UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 | |||||
T | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
New York | 25-0484900 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
707 17th Street, Suite 3600 Denver, Colorado | 80202 |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer T | Accelerated filer ¨ |
Non-accelerated filer ¨ (Do not check if a smaller reporting company) | Smaller reporting company ¨ |
September 30, 2012 | December 31, 2011 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 39,169 | $ | 3,012 | |||
Accounts receivable | 77,210 | 79,089 | |||||
Derivative instruments | 43,853 | 89,621 | |||||
Other current assets | 16,278 | 38,950 | |||||
Total current assets | 176,510 | 210,672 | |||||
Property and equipment: | |||||||
Oil and natural gas properties, full cost method of accounting: | |||||||
Proved, net of accumulated depletion of $7,892,873 and $6,901,997 | 1,774,587 | 1,923,145 | |||||
Unproved | 442,275 | 675,995 | |||||
Net oil and natural gas properties | 2,216,862 | 2,599,140 | |||||
Other property and equipment, net of accumulated depreciation and amortization of $46,040 and $47,989 | 16,327 | 51,976 | |||||
Assets held for sale | 27,373 | — | |||||
Net property and equipment | 2,260,562 | 2,651,116 | |||||
Deferred income taxes | 9,851 | 231,116 | |||||
Goodwill | 239,420 | 239,420 | |||||
Derivative instruments | 5,273 | 10,422 | |||||
Other assets | 90,762 | 38,405 | |||||
$ | 2,782,378 | $ | 3,381,151 | ||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 189,753 | $ | 247,880 | |||
Accrued interest | 29,663 | 23,259 | |||||
Derivative instruments | 7,759 | 28,944 | |||||
Deferred income taxes | 9,851 | 20,172 | |||||
Current portion of long-term debt | 296,002 | — | |||||
Other current liabilities | 20,743 | 20,582 | |||||
Total current liabilities | 553,771 | 340,837 | |||||
Long-term debt | 1,796,369 | 1,693,044 | |||||
Asset retirement obligations | 79,133 | 77,898 | |||||
Derivative instruments | 16,640 | — | |||||
Other liabilities | 93,688 | 76,259 | |||||
Total liabilities | 2,539,601 | 2,188,038 | |||||
Shareholders’ equity: | |||||||
Preferred stock, none issued and outstanding | — | — | |||||
Common stock, 118,225,731 and 114,525,673 shares issued and outstanding | 11,823 | 11,454 | |||||
Capital surplus | 2,538,129 | 2,486,994 | |||||
Accumulated deficit | (2,289,461 | ) | (1,287,063 | ) | |||
Accumulated other comprehensive loss | (17,714 | ) | (18,272 | ) | |||
Total shareholders’ equity | 242,777 | 1,193,113 | |||||
$ | 2,782,378 | $ | 3,381,151 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Revenues: | |||||||||||||||
Oil, natural gas, and natural gas liquids sales | $ | 156,014 | $ | 174,012 | $ | 450,609 | $ | 526,915 | |||||||
Interest and other | 54 | 109 | 123 | 939 | |||||||||||
Total revenues | 156,068 | 174,121 | 450,732 | 527,854 | |||||||||||
Costs, expenses, and other: | |||||||||||||||
Lease operating expenses | 27,426 | 23,480 | 82,167 | 70,593 | |||||||||||
Production and property taxes | 8,842 | 7,926 | 26,935 | 32,187 | |||||||||||
Transportation and processing costs | 3,580 | 3,197 | 11,167 | 10,263 | |||||||||||
General and administrative | 13,416 | 19,942 | 45,221 | 49,122 | |||||||||||
Depreciation, depletion, and amortization | 73,845 | 54,323 | 213,802 | 155,227 | |||||||||||
Ceiling test write-down of oil and natural gas properties | 329,957 | — | 713,750 | — | |||||||||||
Impairment of properties | 79,529 | — | 79,529 | — | |||||||||||
Interest expense | 36,223 | 37,225 | 103,932 | 113,081 | |||||||||||
Realized and unrealized losses (gains) on derivative instruments, net | 22,795 | (65,961 | ) | (40,744 | ) | (70,632 | ) | ||||||||
Other, net | 11,727 | (177 | ) | 42,102 | 12,280 | ||||||||||
Total costs, expenses, and other | 607,340 | 79,955 | 1,277,861 | 372,121 | |||||||||||
Earnings (loss) from continuing operations before income taxes | (451,272 | ) | 94,166 | (827,129 | ) | 155,733 | |||||||||
Income tax | 7,280 | 34,556 | 175,269 | 76,940 | |||||||||||
Net earnings (loss) from continuing operations | (458,552 | ) | 59,610 | (1,002,398 | ) | 78,793 | |||||||||
Net earnings from discontinued operations | — | 28,108 | — | 44,569 | |||||||||||
Net earnings (loss) | (458,552 | ) | 87,718 | (1,002,398 | ) | 123,362 | |||||||||
Less: net earnings attributable to noncontrolling interest | — | 4,923 | — | 4,987 | |||||||||||
Net earnings (loss) attributable to Forest Oil Corporation common shareholders | $ | (458,552 | ) | $ | 82,795 | $ | (1,002,398 | ) | $ | 118,375 | |||||
Basic earnings (loss) per common share attributable to Forest Oil Corporation common shareholders: | |||||||||||||||
Earnings (loss) from continuing operations | $ | (3.97 | ) | $ | .52 | $ | (8.73 | ) | $ | .69 | |||||
Earnings from discontinued operations | — | .20 | — | .35 | |||||||||||
Basic earnings (loss) per common share | $ | (3.97 | ) | $ | .72 | $ | (8.73 | ) | $ | 1.04 | |||||
Diluted earnings (loss) per common share attributable to Forest Oil Corporation common shareholders: | |||||||||||||||
Earnings (loss) from continuing operations | $ | (3.97 | ) | $ | .52 | $ | (8.73 | ) | $ | .69 | |||||
Earnings from discontinued operations | — | .20 | — | .34 | |||||||||||
Diluted earnings (loss) per common share | $ | (3.97 | ) | $ | .72 | $ | (8.73 | ) | $ | 1.03 | |||||
Amounts attributable to Forest Oil Corporation common shareholders: | |||||||||||||||
Net earnings (loss) from continuing operations | $ | (458,552 | ) | $ | 59,610 | $ | (1,002,398 | ) | $ | 78,793 | |||||
Net earnings from discontinued operations | — | 23,185 | — | 39,582 | |||||||||||
Net earnings (loss) | $ | (458,552 | ) | $ | 82,795 | $ | (1,002,398 | ) | $ | 118,375 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net earnings (loss) | $ | (458,552 | ) | $ | 87,718 | $ | (1,002,398 | ) | $ | 123,362 | |||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation losses | — | (38,234 | ) | — | (27,763 | ) | |||||||||
Unfunded postretirement benefits, net of tax | 185 | 93 | 558 | 311 | |||||||||||
Total other comprehensive income (loss) | 185 | (38,141 | ) | 558 | (27,452 | ) | |||||||||
Total comprehensive income (loss) | (458,367 | ) | 49,577 | (1,001,840 | ) | 95,910 | |||||||||
Less: total comprehensive loss attributable to noncontrolling interest | — | (1,824 | ) | — | (1,330 | ) | |||||||||
Total comprehensive income (loss) attributable to Forest Oil Corporation common shareholders | $ | (458,367 | ) | $ | 51,401 | $ | (1,001,840 | ) | $ | 97,240 |
Common Stock | Capital Surplus | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total Shareholders’ Equity | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balances at December 31, 2011 | 114,526 | $ | 11,454 | $ | 2,486,994 | $ | (1,287,063 | ) | $ | (18,272 | ) | $ | 1,193,113 | |||||||||
Common stock issued for acquisition of unproved oil and natural gas properties | 2,657 | 266 | 36,165 | — | — | 36,431 | ||||||||||||||||
Employee stock purchase plan | 128 | 13 | 907 | — | — | 920 | ||||||||||||||||
Restricted stock issued, net of forfeitures | 1,198 | 120 | (120 | ) | — | — | — | |||||||||||||||
Amortization of stock-based compensation | — | — | 18,181 | — | — | 18,181 | ||||||||||||||||
Other, net | (283 | ) | (30 | ) | (3,998 | ) | — | — | (4,028 | ) | ||||||||||||
