,738		12,627		4,006		5,869		5,265		5,474		5,330		5,349
Temco Associates, LLC	4,368		5,284		—		—		4,253		5,113		2,126		2,557
Other ventures (d)	—		4,174		—		2,242		—		1,922		—		1,514
	$	279,674	$	309,067	$	128,288	$	134,103	$	141,802	$	154,738	$	77,611	$	82,453

Summarized Income Statement Information

Combined summarized income statement information for our ventures accounted for using the equity method follows:

	Revenues						Earnings (Loss)									Our Share of Earnings (Loss)
	For the Year
	2016		2015		2014		2016			2015			2014			2016			2015			2014
	(In thousands)
242, LLC (b)	$	5,835	$	20,995	$	5,612	$	1,259		$	9,588		$	2,951		$	668		$	4,919		$	1,514
CL Ashton Woods, LP (c)	2,870		9,820		5,431		914			3,881			1,748			1,332			5,000			2,471
CL Realty, LLC	567		856		1,573		237			424			1,068			119			212			534
CREA FMF Nashville LLC (b) (d)	4,955		1,227		—		(1,420		)	(1,696		)	(163		)	1,103			(1,696		)	(163		)
Elan 99, LLC	1,392		—		—		(2,739		)	(49		)	(87		)	(2,465		)	(44		)	(78		)
FMF Littleton LLC	3,116		120		—		(571		)	(367		)	(239		)	(143		)	(92		)	(60		)
FMF Peakview LLC	939		2,057		4		(248		)	(1,116		)	(410		)	(50		)	(223		)	(83		)
FOR/SR Forsyth LLC	—		—				(65		)	—						(58		)	—
HM Stonewall Estates, Ltd. (c)	2,112		3,990		1,728		832			1,881			613			361			952			248
LM Land Holdings, LP (c)	10,001		10,956		21,980		7,288			8,251			15,520			2,458			3,342			4,827
MRECV DT Holdings LLC	495		—				477			167						429			—
MRECV Edelweiss LLC	416		—				409			151						368			137
MRECV Juniper Ridge LLC	379		—				380			106						342			—
MRECV Meadow Crossing II LLC	267		—		—		220			—			—			198			—			—
Miramonte Boulder Pass, LLC	4,923		—				(399		)	(250		)				(200		)	(125		)
PSW Communities, LP	—		29,986		—		—			2,688			(86		)	—			1,169			(76		)
TEMCO Associates, LLC	1,344		9,485		2,155		440			2,358			494			220			1,179			247
Other ventures	6,519		36,237		3,960		2,105			33,303			3,879			1,441			1,278			(696		)
	$	46,130	$	125,729	$	42,443	$	9,119		$	59,320		$	25,288		$	6,123		$	16,008		$	8,685

_____________________

^(a)  Total includes current maturities of $89,756,000 at year-end 2016, of which $78,557,000 is non-recourse to us, and $39,590,000 at year-end 2015, of which $29,691,000 is non-recourse to us.

^(b)  Includes unamortized deferred gains on real estate contributed by us to ventures. We recognize deferred gains as income as real estate is sold to third parties. Deferred gains of $1,457,000 are reflected as a reduction to our investment in unconsolidated ventures at year-end 2016.

^(c)  Includes unrecognized basis difference of $259,000 which is reflected as an increase of our investment in unconsolidated ventures at year-end 2016. This difference between estimated fair value of the equity investment and our capital account within the respective ventures at closing will be accreted as income or expense over the life of the investment and included in our share of earnings (loss) from the respective ventures.

^(d)  Our share of venture earnings in 2016 includes reallocation of prior year cumulative losses incurred by the venture as a result of equity contribution by the venture partner in 2016.

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Goodwill and Other Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2016

Goodwill and Intangible Assets Disclosure [Abstract]

Carrying Value of Goodwill and Other Intangible Assets

Carrying value of goodwill and other intangible assets follows:

	Year-End
	2016		2015
	(In thousands)
Goodwill	$	37,900	$	41,774
Identified intangibles, net	—		1,681
	$	37,900	$	43,455

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Held for Sale (Tables)

12 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Assets and Liabilities of Properties Held for Sale

The major classes of assets and liabilities of the properties held for sale at year-end 2016 are as follows:

	At Year-End
	2016
Assets Held for Sale:	(In thousands)
Real estate	$	19,931
Timber	1,682
Other intangible assets	1,681
Oil and gas properties and equipment, net	782
Property and equipment, net	6,301
	$	30,377
Liabilities Held for Sale:
Other liabilities	103
	$	103

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Discontinued Operations (Tables)

12 Months Ended

Dec. 31, 2016

Discontinued Operations and Disposal Groups [Abstract]

Summarized Results from Discontinued Operations

Summarized results from discontinued operations were as follows:

	For the Year
	2016			2015			2014
Revenues	$	5,862		$	43,845		$	68,610
Cost of oil and gas producing activities	(6,578		)	(221,402		)	(94,581		)
Other operating expenses	(7,754		)	(10,363		)	(14,357		)
Loss from discontinued operations before income taxes	$	(8,470	)	$	(187,920	)	$	(40,328	)
Gain (loss) on sale of assets before income taxes	(13,664		)	(706		)	8,526
Income tax benefit	5,269			2,496			12,193
Loss from discontinued operations, net of taxes	$	(16,865	)	$	(186,130	)	$	(19,609	)

Disposal Groups, Including Discontinued Operations

The major classes of assets and liabilities of discontinued operations at year-end 2016 and 2015 are as follows:

	At Year-End
	2016		2015
	(In thousands)
Assets of Discontinued Operations:
Receivables, net of allowance for bad debt	$	6	$	4,632
Oil and gas properties and equipment, net	—		79,733
Goodwill and other intangible assets	—		19,673
Prepaid expenses	8		96
Other assets	—		833
	$	14	$	104,967
Liabilities of Discontinued Operations:
Accounts payable	$	67	$	342
Accrued property taxes	—		259
Other accrued expenses	5,228		8,924
Other liabilities	—		1,667
	$	5,295	$	11,192

Significant Operation and Investing Activities of DIscontinued Operations

Significant operating activities and investing activities of discontinued operations are as follows:

	For the Year
	2016			2015			2014
	(In thousands)
Operating activities:
Asset impairments	$	612		$	105,337		$	15,535
Dry hole and unproved leasehold impairment charges	—			67,639			29,528
Loss (gain) on sale of assets	13,664			706			(8,526		)
Depreciation, depletion and amortization	2,202			28,391			28,758
	$	16,478		$	202,073		$	65,295
Investing activities:
Oil and gas properties and equipment	$	(579	)	$	(49,717	)	$	(101,145	)
Acquisition of oil and gas properties	—			—			(1,100		)
Proceeds from sales of assets	77,105			17,800			17,660
	$	76,526		$	(31,917	)	$	(84,585	)

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Receivables (Tables)

12 Months Ended

Dec. 31, 2016

Receivables [Abstract]

Receivables

Receivables consist of:

	At Year-End
	2016			2015
	(In thousands)
Funds held by qualified intermediary for potential 1031 like-kind exchange	$	—		$	14,703
Other receivables and accrued interest	1,505			2,218
Other loans secured by real estate, average interest rate of 5.86% at year-end 2016 and 11.31% at year-end 2015	7,452			2,130
	8,957			19,051
Allowance for bad debts	(26		)	(26		)
	$	8,931		$	19,025

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Debt (Tables)

12 Months Ended

Dec. 31, 2016

Debt Disclosure [Abstract]

Debt

Debt consists of:

	At Year-End
	2016		2015
	(In thousands)
8.50% senior secured notes due 2022	5,200		224,647
3.75% convertible senior notes due 2020, net of discount	104,673		104,719
6.00% tangible equity units, net	—		8,666
Secured promissory notes — average interest rates of 3.42% at year-end 2015	—		15,400
Other indebtedness due through 2018 at variable and fixed interest rates ranging from 5.0% to 5.50%	485		28,083
	$	110,358	$	381,515

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Fair Value (Tables)

12 Months Ended

Dec. 31, 2016

Fair Value Disclosures [Abstract]

Information About Our Fixed Rate Financial Instruments Not Measured at Fair Value

Information about our fixed rate financial instruments not measured at fair value follows:

	Year-End 2016						Year-End 2015
	Carrying Amount			Fair Value			Carrying Amount			Fair Value			Valuation Technique
	(In thousands)
Fixed rate debt	$	(111,506	)	$	(109,789	)	$	(346,090	)	$	(321,653	)	Level 2

Carrying Value of Assets

Non-financial assets measured at fair value on a non-recurring basis are as follows:

	Year-End 2016								Year-End 2015
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(In thousands)
Non-financial Assets and Liabilities:
Real estate	$	—	$	—	$	—	$	—	$	—	$	—	$	641	$	641
Assets of discontinued operations	$	—	$	—	$	—	$	—	$	—	$	—	$	57,219	$	57,219

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Net Income (Loss) per Share (Tables)

12 Months Ended

Dec. 31, 2016

Earnings Per Share [Abstract]

Earnings Attributable to Common Shareholders and Weighted Average Common Shares Outstanding

The computations of basic and diluted earnings (loss) per share are as follows:

	For the Year
	2016			2015			2014
	(In thousands)
Numerator:
Continuing operations
Net income (loss) from continuing operations	$	77,044		$	(26,241	)	$	36,697
Less: Net (income) attributable to noncontrolling interest	(1,531		)	(676		)	(505		)
Earnings (loss) available for diluted earnings per share	$	75,513		$	(26,917	)	$	36,192
Less: Undistributed net income from continuing operations allocated to participating securities	(13,493		)	—			(6,586		)
Earnings (loss) from continuing operations available to common shareholders for basic earnings per share	$	62,020		$	(26,917	)	$	29,606
Discontinued operations
Net income (loss) from discontinued operations available for diluted earnings per share	(16,865		)	(186,130		)	(19,609		)
Less: Undistributed net income from discontinued operations allocated to participating securities	3,014			—			3,569
Earnings (loss) from discontinued operations available to common shareholders for basic earnings per share	(13,851		)	(186,130		)	(16,040		)
Denominator:
Weighted average common shares outstanding — basic	34,546			34,266			35,317
Weighted average common shares upon conversion of participating securities (a)	7,515			—			7,857
Dilutive effect of stock options, restricted stock and equity-settled awards	273			—			422
Total weighted average shares outstanding — diluted	42,334			34,266			43,596
Anti-dilutive awards excluded from diluted weighted average shares outstanding	2,102			10,864			2,238

 _____________________

^(a) Our earnings per share calculation reflects the weighted average shares issuable upon settlement of the prepaid stock purchase contract component of our 6.00% tangible equity units, issued in 2013.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Income Tax Expense

Income tax (expense) benefit from continuing operations consists of:

	For the Year
	2016			2015			2014
	(In thousands)
Current tax provision:
U.S. Federal	$	(15,089	)	$	6,740		$	(18,905	)
State and other	(1,520		)	(418		)	(2,182		)
	(16,609		)	6,322			(21,087		)
Deferred tax provision:
U.S. Federal	1,382			(38,262		)	184
State and other	(75		)	(3,191		)	53
	1,307			(41,453		)	237
Income tax (expense) benefit	$	(15,302	)	$	(35,131	)	$	(20,850	)

Reconciliation of Federal Statutory Rate to Effective Income Tax Rate on Continuing Operations

A reconciliation of the federal statutory rate to the effective income tax rate on continuing operations follows:

	For the Year
	2016		2015		2014
Federal statutory rate (benefit)	35	%	35	%	35	%
State, net of federal benefit	—		10		2
Valuation allowance	(19	)	348
Noncontrolling interests	(1	)	(3	)	—
Installment sale ace adjustment	2		—		—
Stock based compensation	—		5		—
Charitable contributions	—		—		(1	)
Oil and gas percentage depletion	—		(1	)	—
Other	—		1		—
Effective tax rate	17	%	395	%	36	%

Significant Components of Deferred Taxes

Significant components of deferred taxes are:

	At Year-End
	2016			2015
	(In thousands)
Deferred Tax Assets:
Real estate	$	50,759		$	69,594
Employee benefits	13,185			15,752
Net operating loss carryforwards	2,804			13,827
Oil and gas properties	1,672			5,510
AMT credits	5,900			3,620
Income producing properties	2,055			—
Oil and gas percentage depletion carryforwards	3,478			3,616
Accruals not deductible until paid	552			911
Other assets	—			139
Gross deferred tax assets	80,405			112,969
Valuation allowance	(73,405		)	(97,068		)
Deferred tax asset net of valuation allowance	7,000			15,901
Deferred Tax Liabilities:
Undeveloped land	(1,359		)	(7,588		)
Convertible debt	(5,035		)	(6,516		)
Income producing properties	—			(2,257		)
Timber	(283		)	(577		)
Gross deferred tax liabilities	(6,677		)	(16,938		)
Net Deferred Tax Asset (Liability)	$	323		$	(1,037	)

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Commitments and Other Contingencies (Tables)

12 Months Ended

Dec. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Restructuring and related costs

The following table summarizes activity related to liabilities associated with our restructuring activities in 2016:

	Employee-Related Costs			Retention Bonuses			Total
	(In thousands)
Balance at year-end 2015	$	(1,049	)	$	—		$	(1,049	)
Additions	(2,072		)	(832		)	(2,904		)
Payments	3,121			832			3,953
Balance at year-end 2016	$	—		$	—		$	—

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Segment Information (Tables)

12 Months Ended

Dec. 31, 2016

Segment Reporting [Abstract]

Segment Revenues and Earnings

	Real Estate		Mineral Resources		Other			Items Not Allocated to Segments				Total
	(In thousands)
For the year or at year-end 2016
Revenues	$	190,273	$	5,076	$	1,965		$	—			$	197,314
Depreciation, depletion and amortization	976		145		352			7,772				9,245
Equity in earnings of unconsolidated ventures	5,778		173		172			—				6,123
Income (loss) before taxes from continuing operations attributable to Forestar Group Inc.	121,420		3,327		(4,625		)	(29,307		)	(a)	90,815
Total assets (b)	403,062		38,907		11,531			279,694				733,194
Investment in unconsolidated ventures	77,611		—		—			—				77,611
Capital expenditures	5,783		—		299			56				6,138
For the year or at year-end 2015
Revenues	$	202,830	$	9,094	$	6,652		$	—			$	218,576
Depreciation, depletion and amortization	7,605		383		540			8,166				16,694
Equity in earnings of unconsolidated ventures	15,582		275		151			—				16,008
Income (loss) before taxes from continuing operations attributable to Forestar Group Inc.	67,678		4,230		(608		)	(63,086		)	(a)	8,214
Total assets (b)	691,238		39,469		19,106			117,466				867,279
Investment in unconsolidated ventures	82,453		—		—			—				82,453
Capital expenditures	13,644		59		745			242				14,690
For the year or at year-end 2014
Revenues	$	213,112	$	15,690	$	9,362		$	—			$	238,164
Depreciation, depletion and amortization	3,741		684		497			8,035				12,957
Equity in earnings of unconsolidated ventures	8,068		586		31			—				8,685
Income (loss) before taxes from continuing operations attributable to Forestar Group Inc.	96,906		9,116		5,499			(54,479		)	(a)	57,042
Investment in unconsolidated ventures	65,005		—		—			—				65,005
Capital expenditures	28,980		2,240		5,817			616				37,653

 _____________________

^(a)  Items not allocated to segments consist of:

	For the Year
	2016			2015			2014
	(In thousands)
General and administrative expense	$	(18,274	)	$	(24,802	)	$	(21,229	)
Share-based and long-term incentive compensation expense	(4,425		)	(4,474		)	(3,417		)
Gain on sale of assets	48,891			—			—
Interest expense	(19,985		)	(34,066		)	(30,286		)
Loss on extinguishment of debt, net	(35,864		)	—			—
Other corporate non-operating income	350			256			453
	$	(29,307	)	$	(63,086	)	$	(54,479	)

^(b)  Total assets excludes assets of discontinued operations of $14 and $104,967 in 2016 and 2015.