Net loss | — | — | — | (1,002,398 | ) | — | (1,002,398 | ) | ||||||||||||||
Other comprehensive income | — | — | — | — | 558 | 558 | ||||||||||||||||
Balances at September 30, 2012 | 118,226 | $ | 11,823 | $ | 2,538,129 | $ | (2,289,461 | ) | $ | (17,714 | ) | $ | 242,777 |
Nine Months Ended | |||||||
September 30, | |||||||
2012 | 2011 | ||||||
Operating activities: | |||||||
Net earnings (loss) | $ | (1,002,398 | ) | $ | 123,362 | ||
Less: net earnings from discontinued operations | — | 44,569 | |||||
Net earnings (loss) from continuing operations | (1,002,398 | ) | 78,793 | ||||
Adjustments to reconcile net earnings (loss) from continuing operations to net cash provided by operating activities of continuing operations: | |||||||
Depreciation, depletion, and amortization | 213,802 | 155,227 | |||||
Deferred income tax | 208,990 | 46,724 | |||||
Unrealized losses (gains) on derivative instruments, net | 46,372 | (40,538 | ) | ||||
Ceiling test write-down of oil and natural gas properties | 713,750 | — | |||||
Impairment of properties | 79,529 | — | |||||
Stock-based compensation expense | 12,227 | 17,809 | |||||
Accretion of asset retirement obligations | 4,914 | 4,496 | |||||
Other, net | 6,438 | 6,074 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | 9,070 | 29,686 | |||||
Other current assets | 4,426 | 8,262 | |||||
Accounts payable and accrued liabilities | 2,182 | (5,096 | ) | ||||
Accrued interest and other | (13,477 | ) | 3,977 | ||||
Net cash provided by operating activities of continuing operations | 285,825 | 305,414 | |||||
Investing activities: | |||||||
Capital expenditures for property and equipment: | |||||||
Exploration, development, and leasehold acquisition costs | (598,882 | ) | (656,894 | ) | |||
Other fixed assets | (6,011 | ) | (4,370 | ) | |||
Proceeds from sales of assets | 8,902 | 120,956 | |||||
Net cash used by investing activities of continuing operations | (595,991 | ) | (540,308 | ) | |||
Financing activities: | |||||||
Proceeds from bank borrowings | 651,000 | 12,000 | |||||
Repayments of bank borrowings | (756,000 | ) | (12,000 | ) | |||
Issuance of senior notes, net of issuance costs | 491,250 | — | |||||
Payment of debt issue costs | (872 | ) | (8,198 | ) | |||
Change in bank overdrafts | (37,716 | ) | (20,660 | ) | |||
Other, net | (1,339 | ) | (4,109 | ) | |||
Net cash provided (used) by financing activities of continuing operations | 346,323 | (32,967 | ) | ||||
Cash flows of discontinued operations: | |||||||
Operating cash flows | — | 101,292 | |||||
Investing cash flows | — | (255,470 | ) | ||||
Financing cash flows | — | 478,324 | |||||
Net cash provided by discontinued operations | — | 324,146 | |||||
Effect of exchange rate changes on cash | — | (3,476 | ) | ||||
Net increase in cash and cash equivalents | 36,157 | 52,809 | |||||
Net increase in cash and cash equivalents of discontinued operations | — | (289 | ) | ||||
Net increase in cash and cash equivalents of continuing operations | 36,157 | 52,520 | |||||
Cash and cash equivalents of continuing operations at beginning of period | 3,012 | 217,569 | |||||
Cash and cash equivalents of continuing operations at end of period | $ | 39,169 | $ | 270,089 | |||
Cash paid by continuing operations during the period for: | |||||||
Interest (net of capitalized amounts) | $ | 88,619 | $ | 94,398 | |||
Income taxes (net of refunded amounts) | 979 | 31,523 | |||||
Non-cash investing activities of continuing operations: | |||||||
Increase (decrease) in accrued capital expenditures | $ | (22,878 | ) | $ | 38,927 | ||
Increase in asset retirement costs | 4,786 | 2,553 | |||||
Common stock issued for acquisition of unproved oil and natural gas properties | 36,431 | — |
Three Months Ended September 30, | |||||||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||||
Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | ||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Net earnings (loss) | $ | (458,552 | ) | $ | — | $ | (458,552 | ) | $ | 59,610 | $ | 28,108 | $ | 87,718 | |||||||||
Net earnings attributable to noncontrolling interest | — | — | — | — | (4,923 | ) | (4,923 | ) | |||||||||||||||
Net earnings attributable to participating securities | — | — | — | (1,341 | ) | (522 | ) | (1,863 | ) | ||||||||||||||
Net earnings (loss) attributable to common stock for basic earnings per share | $ | (458,552 | ) | $ | — | $ | (458,552 | ) | $ | 58,269 | $ | 22,663 | $ | 80,932 | |||||||||
Adjustment for liability classified stock-based compensation awards | — | — | — | — | (603 | ) | (603 | ) | |||||||||||||||
Net earnings (loss) for diluted earnings per share | $ | (458,552 | ) | $ | — | $ | (458,552 | ) | $ | 58,269 | $ | 22,060 | $ | 80,329 |
Nine Months Ended September 30, | |||||||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||||
Continuing Operations | Discontinued Operations | Total | Continuing Operations | Discontinued Operations | Total | ||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Net earnings (loss) | $ | (1,002,398 | ) | $ | — | $ | (1,002,398 | ) | $ | 78,793 | $ | 44,569 | $ | 123,362 | |||||||||
Net earnings attributable to noncontrolling interest | — | — | — | — | (4,987 | ) | (4,987 | ) | |||||||||||||||
Net earnings attributable to participating securities | — | — | — | (1,606 | ) | (807 | ) | (2,413 | ) | ||||||||||||||
Net earnings (loss) attributable to common stock for basic earnings per share | $ | (1,002,398 | ) | $ | — | $ | (1,002,398 | ) | $ | 77,187 | $ | 38,775 | $ | 115,962 | |||||||||
Adjustment for liability classified stock-based compensation awards | — | — | — | — | (707 | ) | (707 | ) | |||||||||||||||
Net earnings (loss) for diluted earnings per share | $ | (1,002,398 | ) | $ | — | $ | (1,002,398 | ) | $ | 77,187 | $ | 38,068 | $ | 115,255 |
Three Months Ended | Nine Months Ended | ||||||||||
September 30, | September 30, | ||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||
(In Thousands) | |||||||||||
Weighted average common shares outstanding during the period for basic earnings (loss) per share | 115,417 | 111,810 | 114,784 | 111,598 | |||||||
Dilutive effects of potential common shares | — | 352 | — | 521 | |||||||
Weighted average common shares outstanding during the period, including the effects of dilutive potential common shares, for diluted earnings (loss) per share | 115,417 | 112,162 | 114,784 | 112,119 |
Stock Options | Restricted Stock | Performance Units | Phantom Stock Units | Total(1) | ||||||||||||||||
(In Thousands) | ||||||||||||||||||||
Three months ended September 30, 2012: | ||||||||||||||||||||
Total stock-based compensation costs | $ | — | $ | 3,500 | $ | 1,273 | $ | 909 | $ | 5,682 | ||||||||||
Less: stock-based compensation costs capitalized | — | (1,435 | ) | (455 | ) | (402 | ) | (2,292 | ) | |||||||||||
Stock-based compensation costs expensed | $ | — | $ | 2,065 | $ | 818 | $ | 507 | $ | 3,390 | ||||||||||
Nine months ended September 30, 2012: | ||||||||||||||||||||
Total stock-based compensation costs | $ | — | $ | 12,219 | $ | 5,630 | $ | 796 | $ | 18,645 | ||||||||||
Less: stock-based compensation costs capitalized | — | (4,630 | ) | (1,322 | ) | (532 | ) | (6,484 | ) | |||||||||||
Stock-based compensation costs expensed | $ | — | $ | 7,589 | $ | 4,308 | $ | 264 | $ | 12,161 | ||||||||||
Unamortized stock-based compensation costs | $ | — | $ | 19,517 | $ | 5,978 | $ | 4,618 | (2) | $ | 30,113 | |||||||||
Weighted average amortization period remaining | — | 1.9 years | 1.7 years | 1.5 years | 1.8 years | |||||||||||||||
Three months ended September 30, 2011: | ||||||||||||||||||||
Total stock-based compensation costs | $ | 1,095 | $ | 15,434 | $ | 775 | $ | (1,456 | ) | $ | 15,848 | |||||||||
Less: stock-based compensation costs capitalized | (437 | ) | (6,994 | ) | (253 | ) | 529 | (7,155 | ) | |||||||||||
Stock-based compensation costs expensed | $ | 658 | $ | 8,440 | $ | 522 | $ | (927 | ) | $ | 8,693 | |||||||||
Nine months ended September 30, 2011: | ||||||||||||||||||||
Total stock-based compensation costs | $ | 1,536 | $ | 26,566 | $ | 2,181 | $ | (1,788 | ) | $ | 28,495 | |||||||||
Less: stock-based compensation costs capitalized | (663 | ) | (11,522 | ) | (683 | ) | 696 | (12,172 | ) | |||||||||||
Stock-based compensation costs expensed | $ | 873 | $ | 15,044 | $ | 1,498 | $ | (1,092 | ) | $ | 16,323 |
(1) | The Company also maintains an employee stock purchase plan (which is not included in the table) under which $.1 million and $.3 million of compensation cost was recognized for the three and nine month periods ended September 30, 2012, respectively, and $.1 million and $.4 million of compensation cost was recognized for the three and nine month periods ended September 30, 2011, respectively. |
(2) | Based on the closing price of Forest’s common stock on September 30, 2012. |
Number of Options | Weighted Average Exercise Price | Aggregate Intrinsic Value (In Thousands)(1) | Number of Options Exercisable | ||||||||||
Outstanding at January 1, 2012 | 1,766,587 | $ | 14.55 | $ | 2,731 | 1,766,587 | |||||||
Granted | — | — | |||||||||||
Exercised | — | — | — | ||||||||||
Cancelled | (879,843 | ) | 11.08 | ||||||||||
Outstanding at September 30, 2012 | 886,744 | $ | 17.99 | $ | — | 886,744 |
(1) | The intrinsic value of a stock option is the amount by which the market value of the underlying stock, as of the date outstanding or exercised, exceeds the exercise price of the option. |
Restricted Stock | Performance Units | Phantom Stock Units | ||||||||||||||||||||||||||||||
Number of Shares | Weighted Average Grant Date Fair Value | Vest Date Fair Value (In Thousands) | Number of Units(1) | Weighted Average Grant Date Fair Value | Vest Date Fair Value (In Thousands) | Number of Units(2) | Weighted Average Grant Date Fair Value | Vest Date Fair Value (In Thousands) | ||||||||||||||||||||||||
Unvested at January 1, 2012 | 2,474,112 | $ | 24.00 | 655,120 | $ | 19.50 | 1,238,817 | $ | 14.32 | |||||||||||||||||||||||
Awarded | 1,524,594 | 10.16 | 511,500 | 14.70 | — | — | ||||||||||||||||||||||||||
Vested | (891,207 | ) | 19.46 | $ | 7,236 | (323,760 | ) | 18.18 | $ | — | (274,897 | ) | 12.23 | $ | 2,313 | |||||||||||||||||
Forfeited | (326,430 | ) | 19.20 | (181,680 | ) | 17.55 | (73,249 | ) | 15.71 | |||||||||||||||||||||||
Unvested at September 30, 2012 | 2,781,069 | $ | 18.43 | 661,180 | $ | 16.97 | 890,671 | $ | 14.85 |
(1) | Forest granted 511,500 performance units on March 12, 2012, with a grant date fair value of $14.70 each. Under the terms of the award agreements, each performance unit represents a contractual right to receive one share of Forest’s common stock; provided that the actual number of shares that may be deliverable under an award will range from 0% to 200% of the number of performance units awarded, depending on Forest’s relative total shareholder return in comparison to an identified peer group during the thirty-six-month performance period ending on February 28, 2015. |
(2) | All of the unvested phantom stock units at September 30, 2012 must be settled in cash. The phantom stock units have been accounted for as a liability within the Condensed Consolidated Financial Statements. Of the 274,897 phantom stock units that vested during the nine months ended September 30, 2012, 268,817 were settled in cash, while the remaining 6,080 were settled in shares. |
September 30, 2012 | December 31, 2011 | ||||||||||||||||||||||
Principal | Unamortized Premium (Discount) | Total | Principal | Unamortized Premium (Discount) | Total | ||||||||||||||||||
(In Thousands) | |||||||||||||||||||||||
Credit Facility | $ | — | $ | — | $ | — | $ | 105,000 | $ | — | $ | 105,000 | |||||||||||
7% Senior Subordinated Notes due 2013 | 12 | — | 12 | 12 | — | 12 | |||||||||||||||||
8½% Senior Notes due 2014(1) | 600,000 | (8,020 | ) | 591,980 | 600,000 | (12,389 | ) | 587,611 | |||||||||||||||
7¼% Senior Notes due 2019 | 1,000,000 | 379 | 1,000,379 | 1,000,000 | 421 | 1,000,421 | |||||||||||||||||
7½% Senior Notes due 2020 | 500,000 | — | 500,000 | — | — | — | |||||||||||||||||
Total debt | $ | 2,100,012 | $ | (7,641 | ) | $ | 2,092,371 | $ | 1,705,012 | $ | (11,968 | ) | $ | 1,693,044 | |||||||||
Less: current portion of long-term debt(1) | (300,012 | ) | 4,010 | (296,002 | ) | — | — | — | |||||||||||||||
Long-term debt | $ | 1,800,000 | $ | (3,631 | ) | $ | 1,796,369 | $ | 1,705,012 | $ | (11,968 | ) | $ | 1,693,044 |
(1) | In September 2012, the Company irrevocably called $300.0 million (50% of the aggregate principal amount) of the 8½% senior notes due 2014 and redeemed those called notes in October 2012 at 110.24% of par, recognizing a loss of $36.3 million upon redemption. |
2016 | 103.75 | % |
2017 | 101.88 | % |
2018 and thereafter | 100.00 | % |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands) | |||||||||||||||
Federal income tax at 35% of earnings (loss) from continuing operations before income taxes | $ | (157,945 | ) | $ | 32,958 | $ | (289,495 | ) | $ | 54,507 | |||||
State income taxes, net of federal income tax benefits | (5,442 | ) | 1,107 | (9,983 | ) | 1,830 | |||||||||
Canadian dividend tax, net of U.S. tax benefit | — | — | — | 18,460 | |||||||||||
Effect of federal, state, and foreign tax on permanent items | 342 | 1,397 | 997 | 2,243 | |||||||||||
Change in valuation allowance | 170,065 | — | 472,569 | — | |||||||||||
Other | 260 | (906 | ) | 1,181 | (100 | ) | |||||||||
Total income tax | $ | 7,280 | $ | 34,556 | $ | 175,269 | $ | 76,940 |
September 30, 2012 | December 31, 2011 | |||||||
Using Significant Other Observable Inputs (Level 2)(1) | ||||||||
(In Thousands) | ||||||||
Assets: | ||||||||
Derivative instruments(2): | ||||||||
Commodity | $ | 33,282 | $ | 79,487 | ||||
Interest rate | 15,844 | 20,556 | ||||||
Total assets | $ | 49,126 | $ | 100,043 | ||||
Liabilities: | ||||||||
Derivative instruments(2): | ||||||||
Commodity | $ | 24,399 | $ | 28,944 | ||||
Interest rate | — | — | ||||||
Total liabilities | $ | 24,399 | $ | 28,944 |
(1) | The authoritative accounting guidance regarding fair value measurements for assets and liabilities measured at fair value establishes a three-tier fair value hierarchy, which prioritizes the inputs used to measure fair value. These tiers consist of: Level 1, defined as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when relevant observable inputs are not available. There were no transfers between levels of the fair value hierarchy during the three and nine months ended September 30, 2012. The Company’s policy is to recognize transfers between levels of the fair value hierarchy as of the beginning of the reporting period in which the event or change in circumstances caused the transfer. |