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Share-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Components of Share-Based Compensation Expense (Income)

Share-based and long-term incentive compensation expense consists of:

	For the Year
	2016		2015			2014
	(In thousands)
Cash-settled awards	$	717	$	(3,127	)	$	(3,710	)
Equity-settled awards	2,444		5,026			5,168
Restricted stock	22		(8		)	(25		)
Stock options	854		2,355			1,984
Total share-based compensation	$	4,037	$	4,246		$	3,417
Deferred cash	388		228			—
	$	4,425	$	4,474		$	3,417

Share-Based Compensation Expense (Income) Included in Operating Expense

Share-based and long-term incentive compensation expense is included in:

	For the Year
	2016		2015		2014
	(In thousands)
General and administrative	$	3,323	$	2,451	$	1,001
Other operating	1,102		2,023		2,416
	$	4,425	$	4,474	$	3,417

Summarized Activity of Cash-Settled Restricted Stock Unit Awards

The following table summarizes the activity of cash-settled restricted stock unit awards in 2016:

	Equivalent Units		Weighted Average Grant Date Fair Value
	(In thousands)		(Per unit)
Non-vested at beginning of period	117		$16.00
Granted	—		—
Vested	(41	)	18.84
Forfeited	(34	)	13.83
Non-vested at end of period	42		14.98

Summarized Activity of Cash-Settled Stock Appreciation Rights

The following table summarizes the activity of cash-settled stock appreciation rights in 2016:

	Rights Outstanding		Weighted Average Exercise Price	Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (Current Value Less Exercise Price)
	(In thousands)		(Per share)	(In years)	(In thousands)
Balance at beginning of period	487		$12.97	4	$404
Granted	—		—
Exercised	(52	)	9.29
Forfeited	(61	)	16.12
Balance at end of period	374		12.97	3	773
Exercisable at end of period	345		12.87	3	773

Summarized Activity of Equity-Settled Awards

The following table summarizes the activity of equity-settled awards in 2016:

	Equivalent Units		Weighted Average Grant Date Fair Value
	(In thousands)		(Per unit)
Non-vested at beginning of period	631		$	18.25
Granted	313		9.04
Vested	(281	)	15.12
Forfeited	(108	)	17.91
Non-vested at end of period	555		14.70

Schedule of Fair Value Assumptions of MSU Awards

We estimate the grant date fair value of MSU awards using a Monte Carlo simulation pricing model and the following assumptions:

	For the Year
	2015			2014
Expected stock price volatility	32.9		%	42.2		%
Risk-free interest rate	1.0		%	0.7		%
Expected dividend yield	—		%	—		%
Weighted average grant date fair value of MSU awards (per unit)	$	15.11		$	20.38

Summarized Activity of Restricted Stock Awards

The following table summarizes the activity of restricted stock awards in 2016:

	Restricted Shares		Weighted Average Grant Date Fair Value
	(In thousands)		(Per unit)
Non-vested at beginning of period	4		$	20.55
Granted	—		—
Vested	(4	)	20.55
Forfeited	—		—
Non-vested at end of period	—		—

Summarized Activity of Stock Option Awards

The following table summarizes the activity of stock option awards in 2016:

	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value (Current Value Less Exercise Price)
	(In thousands)		(Per share)		(In years)	(In thousands)
Balance at beginning of period	2,171		$	19.56	5	$	156
Granted	53		9.98
Exercised	(35	)	9.29
Forfeited	(353	)	20.03
Balance at end of period	1,836		19.39		5	449
Exercisable at end of period	1,597		20.25		4	261

Schedule of Fair Value Assumptions of Stock Options

We estimate the grant date fair value of stock options that do not have a market condition using the Black-Scholes option pricing model and the following assumptions:

	For the Year
	2016			2015
Expected stock price volatility	39.5		%	45.6		%
Risk-free interest rate	1.5		%	1.8		%
Expected life of options (years)	6			6
Expected dividend yield	—		%	—		%
Weighted average grant date fair value of options (per share)	$	8.60		$	6.51

We estimated the fair value of these options with market conditions using Monte Carlo simulation pricing model and the following assumptions:

Expected stock price volatility	61.4		%
Risk-free interest rate	2.2		%
Expected dividend yield	—		%
Weighted average grant date fair value of options (per share)	$	7.87

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Supplemental Oil and Gas Disclosures (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2016

Summary of Estimated Quantities of Proved Developed Oil and Natural Gas Reserves

Estimated quantities of proved oil and gas reserves are summarized as follows:

	Reserves
	Oil (a) (Barrels)		Gas (Mcf)
	(In thousands)
Consolidated entities:
Year-end 2013	5,824		13,630
Revisions of previous estimates	608		293
Extensions and discoveries	2,191		774
Acquisitions	85		31
Sales	(105	)	(218	)
Production	(931	)	(1,861	)
Year-end 2014	7,672		12,649
Revisions of previous estimates	(855	)	(1,675	)
Extensions and discoveries	224		173
Acquisitions	—		—
Sales	(704	)	(1,223	)
Production	(1,158	)	(1,967	)
Year-end 2015	5,179		7,957
Revisions of previous estimates	(11	)	631
Extensions and discoveries	29		—
Acquisitions	—		—
Sales	(4,460	)	(3,756	)
Production	(291	)	(996	)
Year-end 2016	446		3,836
Our share of ventures accounted for using the equity method:
Year-end 2013	—		2,332
Revisions of previous estimates	—		(382	)
Production	—		(199	)
Year-end 2014	—		1,751
Revisions of previous estimates	—		(320	)
Production	—		(168	)
Year-end 2015	—		1,263
Revisions of previous estimates	—		79
Production	—		(143	)
Year-end 2016	—		1,199
Total consolidated and our share of equity method ventures:
Year-end 2014
Proved developed reserves	5,269		12,599
Proved undeveloped reserves	2,403		1,801
Total Year-end 2014	7,672		14,400
Year-end 2015
Proved developed reserves	5,179		9,220
Proved undeveloped reserves	—		—
Total Year-end 2015	5,179		9,220
Year-end 2016
Proved developed reserves	446		5,035
Proved undeveloped reserves	—		—
Total Year-end 2016	446		5,035

 _____________________

^(a)  Includes natural gas liquids (NGLs).

Costs Incurred in Oil and Natural Gas Property Acquisition, Exploration and Development Activities

Costs incurred in oil and gas property acquisition, exploration and development activities, whether capitalized or expensed, follows:

	For the Year
	2016		2015		2014
	(In thousands)
Consolidated entities:
Acquisition costs
Proved properties	$	—	$	—	$	2,001
Unproved properties	15		4,832		25,666
Exploration costs	21		17,922		39,399
Development costs	537		27,609		40,277
	$	573	$	50,363	$	107,343

Estimates of Future Cash Flows from Proved Developed Oil and Natural Gas Reserves

Estimates of future cash flows from proved oil and gas reserves are shown in the following table. Estimated income taxes are calculated by applying the appropriate tax rates to the estimated future pre-tax net cash flows less depreciation of the tax basis of properties and the statutory depletion allowance.

	At Year-End
	2016			2015			2014
	(In thousands)
Consolidated entities:
Future cash inflows	$	24,304		$	216,588		$	665,657
Future production and development costs	(2,988		)	(93,623		)	(271,735		)
Future income tax expenses	(3,926		)	(22,218		)	(106,002		)
Future net cash flows	17,390			100,747			287,920
10% annual discount for estimated timing of cash flows	(7,077		)	(33,951		)	(124,079		)
Standardized measure of discounted future net cash flows	$	10,313		$	66,796		$	163,841
Our share in ventures accounted for using the equity method:
Future cash inflows	$	2,010		$	2,283		$	6,186
Future production and development costs	(216		)	(245		)	(664		)
Future income tax expenses	(537		)	(774		)	(2,098		)
Future net cash flows	1,257			1,264			3,424
10% annual discount for estimated timing of cash flows	(585		)	(562		)	(1,649		)
Standardized measure of discounted future net cash flows	$	672		$	702		$	1,775
Total consolidated and our share of equity method ventures	$	10,985		$	67,498		$	165,616

Changes in Standardized Measure of Discounted Future Net Cash Flow

Changes in the standardized measure of discounted future net cash flow follows:

	For the Year
	Consolidated			Our Share of Equity Method Ventures			Total
	(In thousands)
Year-end 2013	$	135,553		$	1,300		$	136,853
Changes resulting from:
Net change in sales prices and production costs	(1,064		)	1,571			507
Net change in future development costs	1,308			—			1,308
Sales of oil and gas, net of production costs	(63,192		)	(787		)	(63,979		)
Net change due to extensions and discoveries	58,228			—			58,228
Net change due to acquisition of reserves	2,778			—			2,778
Net change due to divestitures of reserves	(5,804		)	—			(5,804		)
Net change due to revisions of quantity estimates	15,303			(343		)	14,960
Previously estimated development costs incurred	15,497			—			15,497
Accretion of discount	18,067			210			18,277
Net change in timing and other	4,198			115			4,313
Net change in income taxes	(17,031		)	(291		)	(17,322		)
Aggregate change for the year	28,288			475			28,763
Year-end 2014	163,841			1,775			165,616
Changes resulting from:
Net change in sales prices and production costs	(136,536		)	(1,112		)	(137,648		)
Net change in future development costs	92			—			92
Sales of oil and gas, net of production costs	(31,732		)	(428		)	(32,160		)
Net change due to extensions and discoveries	11,747			—			11,747
Net change due to acquisition of reserves	—			—			—
Net change due to divestitures of reserves	(15,855		)	—			(15,855		)
Net change due to revisions of quantity estimates	(15,164		)	(267		)	(15,431		)
Previously estimated development costs incurred	15,096			—			15,096
Accretion of discount	22,600			286			22,886
Net change in timing and other	4,018			(210		)	3,808
Net change in income taxes	48,689			658			49,347
Aggregate change for the year	(97,045		)	(1,073		)	(98,118		)
Year-end 2015	66,796			702			67,498
Changes resulting from:
Net change in sales prices and production costs	(3,585		)	(60		)	(3,645		)
Net change in future development costs	—			—			—
Sales of oil and gas, net of production costs	(5,663		)	(208		)	(5,871		)
Net change due to extensions and discoveries	410			—			410
Net change due to acquisition of reserves	—			—			—
Net change due to divestitures of reserves	(63,535		)				(63,535		)
Net change due to revisions of quantity estimates	1,304			63			1,367
Previously estimated development costs incurred	—			—			—
Accretion of discount	2,992			113			3,105
Net change in timing and other	(128		)	(80		)	(208		)
Net change in income taxes	11,722			142			11,864
Aggregate change for the year	(56,483		)	(30		)	(56,513		)
Year-end 2016	$	10,313		$	672		$	10,985

Information About Results of Operations of Oil and Natural Gas Interests

Information about the results of operations of our oil and gas interests follows:

	For the Year
	2016			2015			2014
	(In thousands)
Consolidated entities
Revenues	$	10,111		$	51,553		$	82,919
Production costs	(4,392		)	(19,820		)	(19,727		)
Exploration costs	(124		)	(11,864		)	(17,416		)
Depreciation, depletion, amortization	(2,157		)	(28,774		)	(29,442		)
Non-cash impairment of proved oil and gas properties and unproved leasehold interests	(612		)	(164,831		)	(32,665		)
Oil and gas administrative expenses	(8,700		)	(11,700		)	(17,000		)
Accretion expense	(56		)	(144		)	(121		)
Income tax (expense) benefit	(20		)	14,717			13,398
Results of operations	(5,950		)	(170,863		)	(20,054		)
Our share in ventures accounted for using the equity method:
Revenues	$	284		$	428		$	786
Production costs	(76		)	(102		)	(105		)
Oil and gas administrative expenses	(35		)	(51		)	(95		)
Income tax (expense) benefit	—			21			(235		)
Results of operations	$	173		$	296		$	351
Total results of operations	$	(5,777	)	$	(170,567	)	$	(19,703	)

Consolidated Entities

Capitalized Costs Relating to Oil and Gas Producing Activities Disclosure

Capitalized costs related to our oil and gas producing activities classified as assets held for sale at year-end 2016 are as follows:

	At Year-End
	2016			2015
	(In thousands)
Consolidated entities:
Unproved oil and gas properties	$	374		$	19,441
Proved oil and gas properties	5,159			119,414
Total costs	5,533			138,855
Less accumulated depreciation, depletion and amortization	(4,751		)	(58,242		)
	$	782		$	80,613

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Summary of Quarterly Results of Operations (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2016

Quarterly Financial Information Disclosure [Abstract]

Summary of Quarterly Results of Operations

Summarized quarterly financial results for 2016 and 2015 follows:

	First Quarter (a)			Second Quarter (a)			Third     Quarter (a)			Fourth     Quarter (a)
	(In thousands, except per share amounts)
2016
Total revenues	$	37,618		$	47,992		$	47,207		$	64,497
Gross profit (loss)	18,579			(24,953		)	17,403			17,352
Operating income (loss)	13,590			69,528			6,256			50,980
Equity in earnings of unconsolidated ventures	47			188			3,637			2,251
Income from continuing operations before taxes attributable to Forestar Group Inc.	5,992			26,591			7,163			51,069
Income (loss) from discontinued operations, net of taxes	(8,216		)	(2,048		)	(7,164		)	563
Net income (loss) attributable to Forestar Group Inc.	(4,376		)	9,614			9,665			43,745
Net income (loss) per share — basic
Continuing operations	$	0.11		$	0.28		$	0.40		$	1.03
Discontinued operations	$	(0.24	)	$	(0.05	)	$	(0.17	)	$	0.01
Net income (loss) per share — basic	$	(0.13	)	$	0.23		$	0.23		$	1.04
Net income (loss) per share — diluted
Continuing operations	$	0.09		0.28			0.40			$	1.02
Discontinued operations	$	(0.19	)	(0.05		)	(0.17		)	$	0.01
Net income (loss) per share — diluted	$	(0.10	)	0.23			0.23			$	1.03
2015
Total revenues	$	37,374		$	43,625		$	32,185		$	105,392
Gross profit (loss)	18,012			21,060			12,879			46,655
Operating income (loss)	(3,424		)	5,919			(8,482		)	29,929
Equity in earnings of unconsolidated ventures	3,045			5,584			2,909			4,470
Income from continuing operations before taxes attributable to Forestar Group Inc.	(8,204		)	3,382			(13,711		)	26,747
Income (loss) from discontinued operations, net of taxes	(2,719		)	(36,992		)	(106,937		)	(39,482		)
Net loss attributable to Forestar Group Inc.	(8,158		)	(34,507		)	(164,216		)	(6,166		)
Net income (loss) per share — basic
Continuing operations	$	(0.16	)	$	0.07		$	(1.67	)	$	0.97
Discontinued operations	$	(0.08	)	$	(1.08	)	$	(3.12	)	$	(1.15	)
Net income (loss) per share — basic	$	(0.24	)	$	(1.01	)	$	(4.79	)	$	(0.18	)
Net income (loss) per share — diluted
Continuing operations	$	(0.16	)	$	0.06		$	(1.67	)	$	0.79
Discontinued operations	$	(0.08	)	$	(0.87	)	$	(3.12	)	$	(0.93	)
Net income (loss) per share — diluted	$	(0.24	)	$	(0.81	)	$	(4.79	)	$	(0.14	)

 _____________________

^(a)Non-cash impairment charges related to real estate, water assets and unproved leasehold interests and proved oil and gas properties included in our quarterly financial results are as follows:

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
	(In thousands)
2016
Continuing operations	$	—	$	48,826	$	7,627	$	3,874
Discontinued operations	$	—	$	612	$	—	$	—
2015
Continuing operations	$	504	$	225	$	—	$	315
Discontinued operations	$	7	$	45,938	$	81,240	$	37,646