(2) | The Company’s derivative assets and liabilities include commodity and interest rate derivatives (see Note 8 for more information on these instruments). The Company utilizes present value techniques and option-pricing models for valuing its derivatives. Inputs to these valuation techniques include published forward prices, volatilities, and credit risk considerations, including the incorporation of published interest rates and credit spreads. All of the significant inputs are observable, either directly or indirectly; therefore, the Company’s derivative instruments are included within the Level 2 fair value hierarchy. |
September 30, 2012 | |||||||||||||||
Fair Value Measurements: | |||||||||||||||
Carrying Amount | Total Fair Value(1) | Using Quoted Prices in Active Markets for Identical Assets (Level 1) | Using Significant Other Observable Inputs (Level 2) | ||||||||||||
(In Thousands) | |||||||||||||||
Assets: | |||||||||||||||
Derivative instruments | $ | 49,126 | $ | 49,126 | $ | — | $ | 49,126 | |||||||
Liabilities: | |||||||||||||||
Derivative instruments | 24,399 | 24,399 | — | 24,399 | |||||||||||
8½% Senior Notes due 2014 | 591,980 | 651,000 | 651,000 | — | |||||||||||
7¼% Senior Notes due 2019 | 1,000,379 | 990,000 | 990,000 | — | |||||||||||
7½% Senior Notes due 2020 | 500,000 | 497,190 | 497,190 | — |
(1) | The Company used various assumptions and methods in estimating the fair values of its financial instruments. The fair values of the senior notes were estimated based on quoted market prices. The methods used to determine the fair values of the derivative instruments are discussed above. See also Note 8 for more information on the derivative instruments. |
December 31, 2011 | |||||||
Carrying Amount | Fair Value(1) | ||||||
(In Thousands) | |||||||
Assets: | |||||||
Derivative instruments | $ | 100,043 | $ | 100,043 | |||
Liabilities: | |||||||
Derivative instruments | 28,944 | 28,944 | |||||
Credit Facility | 105,000 | 105,000 | |||||
8½% Senior Notes due 2014 | 587,611 | 653,250 | |||||
7¼% Senior Notes due 2019 | 1,000,421 | 1,025,000 |
(1) | The Company used various assumptions and methods in estimating the fair values of its financial instruments. The fair values of the senior notes were estimated based on quoted market prices. The carrying amount of the credit facility approximated fair value due to the short original maturities of the borrowings and because the borrowings bear interest at variable market rates. The methods used to determine the fair values of the derivative instruments are discussed above. See also Note 8 for more information on the derivative instruments. |
Commodity Swaps | |||||||||||||||||||||
Natural Gas (NYMEX HH) | Oil (NYMEX WTI) | NGL (OPIS Refined Products) | |||||||||||||||||||
Remaining Term | Bbtu Per Day | Weighted Average Hedged Price per MMBtu | Barrels Per Day | Weighted Average Hedged Price per Bbl | Barrels Per Day | Weighted Average Hedged Price per Bbl | |||||||||||||||
October 2012 - December 2012(1) | 155 | $ | 4.63 | 4,500 | $ | 97.26 | 2,000 | $ | 45.22 | ||||||||||||
Calendar 2013 | 160 | 3.98 | 4,000 | 95.53 | — | — |
(1) | 50 Bbtu per day of 2012 gas swaps with a weighted average hedged price per MMBtu of $5.30 are layered with a written put of $3.53 and a call spread of $4.00 to $4.50. Together with the put and call spread, Forest will receive the $5.30 swap price on 50 Bbtu per day except as follows: Forest will receive (i) NYMEX HH plus $1.77 when NYMEX HH is below $3.53; (ii) $5.30 plus the value of the call spread when NYMEX HH is between $4.00 and $4.50; and (iii) $5.80 when NYMEX HH is $4.50 or above. |
Commodity Options | ||||||||||||||||
Natural Gas (NYMEX HH) | Oil (NYMEX WTI) | |||||||||||||||
Underlying Term | Option Expiration | Underlying Bbtu Per Day | Underlying Hedged Price per MMBtu | Underlying Barrels Per Day | Underlying Hedged Price per Bbl | |||||||||||
Gas Swaptions: | ||||||||||||||||
Calendar 2013 | December 2012 | 30 | $ | 4.02 | — | $ | — | |||||||||
Calendar 2013 | December 2012 | 10 | 4.01 | — | — | |||||||||||
Oil Swaptions: | ||||||||||||||||
Calendar 2013 | December 2012 | — | — | 2,000 | 95.00 | |||||||||||
Calendar 2014 | December 2013 | — | — | 2,000 | 110.00 | |||||||||||
Calendar 2014 | December 2013 | — | — | 1,000 | 109.00 | |||||||||||
Calendar 2014 | December 2013 | — | — | 2,000 | 100.00 | |||||||||||
Calendar 2015 | December 2014 | — | — | 3,000 | 100.00 | |||||||||||
Oil Put Options: | ||||||||||||||||
Monthly Oct - Dec 2012 | Monthly Oct - Dec 2012 | — | — | 5,000 | 75.00 |
Commodity Swaps | |||||||
Natural Gas (NYMEX HH) | |||||||
Swap Term | Bbtu Per Day | Weighted Average Hedged Price per MMBtu | |||||
Calendar 2014(1) | 40 | $ | 4.50 |
(1) | In connection with entering into these natural gas swaps with premium hedged prices, Forest granted options to the counterparties to enter into gas swaps with Forest for Calendar 2014 covering 40 Bbtu per day at a weighted average hedged price per MMBtu of $4.50, with such options expiring in December 2013. |
Interest Rate Swaps | |||||||||
Remaining Term | Notional Amount (In Thousands) | Weighted Average Floating Rate | Weighted Average Fixed Rate | ||||||
October 2012 - February 2014 | $ | 500,000 | 1 month LIBOR + 5.89% | 8.50 | % |
September 30, 2012 | December 31, 2011 | ||||||
(In Thousands) | |||||||
Current assets: | |||||||
Commodity derivatives: | |||||||
Derivative instruments | $ | 32,369 | $ | 79,487 | |||
Interest rate derivatives: | |||||||
Derivative instruments | 11,484 | 10,134 | |||||
Total current assets | $ | 43,853 | $ | 89,621 | |||
Long-term assets: | |||||||
Commodity derivatives: | |||||||
Derivative instruments | $ | 913 | $ | — | |||
Interest rate derivatives: | |||||||
Derivative instruments | 4,360 | 10,422 | |||||
Total long-term assets | $ | 5,273 | $ | 10,422 | |||
Current liabilities: | |||||||
Commodity derivatives: | |||||||
Derivative instruments | $ | 7,759 | $ | 28,944 | |||
Long-term liabilities: | |||||||
Commodity derivatives: | |||||||
Derivative instruments | $ | 16,640 | $ | — |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands) | |||||||||||||||
Commodity derivatives: | |||||||||||||||
Realized gains | $ | (26,242 | ) | $ | (8,639 | ) | $ | (78,637 | ) | $ | (21,478 | ) | |||
Unrealized losses (gains) | 50,231 | (51,886 | ) | 41,659 | (36,113 | ) | |||||||||
Interest rate derivatives: | |||||||||||||||
Realized gains | (2,758 | ) | (2,774 | ) | (8,479 | ) | (8,616 | ) | |||||||
Unrealized losses (gains) | 1,564 | (2,662 | ) | 4,713 | (4,425 | ) | |||||||||
Realized and unrealized losses (gains) on derivative instruments, net | $ | 22,795 | $ | (65,961 | ) | $ | (40,744 | ) | $ | (70,632 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands) | |||||||||||||||
Accretion of asset retirement obligations | $ | 1,719 | $ | 1,539 | $ | 4,914 | $ | 4,496 | |||||||
Legal proceeding liabilities | 6,404 | — | 29,251 | 6,500 | |||||||||||
Other, net | 3,604 | (1,716 | ) | 7,937 | 1,284 | ||||||||||
$ | 11,727 | $ | (177 | ) | $ | 42,102 | $ | 12,280 |
Three Months Ended September 30, 2011 | Nine Months Ended September 30, 2011 | ||||||
(In Thousands) | |||||||
Net earnings attributable to Forest Oil Corporation common shareholders | $ | 82,795 | $ | 118,375 | |||
Transfers from (to) the noncontrolling interest: | |||||||
Increase in Forest Oil Corporation’s capital surplus for sale of 15 million Lone Pine Resources Inc. common shares | (269 | ) | 112,610 | ||||
Decrease in Forest Oil Corporation’s capital surplus for spin-off of 70 million Lone Pine Resources Inc. common shares | (333,568 | ) | (333,568 | ) | |||
Change from net earnings attributable to Forest Oil Corporation and transfers from (to) noncontrolling interest | $ | (251,042 | ) | $ | (102,583 | ) |
Three Months Ended September 30, 2011 | Nine Months Ended September 30, 2011 | |||||||
(In Thousands) | ||||||||
(Unaudited) | ||||||||
Total revenues | $ | 50,298 | $ | 137,834 | ||||
Production expenses | 13,902 | 40,350 | ||||||
General and administrative | 3,255 | 8,846 | ||||||
Depreciation, depletion, and amortization | 20,799 | 60,780 | ||||||
Interest expense | 3,000 | 3,866 | ||||||
Realized and unrealized gains on derivative instruments | (28,498 | ) | (33,628 | ) | ||||
Realized foreign currency exchange losses (gains) | 23 | (33,869 | ) | |||||
Unrealized foreign currency exchange (gains) losses, net | (52 | ) | 28,488 | |||||
Other, net | 264 | 1,328 | ||||||
Earnings from discontinued operations before tax | 37,605 | 61,673 | ||||||
Income tax | 9,497 | 17,104 | ||||||
Net earnings from discontinued operations | $ | 28,108 | $ | 44,569 |
September 30, 2012 | December 31, 2011 | ||||||||||||||||||||||||||||||||||||||
Parent Company | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | Parent Company | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||||||||
ASSETS | |||||||||||||||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 39,098 | $ | — | $ | 71 | $ | — | $ | 39,169 | $ | 1,734 | $ | 1 | $ | 1,277 | $ | — | $ | 3,012 | |||||||||||||||||||
Accounts receivable | 46,533 | 26,978 | 4,161 | (462 | ) | 77,210 | 43,999 | 34,142 | 2,201 | (1,253 | ) | 79,089 | |||||||||||||||||||||||||||
Other current assets | 59,190 | 319 | 622 | — | 60,131 | 127,667 | 313 | 591 | — | 128,571 | |||||||||||||||||||||||||||||
Total current assets | 144,821 | 27,297 | 4,854 | (462 | ) | 176,510 | 173,400 | 34,456 | 4,069 | (1,253 | ) | 210,672 | |||||||||||||||||||||||||||
Property and equipment | 8,578,281 | 1,413,677 | 207,517 | — | 10,199,475 | 8,000,466 | 1,317,917 | 282,719 | — | 9,601,102 | |||||||||||||||||||||||||||||
Less accumulated depreciation, depletion, and amortization | 6,611,026 | 1,157,456 | 170,431 | — | 7,938,913 | 5,782,409 | 1,102,339 | 65,238 | — | 6,949,986 | |||||||||||||||||||||||||||||
Net property and equipment | 1,967,255 | 256,221 | 37,086 | — | 2,260,562 | 2,218,057 | 215,578 | 217,481 | — | 2,651,116 | |||||||||||||||||||||||||||||
Investment in subsidiaries | 80,577 | — | — | (80,577 | ) | — | 160,591 | — | — | (160,591 | ) | — | |||||||||||||||||||||||||||
Goodwill | 216,460 | 22,960 | — | — | 239,420 | 216,460 | 22,960 | — | — | 239,420 | |||||||||||||||||||||||||||||
Due from subsidiaries | 145,817 | 58,730 | — | (204,547 | ) | — | 214,394 | 46,944 | — | (261,338 | ) | — | |||||||||||||||||||||||||||
Deferred income taxes | 100,874 | — | 35,064 | (126,087 | ) | 9,851 | 312,564 | — | 25,564 | (107,012 | ) | 231,116 | |||||||||||||||||||||||||||
Other assets | 96,035 | — | — | — | 96,035 | 48,827 | — | — | — | 48,827 | |||||||||||||||||||||||||||||
$ | 2,751,839 | $ | 365,208 | $ | 77,004 | $ | (411,673 | ) | $ | 2,782,378 | $ | 3,344,293 | $ | 319,938 | $ | 247,114 | $ | (530,194 | ) | $ | 3,381,151 | ||||||||||||||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | |||||||||||||||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||||||||||||||
Accounts payable and accrued liabilities | $ | 181,923 | $ | 2,583 | $ | 5,709 | $ | (462 | ) | $ | 189,753 | $ | 235,788 | $ | 8,846 | $ | 4,499 | $ | (1,253 | ) | $ | 247,880 | |||||||||||||||||
Current portion of long-term debt | 296,002 | — | — | — | 296,002 | — | — | — | — | — | |||||||||||||||||||||||||||||
Other current liabilities | 61,574 | 129 | 6,313 | — | 68,016 | 86,618 | 63 | 6,276 | — | 92,957 | |||||||||||||||||||||||||||||
Total current liabilities | 539,499 | 2,712 | 12,022 | (462 | ) | 553,771 | 322,406 | 8,909 | 10,775 | (1,253 | ) | 340,837 | |||||||||||||||||||||||||||
Long-term debt | 1,796,369 | — | — | — | 1,796,369 | 1,693,044 | — | — | — | 1,693,044 | |||||||||||||||||||||||||||||
Due to parent and subsidiaries | — | — | 204,547 | (204,547 | ) | — | — | — | 261,338 | (261,338 | ) | — | |||||||||||||||||||||||||||
Deferred income taxes | — | 126,087 | — | (126,087 | ) | — | — | 107,012 | — | (107,012 | ) | — | |||||||||||||||||||||||||||
Other liabilities | 173,194 | 3,650 | 12,617 | — | 189,461 | 135,730 | 2,614 | 15,813 | — | 154,157 | |||||||||||||||||||||||||||||
Total liabilities | 2,509,062 | 132,449 | 229,186 | (331,096 | ) | 2,539,601 | 2,151,180 | 118,535 | 287,926 | (369,603 | ) | 2,188,038 | |||||||||||||||||||||||||||
Shareholders’ equity | 242,777 | 232,759 | (152,182 | ) | (80,577 | ) | 242,777 | 1,193,113 | 201,403 | (40,812 | ) | (160,591 | ) | 1,193,113 | |||||||||||||||||||||||||
$ | 2,751,839 | $ | 365,208 | $ | 77,004 | $ | (411,673 | ) | $ | 2,782,378 | $ | 3,344,293 | $ | 319,938 | $ | 247,114 | $ | (530,194 | ) | $ | 3,381,151 |
Three Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||||||||||||||||||||
Parent Company | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | Parent Company | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||
Oil, natural gas, and NGL sales | $ | 119,588 | $ | 36,002 | $ | 424 | $ | — | $ | 156,014 | $ | 128,849 | $ | 44,529 | $ | 634 | $ | — | $ | 174,012 | |||||||||||||||||||
Interest and other | 1,694 | 1,278 | — | (2,918 | ) | 54 | 348 | 76 | — | (315 | ) | 109 | |||||||||||||||||||||||||||
Equity earnings in subsidiaries | (73,712 | ) | — | — | 73,712 | — | 39,093 | — | — | (39,093 | ) | — | |||||||||||||||||||||||||||
Total revenues | 47,570 | 37,280 | 424 | 70,794 | 156,068 | 168,290 | 44,605 | 634 | (39,408 | ) | 174,121 | ||||||||||||||||||||||||||||
Costs, expenses, and other: | |||||||||||||||||||||||||||||||||||||||
Lease operating expenses | 23,115 | 4,195 | 116 | — | 27,426 | 20,218 | 3,161 | 101 | — | 23,480 | |||||||||||||||||||||||||||||
Other production expenses | 12,546 | (165 | ) | 41 | — | 12,422 | 11,816 | (735 | ) | 42 | — | 11,123 | |||||||||||||||||||||||||||
General and administrative | 12,341 | 689 | 386 | — | 13,416 | 18,672 | 881 | 389 | — | 19,942 | |||||||||||||||||||||||||||||
Depreciation, depletion, and amortization | 55,978 | 17,433 | 434 | — | 73,845 | 40,675 | 13,251 | 397 | — | 54,323 | |||||||||||||||||||||||||||||
Ceiling test write-down of oil and natural gas properties | 324,155 | — | 5,802 | — | 329,957 | — | — | — | — | — | |||||||||||||||||||||||||||||
Impairment of properties | — | — | 79,529 | — | 79,529 | — | — | — | — | — | |||||||||||||||||||||||||||||
Interest expense | 36,224 | 706 | 2,211 | (2,918 | ) | 36,223 | 37,225 | (159 | ) | 474 | (315 | ) | 37,225 | ||||||||||||||||||||||||||
Realized and unrealized losses (gains) on derivative instruments, net | 17,883 | 4,848 | 64 | — | 22,795 | (73,757 | ) | 7,780 | 16 | — | (65,961 | ) | |||||||||||||||||||||||||||
Other, net | 8,692 | 96 | 2,939 | — | 11,727 | (1,895 | ) | 186 | 1,532 | — | (177 | ) | |||||||||||||||||||||||||||