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Summary of Significant Accounting Policies - Additional Information (Detail) a in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) a community_development_project multifamily_site	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)	Feb. 17, 2017 USD ($)
Significant Accounting Policies [Line Items]
Restricted cash and cash equivalents	$ 275,000	$ 200,000
Capital expenditures incurred but not yet paid	834,000	7,033,000
Non-cash impairment charges	60,939,000	108,184,000	$ 15,934,000
Capitalized exploratory well costs	0
Non-Oil And Gas Properties
Significant Accounting Policies [Line Items]
Depreciation expense of property and equipment	$ 889,000	1,067,000	903,000
Minimum
Significant Accounting Policies [Line Items]
Reimbursement range on water, sewer and other infrastructure-related assets	70.00%
Maximum
Significant Accounting Policies [Line Items]
Reimbursement range on water, sewer and other infrastructure-related assets	90.00%
Capitalize reforestation costs	2 years
Computer Software, Intangible Asset
Significant Accounting Policies [Line Items]
Carrying value of capitalized software	$ 52,000	237,000
Capitalized software amortization	$ 155,000	996,000	1,067,000
Computer Software, Intangible Asset | Minimum
Significant Accounting Policies [Line Items]
Useful life range	3 years
Computer Software, Intangible Asset | Maximum
Significant Accounting Policies [Line Items]
Useful life range	5 years
Georgia
Significant Accounting Policies [Line Items]
Timber owned directly or through ventures | a	19
Depletion	$ 63,000	$ 250,000	$ 371,000
Real Estate Impairment Charges
Significant Accounting Policies [Line Items]
Non-cash impairment charges	$ 56,453,000
Community Development Project
Significant Accounting Policies [Line Items]
Number of properties impaired | community_development_project	6
Multifamily Site
Significant Accounting Policies [Line Items]
Number of properties impaired | multifamily_site	2
Water Resources Company | Texas
Significant Accounting Policies [Line Items]
Non-cash impairment charges	$ 3,874,000
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Community Development Project
Significant Accounting Policies [Line Items]
Number of properties impaired | community_development_project	4
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Multifamily Site
Significant Accounting Policies [Line Items]
Number of properties impaired | multifamily_site	1
Disposal Group, Disposed of by Sale, Not Discontinued Operations | The Mineral Companies | Subsequent Event
Significant Accounting Policies [Line Items]
Purchase price of properties sold				$ 85,600,000

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Summary of Significant Accounting Policies - Schedule of Change in Asset Retirement Obligation (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Asset Retirement Obligation [Roll Forward]
Beginning balance	$ 1,758	$ 1,807
Additions	6	65
Oil and gas working interest property dispositions	(1,610)	(119)
Liabilities settled	(107)	(139)
Accretion expense	56	144
Ending balance	$ 103	$ 1,758

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Summary of Significant Accounting Policies - Estimated Useful Lives of Property Plant and Equipment (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	$ 7,657	$ 16,274
Less: accumulated depreciation	(4,541)	(5,542)
Property Plant And Equipment, Net	3,116	10,732
Building and Building Improvements
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	2,700	4,044
Property and Equipment
Property, Plant and Equipment [Line Items]
Property plant and equipment, gross	$ 4,957	$ 12,230
Minimum | Building and Building Improvements
Property, Plant and Equipment [Line Items]
Property plant and equipment, useful life	10 years
Minimum | Property and Equipment
Property, Plant and Equipment [Line Items]
Property plant and equipment, useful life	2 years
Maximum | Building and Building Improvements
Property, Plant and Equipment [Line Items]
Property plant and equipment, useful life	40 years
Maximum | Property and Equipment
Property, Plant and Equipment [Line Items]
Property plant and equipment, useful life	10 years

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New and Pending Accounting Pronouncements - Narrative (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net	$ (1,633)	$ (8,267)
Accounting Standards Update 2015-03 | Long-term Debt
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net		(8,267)
Accounting Standards Update 2015-03 | Other Assets
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Deferred finance costs, net		$ 8,267

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Real Estate - Real Estate (Detail) - USD ($) $ in Thousands		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Real Estate Properties [Line Items]
Carrying value		$ 293,003	$ 618,844
Accumulated depreciation		0	(32,129)	$ (31,377)	$ (28,066)
Net carrying value		293,003	586,715
Entitled, developed and under development projects
Real Estate Properties [Line Items]
Carrying value		263,859	352,141
Accumulated depreciation		0
Net carrying value		263,859	352,141
Undeveloped land (includes land in entitlement)
Real Estate Properties [Line Items]
Carrying value		29,144	98,181
Accumulated depreciation		0
Net carrying value		29,144	98,181
Radisson Hotel & Suites
Real Estate Properties [Line Items]
Carrying value		0	62,889
Accumulated depreciation		0	(29,268)
Net carrying value	[1]	0	33,621
Eleven
Real Estate Properties [Line Items]
Carrying value		0	53,896
Accumulated depreciation		0	(2,861)
Net carrying value	[1]	0	51,035
Dillon
Real Estate Properties [Line Items]
Carrying value		0	19,987
Accumulated depreciation		0
Net carrying value	[1]	0	19,987
Music Row
Real Estate Properties [Line Items]
Carrying value		0	9,947
Accumulated depreciation		0
Net carrying value	[1]	0	9,947
Downtown Edge
Real Estate Properties [Line Items]
Carrying value		0	12,706
Accumulated depreciation		0
Net carrying value	[1]	0	12,706
West Austin
Real Estate Properties [Line Items]
Carrying value		0	9,097
Accumulated depreciation		0
Net carrying value	[2]	$ 0	$ 9,097

[1] Sold in 2016.

[2] Classified as assets held for sale at year-end 2016.

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Real Estate - Additional Information (Detail)	12 Months Ended			120 Months Ended
	Dec. 31, 2016 USD ($) a property room transaction community_development_project multifamily_site	Dec. 31, 2015 USD ($) property	Dec. 31, 2014 USD ($)	Dec. 31, 2016 USD ($) a property room
Real Estate Properties [Line Items]
Non-cash impairment charges	$ 60,939,000	$ 108,184,000	$ 15,934,000
Payment of debt	315,229,000	58,220,000	225,481,000
Gain of sale of assets	166,747,000	1,585,000	29,512,000
General contractor costs	392,000	1,543,000	5,111,000
Recovery of direct costs	(27,107,000)	(15,176,000)	(66,047,000)
Income Producing Properties | Land, Buildings and Improvements
Real Estate Properties [Line Items]
Depreciation expense, related to commercial and income producing properties	816,000	6,810,000	3,319,000
Utility and Improvement District
Real Estate Properties [Line Items]
Cost of asset in developed and under development projects	45,157,000	67,554,000		$ 45,157,000
Cibolo Canyons Project | San Antonio, Texas
Real Estate Properties [Line Items]
Gain of sale of assets	1,219,000	1,160,000	6,577,000
Cost of asset in developed and under development projects	14,749,000	22,302,000		14,749,000
Recovery of direct costs				45,132,000
Costs relate to water, sewer and other infrastructure assets				54,376,000
Consolidated Properties
Real Estate Properties [Line Items]
Recovery of direct costs	26,606,000
Bonds | Cibolo Canyons Project | San Antonio, Texas
Real Estate Properties [Line Items]
Payments received from special improvement district	501,000	425,000	50,550,000
Debt instrument, face amount			48,900,000
Letters of credit outstanding, amount			$ 6,846,000
Surety bond for bond trustee	$ 6,631,000			$ 6,631,000
Radisson Hotel & Suites, Austin | Austin, Texas
Real Estate Properties [Line Items]
Number of hotel rooms | room	413			413
Sales price	$ 130,000,000			$ 130,000,000
Net proceeds	128,764,000
Payment of debt	15,400,000
Gain of sale of assets	95,336,000
Eleven | Multi Family Property | Austin, Texas
Real Estate Properties [Line Items]
Sales price	60,150,000			$ 60,150,000
Net proceeds	59,719,000
Payment of debt	23,936,000
Gain of sale of assets	$ 9,116,000
Number of units of multifamily project | property	257			257
Dillon | Charlotte, North Carolina
Real Estate Properties [Line Items]
Sales price	$ 25,979,000			$ 25,979,000
Net proceeds	25,428,000
Gain of sale of assets	$ 1,223,000
Number of units of multifamily project | property	379			379
Music Row | Nashville, Tennessee
Real Estate Properties [Line Items]
Sales price	$ 15,025,000			$ 15,025,000
Net proceeds	14,703,000
Gain of sale of assets	$ 3,968,000
Number of units of multifamily project | property	230			230
Downtown Edge | Austin, Texas
Real Estate Properties [Line Items]
Sales price	$ 5,000,000			$ 5,000,000
Net proceeds	4,975,000
Gain of sale of assets	(3,870,000)
Midtown
Real Estate Properties [Line Items]
Net proceeds		$ 42,639,000
Number of units of multifamily project | property		354
Real estate property sale price		$ 42,880,000
Segment earnings from sale of multifamily property		9,265,000
Repayments of debt		$ 24,166,000
Real Estate Impairment Charges
Real Estate Properties [Line Items]
Non-cash impairment charges	$ 56,453,000
Community Development Project
Real Estate Properties [Line Items]
Number of properties impaired | community_development_project	6
Multifamily Site
Real Estate Properties [Line Items]
Number of properties impaired | multifamily_site	2
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Georgia and Alabama
Real Estate Properties [Line Items]
Sales price	$ 104,172,000			$ 104,172,000
Net proceeds	103,238,000
Gain of sale of assets	$ 48,891,000
Area of land (in acres) | a	58,300			58,300
Number of transactions | transaction	3
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Community Development Project
Real Estate Properties [Line Items]
Number of properties impaired | community_development_project	4
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Multifamily Site
Real Estate Properties [Line Items]
Number of properties impaired | multifamily_site	1

XML

Investment In Unconsolidated Ventures - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) property venture	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Number of ventures under ownership interest using equity method | venture	16
Gain of sale of assets	$ 166,747	$ 1,585	$ 29,512
Distributions	13,419	24,909	7,518
Investment in unconsolidated ventures	6,089	26,349	14,692
Fees for services	$ 2,466	$ 1,856	$ 2,275
Variable Interest Entity, Primary Beneficiary
Number of ventures that are a VIE | venture	0
FMF Peakview
Net proceeds	$ 13,917
Gain of sale of assets	$ 10,363
FMF Peakview | Multi Family Property
Number of units of multifamily project | property	304

XML

Investment In Unconsolidated Ventures - Summarized Balance Sheet Information (Detail) - USD ($) $ in Thousands		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Schedule of Equity Method Investments [Line Items]
Venture Assets		$ 279,674	$ 309,067
Venture Borrowings	[1]	128,288	134,103
Venture Equity		141,802	154,738
Investment in unconsolidated ventures		77,611	82,453	$ 65,005
242, LLC
Schedule of Equity Method Investments [Line Items]
Venture Assets	[2]	26,503	26,687
Venture Borrowings	[2]	1,107	0
Venture Equity	[2]	23,136	24,877
Investment in unconsolidated ventures	[2]	10,934	11,766
CL Ashton Woods
Schedule of Equity Method Investments [Line Items]
Venture Assets	[3]	2,653	7,654
Venture Borrowings	[3]	0	0
Venture Equity	[3]	2,198	6,084
Investment in unconsolidated ventures	[3]	1,107	3,615
CL Realty
Schedule of Equity Method Investments [Line Items]
Venture Assets		8,048	7,872
Venture Borrowings		0	0
Venture Equity		7,899	7,662
Investment in unconsolidated ventures		3,950	3,831
CREA FMF
Schedule of Equity Method Investments [Line Items]
Venture Assets	[2]	56,081	57,820
Venture Borrowings	[2]		50,845
Venture Equity	[2]	17,091	4,291
Investment in unconsolidated ventures	[2]	4,923	3,820
Elan 99 LLC
Schedule of Equity Method Investments [Line Items]
Venture Assets		49,652	34,192
Venture Borrowings			14,587
Venture Equity		13,100	15,838
Investment in unconsolidated ventures		11,790	14,255
FMF Littleton
Schedule of Equity Method Investments [Line Items]
Venture Assets		70,282	52,376
Venture Borrowings		44,446	22,347
Venture Equity		23,798	24,370
Investment in unconsolidated ventures		6,128	6,270
FMF Peakview
Schedule of Equity Method Investments [Line Items]
Venture Assets		0	48,869
Venture Borrowings		0	30,485
Venture Equity		0	16,828
Investment in unconsolidated ventures		0	3,447
FOR/SR Forsyth LLC
Schedule of Equity Method Investments [Line Items]
Venture Assets		10,672	6,500
Venture Borrowings		1,568	0
Venture Equity		8,990	6,500
Investment in unconsolidated ventures		8,091	5,850
HM Stonewall Estates
Schedule of Equity Method Investments [Line Items]
Venture Assets	[3]	852	2,842
Venture Borrowings	[3]	0	0
Venture Equity	[3]	852	2,842
Investment in unconsolidated ventures	[3]	477	1,294
LM Land Holdings
Schedule of Equity Method Investments [Line Items]
Venture Assets	[3]	25,538	31,984
Venture Borrowings	[3]	3,477	7,728
Venture Equity	[3]	20,945	22,751
Investment in unconsolidated ventures	[3]	9,685	9,664
MRECV DT Holdings LLC
Schedule of Equity Method Investments [Line Items]
Venture Assets		4,155	4,215
Venture Borrowings		0	0
Venture Equity		4,144	4,215
Investment in unconsolidated ventures		3,729	3,807
MRECV Edelweiss LLC
Schedule of Equity Method Investments [Line Items]
Venture Assets		3,484	2,237
Venture Borrowings		0	0
Venture Equity		3,484	2,237
Investment in unconsolidated ventures		3,358	2,029
MRECV Juniper Ridge LLC
Schedule of Equity Method Investments [Line Items]
Venture Assets		4,156	3,006
Venture Borrowings		0	0
Venture Equity		4,156	3,006
Investment in unconsolidated ventures		3,741	2,730
MRECV Meadow Crossing II LLC
Schedule of Equity Method Investments [Line Items]
Venture Assets		2,492	728
Venture Borrowings		0	0
Venture Equity		2,491	728
Investment in unconsolidated ventures		2,242	655
Miramonte Boulder Pass, LLC
Schedule of Equity Method Investments [Line Items]
Venture Assets		10,738	12,627
Venture Borrowings		4,006	5,869
Venture Equity		5,265	5,474
Investment in unconsolidated ventures		5,330	5,349
Temco
Schedule of Equity Method Investments [Line Items]
Venture Assets		4,368	5,284
Venture Borrowings		0	0
Venture Equity		4,253	5,113
Investment in unconsolidated ventures		2,126	2,557
Other Ventures
Schedule of Equity Method Investments [Line Items]
Venture Assets	[4]	0	4,174
Venture Borrowings	[4]	0	2,242
Venture Equity	[4]	0	1,922
Investment in unconsolidated ventures	[4]	0	$ 1,514
Nashville, Tennessee | Construction Loans | CREA FMF
Schedule of Equity Method Investments [Line Items]
Venture Borrowings	[2]	37,446
Houston, Texas | Construction Loans | Elan 99 LLC
Schedule of Equity Method Investments [Line Items]
Venture Borrowings		$ 36,238

[1] Total includes current maturities of $89,756,000 at year-end 2016, of which $78,557,000 is non-recourse to us, and $39,590,000 at year-end 2015, of which $29,691,000 is non-recourse to us.

[2] Includes unamortized deferred gains on real estate contributed by us to ventures. We recognize deferred gains as income as real estate is sold to third parties. Deferred gains of $1,457,000 are reflected as a reduction to our investment in unconsolidated ventures at year-end 2016.

[3] Includes unrecognized basis difference of $259,000 which is reflected as an increase of our investment in unconsolidated ventures at year-end 2016. This difference between estimated fair value of the equity investment and our capital account within the respective ventures at closing will be accreted as income or expense over the life of the investment and included in our share of earnings (loss) from the respective ventures.

[4] Our share of venture earnings in 2016 includes reallocation of prior year cumulative losses incurred by the venture as a result of equity contribution by the venture partner in 2016.