Total costs, expenses, and other | 490,934 | 27,802 | 91,522 | (2,918 | ) | 607,340 | 52,954 | 24,365 | 2,951 | (315 | ) | 79,955 | |||||||||||||||||||||||||||
Earnings (loss) from continuing operations before income taxes | (443,364 | ) | 9,478 | (91,098 | ) | 73,712 | (451,272 | ) | 115,336 | 20,240 | (2,317 | ) | (39,093 | ) | 94,166 | ||||||||||||||||||||||||
Income tax | 15,188 | (842 | ) | (7,066 | ) | — | 7,280 | 27,618 | 7,825 | (887 | ) | — | 34,556 | ||||||||||||||||||||||||||
Net earnings (loss) from continuing operations | (458,552 | ) | 10,320 | (84,032 | ) | 73,712 | (458,552 | ) | 87,718 | 12,415 | (1,430 | ) | (39,093 | ) | 59,610 | ||||||||||||||||||||||||
Net earnings from discontinued operations | — | — | — | — | — | — | — | 28,108 | — | 28,108 | |||||||||||||||||||||||||||||
Net earnings (loss) | (458,552 | ) | 10,320 | (84,032 | ) | 73,712 | (458,552 | ) | 87,718 | 12,415 | 26,678 | (39,093 | ) | 87,718 | |||||||||||||||||||||||||
Less: net earnings attributable to noncontrolling interest | — | — | — | — | — | — | — | 4,923 | — | 4,923 | |||||||||||||||||||||||||||||
Net earnings (loss) attributable to Forest Oil Corporation common shareholders | $ | (458,552 | ) | $ | 10,320 | $ | (84,032 | ) | $ | 73,712 | $ | (458,552 | ) | $ | 87,718 | $ | 12,415 | $ | 21,755 | $ | (39,093 | ) | $ | 82,795 | |||||||||||||||
Comprehensive income (loss) | $ | (458,367 | ) | $ | 10,320 | $ | (84,032 | ) | $ | 73,712 | $ | (458,367 | ) | $ | 49,577 | $ | 12,415 | $ | 26,678 | $ | (39,093 | ) | $ | 49,577 |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||||||||||||||||||||
Parent Company | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | Parent Company | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Eliminations | Consolidated | ||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||||||
Oil, natural gas, and NGL sales | $ | 326,209 | $ | 123,093 | $ | 1,307 | $ | — | $ | 450,609 | $ | 382,211 | $ | 142,775 | $ | 1,929 | $ | — | $ | 526,915 | |||||||||||||||||||
Interest and other | 3,381 | 1,850 | — | (5,108 | ) | 123 | 1,696 | 138 | — | (895 | ) | 939 | |||||||||||||||||||||||||||
Equity earnings in subsidiaries | (81,311 | ) | — | — | 81,311 | — | 90,828 | — | — | (90,828 | ) | — | |||||||||||||||||||||||||||
Total revenues | 248,279 | 124,943 | 1,307 | 76,203 | 450,732 | 474,735 | 142,913 | 1,929 | (91,723 | ) | 527,854 | ||||||||||||||||||||||||||||
Costs, expenses, and other: | |||||||||||||||||||||||||||||||||||||||
Lease operating expenses | 69,087 | 12,774 | 306 | — | 82,167 | 60,487 | 9,789 | 317 | — | 70,593 | |||||||||||||||||||||||||||||
Other production expenses | 36,937 | 1,026 | 139 | — | 38,102 | 37,160 | 5,188 | 102 | — | 42,450 | |||||||||||||||||||||||||||||
General and administrative | 42,300 | 2,040 | 881 | — | 45,221 | 45,726 | 2,094 | 1,302 | — | 49,122 | |||||||||||||||||||||||||||||
Depreciation, depletion, and amortization | 157,381 | 55,116 | 1,305 | — | 213,802 | 115,738 | 38,193 | 1,296 | — | 155,227 | |||||||||||||||||||||||||||||
Ceiling test write-down of oil and natural gas properties | 673,131 | — | 40,619 | — | 713,750 | — | — | — | — | — | |||||||||||||||||||||||||||||
Impairment of properties | — | — | 79,529 | — | 79,529 | — | — | — | — | — | |||||||||||||||||||||||||||||
Interest expense | 103,932 | 894 | 4,214 | (5,108 | ) | 103,932 | 113,081 | (351 | ) | 1,246 | (895 | ) | 113,081 | ||||||||||||||||||||||||||
Realized and unrealized (gains) losses on derivative instruments, net | (33,044 | ) | (7,603 | ) | (97 | ) | — | (40,744 | ) | (77,929 | ) | 7,282 | 15 | — | (70,632 | ) | |||||||||||||||||||||||
Other, net | 35,259 | 293 | 6,550 | — | 42,102 | 8,354 | 165 | 3,761 | — | 12,280 | |||||||||||||||||||||||||||||
Total costs, expenses, and other | 1,084,983 | 64,540 | 133,446 | (5,108 | ) | 1,277,861 | 302,617 | 62,360 | 8,039 | (895 | ) | 372,121 | |||||||||||||||||||||||||||
Earnings (loss) from continuing operations before income taxes | (836,704 | ) | 60,403 | (132,139 | ) | 81,311 | (827,129 | ) | 172,118 | 80,553 | (6,110 | ) | (90,828 | ) | 155,733 | ||||||||||||||||||||||||
Income tax | 165,694 | 19,075 | (9,500 | ) | — | 175,269 | 48,756 | 30,497 | (2,313 | ) | — | 76,940 | |||||||||||||||||||||||||||
Net earnings (loss) from continuing operations | (1,002,398 | ) | 41,328 | (122,639 | ) | 81,311 | (1,002,398 | ) | 123,362 | 50,056 | (3,797 | ) | (90,828 | ) | 78,793 | ||||||||||||||||||||||||
Net earnings from discontinued operations | — | — | — | — | — | — | — | 44,569 | — | 44,569 | |||||||||||||||||||||||||||||
Net earnings (loss) | (1,002,398 | ) | 41,328 | (122,639 | ) | 81,311 | (1,002,398 | ) | 123,362 | 50,056 | 40,772 | (90,828 | ) | 123,362 | |||||||||||||||||||||||||
Less: net earnings attributable to noncontrolling interest | — | — | — | — | — | — | — | 4,987 | — | 4,987 | |||||||||||||||||||||||||||||
Net earnings (loss) attributable to Forest Oil Corporation common shareholders | $ | (1,002,398 | ) | $ | 41,328 | $ | (122,639 | ) | $ | 81,311 | $ | (1,002,398 | ) | $ | 123,362 | $ | 50,056 | $ | 35,785 | $ | (90,828 | ) | $ | 118,375 | |||||||||||||||
Comprehensive income (loss) | $ | (1,001,840 | ) | $ | 41,328 | $ | (122,639 | ) | $ | 81,311 | $ | (1,001,840 | ) | $ | 95,910 | $ | 50,056 | $ | 40,772 | $ | (90,828 | ) | $ | 95,910 |
Nine Months Ended September 30, | |||||||||||||||||||||||||||||||
2012 | 2011 | ||||||||||||||||||||||||||||||
Parent Company | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Consolidated | Parent Company | Guarantor Subsidiary | Combined Non-Guarantor Subsidiaries | Consolidated | ||||||||||||||||||||||||
Operating activities: | |||||||||||||||||||||||||||||||
Net earnings (loss) | $ | (921,087 | ) | $ | 41,328 | $ | (122,639 | ) | $ | (1,002,398 | ) | $ | 32,534 | $ | 50,056 | $ | 40,772 | $ | 123,362 | ||||||||||||
Less: net earnings from discontinued operations | — | — | — | — | — | — | 44,569 | 44,569 | |||||||||||||||||||||||
Net earnings (loss) from continuing operations | (921,087 | ) | 41,328 | (122,639 | ) | (1,002,398 | ) | 32,534 | 50,056 | (3,797 | ) | 78,793 | |||||||||||||||||||
Adjustments to reconcile net earnings (loss) from continuing operations to net cash provided (used) by operating activities of continuing operations: | |||||||||||||||||||||||||||||||
Depreciation, depletion, and amortization | 157,381 | 55,116 | 1,305 | 213,802 | 115,738 | 38,193 | 1,296 | 155,227 | |||||||||||||||||||||||
Deferred income tax | 199,415 | 19,075 | (9,500 | ) | 208,990 | 18,540 | 30,497 | (2,313 | ) | 46,724 | |||||||||||||||||||||
Unrealized losses (gains) on derivative instruments, net | 37,698 | 8,565 | 109 | 46,372 | (45,114 | ) | 4,566 | 10 | (40,538 | ) | |||||||||||||||||||||
Ceiling test write-down of oil and natural gas properties | 673,131 | — | 40,619 | 713,750 | — | — | — | — | |||||||||||||||||||||||
Impairment of properties | — | — | 79,529 | 79,529 | — | — | — | — | |||||||||||||||||||||||
Other, net | 25,311 | 294 | (2,026 | ) | 23,579 | 30,018 | 243 | (1,882 | ) | 28,379 | |||||||||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||||||||||||||||
Accounts receivable | 4,657 | 7,164 | (2,751 | ) | 9,070 | 12,168 | 16,341 | 1,177 | 29,686 | ||||||||||||||||||||||
Other current assets | 4,463 | (6 | ) | (31 | ) | 4,426 | 6,756 | 443 | 1,063 | 8,262 | |||||||||||||||||||||