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Investment In Unconsolidated Ventures - Summarized Income Statement Information (Detail) - USD ($) $ in Thousands		3 Months Ended								12 Months Ended
		Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Schedule of Equity Method Investments [Line Items]
Revenues										$ 46,130	$ 125,729	$ 42,443
Earnings (Loss)										9,119	59,320	25,288
Our share of earnings (loss)		$ 2,251	$ 3,637	$ 188	$ 47	$ 4,470	$ 2,909	$ 5,584	$ 3,045	6,123	16,008	8,685
242, LLC
Schedule of Equity Method Investments [Line Items]
Revenues	[1]									5,835	20,995	5,612
Earnings (Loss)	[1]									1,259	9,588	2,951
Our share of earnings (loss)	[1]									668	4,919	1,514
CL Ashton Woods
Schedule of Equity Method Investments [Line Items]
Revenues	[2]									2,870	9,820	5,431
Earnings (Loss)	[2]									914	3,881	1,748
Our share of earnings (loss)	[2]									1,332	5,000	2,471
CL Realty
Schedule of Equity Method Investments [Line Items]
Revenues										567	856	1,573
Earnings (Loss)										237	424	1,068
Our share of earnings (loss)										119	212	534
CREA FMF
Schedule of Equity Method Investments [Line Items]
Revenues	[1],[2]									4,955	1,227	0
Earnings (Loss)	[1],[2]									(1,420)	(1,696)	(163)
Our share of earnings (loss)	[1],[2]									1,103	(1,696)	(163)
Elan 99 LLC
Schedule of Equity Method Investments [Line Items]
Revenues										1,392	0	0
Earnings (Loss)										(2,739)	(49)	(87)
Our share of earnings (loss)										(2,465)	(44)	(78)
FMF Littleton
Schedule of Equity Method Investments [Line Items]
Revenues										3,116	120	0
Earnings (Loss)										(571)	(367)	(239)
Our share of earnings (loss)										(143)	(92)	(60)
FMF Peakview
Schedule of Equity Method Investments [Line Items]
Revenues										939	2,057	4
Earnings (Loss)										(248)	(1,116)	(410)
Our share of earnings (loss)										(50)	(223)	(83)
FOR/SR Forsyth LLC
Schedule of Equity Method Investments [Line Items]
Revenues										0	0
Earnings (Loss)										(65)	0
Our share of earnings (loss)										(58)	0
HM Stonewall Estates
Schedule of Equity Method Investments [Line Items]
Revenues	[3]									2,112	3,990	1,728
Earnings (Loss)	[3]									832	1,881	613
Our share of earnings (loss)	[3]									361	952	248
LM Land Holdings
Schedule of Equity Method Investments [Line Items]
Revenues	[3]									10,001	10,956	21,980
Earnings (Loss)	[3]									7,288	8,251	15,520
Our share of earnings (loss)	[3]									2,458	3,342	4,827
MRECV DT Holdings LLC
Schedule of Equity Method Investments [Line Items]
Revenues										495	0
Earnings (Loss)										477	167
Our share of earnings (loss)										429	0
MRECV Edelweiss LLC
Schedule of Equity Method Investments [Line Items]
Revenues										416	0
Earnings (Loss)										409	151
Our share of earnings (loss)										368	137
MRECV Juniper Ridge LLC
Schedule of Equity Method Investments [Line Items]
Revenues										379	0
Earnings (Loss)										380	106
Our share of earnings (loss)										342	0
MRECV Meadow Crossing II LLC
Schedule of Equity Method Investments [Line Items]
Revenues										267	0	0
Earnings (Loss)										220	0	0
Our share of earnings (loss)										198	0	0
Miramonte Boulder Pass, LLC
Schedule of Equity Method Investments [Line Items]
Revenues										4,923	0
Earnings (Loss)										(399)	(250)
Our share of earnings (loss)										(200)	(125)
PSW Communities
Schedule of Equity Method Investments [Line Items]
Revenues										0	29,986	0
Earnings (Loss)										0	2,688	(86)
Our share of earnings (loss)										0	1,169	(76)
Temco
Schedule of Equity Method Investments [Line Items]
Revenues										1,344	9,485	2,155
Earnings (Loss)										440	2,358	494
Our share of earnings (loss)										220	1,179	247
Other Ventures
Schedule of Equity Method Investments [Line Items]
Revenues										6,519	36,237	3,960
Earnings (Loss)										2,105	33,303	3,879
Our share of earnings (loss)										$ 1,441	$ 1,278	$ (696)

[1] Includes unamortized deferred gains on real estate contributed by us to ventures. We recognize deferred gains as income as real estate is sold to third parties. Deferred gains of $1,457,000 are reflected as a reduction to our investment in unconsolidated ventures at year-end 2016.

[2] Our share of venture earnings in 2016 includes reallocation of prior year cumulative losses incurred by the venture as a result of equity contribution by the venture partner in 2016.

[3] Includes unrecognized basis difference of $259,000 which is reflected as an increase of our investment in unconsolidated ventures at year-end 2016. This difference between estimated fair value of the equity investment and our capital account within the respective ventures at closing will be accreted as income or expense over the life of the investment and included in our share of earnings (loss) from the respective ventures.

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Investment In Unconsolidated Ventures - Summarized Income Statement Information (Footnotes) (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Schedule of Equity Method Investments [Line Items]
Reduction in investment	$ 259
242, LLC
Schedule of Equity Method Investments [Line Items]
Reduction in investment	1,457
Equity Method Investments
Schedule of Equity Method Investments [Line Items]
Long-term debt, current maturities	89,756	$ 39,590
Equity Method Investments | Non-recourse Debt
Schedule of Equity Method Investments [Line Items]
Long-term debt, current maturities	$ 78,557	$ 29,691

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Goodwill and Other Intangible Assets - Carrying Value of Goodwill and Other Intangible Assets (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 37,900	$ 41,774
Identified intangibles, net	0	1,681
Total	$ 37,900	$ 43,455

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Goodwill and Other Intangible Assets - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Schedule Of Goodwill And Other Intangible Assets [Line Items]
Goodwill acquired on acquisition	$ 37,900,000	$ 41,774,000
Non-cash impairment charges	60,939,000	108,184,000	$ 15,934,000
Unproved leasehold interests
Schedule Of Goodwill And Other Intangible Assets [Line Items]
Goodwill acquired on acquisition	37,900,000	37,900,000
Water Resources Company
Schedule Of Goodwill And Other Intangible Assets [Line Items]
Goodwill acquired on acquisition	0	$ 3,874,000
Water Resources Company | Groundwater Leases
Schedule Of Goodwill And Other Intangible Assets [Line Items]
Identified intangible assets	1,681,000
Texas | Water Resources Company
Schedule Of Goodwill And Other Intangible Assets [Line Items]
Non-cash impairment charges	$ 3,874,000

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Held for Sale (Additional Information) (Details)	Dec. 31, 2016 a
Disposal Group, Held-for-sale, Not Discontinued Operations
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Area of land (in acres)	19,000

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Held for Sale (Assets and Liabilities of Properties Held for Sale) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Assets Held for Sale [Abstract]
Property and equipment	$ 0	$ 79,733
Assets	14	104,967
Liabilities Held for Sale [Abstract]
Other liabilities	0	1,667
Liabiltiies	5,295	$ 11,192
Disposal Group, Held-for-sale, Not Discontinued Operations
Assets Held for Sale [Abstract]
Property and equipment	6,301
Other intangible assets	1,681
Assets	30,377
Liabilities Held for Sale [Abstract]
Other liabilities	103
Liabiltiies	103
Disposal Group, Held-for-sale, Not Discontinued Operations | Real Estate
Assets Held for Sale [Abstract]
Property and equipment	19,931
Disposal Group, Held-for-sale, Not Discontinued Operations | Timber
Assets Held for Sale [Abstract]
Property and equipment	1,682
Disposal Group, Held-for-sale, Not Discontinued Operations | Oil and Gas Properties
Assets Held for Sale [Abstract]
Property and equipment	$ 782

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Discontinued Operations (Summarized Results from Discontinued Operations) (Detail) - USD ($) $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Discontinued Operations and Disposal Groups [Abstract]
Revenues									$ 5,862	$ 43,845	$ 68,610
Cost of oil and gas producing activities									(6,578)	(221,402)	(94,581)
Other operating expenses									(7,754)	(10,363)	(14,357)
Loss from discontinued operations before income taxes									(8,470)	(187,920)	(40,328)
Gain (loss) on sale of assets before income taxes									(13,664)	(706)	8,526
Income tax benefit									5,269	2,496	12,193
Net income (loss) from discontinued operations available for diluted earnings per share	$ 563	$ (7,164)	$ (2,048)	$ (8,216)	$ (39,482)	$ (106,937)	$ (36,992)	$ (2,719)	$ (16,865)	$ (186,130)	$ (19,609)

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Discontinued Operations (Additional Information) (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) a well	Dec. 31, 2015 USD ($) a well	Dec. 31, 2014 USD ($) a well
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
(Loss) gain on disposition of proved property	$ (13,664)	$ (706)	$ 8,526
Net mineral acres leased from others sold | a	199,263
Gross producing oil and gas wells sold | well	379
Net producing oil and gas wells sold | well	95
Proceeds from sale of oil and gas property and equipment	$ 80,374	17,800	17,660
Reimbursement of capital costs related to sale of in progress wells	3,269
Non-cash impairment charges	60,939	$ 108,184	$ 15,934
Pending Litigation | Huffman vs. Forestar Petroleum Corporation
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Accrual for damages	2,990
Wyoming
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Environmental liability	1,155
Transaction
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Gas and oil area, undeveloped, net | a		109,000	650
Productive oil wells, number of wells, gross | well		39	124
Productive oil wells, number of wells, net | well		7	18
Cost of Sales
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Non-cash impairment charges	$ 612	$ 163,029	$ 32,665

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Discontinued Operations (Assets and Liabilities of Discontinued Operations) (Detail) (Details) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Assets of Discontinued Operations:
Receivables, net of allowance for bad debt	$ 6	$ 4,632
Oil and gas properties and equipment, net	0	79,733
Goodwill and other intangible assets	0	19,673
Prepaid expenses	8	96
Other assets	0	833
Assets	14	104,967
Liabilities of Discontinued Operations:
Accounts payable	67	342
Accrued property taxes	0	259
Other accrued expenses	5,228	8,924
Other liabilities	0	1,667
Liabiltiies	$ 5,295	$ 11,192

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Discontinued Operations (Significant Operating and Investing Activities of Discontinued Operations) (Detail) (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Net Cash Provided by (Used in) Operating Activities, Discontinuing Operations [Abstract]
Asset impairments	$ 60,939	$ 108,184	$ 15,934
Dry hole and unproved leasehold impairment costs	0	67,639	29,528
Loss (gain) on sale of assets	13,664	706	(8,526)
Depreciation, depletion and amortization	11,447	45,085	41,715
Cash provided by (used in) operating activities, discontinued operations	16,478	202,073	65,295
Net Cash Provided by (Used in) Investing Activities, Discontinuing Operations [Abstract] [Abstract]
Oil and gas properties and equipment	(579)	(49,717)	(101,145)
Acquisition of oil and gas properties	0	0	(1,100)
Cash provided by (used in) investing activities, discontinued operations	76,526	(31,917)	(84,585)
Discontinued Operations
Net Cash Provided by (Used in) Operating Activities, Discontinuing Operations [Abstract]
Asset impairments	612	105,337	15,535
Dry hole and unproved leasehold impairment costs	0	67,639	29,528
Loss (gain) on sale of assets	13,664	706	(8,526)
Depreciation, depletion and amortization	2,202	28,391	28,758
Net Cash Provided by (Used in) Investing Activities, Discontinuing Operations [Abstract] [Abstract]
Oil and gas properties and equipment	(579)	(49,717)	(101,145)
Acquisition of oil and gas properties	0	0	(1,100)
Proceeds from sales of assets	$ 77,105	$ 17,800	$ 17,660

XML

Receivables - Receivables (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivables, gross	$ 8,957	$ 19,051
Allowance for bad debts	(26)	(26)
Receivables, net	8,931	19,025
Funds held by qualified intermediary
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivables, gross	0	14,703
Other receivables and accrued interest
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivables, gross	1,505	2,218
Other loans secured by real estate
Accounts, Notes, Loans and Financing Receivable [Line Items]
Receivables, gross	$ 7,452	$ 2,130
Average interest rates	5.86%	11.31%

XML

Receivables - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2016 a
Funds held by qualified intermediary
Accounts, Notes, Loans and Financing Receivable [Line Items]
Area of land (in acres)	6,915
Minimum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Due period of notes receivable as secured by deed of trust	3 years
Maximum
Accounts, Notes, Loans and Financing Receivable [Line Items]
Due period of notes receivable as secured by deed of trust	5 years

XML

Debt - Schedule of Debt (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Line of Credit Facility [Line Items]
Debt	$ 110,358	$ 381,515
6% Tangible Equity Units
Line of Credit Facility [Line Items]
Debt	0	8,666
Senior Notes
Line of Credit Facility [Line Items]
Debt	5,200	224,647
Convertible Debt
Line of Credit Facility [Line Items]
Debt	104,673	104,719
Secured Promissory Notes
Line of Credit Facility [Line Items]
Debt	0	15,400
Other Indebtedness
Line of Credit Facility [Line Items]
Debt	$ 485	$ 28,083

XML

Debt - Debt (Detail)	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2013	Nov. 27, 2013	Feb. 26, 2013
Convertible Debt
Line of Credit Facility [Line Items]
Average interest rate	3.75%	3.75%
Variable and fixed interest rates ranging, minimum	3.75%		3.75%		3.75%
6% Tangible Equity Units
Line of Credit Facility [Line Items]
Average interest rate	6.00%	6.00%
Secured Promissory Notes
Line of Credit Facility [Line Items]
Average interest rate		3.42%
Senior Secured Credit Facility | Revolving Credit Facility
Line of Credit Facility [Line Items]
Average interest rate	8.50%	8.50%
6% Tangible Equity Units
Line of Credit Facility [Line Items]
Variable and fixed interest rates ranging, minimum			6.00%	6.00%
Minimum | Other Indebtedness
Line of Credit Facility [Line Items]
Variable and fixed interest rates ranging, minimum	5.00%
Maximum | Other Indebtedness
Line of Credit Facility [Line Items]
Variable and fixed interest rates ranging, minimum	5.50%