Accounts payable and accrued liabilities | 1,915 | (1,330 | ) | 1,597 | 2,182 | (7,118 | ) | 787 | 1,235 | (5,096 | ) | ||||||||||||||||||||
Accrued interest and other | (13,102 | ) | 143 | (518 | ) | (13,477 | ) | 3,420 | (122 | ) | 679 | 3,977 | |||||||||||||||||||
Net cash provided (used) by operating activities of continuing operations | 169,782 | 130,349 | (14,306 | ) | 285,825 | 166,942 | 141,004 | (2,532 | ) | 305,414 | |||||||||||||||||||||
Investing activities: | |||||||||||||||||||||||||||||||
Capital expenditures for property and equipment | (496,178 | ) | (99,814 | ) | (8,901 | ) | (604,893 | ) | (501,683 | ) | (89,477 | ) | (70,104 | ) | (661,264 | ) | |||||||||||||||
Proceeds from sales of assets | 8,902 | — | — | 8,902 | 120,949 | — | 7 | 120,956 | |||||||||||||||||||||||
Net cash used by investing activities of continuing operations | (487,276 | ) | (99,814 | ) | (8,901 | ) | (595,991 | ) | (380,734 | ) | (89,477 | ) | (70,097 | ) | (540,308 | ) | |||||||||||||||
Financing activities: | |||||||||||||||||||||||||||||||
Proceeds from bank borrowings | 651,000 | — | — | 651,000 | 12,000 | — | — | 12,000 | |||||||||||||||||||||||
Repayments of bank borrowings | (756,000 | ) | — | — | (756,000 | ) | (12,000 | ) | — | — | (12,000 | ) | |||||||||||||||||||
Issuance of senior notes, net of issuance costs | 491,250 | — | — | 491,250 | — | — | — | — | |||||||||||||||||||||||
Change in bank overdrafts | (37,661 | ) | (213 | ) | 158 | (37,716 | ) | (20,979 | ) | 185 | 134 | (20,660 | ) | ||||||||||||||||||
Net activity in investments from subsidiaries | 8,480 | (30,323 | ) | 21,843 | — | 299,883 | (51,715 | ) | (248,168 | ) | — | ||||||||||||||||||||
Other, net | (2,211 | ) | — | — | (2,211 | ) | (12,307 | ) | — | — | (12,307 | ) | |||||||||||||||||||
Net cash provided (used) by financing activities of continuing operations | 354,858 | (30,536 | ) | 22,001 | 346,323 | 266,597 | (51,530 | ) | (248,034 | ) | (32,967 | ) | |||||||||||||||||||
Cash flows from discontinued operations: | |||||||||||||||||||||||||||||||
Operating cash flows | — | — | — | — | — | — | 101,292 | 101,292 | |||||||||||||||||||||||
Investing cash flows | — | — | — | — | — | — | (255,470 | ) | (255,470 | ) | |||||||||||||||||||||
Financing cash flows | — | — | — | — | — | — | 478,324 | 478,324 | |||||||||||||||||||||||
Net cash provided by discontinued operations | — | — | — | — | — | — | 324,146 | 324,146 | |||||||||||||||||||||||
Effect of exchange rate changes on cash | — | — | — | — | — | — | (3,476 | ) | (3,476 | ) | |||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 37,364 | (1 | ) | (1,206 | ) | 36,157 | 52,805 | (3 | ) | 7 | 52,809 | ||||||||||||||||||||
Net increase in cash and cash equivalents of discontinued operations | — | — | — | — | — | — | (289 | ) | (289 | ) | |||||||||||||||||||||
Net increase (decrease) in cash and cash equivalents of continuing operations | 37,364 | (1 | ) | (1,206 | ) | 36,157 | 52,805 | (3 | ) | (282 | ) | 52,520 | |||||||||||||||||||
Cash and cash equivalents of continuing operations at beginning of period | 1,734 | 1 | 1,277 | 3,012 | 216,580 | 3 | 986 | 217,569 | |||||||||||||||||||||||
Cash and cash equivalents of continuing operations at end of period | $ | 39,098 | $ | — | $ | 71 | $ | 39,169 | $ | 269,385 | $ | — | $ | 704 | $ | 270,089 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Net earnings (loss) from continuing operations (in thousands) | $ | (458,552 | ) | $ | 59,610 | $ | (1,002,398 | ) | $ | 78,793 | |||||
Diluted earnings (loss) per common share from continuing operations | $ | (3.97 | ) | $ | .52 | $ | (8.73 | ) | $ | .69 | |||||
Adjusted EBITDA from continuing operations (in thousands)(1) | $ | 133,914 | $ | 142,437 | $ | 381,243 | $ | 412,308 |
(1) | In addition to reporting net earnings (loss) from continuing operations as defined under generally accepted accounting principles (“GAAP”), we also present Adjusted EBITDA from continuing operations, which is a non-GAAP performance measure. See “Reconciliation of Non-GAAP Measure” at the end of this Item 2 for a reconciliation of Adjusted EBITDA from continuing operations to reported net earnings (loss) from continuing operations, which is the most directly comparable financial measure calculated and presented in accordance with GAAP. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
Sales volumes: | |||||||||||||||
Oil (MBbls) | 820 | 638 | 2,345 | 1,748 | |||||||||||
Natural gas (MMcf) | 20,694 | 21,774 | 62,459 | 66,600 | |||||||||||
NGL (MBbls) | 930 | 689 | 2,646 | 2,309 | |||||||||||
Totals (MMcfe) | 31,194 | 29,736 | 92,405 | 90,942 | |||||||||||
Revenues (in thousands): | |||||||||||||||
Oil | $ | 77,359 | $ | 58,610 | $ | 229,101 | $ | 167,189 | |||||||
Natural gas | 51,241 | 84,158 | 137,962 | 258,700 | |||||||||||
NGL | 27,414 | 31,244 | 83,546 | 101,026 | |||||||||||
Totals | $ | 156,014 | $ | 174,012 | $ | 450,609 | $ | 526,915 | |||||||
Average sales price per unit: | |||||||||||||||
Oil ($/Bbl) | $ | 94.34 | $ | 91.87 | $ | 97.70 | $ | 95.65 | |||||||
Natural gas ($/Mcf) | 2.48 | 3.87 | 2.21 | 3.88 | |||||||||||
NGL ($/Bbl) | 29.48 | 45.35 | 31.57 | 43.75 | |||||||||||
Totals ($/Mcfe) | $ | 5.00 | $ | 5.85 | $ | 4.88 | $ | 5.79 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands, Except Per Mcfe Data) | |||||||||||||||
Production expense: | |||||||||||||||
Lease operating expenses | $ | 27,426 | $ | 23,480 | $ | 82,167 | $ | 70,593 | |||||||
Production and property taxes | 8,842 | 7,926 | 26,935 | 32,187 | |||||||||||
Transportation and processing costs | 3,580 | 3,197 | 11,167 | 10,263 | |||||||||||
Production expense | $ | 39,848 | $ | 34,603 | $ | 120,269 | $ | 113,043 | |||||||
Production expense per Mcfe: | |||||||||||||||
Lease operating expenses | $ | .88 | $ | .79 | $ | .89 | $ | .78 | |||||||
Production and property taxes | .28 | .27 | .29 | .35 | |||||||||||
Transportation and processing costs | .11 | .11 | .12 | .11 | |||||||||||
Production expense per Mcfe | $ | 1.28 | $ | 1.16 | $ | 1.30 | $ | 1.24 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands) | |||||||||||||||
Stock-based compensation costs | $ | 5,766 | $ | 15,999 | $ | 19,140 | $ | 28,938 | |||||||
Stock-based compensation costs capitalized | (2,292 | ) | (7,167 | ) | (6,509 | ) | (12,189 | ) | |||||||
3,474 | 8,832 | 12,631 | 16,749 | ||||||||||||
Other general and administrative costs | 16,949 | 19,767 | 55,696 | 58,096 | |||||||||||
Other general and administrative costs capitalized | (7,007 | ) | (8,657 | ) | (23,106 | ) | (25,723 | ) | |||||||
9,942 | 11,110 | 32,590 | 32,373 | ||||||||||||
General and administrative expense | $ | 13,416 | $ | 19,942 | $ | 45,221 | $ | 49,122 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands) | |||||||||||||||
Interest costs | $ | 37,913 | $ | 40,269 | $ | 109,719 | $ | 120,590 | |||||||
Interest costs capitalized | (1,690 | ) | (3,044 | ) | (5,787 | ) | (7,509 | ) | |||||||
Interest expense | $ | 36,223 | $ | 37,225 | $ | 103,932 | $ | 113,081 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands) | |||||||||||||||
Realized (gains) losses on derivative instruments, net: | |||||||||||||||
Oil | $ | (2,097 | ) | $ | 1,335 | $ | (2,112 | ) | $ | 9,867 | |||||
Natural gas | (22,664 | ) | (17,708 | ) | (75,172 | ) | (51,582 | ) | |||||||