XML

Debt - Additional Information (Detail)		12 Months Ended
	Dec. 15, 2016 shares	Dec. 31, 2016 USD ($) property extension $ / shares	Dec. 31, 2015 USD ($) $ / shares	Dec. 31, 2014 USD ($)	Dec. 31, 2013 USD ($) unit $ / shares $ / Unit	Dec. 30, 2016 USD ($)	Nov. 27, 2013	Feb. 26, 2013
Line of Credit Facility [Line Items]
Extinguishment of debt, amount		$ 315,229,000	$ 58,220,000	$ 225,481,000
Accrued interest		1,585,000	3,267,000
Loss on extinguishment of debt, net		$ 35,864,000	$ 0	0
Common stock, par value | $ / shares		$ 1.00	$ 1.00
Debt		$ 110,358,000	$ 381,515,000
Deferred finance costs, net		1,633,000	8,267,000
Amortization of deferred financing fees		3,598,000	4,002,000	$ 3,845,000
Debt maturities, 2017		0
Debt maturities, 2018		485,000
Debt maturities, 2019		0
Debt maturities, 2020		104,673,000
Debt maturities, 2021		0
Debt maturities, thereafter		5,200,000
6% Tangible Equity Units
Line of Credit Facility [Line Items]
Interest rate percentage					6.00%		6.00%
Principal amount of debt					$ 150,000,000
Units issued | unit					6,000,000
Exercise price of unit | $ / Unit					25.00
Common stock, par value | $ / shares					$ 1.00
Issuance of common stock (in shares) | shares	7,857,000
Debt		0	$ 8,666,000
Revolving Line of Credit | Sublimit For Letters Of Credit
Line of Credit Facility [Line Items]
Sublimit for letters of credit under line of credit facility		100,000,000
Letter of Credit
Line of Credit Facility [Line Items]
Sublimit for letters of credit outstanding		14,850,000
Senior Notes
Line of Credit Facility [Line Items]
Interest rate percentage				8.50%
Percentage of principal amount redeemed			97.00%
Principal amount of debt				$ 250,000,000
Loss on extinguishment of debt, net		35,681,000
Write off of deferred debt issuance cost		5,416,000	$ 506,000
Tender offer advisory services		1,301,000
Principal amount of notes			19,440,000
Gain on early extinguishment of debt			(589,000)
Debt		$ 5,200,000	224,647,000
Senior Notes | 6% Tangible Equity Units
Line of Credit Facility [Line Items]
Interest rate percentage					4.50%
Face amount per unit, debt | $ / Unit					4.2522
Convertible Debt
Line of Credit Facility [Line Items]
Interest rate percentage		3.75%			3.75%			3.75%
Extinguishment of debt, amount		$ 5,000,000
Extinguishment of debt, amount		$ 4,452,000
Percentage of principal amount redeemed		93.25%
Principal amount of debt					$ 125,000,000
Loss on extinguishment of debt, net		$ 183,000
Gain on early extinguishment of debt		110,000
Maturity date					Mar. 01, 2020
Initial conversion rate					40.8351
Principal amount of initial conversion rate					$ 1,000
Unamortized debt discount		13,809,000
Repayments of long-term debt, including payments for repurchase of equity		4,663,000
Carrying amount of equity component		211,000
Debt		104,673,000	104,719,000
Secured Promissory Notes
Line of Credit Facility [Line Items]
Debt		$ 0	15,400,000
Senior Secured Credit Facility
Line of Credit Facility [Line Items]
Expiration date		May 15, 2017
Number of extensions | extension		2
Length of extensions		1 year
Maximum borrowing capacity under term loan facility		$ 125,000,000				$ 300,000,000
Amount drawn on		0
Net unused borrowing capacity		$ 71,262,000
Percentage of spread on federal funds effective rate		0.50%
Minimum net worth required for compliance		$ 426,312,000
Minimum net worth required for compliance, computed as		$ 379,044,000
Positive net income requirement for net worth compliance (as a percent)		85.00%
Minimum net worth required for compliance (as a percentage)		75.00%
Minimum effective leverage ratio exceeded (less than)		40.00%
Stockholders distribution covenant, interest coverage ratio		3.0
Minimum liquidity required (less than)		$ 125,000,000
Payments of capital distribution		$ 50,000,000
Percentage from sales of properties and non-core assets (up to)		65.00%
Deferred finance costs, net		$ 314,000	$ 2,768,000
Over-Allotment Option | 6% Tangible Equity Units
Line of Credit Facility [Line Items]
Units issued | unit					600,000
London Interbank Offered Rate (LIBOR) | Senior Secured Credit Facility
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate		4.00%
Base Rate | Senior Secured Credit Facility
Line of Credit Facility [Line Items]
Percentage of variable spread on base rate		3.00%
Thirty Day LIBOR Rate | Senior Secured Credit Facility
Line of Credit Facility [Line Items]
Debt instrument, basis spread on variable rate		1.00%
Radisson Hotel & Suites, Austin | Austin, Texas
Line of Credit Facility [Line Items]
Extinguishment of debt, amount		$ 15,400,000
Purchase price of properties sold		130,000,000
Radisson Hotel & Suites, Austin | Secured Promissory Notes | Austin, Texas
Line of Credit Facility [Line Items]
Debt		15,400,000
Eleven | Multi Family Property | Austin, Texas
Line of Credit Facility [Line Items]
Extinguishment of debt, amount		23,936,000
Purchase price of properties sold		$ 60,150,000
Number of units of multifamily project | property		257
Tender Offer | Senior Notes
Line of Credit Facility [Line Items]
Extinguishment of debt, amount		$ 215,495,000
Redemption price, (as a percent)		97.60%
Extinguishment of debt, amount		$ 245,604,000
Unamortized premium		$ 29,091,000
Percentage of principal amount redeemed		113.50%
Accrued interest		$ 1,018,000
Open Market Transaction | Senior Notes
Line of Credit Facility [Line Items]
Principal amount of debt		$ 9,750,000
Minimum | Open Market Transaction | Senior Notes
Line of Credit Facility [Line Items]
Percentage of principal amount redeemed		99.00%
Maximum | Open Market Transaction | Senior Notes
Line of Credit Facility [Line Items]
Percentage of principal amount redeemed		99.95%

XML

Fair Value - Information About our Fixed Rate Financial instruments not Measured at Fair Value (Detail) - Level 2 - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Reported Value Measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed rate debt	$ (111,506)	$ (346,090)
Estimate of Fair Value Measurement
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fixed rate debt	$ (109,789)	$ (321,653)

XML

Fair Value - Additional Information (Detail) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) community_development_project multifamily_site	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset impairments	$ 60,939	$ 108,184	$ 15,934
Impairment of oil and gas properties		107,140
Impairment of leasehold		57,691
Real Estate
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset impairments		$ 1,044
Real Estate Impairment Charges
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Asset impairments	$ 56,453
Community Development Project
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of properties impaired | community_development_project	6
Multifamily Site
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of properties impaired | multifamily_site	2
Oil and Gas Properties
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Impairment of assets to be disposed of	$ 612
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Community Development Project
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of properties impaired | community_development_project	4
Disposal Group, Disposed of by Sale, Not Discontinued Operations | Multifamily Site
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of properties impaired | multifamily_site	1

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Fair Value - Carrying Value of Assets (Detail) - Non-recurring - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Real estate
Non-Financial Assets and Liabilities:
Assets, fair value disclosure, nonrecurring	$ 0	$ 641
Real estate | Level 1
Non-Financial Assets and Liabilities:
Assets, fair value disclosure, nonrecurring	0	0
Real estate | Level 2
Non-Financial Assets and Liabilities:
Assets, fair value disclosure, nonrecurring	0	0
Real estate | Level 3
Non-Financial Assets and Liabilities:
Assets, fair value disclosure, nonrecurring	0	641
Discontinued Operations
Non-Financial Assets and Liabilities:
Assets, fair value disclosure, nonrecurring	0	57,219
Discontinued Operations | Level 1
Non-Financial Assets and Liabilities:
Assets, fair value disclosure, nonrecurring	0	0
Discontinued Operations | Level 2
Non-Financial Assets and Liabilities:
Assets, fair value disclosure, nonrecurring	0	0
Discontinued Operations | Level 3
Non-Financial Assets and Liabilities:
Assets, fair value disclosure, nonrecurring	$ 0	$ 57,219

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Capital Stock - (Detail) - USD ($) $ / shares in Units, $ in Thousands		12 Months Ended
	Dec. 15, 2016	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013	Nov. 27, 2013	Feb. 26, 2013
Class of Stock [Line Items]
Settlement of tangible equity units, Shares	7,857,000
Number of shares repurchased		283,976		1,491,187
Value of share repurchased		$ 3,537		$ 24,595
Common stock repurchased since announcement of strategic initiative		3,777,308
Value of common stock repurchased since announcement of strategic initiative		$ 57,696
Maximum percentage of shares repurchased under strategic initiative		20.00%
Maximum number of shares repurchased under strategic initiative		7,000,000
Former Affiliated Entity | Pre Spin Stock Option Awards
Class of Stock [Line Items]
Options to purchase shares of common stock		234,764
Weighted average exercise price		$ 30.56
Aggregate intrinsic value		$ 0
6% Tangible Equity Units
Class of Stock [Line Items]
Interest rate percentage					6.00%	6.00%
Convertible Debt
Class of Stock [Line Items]
Interest rate percentage		3.75%			3.75%		3.75%
Preferred Stock
Class of Stock [Line Items]
Expiry date of rights			Dec. 11, 2017

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Net Income (Loss) per Share - Earnings Attributable to Common Shareholders and Weighted Average Common Shares Outstanding (Detail) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Continuing operations
Consolidated net income (loss)									$ 77,044	$ (26,241)	$ 36,697
Less: Net (income) attributable to noncontrolling interest									(1,531)	(676)	(505)
Earnings (loss) available for diluted earnings per share									75,513	(26,917)	36,192
Less: Undistributed net income from continuing operations allocated to participating securities									(13,493)	0	(6,586)
Earnings (loss) from continuing operations available to common shareholders for basic earnings per share									62,020	(26,917)	29,606
Discontinued operations
Net income (loss) from discontinued operations available for diluted earnings per share	$ 563	$ (7,164)	$ (2,048)	$ (8,216)	$ (39,482)	$ (106,937)	$ (36,992)	$ (2,719)	(16,865)	(186,130)	(19,609)
Less: Undistributed net income from discontinued operations allocated to participating securities									3,014	0	3,569
Earnings (loss) from discontinued operations available to common shareholders for basic earnings per share									$ (13,851)	$ (186,130)	$ (16,040)
Weighted Average Number of Shares Outstanding Reconciliation [Abstract]
Weighted average common shares outstanding - basic									34,546	34,266	35,317
Weighted average common shares upon conversion of participating securities									7,515	0	7,857
Incremental Common Shares Attributable to Dilutive Effect of Share-based Payment Arrangements									273	0	422
Weighted average common shares outstanding - diluted									42,334	34,266	43,596
Anti-dilutive awards excluded from diluted weighted average shares outstanding									2,102	10,864	2,238

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Net Income (Loss) per Share - Additional Information (Details) - $ / shares	Dec. 15, 2016	Dec. 31, 2016	Dec. 31, 2013	Nov. 27, 2013
Debt Instrument [Line Items]
Settlement of tangible equity units, Shares	7,857,000
6% Tangible Equity Units
Debt Instrument [Line Items]
Interest rate percentage			6.00%	6.00%
Convertible Debt
Debt Instrument [Line Items]
Exercise price of unit		$ 24.49
Maximum | 6% Tangible Equity Units
Debt Instrument [Line Items]
Settlement of tangible equity units, Shares	7,857,000

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Income Taxes - Income Tax Expense (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Current tax provision:
U.S. Federal	$ (15,089)	$ 6,740	$ (18,905)
State and other	(1,520)	(418)	(2,182)
Total	(16,609)	6,322	(21,087)
Deferred tax provision:
U.S. Federal	1,382	(38,262)	184
State and other	(75)	(3,191)	53
Total	1,307	(41,453)	237
Income tax expense	$ (15,302)	$ (35,131)	$ (20,850)

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Income Taxes - Reconciliation of Federal Statutory Rate to Effective Income Tax Rate on Continuing Operations (Detail)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Federal statutory rate (benefit)	35.00%	35.00%	35.00%
State, net of federal benefit	0.00%	10.00%	2.00%
Valuation allowance	(19.00%)	348.00%
Noncontrolling interests	(1.00%)	(3.00%)	0.00%
Installment sale ace adjustment	2.00%	0.00%	0.00%
Stock based compensation	0.00%	5.00%	0.00%
Charitable contributions	0.00%	0.00%	(1.00%)
Oil and gas percentage depletion	0.00%	(1.00%)	0.00%
Other	0.00%	1.00%	0.00%
Effective tax rate	17.00%	395.00%	36.00%

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Income Taxes - Additional Information (Detail) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Operating Loss Carryforwards [Line Items]
Detriment from a valuation allowance recorded against deferred tax asset, percentage	$ 0.19
Detriment from the recording of a valuation allowance, percentage	(19.00%)	348.00%
Oil and gas percentage depletion carryforwards	$ 9,200,000
AMT credits	5,900,000	$ 3,620,000
Valuation allowance	73,405,000	97,068,000
Decrease in valuation allowance	23,663,000
Unrecognized tax benefit	2,499,000	0	$ 0
Recognized interest accrued related to unrecognized tax benefits	0	0	$ 0
Accrued interest	0	$ 0
Credo
Operating Loss Carryforwards [Line Items]
Oil and gas percentage depletion carryforwards	9,200,000
Domestic Tax Authority
Operating Loss Carryforwards [Line Items]
Operating loss carry forwards	$ 7,500,000
Expiration date of operating loss carry forwards	Dec. 31, 2031
Domestic Tax Authority | Credo
Operating Loss Carryforwards [Line Items]
Operating loss carry forwards	$ 7,500,000
State and Local Jurisdiction
Operating Loss Carryforwards [Line Items]
Operating loss carry forwards	64,200,000
State and Local Jurisdiction | Credo
Operating Loss Carryforwards [Line Items]
Operating loss carry forwards	$ 2,400,000
Minimum | State and Local Jurisdiction
Operating Loss Carryforwards [Line Items]
Expiration date of operating loss carry forwards	Dec. 31, 2017
Maximum | State and Local Jurisdiction
Operating Loss Carryforwards [Line Items]
Expiration date of operating loss carry forwards	Dec. 31, 2036

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Income Taxes - Significant Components of Deferred Taxes (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Deferred Tax Assets:
Real estate	$ 50,759	$ 69,594
Employee benefits	13,185	15,752
Net operating loss carryforwards	2,804	13,827
Oil and gas properties	1,672	5,510
AMT credits	5,900	3,620
Income producing properties	2,055	0
Oil and gas percentage depletion carryforwards	3,478	3,616
Accruals not deductible until paid	552	911
Other assets	0	139
Gross deferred tax assets	80,405	112,969
Valuation allowance	(73,405)	(97,068)
Deferred tax asset net of valuation allowance	7,000	15,901
Deferred Tax Liabilities:
Undeveloped land	(1,359)	(7,588)
Convertible debt	(5,035)	(6,516)
Income producing properties	0	(2,257)
Timber	(283)	(577)
Gross deferred tax liabilities	6,677	16,938
Deferred tax asset, net	323	0
Deferred tax liabilities, net	$ 0	$ (1,037)

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Litigation and Environmental Contingencies - Litigation (Details) - Huffman vs. Forestar Petroleum Corporation - Settled Litigation - USD ($)	3 Months Ended
	Dec. 31, 2016	Sep. 30, 2016
Loss Contingencies [Line Items]
Litigation settlement, amount		$ 150,000
Increase in accrual	$ 1,890,000	$ 1,100,000
Accrual for damages	$ (2,990,000)

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Litigation and Environmental Contingencies - Environmental (Detail)	12 Months Ended
	Dec. 31, 2016 USD ($) a	Dec. 31, 2015 USD ($) a	Dec. 31, 2014 USD ($)
Environmental Exit Cost [Line Items]
Asset retirement obligation	$ 103,000	$ 1,758,000	$ 1,807,000
Antioch, California
Environmental Exit Cost [Line Items]
Area of land (in acres) | a	25	289
Area sold without certificate of completion under voluntary remediation program | a	80
Wyoming
Environmental Exit Cost [Line Items]
Environmental liability	$ 1,155,000
Paper Manufacturing Sites [Member]
Environmental Exit Cost [Line Items]
Insurance policy	$ 20,000,000
Length of insurance policy (in years)	10 years

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Commitments and Other Contingencies (Detail) ft² in Thousands, a in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($) a ft²	Dec. 31, 2015 USD ($)	Dec. 31, 2014 USD ($)
Operating Leased Assets [Line Items]
Operating lease future payments, 2017	$ 2,267
Operating lease future payments, 2018	1,593
Operating lease future payments, 2019	298
Operating lease future payments, 2020	182
Operating lease future payments, 2021	62
Operating lease future payments, thereafter	0
Office Facilities And Other Equipment
Operating Leased Assets [Line Items]
Lease expense	$ 1,923	$ 3,872	$ 2,617
Ground Water Lease
Operating Leased Assets [Line Items]
Remaining years of timber lease	1 year
Timber land area taken on lease | a	20
Remaining contractual obligation	$ 494
Corporate Headquarters
Operating Leased Assets [Line Items]
Remaining contractual obligation	$ 1,983
Corporate Headquarters | Texas
Operating Leased Assets [Line Items]
Net rentable area | ft²	22
Other Office Locations
Operating Leased Assets [Line Items]
Remaining contractual obligation	$ 1,925

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Commitments and Other Contingencies - Unallocated Severance-related Costs (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2015	Dec. 31, 2016
Restructuring Cost and Reserve [Line Items]
Restructuring charges			$ 2,904
Payments for restructuring			3,953
Special Termination Benefits
Restructuring Cost and Reserve [Line Items]
Restructuring charges			2,072
Payments for restructuring			3,121
General and Administrative Expense | One-time Termination Benefits
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 3,314		$ 486
General and Administrative Expense | Special Termination Benefits
Restructuring Cost and Reserve [Line Items]
Payments for restructuring		$ 2,732

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Commitments and Other Contingencies - Non-core Assets Restructuring Costs (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2016
Restructuring Cost and Reserve [Line Items]
Restructuring charges		$ 2,904
One-time Termination Benefits | Real Estate Segment
Restructuring Cost and Reserve [Line Items]
Restructuring charges		1,422
One-time Termination Benefits | Other Natural Resources
Restructuring Cost and Reserve [Line Items]
Restructuring charges		164
General and Administrative Expense | One-time Termination Benefits
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 3,314	$ 486

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Commitments and Other Contingencies - Restructuring Activities (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2016 USD ($)
Restructuring Cost and Reserve [Line Items]
Beginning balance	$ (1,049)
Additions	(2,904)
Payments	3,953
Ending balance	0
Special Termination Benefits
Restructuring Cost and Reserve [Line Items]
Beginning balance	(1,049)
Additions	(2,072)
Payments	3,121
Ending balance	0
Facility Closing
Restructuring Cost and Reserve [Line Items]
Beginning balance	0
Additions	(832)
Payments	832
Ending balance	$ 0

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Segment Information - Additional Information (Detail)	12 Months Ended
	Dec. 31, 2016 multifamily_site segment Project
Segment Reporting [Abstract]
Number of business segments | segment	3
Number of projects | Project	3
Number of multifamilly sales | multifamily_site	1
Concentration risk, percentage (more than)	10.00%

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Segment Information - Segment Revenues and Earnings (Detail) - USD ($) $ in Thousands		3 Months Ended								12 Months Ended
		Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
Revenues		$ 64,497	$ 47,207	$ 47,992	$ 37,618	$ 105,392	$ 32,185	$ 43,625	$ 37,374	$ 197,314	$ 218,576	$ 238,164
Depreciation, depletion and amortization										11,447	45,085	41,715
Equity in earnings of unconsolidated ventures		2,251	$ 3,637	$ 188	$ 47	4,470	$ 2,909	$ 5,584	$ 3,045	6,123	16,008	8,685
Income (loss) before taxes from continuing operations										90,815	8,214	57,042
Total assets		733,208				972,246				733,208	972,246
Investment in unconsolidated ventures		77,611				82,453				77,611	82,453	65,005
Capital expenditures										6,138	14,690	37,653
Assets of discontinued operations		14				104,967				14	104,967
Operating Segments | Real Estate
Segment Reporting Information [Line Items]
Revenues										190,273	202,830	213,112
Depreciation, depletion and amortization										976	7,605	3,741
Equity in earnings of unconsolidated ventures										5,778	15,582	8,068
Income (loss) before taxes from continuing operations										121,420	67,678	96,906
Investment in unconsolidated ventures		77,611				82,453				77,611	82,453	65,005
Capital expenditures										5,783	13,644	28,980
Operating Segments | Oil and Gas
Segment Reporting Information [Line Items]
Revenues										5,076	9,094	15,690
Depreciation, depletion and amortization										145	383	684
Equity in earnings of unconsolidated ventures										173	275	586
Income (loss) before taxes from continuing operations										3,327	4,230	9,116
Investment in unconsolidated ventures		0				0				0	0	0
Capital expenditures										0	59	2,240
Operating Segments | Other Natural Resources
Segment Reporting Information [Line Items]
Revenues										1,965	6,652	9,362
Depreciation, depletion and amortization										352	540	497
Equity in earnings of unconsolidated ventures										172	151	31
Income (loss) before taxes from continuing operations										(4,625)	(608)	5,499
Investment in unconsolidated ventures		0				0				0	0	0
Capital expenditures										299	745	5,817
Items Not Allocated To Segments
Segment Reporting Information [Line Items]
Revenues										0	0	0
Depreciation, depletion and amortization										7,772	8,166	8,035
Equity in earnings of unconsolidated ventures										0	0	0
Income (loss) before taxes from continuing operations	[1]									(29,307)	(63,086)	(54,479)
Investment in unconsolidated ventures		0				0				0	0	0
Capital expenditures										56	242	616
Continuing Operations
Segment Reporting Information [Line Items]
Depreciation, depletion and amortization										9,245	16,694	$ 12,957
Total assets	[2]	733,194				867,279				733,194	867,279
Continuing Operations | Operating Segments | Real Estate
Segment Reporting Information [Line Items]
Total assets	[2]	403,062				691,238				403,062	691,238
Continuing Operations | Operating Segments | Oil and Gas
Segment Reporting Information [Line Items]
Total assets	[2]	38,907				39,469				38,907	39,469
Continuing Operations | Operating Segments | Other Natural Resources
Segment Reporting Information [Line Items]
Total assets	[2]	11,531				19,106				11,531	19,106
Continuing Operations | Items Not Allocated To Segments
Segment Reporting Information [Line Items]
Total assets	[2]	$ 279,694				$ 117,466				$ 279,694	$ 117,466

[1] Items not allocated to segments consist of: For the Year 2016 2015 2014 (In thousands)General and administrative expense$(18,274) $(24,802) $(21,229)Share-based and long-term incentive compensation expense(4,425) (4,474) (3,417)Gain on sale of assets48,891 — —Interest expense(19,985) (34,066) (30,286)Loss on extinguishment of debt, net(35,864) — —Other corporate non-operating income350 256 453 $(29,307) $(63,086) $(54,479)

[2] Total assets excludes assets of discontinued operations of $14 and $104,967 in 2016 and 2015.

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Segment Information - Items Not Allocated to Segments (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Segment Reporting Information [Line Items]
General and administrative expense		$ (21,597)	$ (27,253)	$ (22,230)
Gain of sale of assets		166,747	1,585	29,512
Interest expense		(19,985)	(34,066)	(30,286)
Loss on extinguishment of debt, net		(35,864)	0	0
Other corporate non-operating income		1,718	3,006	8,588
Income (loss) before taxes from continuing operations		90,815	8,214	57,042
Items Not Allocated To Segments
Segment Reporting Information [Line Items]
General and administrative expense		(18,274)	(24,802)	(21,229)
Share-based and long-term incentive compensation expense		(4,425)	(4,474)	(3,417)
Gain of sale of assets		48,891	0	0
Interest expense		(19,985)	(34,066)	(30,286)
Loss on extinguishment of debt, net		(35,864)	0	0
Other corporate non-operating income		350	256	453
Income (loss) before taxes from continuing operations	[1]	$ (29,307)	$ (63,086)	$ (54,479)

[1] Items not allocated to segments consist of: For the Year 2016 2015 2014 (In thousands)General and administrative expense$(18,274) $(24,802) $(21,229)Share-based and long-term incentive compensation expense(4,425) (4,474) (3,417)Gain on sale of assets48,891 — —Interest expense(19,985) (34,066) (30,286)Loss on extinguishment of debt, net(35,864) — —Other corporate non-operating income350 256 453 $(29,307) $(63,086) $(54,479)

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Share Based Compensation - Components of Share-Based Compensation Expense (Income) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 4,037	$ 4,246	$ 3,417
Deferred cash	388	228	0
Share-based and long-term incentive compensation	4,425	4,474	3,417
Cash Settled Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	717	(3,127)	(3,710)
Equity-settled awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	2,444	5,026	5,168
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	22	(8)	(25)
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation	$ 854	$ 2,355	$ 1,984

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Share Based Compensation - Share Based Compensation Expense Included in Operating Expense (Income) (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based and long-term incentive compensation	$ 4,425	$ 4,474	$ 3,417
General and Administrative Expense
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based and long-term incentive compensation	3,323	2,451	1,001
Other Operating Expenses
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based and long-term incentive compensation	$ 1,102	$ 2,023	$ 2,416

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Share Based Compensation - Additional Information (Detail)	3 Months Ended		12 Months Ended
	Mar. 31, 2016 director shares	Sep. 30, 2015 USD ($)	Dec. 31, 2016 USD ($) $ / shares shares	Dec. 31, 2015 USD ($) $ / shares shares	Dec. 31, 2014 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			$ 4,037,000	$ 4,246,000	$ 3,417,000
Fair value of awards granted to retirement eligible employees and expensed at date of grant			600,000	$ 517,000	760,000
Unrecognized share-based compensation expense related to non-vested equity-settled awards, restricted stock and stock options			$ 1,878,000
Weighted average period over which amount will be recognized			1 year
Shares issued out of treasury stock | shares			300,491	288,089
Vesting of restricted stock awards and exercises of stock options, shares withheld | shares			25,082	51,521
Payroll taxes on restricted stock and stock options			$ 222,000	$ 762,000
Stock price of non-vested cash-settled awards | $ / shares			$ 13.30
Financial instruments subject to mandatory redemption, settlement terms, share value, amount, noncurrent		$ 17.50
Board of Director Fees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			$ 725,000	1,203,000	906,000
Cash Settled Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			$ 717,000	(3,127,000)	(3,710,000)
Cash Settled Awards | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period over or after performance stock unit vest			3 years
Cash Settled Awards | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period over or after performance stock unit vest			4 years
Stock Appreciation Rights (SARs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period over or after performance stock unit vest			4 years
Expiration period			10 years
Fair value of awards settled in cash			$ 154,000	206,000	$ 1,181,000
Fair value of vested cash-settled awards			$ 1,758,000	$ 3,757,000
Granted, equivalent units | shares			0
Cash Settled Restricted Stock Unit
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted, weighted average grant date fair value | $ / shares			$ 0.00	$ 13.26	$ 18.96
Fair value of awards settled in cash			$ 1,195,000	$ 2,469,000	$ 2,286,000
Aggregate current value of non-vested cash-settled awards			$ 555,000
Granted, equivalent units | shares			0
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period over or after performance stock unit vest			3 years
Granted, equivalent units | shares			313,000
Restricted Stock Units (RSUs) | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period over or after performance stock unit vest			3 years
Restricted Stock Units (RSUs) | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period over or after performance stock unit vest			4 years
Market-leveraged stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period over or after performance stock unit vest			3 years
Granted, equivalent units | shares				234,000	86,000
Number of shares to be issued if stock price increases by fifty percent | shares			351,000
Numbers of shares to be issued if stock price decreases by fifty percent | shares			117,000
Weighted average estimated fair value of options at grant date | $ / shares				$ 15.11	$ 20.38
Performance Stock Units Psu
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period over or after performance stock unit vest			3 years
Equity-settled awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			$ 2,444,000	$ 5,026,000	$ 5,168,000
Unrecognized share-based compensation expense related to non-vested equity-settled awards, restricted stock and stock options			$ 1,106,000
Weighted average period over which amount will be recognized			1 year
Granted, weighted average grant date fair value | $ / shares			$ 9.04
Fair value of vested cash-settled awards			$ 2,884,478	$ 4,451,000	$ 3,119,000
Granted, equivalent units | shares			313,000
Minimum increases in stock price			50.00%
Percentage of decrease in stock price			50.00%
Weighted average estimated fair value of options at grant date | $ / shares			$ 9.04	$ 12.99	$ 19.18
Special Performance | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Special performance stock unit awards to be issued | shares			0
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			$ 22,000	$ (8,000)	$ (25,000)
Period over or after performance stock unit vest			3 years
Granted, weighted average grant date fair value | $ / shares			$ 0.00
Fair value of vested cash-settled awards			$ 44,000	88,000	341,000
Granted, equivalent units | shares			0
Minimum percent annualized return on assets vesting for stock unit awards			1.00%
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation			$ 854,000	2,355,000	1,984,000
Unrecognized share-based compensation expense related to non-vested equity-settled awards, restricted stock and stock options			$ 772,000
Weighted average period over which amount will be recognized			2 years
Period over or after performance stock unit vest		3 years	4 years
Expiration period		10 years	10 years
Fair value of vested stock options			$ 0	0	21,000
Intrinsic value of options exercised			$ 61,000	$ 0	568,000
Options outstanding | shares			1,836,000	2,171,000
Weighted average exercise price | $ / shares			$ 20.25
Weighted average remaining contractual term			5 years	5 years
Former Affiliated Entity | Pre Spin Stock Option Awards
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Period over or after performance stock unit vest			4 years
Expiration period			10 years
Intrinsic value of options exercised			$ 0	$ 24,000	$ 352,000
Options outstanding | shares			17,000
Weighted average exercise price | $ / shares			$ 30.56
Weighted average remaining contractual term			1 year
Long Term Incentive Compensation
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Deferred cash compensation			$ 620,000
Requisite service period (in years)			2 years	3 years
Accrued liability			$ 539,000
Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of new directors | director	2
Granted (in shares) | shares	20,000
Tranche One | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting, number | shares	6,500
Tranche Two | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting, number | shares			6,500
Tranche Three | Director
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting, number | shares	7,000

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Share Based Compensation - Summarized Activity of Cash Settled Restricted Stock Unit Awards (Detail) - Cash Settled Restricted Stock Unit - $ / shares shares in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Balance at beginning of year	117
Granted, equivalent units	0
Vested, equivalent units	(41)
Forfeited, equivalent units	(34)
Balance at end of period	42	117
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Non-vested at beginning of year, weighted average grant date fair value	$ 16.00
Granted, weighted average grant date fair value	0.00	$ 13.26	$ 18.96
Vested, Weighted Average Grant Date Fair Value	18.84
Forfeited, weighted average grant date	13.83
Non-vested at end of period, weighted average grant date fair value	$ 14.98	$ 16.00

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Share Based Compensation - Summarized Activity of Cash-Settled Stock Appreciation Rights (Detail) - Stock Appreciation Rights (SARs) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding [Roll Forward]
Balance at beginning of year	487
Granted, rights outstanding	0
Exercised, rights outstanding	(52)
Forfeited, rights outstanding	(61)
Balance at end of period	374	487
Exercisable at end of period, rights outstanding	345
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Non-vested at beginning of year, weighted average grant date fair value	$ 12.97
Granted, weighted average exercise price	0.00
Exercised, weighted average exercise price	9.29
Forfeited, weighted average grant date	16.12
Non-vested at end of period, weighted average grant date fair value	12.97	$ 12.97
Exercisable at end of period, weighted average exercise price	$ 12.87
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Additional Disclosures [Abstract]
Exercisable at end of period, weighted average remaining contractual terms	3 years	4 years
Weighted average remaining contractual term	3 years
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value [Abstract]
Aggregate intrinsic value	$ 773	$ 404
Exercisable at end of period, aggregate intrinsic value	$ 773

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Share Based Compensation - Equity-Settled Awards (Detail) - Equity-settled awards shares in Thousands	12 Months Ended
	Dec. 31, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Balance at beginning of year | shares	631
Granted, equivalent units | shares	313
Vested, equivalent units | shares	(281)
Forfeited, equivalent units | shares	(108)
Balance at end of period | shares	555
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Non-vested at beginning of year, weighted average grant date fair value | $ / shares	$ 18.25
Granted, weighted average grant date fair value | $ / shares	9.04
Vested, Weighted Average Grant Date Fair Value | $ / shares	15.12
Forfeited, weighted average grant date | $ / shares	17.91
Non-vested at end of period, weighted average grant date fair value | $ / shares	$ 14.70

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Share Based Compensation - Summarized Activity of Restricted Stock Awards (Detail) - Restricted Stock shares in Thousands	12 Months Ended
	Dec. 31, 2016 $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Balance at beginning of year | shares	4
Granted, equivalent units | shares	0
Vested, equivalent units | shares	(4)
Forfeited, equivalent units | shares	0
Balance at end of period | shares	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Nonvested, Weighted Average Grant Date Fair Value [Abstract]
Non-vested at beginning of year, weighted average grant date fair value | $ / shares	$ 20.55
Granted, weighted average grant date fair value | $ / shares	0.00
Vested, Weighted Average Grant Date Fair Value | $ / shares	20.55
Forfeited, weighted average grant date | $ / shares	0.00
Non-vested at end of period, weighted average grant date fair value | $ / shares	$ 0.00

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Share Based Compensation - Summarized Activity of Stock Option Awards (Detail) - Stock Options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Balance at beginning of year, options outstanding	2,171
Granted, options outstanding	53
Exercised, options outstanding	(35)
Forfeited, options outstanding	(353)
Balance at end of period, options outstanding	1,836	2,171
Exercisable at end of period, options outstanding	1,597
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract]
Balance at beginning of year, weighted average exercise price	$ 19.56
Granted, weighted average exercise price	9.98
Exercised, weighted average exercise price	9.29
Forfeited, weighted average exercise price	20.03
Balance at end of period, weighted average exercise price	19.39	$ 19.56
Exercisable at end of period, weighted average exercise price	$ 20.25
Share-based Compensation Arrangement by Share-based Payment Award, Options, Aggregate Intrinsic Value [Abstract]
Weighted average remaining contractual term	5 years	5 years
Exercisable at end of period, weighted average remaining contractual term	4 years
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Aggregate intrinsic value	$ 449	$ 156
Exercisable at end of period, aggregate intrinsic value	$ 261

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Share Based Compensation - Fair Value of Stock Options Using Black-Scholes Option Pricing Model (Detail) - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Market-leveraged stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected stock price volatility		32.90%	42.20%
Risk-free interest rate		1.00%	0.70%
Expected dividend yield		0.00%	0.00%
Weighted average estimated fair value of options at grant date		$ 15.11	$ 20.38
Stock Options | Market Condition Vesting
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected stock price volatility	39.50%	45.60%
Risk-free interest rate	1.50%	1.80%
Expected life of options (years)	6 years	6 years
Expected dividend yield	0.00%	0.00%
Weighted average estimated fair value of options at grant date	$ 8.60	$ 6.51
Management | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected stock price volatility		61.40%
Risk-free interest rate		2.20%
Expected dividend yield		0.00%
Weighted average estimated fair value of options at grant date		$ 7.87

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Retirement Plans - Additional Information (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
Expense of defined contribution retirement plans	$ 978	$ 1,060	$ 1,338
Unfunded liability for supplemental plan	$ 334	$ 802

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Supplemental Oil and Gas Disclosures (Unaudited) - Additional Information (Detail) bbl in Thousands, Mcf in Thousands		12 Months Ended
		Dec. 31, 2016 well $ / MMBTU $ / Boe bbl Mcf	Dec. 31, 2015 Boe well	Dec. 31, 2015 Boe $ / MMBTU	Dec. 31, 2015 Boe bbl	Dec. 31, 2015 Boe Mcf	Dec. 31, 2015 Boe $ / Boe	Dec. 31, 2014 Boe well $ / MMBTU $ / Boe bbl Mcf
Supplemental Oil And Gas Reserve Information [Line Items]
New well addition | well		0	36					106
Crude Oil and NGL
Supplemental Oil And Gas Reserve Information [Line Items]
Average spot price | $ / Boe		42.75					50.28	94.99
Natural Gas in Mmbtu
Supplemental Oil And Gas Reserve Information [Line Items]
Average spot price | $ / MMBTU		2.48		2.59				4.35
Consolidated Entities
Supplemental Oil And Gas Reserve Information [Line Items]
Proved developed and undeveloped reserves, revisions of previous estimates								608
Oil | Consolidated Entities
Supplemental Oil And Gas Reserve Information [Line Items]
Proved developed and undeveloped reserves, sales of minerals in place	[1]	4,460			704			105
Proved developed and undeveloped reserves, revisions of previous estimates	[1]	(11)			855			608
Extensions and discoveries (added)	[1]	29			224			2,191
New PDP Reserves | Consolidated Entities
Supplemental Oil And Gas Reserve Information [Line Items]
Extensions and discoveries (added)								694
New PUD Reserves | Consolidated Entities
Supplemental Oil And Gas Reserve Information [Line Items]
Extensions and discoveries (added)								913
Oil Less Natural Gas Liquids | Consolidated Entities
Supplemental Oil And Gas Reserve Information [Line Items]
Proved developed and undeveloped reserves, sales of minerals in place	[1]	4,155
Natural Gas Liquids | Consolidated Entities
Supplemental Oil And Gas Reserve Information [Line Items]
Proved developed and undeveloped reserves, sales of minerals in place		305
Natural Gas | Consolidated Entities
Supplemental Oil And Gas Reserve Information [Line Items]
Proved developed and undeveloped reserves, sales of minerals in place | Mcf		3,756				1,223		218
Proved developed and undeveloped reserves, revisions of previous estimates		631			1,995	1,675		293
Extensions and discoveries (added) | Mcf		0				173		774
BOE
Supplemental Oil And Gas Reserve Information [Line Items]
Proved undeveloped reserve (Energy) | Boe			0	0	0	0	0	2,703,000

[1] Includes natural gas liquids (NGLs).

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Supplemental Oil and Gas Disclosures (Unaudited) - Summary of Estimated Quantities of Proved Developed Oil and Natural Gas Reserves (Detail) bbl in Thousands, Mcf in Thousands		12 Months Ended
		Dec. 31, 2016 bbl Mcf	Dec. 31, 2015 bbl Mcf	Dec. 31, 2015 bbl Mcf	Dec. 31, 2014 bbl Mcf
Oil
Reserve Quantities [Line Items]
Beginning Balance	[1]	5,179	7,672
Proved developed reserves	[1]	446	5,179	5,179	5,269
Proved undeveloped reserves	[1]	0	0	0	2,403
Ending Balance	[1]	446	5,179		7,672
Natural Gas
Reserve Quantities [Line Items]
Beginning Balance | Mcf		9,220		14,400
Proved developed reserves | Mcf		5,035	9,220	9,220	12,599
Proved undeveloped reserves | Mcf		0	0	0	1,801
Ending Balance | Mcf		5,035		9,220	14,400
Consolidated Entities
Reserve Quantities [Line Items]
Revisions of previous estimates					608
Consolidated Entities | Oil
Reserve Quantities [Line Items]
Beginning Balance	[1]	5,179	7,672		5,824
Revisions of previous estimates	[1]	(11)	855		608
Extensions and discoveries	[1]	29	224		2,191
Acquisitions	[1]	0	0		85
Sales	[1]	(4,460)	(704)		(105)
Production	[1]	(291)	(1,158)		(931)
Ending Balance	[1]	446	5,179		7,672
Consolidated Entities | Natural Gas
Reserve Quantities [Line Items]
Beginning Balance | Mcf		7,957		12,649	13,630
Revisions of previous estimates		631	1,995	1,675	293
Extensions and discoveries | Mcf		0		173	774
Acquisitions | Mcf		0		0	31
Sales | Mcf		(3,756)		(1,223)	(218)
Production | Mcf		(996)		(1,967)	(1,861)
Ending Balance | Mcf		3,836		7,957	12,649
Equity Method Investee | Oil
Reserve Quantities [Line Items]
Beginning Balance	[1]	0	0		0
Revisions of previous estimates	[1]	0	0		0
Production	[1]	0	0		0
Ending Balance	[1]	0	0		0
Equity Method Investee | Natural Gas
Reserve Quantities [Line Items]
Beginning Balance | Mcf		1,263		1,751	2,332
Revisions of previous estimates | Mcf		79		(320)	(382)
Production | Mcf		(143)		(168)	(199)
Ending Balance | Mcf		1,199		1,263	1,751

[1] Includes natural gas liquids (NGLs).

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Supplemental Oil and Gas Disclosures (Unaudited) - Capitalized Cost Related to Oil and Natural Gas Producing Activities (Detail) - Consolidated Entities - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Capitalized Costs Relating To Oil And Gas Producing Activities [Line Items]
Unproved oil and gas properties	$ 374	$ 19,441
Proved oil and gas properties	5,159	119,414
Total costs	5,533	138,855
Less accumulated depreciation, depletion and amortization	(4,751)	(58,242)
Net capitalized costs	$ 782	$ 80,613

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Supplemental Oil and Gas Disclosures (Unaudited) - Costs Incurred in Oil and Natural Gas Property Acquisition, Exploration and Development (Detail) - Consolidated Entities - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Costs Incurred, Oil and Gas Property Acquisition, Exploration, and Development Activities [Line Items]
Costs incurred, acquisition of oil and gas properties with proved reserves	$ 0	$ 0	$ 2,001
Costs incurred, acquisition of unproved oil and gas properties	15	4,832	25,666
Exploration costs	21	17,922	39,399
Development costs	537	27,609	40,277
Costs Incurred, Oil and Gas Property Acquisition, Exploration, and Development Activities	$ 573	$ 50,363	$ 107,343

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Supplemental Oil and Gas Disclosures (Unaudited) - Estimates of Future Cash Flows from Proved Developed Oil and Natural Gas Reserves (Detail) - USD ($) $ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Standardized measure of discounted future net cash flows	$ 10,985	$ 67,498	$ 165,616	$ 136,853
Consolidated Entities
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Future cash inflows	24,304	216,588	665,657
Future Net Cash Flows Relating to Proved Oil and Gas Reserves, Production Costs	(2,988)	(93,623)	(271,735)
Future income tax expenses	(3,926)	(22,218)	(106,002)
Future net cash flows	17,390	100,747	287,920
10% annual discount for estimated timing of cash flows	(7,077)	(33,951)	(124,079)
Standardized measure of discounted future net cash flows	10,313	66,796	163,841	135,553
Equity Method Investee
Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves [Line Items]
Future cash inflows	2,010	2,283	6,186
Future Net Cash Flows Relating to Proved Oil and Gas Reserves, Production Costs	(216)	(245)	(664)
Future income tax expenses	(537)	(774)	(2,098)
Future net cash flows	1,257	1,264	3,424
10% annual discount for estimated timing of cash flows	(585)	(562)	(1,649)
Standardized measure of discounted future net cash flows	$ 672	$ 702	$ 1,775	$ 1,300

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Supplemental Oil and Gas Disclosures (Unaudited) - Changes in Standardized Measure of Discounted Future Net Cash Flow (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Schedule Of Changes In Standardized Measure Of Discounted Future Net Cash Flows [Line Items]
Beginning Balance	$ 67,498	$ 165,616	$ 136,853
Changes resulting from:
Net change in sales prices and production costs	(3,645)	(137,648)	507
Net change in future development costs	0	92	1,308
Sales of oil and gas, net of production costs	(5,871)	(32,160)	(63,979)
Net change due to extensions and discoveries	410	11,747	58,228
Net change due to acquisition of reserves	0	0	2,778
Net change due to divestitures of reserves	(63,535)	(15,855)	(5,804)
Net change due to revisions of quantity estimates	1,367	(15,431)	14,960
Previously estimated development costs incurred	0	(15,096)	(15,497)
Accretion of discount	3,105	22,886	18,277
Net change in timing and other	(208)	3,808	4,313
Net change in income taxes	11,864	49,347	(17,322)
Aggregate change for the year	(56,513)	(98,118)	28,763
Ending Balance	10,985	67,498	165,616
Consolidated Entities
Schedule Of Changes In Standardized Measure Of Discounted Future Net Cash Flows [Line Items]
Beginning Balance	66,796	163,841	135,553
Changes resulting from:
Net change in sales prices and production costs	(3,585)	(136,536)	(1,064)
Net change in future development costs	0	92	1,308
Sales of oil and gas, net of production costs	(5,663)	(31,732)	(63,192)
Net change due to extensions and discoveries	410	11,747	58,228
Net change due to acquisition of reserves	0	0	2,778
Net change due to divestitures of reserves	(63,535)	(15,855)	(5,804)
Net change due to revisions of quantity estimates	1,304	(15,164)	15,303
Previously estimated development costs incurred	0	(15,096)	(15,497)
Accretion of discount	2,992	22,600	18,067
Net change in timing and other	(128)	4,018	4,198
Net change in income taxes	11,722	48,689	(17,031)
Aggregate change for the year	(56,483)	(97,045)	28,288
Ending Balance	10,313	66,796	163,841
Equity Method Investee
Schedule Of Changes In Standardized Measure Of Discounted Future Net Cash Flows [Line Items]
Beginning Balance	702	1,775	1,300
Changes resulting from:
Net change in sales prices and production costs	(60)	(1,112)	1,571
Net change in future development costs	0	0	0
Sales of oil and gas, net of production costs	(208)	(428)	(787)
Net change due to extensions and discoveries	0	0	0
Net change due to acquisition of reserves	0	0	0
Net change due to divestitures of reserves		0	0
Net change due to revisions of quantity estimates	63	(267)	(343)
Previously estimated development costs incurred	0	0	0
Accretion of discount	113	286	210
Net change in timing and other	(80)	(210)	115
Net change in income taxes	142	658	(291)
Aggregate change for the year	(30)	(1,073)	475
Ending Balance	$ 672	$ 702	$ 1,775

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Supplemental Oil and Gas Disclosures (Unaudited) - Information About Results of Operations of Oil and Natural Gas Interests (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Consolidated entities
Results of operations	$ (5,777)	$ (170,567)	$ (19,703)
Consolidated Entities
Consolidated entities
Revenues	10,111	51,553	82,919
Production costs	(4,392)	(19,820)	(19,727)
Exploration costs	(124)	(11,864)	(17,416)
Depreciation, depletion, amortization	(2,157)	(28,774)	(29,442)
Results of Operations, Impairment of Oil and Gas Properties	(612)	(164,831)	(32,665)
Oil and gas administrative expenses	(8,700)	(11,700)	(17,000)
Results of Operations, Accretion of Asset Retirement Obligations	(56)	(144)	(121)
Income tax expenses	(20)	14,717	13,398
Results of operations	(5,950)	(170,863)	(20,054)
Equity Method Investee
Consolidated entities
Royalty revenues	284	428	786
Production costs	(76)	(102)	(105)
Oil and gas administrative expenses	(35)	(51)	(95)
Income tax expenses	0	21	(235)
Results of operations	$ 173	$ 296	$ 351

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Summary of Quarterly Results of Operations (Unaudited) - Summary of Quarterly Results of Operations (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2016	Sep. 30, 2016	Jun. 30, 2016	Mar. 31, 2016	Dec. 31, 2015	Sep. 30, 2015	Jun. 30, 2015	Mar. 31, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Quarterly Financial Information Disclosure [Abstract]
Total revenues	$ 64,497	$ 47,207	$ 47,992	$ 37,618	$ 105,392	$ 32,185	$ 43,625	$ 37,374	$ 197,314	$ 218,576	$ 238,164
Gross profit	17,352	17,403	(24,953)	18,579	46,655	12,879	21,060	18,012
Operating income (loss)	50,980	6,256	69,528	13,590	29,929	(8,482)	5,919	(3,424)	140,354	23,942	70,560
Equity in earnings of unconsolidated ventures	2,251	3,637	188	47	4,470	2,909	5,584	3,045	6,123	16,008	8,685
Income (loss) before taxes	51,069	7,163	26,591	5,992	26,747	(13,711)	3,382	(8,204)	92,346	8,890	57,547
Income (loss) discontinued operations, net of taxes	563	(7,164)	(2,048)	(8,216)	(39,482)	(106,937)	(36,992)	(2,719)	(16,865)	(186,130)	(19,609)
Net income (loss) attributable to Forestar Group Inc.	$ 43,745	$ 9,665	$ 9,614	$ (4,376)	$ (6,166)	$ (164,216)	$ (34,507)	$ (8,158)	$ 58,648	$ (213,047)	$ 16,583
Net income (loss) per share -- basic
Continuing operations, basic (usd per share)	$ 1.03	$ 0.40	$ 0.28	$ 0.11	$ 0.97	$ (1.67)	$ 0.07	$ (0.16)	$ 1.80	$ (0.79)	$ 0.84
Discontinued operations, basic (usd per share)	0.01	(0.17)	(0.05)	(0.24)	(1.15)	(3.12)	(1.08)	(0.08)	(0.40)	(5.43)	(0.46)
Net income (loss) per share - basic	1.04	0.23	0.23	(0.13)	(0.18)	(4.79)	(1.01)	(0.24)	1.40	(6.22)	0.38
Net income (loss) per share -- diluted
Continuing operations, diluted (usd per share)	1.02	0.40	0.28	0.09	0.79	(1.67)	0.06	(0.16)	1.78	(0.79)	0.83
Discontinued operations, diluted (usd per share)	0.01	(0.17)	(0.05)	(0.19)	(0.93)	(3.12)	(0.87)	(0.08)	(0.40)	(5.43)	(0.45)
Net income (loss) per share - diluted	$ 1.03	$ 0.23	$ 0.23	$ (0.10)	$ (0.14)	$ (4.79)	$ (0.81)	$ (0.24)	$ 1.38	$ (6.22)	$ 0.38
Continuing Operations
Supplemental Oil And Gas Reserve Information [Line Items]
Impairment of oil and gas properties	$ 3,874	$ 7,627	$ 48,826	$ 0	$ 315	$ 0	$ 225	$ 504
Discontinued Operations
Supplemental Oil And Gas Reserve Information [Line Items]
Impairment of oil and gas properties	$ 0	$ 0	$ 612	$ 0	$ 37,646	$ 81,240	$ 45,938	$ 7

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Subsequent Events (Details)		3 Months Ended	12 Months Ended
	Feb. 17, 2017 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2016 USD ($) $ / shares	Dec. 31, 2015 USD ($) $ / shares	Dec. 31, 2014 USD ($)	Jan. 05, 2017 right $ / shares shares
Subsequent Event [Line Items]
Common stock, par value | $ / shares			$ 1.00	$ 1.00
Proceeds from sale of oil and gas property and equipment			$ 80,374,000	$ 17,800,000	$ 17,660,000
Non-cash impairment charges			$ 60,939,000	$ 108,184,000	$ 15,934,000
Forecast | The Mineral Companies | Disposal Group, Disposed of by Sale, Not Discontinued Operations
Subsequent Event [Line Items]
Gain on disposition of oil and gas property		$ 82,400,000
Gain of sale of assets		10,600,000
Non-cash impairment charges		$ 37,900,000
Subsequent Event
Subsequent Event [Line Items]
Number of rights issued | right						1
Common stock, par value | $ / shares						$ 1.00
Subsequent Event | The Mineral Companies | Disposal Group, Disposed of by Sale, Not Discontinued Operations
Subsequent Event [Line Items]
Purchase price of properties sold	$ 85,600,000
Proceeds from sale of oil and gas property and equipment	$ 75,000,000
Subsequent Event | Series B Preferred Stock
Subsequent Event [Line Items]
Number of securities called by each right | shares						0.001
Preferred stock, par value | $ / shares						$ 0.01
Purchase price of stock called by each right (dollars in share) | $ / shares						$ 50

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Schedule III - Consolidated Real Estate and Accumulated Depreciation (Detail) - USD ($) $ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 238,077
Improvements less Cost of Sales and Other		49,971
Carrying Costs	[1]	4,955
Land & Land Improvements		293,003
Total		293,003	$ 618,844	$ 607,133	$ 547,530
Accumulated depreciation		0	$ (32,129)	$ (31,377)	$ (28,066)
Amount of encumbrances		486
Entitled, developed and under development projects
Real Estate and Accumulated Depreciation [Line Items]
Land		234,047
Improvements less Cost of Sales and Other		24,857
Carrying Costs	[1]	4,955
Land & Land Improvements		263,859
Total		263,859
Amount of encumbrances		486
Entitled, developed and under development projects | Other County | Other Property
Real Estate and Accumulated Depreciation [Line Items]
Land		5,222
Improvements less Cost of Sales and Other		(276)
Carrying Costs	[1]	25
Land & Land Improvements		4,971
Total		4,971
Entitled, developed and under development projects | Tennessee | Williamson County | Morgan Farms
Real Estate and Accumulated Depreciation [Line Items]
Land		6,841
Improvements less Cost of Sales and Other		(1,808)
Carrying Costs	[1]	88
Land & Land Improvements		5,121
Total		$ 5,121
Date of Construction		2013
Date Acquired		2013
Entitled, developed and under development projects | Tennessee | Williamson County | Scales Farmstead
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 3,575
Improvements less Cost of Sales and Other		9,319
Carrying Costs	[1]	389
Land & Land Improvements		13,283
Total		$ 13,283
Date Acquired		2015
Entitled, developed and under development projects | Tennessee | Williamson County | Weatherford Estates
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 856
Improvements less Cost of Sales and Other		374
Carrying Costs	[1]	138
Land & Land Improvements		1,368
Total		$ 1,368
Date of Construction		2015
Date Acquired		2014
Entitled, developed and under development projects | Tennessee | Williamson County | Beckwith Crossing
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 1,294
Improvements less Cost of Sales and Other		2,397
Carrying Costs	[1]	161
Land & Land Improvements		3,852
Total		$ 3,852
Date of Construction		2015
Date Acquired		2014
Entitled, developed and under development projects | Arizona | Pima County | Dove Mountain
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 5,860
Improvements less Cost of Sales and Other		3
Land & Land Improvements		5,863
Total		$ 5,863
Date Acquired		2015
Entitled, developed and under development projects | California | Contra Costa County | San Joaquin River
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 12,225
Improvements less Cost of Sales and Other		(10,558)
Land & Land Improvements		1,667
Total		1,667
Entitled, developed and under development projects | Colorado | Douglas County | Pinery West
Real Estate and Accumulated Depreciation [Line Items]
Land		7,308
Improvements less Cost of Sales and Other		3,791
Land & Land Improvements		11,099
Total		$ 11,099
Date of Construction		2006
Date Acquired		2006
Entitled, developed and under development projects | Colorado | Douglas County | Cielo
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 3,933
Improvements less Cost of Sales and Other		2,645
Land & Land Improvements		6,578
Total		$ 6,578
Date Acquired		2016
Entitled, developed and under development projects | Colorado | Weld County | Buffalo Highlands
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 3,001
Improvements less Cost of Sales and Other		(295)
Land & Land Improvements		2,706
Total		$ 2,706
Date of Construction		2006
Date Acquired		2005
Entitled, developed and under development projects | Colorado | Weld County | Johnstown Farms
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 2,749
Improvements less Cost of Sales and Other		4,189
Carrying Costs	[1]	100
Land & Land Improvements		7,038
Total		$ 7,038
Date of Construction		2002
Date Acquired		2002
Entitled, developed and under development projects | Colorado | Weld County | Stone Braker
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 3,878
Improvements less Cost of Sales and Other		(1,786)
Land & Land Improvements		2,092
Total		$ 2,092
Date of Construction		2005
Date Acquired		2005
Entitled, developed and under development projects | Georgia | Cobb County | West Oaks
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 1,669
Improvements less Cost of Sales and Other		1,543
Land & Land Improvements		3,212
Total		$ 3,212
Date of Construction		2015
Date Acquired		2015
Entitled, developed and under development projects | Georgia | Paulding County | Harris Place
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 265
Improvements less Cost of Sales and Other		(111)
Land & Land Improvements		154
Total		$ 154
Date Acquired		2012
Entitled, developed and under development projects | Georgia | Paulding County | Seven Hills
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 2,964
Improvements less Cost of Sales and Other		1,162
Carrying Costs	[1]	13
Land & Land Improvements		4,139
Total		$ 4,139
Date Acquired		2012
Entitled, developed and under development projects | North Carolina | Cabbarus County | Moss Creek
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 1,254
Improvements less Cost of Sales and Other		101
Land & Land Improvements		1,355
Total		$ 1,355
Date Acquired		2016
Entitled, developed and under development projects | North Carolina | Mechlanburg County | Walden
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 12,085
Improvements less Cost of Sales and Other		2,279
Carrying Costs	[1]	87
Land & Land Improvements		14,451
Total		$ 14,451
Date Acquired		2015
Entitled, developed and under development projects | South Carolina | York County | Habersham
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 3,877
Improvements less Cost of Sales and Other		1,128
Carrying Costs	[1]	421
Land & Land Improvements		5,426
Total		$ 5,426
Date of Construction		2014
Date Acquired		2013
Entitled, developed and under development projects | South Carolina | Lancaster County | Ansley
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 5,089
Improvements less Cost of Sales and Other		1,594
Land & Land Improvements		6,683
Total		$ 6,683
Date Acquired		2015
Entitled, developed and under development projects | Texas | Hays County | Arrowhead Ranch
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 12,856
Improvements less Cost of Sales and Other		9,204
Carrying Costs	[1]	233
Land & Land Improvements		22,293
Total		$ 22,293
Date of Construction		2015
Date Acquired		2007
Entitled, developed and under development projects | Texas | Tarrant County | Summer Creek Ranch
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 2,887
Improvements less Cost of Sales and Other		(1,377)
Land & Land Improvements		1,510
Total		$ 1,510
Date Acquired		2012
Entitled, developed and under development projects | Texas | Tarrant County | Bar C Ranch
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 1,365
Improvements less Cost of Sales and Other		842
Carrying Costs	[1]	197
Land & Land Improvements		2,404
Total		$ 2,404
Date Acquired		2012
Entitled, developed and under development projects | Texas | Calhoun County | Caracol
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 8,603
Improvements less Cost of Sales and Other		(8,025)
Land & Land Improvements		578
Total		$ 578
Date of Construction		2006
Date Acquired		2006
Entitled, developed and under development projects | Texas | Bastrop County | Hunters Crossing
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 3,613
Improvements less Cost of Sales and Other		5,226
Land & Land Improvements		8,839
Total		$ 8,839
Date of Construction		2001
Date Acquired		2001
Entitled, developed and under development projects | Texas | Bexar County | Cibolo Canyons
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 17,305
Improvements less Cost of Sales and Other		26,397
Carrying Costs	[1]	1,203
Land & Land Improvements		44,905
Total		$ 44,905
Date of Construction		2004
Date Acquired		1986
Entitled, developed and under development projects | Texas | Harris County | City Park
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 3,946
Improvements less Cost of Sales and Other		(2,243)
Carrying Costs	[1]	229
Land & Land Improvements		1,932
Total		$ 1,932
Date of Construction		2002
Date Acquired		2001
Entitled, developed and under development projects | Texas | Harris County | Barrington
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 8,950
Improvements less Cost of Sales and Other		(7,483)
Land & Land Improvements		1,467
Total		$ 1,467
Date Acquired		2011
Entitled, developed and under development projects | Texas | Harris County | Imperial Forest
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 5,345
Improvements less Cost of Sales and Other		(957)
Carrying Costs	[1]	4
Land & Land Improvements		4,392
Total		$ 4,392
Date of Construction		2015
Date Acquired		2014
Entitled, developed and under development projects | Texas | Collin County | Lakes Of Prosper
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 8,951
Improvements less Cost of Sales and Other		(3,005)
Carrying Costs	[1]	348
Land & Land Improvements		6,294
Total		$ 6,294
Date Acquired		2012
Entitled, developed and under development projects | Texas | Collin County | Park Place
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 2,177
Improvements less Cost of Sales and Other		(4)
Carrying Costs	[1]	183
Land & Land Improvements		2,356
Total		$ 2,356
Date of Construction		2014
Date Acquired		2013
Entitled, developed and under development projects | Texas | Collin County | Timber Creek
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 7,282
Improvements less Cost of Sales and Other		9,862
Land & Land Improvements		17,144
Total		$ 17,144
Date of Construction		2007
Date Acquired		2007
Entitled, developed and under development projects | Texas | Collin County | Village Park
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 4,772
Improvements less Cost of Sales and Other		(4,720)
Land & Land Improvements		52
Total		$ 52
Date Acquired		2012
Entitled, developed and under development projects | Texas | Comal County | Oak Creek Estates
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 1,921
Improvements less Cost of Sales and Other		685
Carrying Costs	[1]	22
Land & Land Improvements		2,628
Total		$ 2,628
Date of Construction		2006
Date Acquired		2005
Entitled, developed and under development projects | Texas | Dallas County | Stoney Creek
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 12,822
Improvements less Cost of Sales and Other		327
Carrying Costs	[1]	443
Land & Land Improvements		13,592
Total		$ 13,592
Date of Construction		2007
Date Acquired		2007
Entitled, developed and under development projects | Texas | Denton County | Lantana
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 27,673
Improvements less Cost of Sales and Other		(11,242)
Carrying Costs	[1]	529
Land & Land Improvements		16,960
Total		$ 16,960
Date of Construction		2000
Date Acquired		1999
Entitled, developed and under development projects | Texas | Denton County | River's Edge
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 1,227
Improvements less Cost of Sales and Other		436
Land & Land Improvements		1,663
Total		$ 1,663
Date Acquired		2014
Entitled, developed and under development projects | Texas | Denton County | The Preserve At Pecan Creek
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 5,855
Improvements less Cost of Sales and Other		(1,387)
Carrying Costs	[1]	47
Land & Land Improvements		4,515
Total		$ 4,515
Date of Construction		2006
Date Acquired		2005
Entitled, developed and under development projects | Texas | Fort Bend County | Summer Lakes
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 4,269
Improvements less Cost of Sales and Other		374
Carrying Costs	[1]	78
Land & Land Improvements		4,721
Total		$ 4,721
Date of Construction		2013
Date Acquired		2012
Entitled, developed and under development projects | Texas | Fort Bend County | Summer Park
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 4,804
Improvements less Cost of Sales and Other		(2,557)
Carrying Costs	[1]	17
Land & Land Improvements		2,264
Total		$ 2,264
Date of Construction		2013
Date Acquired		2012
Entitled, developed and under development projects | Texas | Fort Bend County | Willow Creek Farms
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 3,479
Improvements less Cost of Sales and Other		(1,187)
Land & Land Improvements		2,292
Total		$ 2,292
Date of Construction		2012
Date Acquired		2012
Amount of encumbrances		$ 486
Undeveloped Land Type
Real Estate and Accumulated Depreciation [Line Items]
Land		4,030
Improvements less Cost of Sales and Other		25,114
Land & Land Improvements		29,144
Total		29,144
Undeveloped Land Type | California | Los Angeles | Land In Entitlement Process
Real Estate and Accumulated Depreciation [Line Items]
Land		3,950
Improvements less Cost of Sales and Other		20,838
Land & Land Improvements		24,788
Total		$ 24,788
Date Acquired		1997
Undeveloped Land Type | Georgia | Cherokee County | Undeveloped Land
Real Estate and Accumulated Depreciation [Line Items]
Land		$ 80
Improvements less Cost of Sales and Other
Land & Land Improvements		80
Total		80
Undeveloped Land Type | Texas | Undeveloped Land
Real Estate and Accumulated Depreciation [Line Items]
Improvements less Cost of Sales and Other		5
Land & Land Improvements		5
Total		5
Undeveloped Land Type | Texas | Bexar County | Undeveloped Land
Real Estate and Accumulated Depreciation [Line Items]
Improvements less Cost of Sales and Other		2,548
Land & Land Improvements		2,548
Total		2,548
Undeveloped Land Type | Texas | Montgomery County | Undeveloped Land
Real Estate and Accumulated Depreciation [Line Items]
Improvements less Cost of Sales and Other		1,723
Land & Land Improvements		1,723
Total		$ 1,723

[1] Includes natural gas liquids (NGLs).

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Schedule III - Reconciliation of Real Estate and Accumulated Depreciation (Detail) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
SEC Schedule III, Real Estate and Accumulated Depreciation Disclosure [Abstract]
Beginning balance	$ 618,844	$ 607,133	$ 547,530
Amounts capitalized	89,780	124,633	214,184
Amounts retired or adjusted	(415,621)	(112,922)	(154,581)
Ending balance	293,003	618,844	607,133
Beginning balance	(32,129)	(31,377)	(28,066)
Depreciation expense	(816)	(6,810)	(3,319)
Amounts retired or adjusted	32,945	6,058	8
Ending balance	$ 0	$ (32,129)	$ (31,377)