NGL | (1,481 | ) | 7,734 | (1,353 | ) | 20,237 | |||||||||
Interest | (2,758 | ) | (2,774 | ) | (8,479 | ) | (8,616 | ) | |||||||
Subtotal realized gains on derivative instruments, net | (29,000 | ) | (11,413 | ) | (87,116 | ) | (30,094 | ) | |||||||
Unrealized losses (gains) on derivative instruments, net: | |||||||||||||||
Oil | 8,390 | (23,696 | ) | (1,129 | ) | (22,751 | ) | ||||||||
Natural gas | 39,087 | (20,726 | ) | 49,554 | (13,441 | ) | |||||||||
NGL | 2,754 | (7,464 | ) | (6,766 | ) | 79 | |||||||||
Interest | 1,564 | (2,662 | ) | 4,713 | (4,425 | ) | |||||||||
Subtotal unrealized losses (gains) on derivative instruments, net | 51,795 | (54,548 | ) | 46,372 | (40,538 | ) | |||||||||
Realized and unrealized losses (gains) on derivative instruments, net | $ | 22,795 | $ | (65,961 | ) | $ | (40,744 | ) | $ | (70,632 | ) |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands) | |||||||||||||||
Accretion of asset retirement obligations | $ | 1,719 | $ | 1,539 | $ | 4,914 | $ | 4,496 | |||||||
Legal proceeding liabilities | 6,404 | — | 29,251 | 6,500 | |||||||||||
Other, net | 3,604 | (1,716 | ) | 7,937 | 1,284 | ||||||||||
$ | 11,727 | $ | (177 | ) | $ | 42,102 | $ | 12,280 |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands, Except Percentages) | |||||||||||||||
Current income tax | $ | (33,830 | ) | $ | 1,172 | $ | (33,721 | ) | $ | 30,216 | |||||
Deferred income tax | 41,110 | 33,384 | 208,990 | 46,724 | |||||||||||
Total income tax | $ | 7,280 | $ | 34,556 | $ | 175,269 | $ | 76,940 | |||||||
Effective income tax rate | (2 | )% | 37 | % | (21 | )% | 49 | % |
(i) | the greatest of (a) the prime rate announced by JPMorgan Chase Bank, N.A., (b) the federal funds effective rate from time to time plus ½ of 1%, and (c) the one-month rate applicable to dollar deposits in the London interbank market for one, two, three or six months (as selected by us) (the “LIBO Rate”) plus 1%, plus, in the case of each of clauses (a), (b), and (c), 50 to 150 basis points depending on borrowing base utilization; or |
(ii) | the LIBO Rate as adjusted for statutory reserve requirements (the “Adjusted LIBO Rate”), plus 150 to 250 basis points, depending on borrowing base utilization. |
Nine Months Ended | |||||||
September 30, | |||||||
2012 | 2011 | ||||||
(In Thousands) | |||||||
Net cash provided by operating activities of continuing operations | $ | 285,825 | $ | 305,414 | |||
Net cash used by investing activities of continuing operations | (595,991 | ) | (540,308 | ) | |||
Net cash provided (used) by financing activities of continuing operations | 346,323 | (32,967 | ) |
Nine Months Ended | |||||||
September 30, | |||||||
2012 | 2011 | ||||||
(In Thousands) | |||||||
Exploration, development, and leasehold acquisition costs(1) | $ | (598,882 | ) | $ | (656,894 | ) | |
Proceeds from sale of assets | 8,902 | 120,956 | |||||
Other fixed asset costs | (6,011 | ) | (4,370 | ) | |||
Net cash used by investing activities of continuing operations | $ | (595,991 | ) | $ | (540,308 | ) |
(1) | Cash paid for exploration, development, and leasehold acquisition costs as reflected in the Condensed Consolidated Statements of Cash Flows differs from the reported capital expenditures in the “Capital Expenditures” table below due to the timing of when the capital expenditures are incurred and when the actual cash payment is made, as well as non-cash capital expenditures such as capitalized stock-based compensation costs and common stock issued for the acquisition of oil and natural gas properties. |
Nine Months Ended | |||||||
September 30, | |||||||
2012 | 2011 | ||||||
(In Thousands) | |||||||
Exploration, development, and acquisition costs: | |||||||
Direct costs: | |||||||
Exploration and development | $ | 526,936 | $ | 481,901 | |||
Leasehold acquisitions | 60,769 | 182,147 | |||||
Overhead capitalized | 29,615 | 37,912 | |||||
Interest capitalized | 5,787 | 7,509 | |||||
Total capital expenditures(1) | $ | 623,107 | $ | 709,469 |
(1) | Total capital expenditures include cash expenditures, accrued expenditures, and non-cash capital expenditures including the value of common stock issued for oil and natural gas property acquisitions and stock-based compensation capitalized under the full cost method of accounting. Total capital expenditures also include changes in estimated discounted asset retirement obligations of $5 million and $3 million recorded during the nine months ended September 30, 2012 and 2011, respectively. |
• | estimates of our oil and natural gas reserves; |
• | estimates of our future oil and natural gas production, including estimates of any increases or decreases in our production; |
• | our future financial condition and results of operations; |
• | our future revenues, cash flows, and expenses; |
• | our access to capital and our anticipated liquidity; |
• | our future business strategy and other plans and objectives for future operations; |
• | our outlook on oil and natural gas prices; |
• | the amount, nature, and timing of future capital expenditures, including future development costs; |
• | our ability to access the capital markets to fund capital and other expenditures; |
• | our assessment of our counterparty risk and the ability of our counterparties to perform their future obligations; and |
• | the impact of federal, state, and local political, regulatory, and environmental developments in the United States and certain foreign locations where we conduct business operations. |
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2012 | 2011 | 2012 | 2011 | ||||||||||||
(In Thousands) | |||||||||||||||
Net earnings (loss) from continuing operations | $ | (458,552 | ) | $ | 59,610 | $ | (1,002,398 | ) | $ | 78,793 | |||||
Income tax expense | 7,280 | 34,556 | 175,269 | 76,940 | |||||||||||
Unrealized losses (gains) on derivative instruments, net | 51,795 | (54,548 | ) | 46,372 | (40,538 | ) | |||||||||
Interest expense | 36,223 | 37,225 | 103,932 | 113,081 | |||||||||||
Accretion of asset retirement obligations | 1,719 | 1,539 | 4,914 | 4,496 | |||||||||||
Ceiling test write-down of oil and natural gas properties | 329,957 | — | 713,750 | — | |||||||||||
Impairment of properties | 79,529 | — | 79,529 | — | |||||||||||
Depreciation, depletion, and amortization | 73,845 | 54,323 | 213,802 | 155,227 | |||||||||||
Stock-based compensation | 2,970 | 9,732 | 12,227 | 17,809 | |||||||||||
Legal proceeding/severance costs | 6,404 | — | 31,102 | 6,500 | |||||||||||
Rig stacking | 2,744 | — | 2,744 | — | |||||||||||
Adjusted EBITDA from continuing operations | $ | 133,914 | $ | 142,437 | $ | 381,243 | $ | 412,308 |
Commodity Swaps | |||||||||||||||||||||||||||||||||
Natural Gas (NYMEX HH) | Oil (NYMEX WTI) | NGL (OPIS Refined Products) | |||||||||||||||||||||||||||||||
Remaining Swap Term | Bbtu per Day | Weighted Average Hedged Price per MMBtu | Fair Value (In Thousands) | Barrels per Day | Weighted Average Hedged Price per Bbl | Fair Value (In Thousands) | Barrels per Day | Weighted Average Hedged Price per Bbl | Fair Value (In Thousands) | ||||||||||||||||||||||||
October 2012 - December 2012(1) | 155 | $ | 4.63 | $ | 18,655 | 4,500 | $ | 97.26 | $ | 1,868 | 2,000 | $ | 45.22 | $ | 1,370 | ||||||||||||||||||
Calendar 2013 | 160 | 3.98 | 7,821 | 4,000 | 95.53 | 2,624 | — | — | — |
(1) | 50 Bbtu per day of 2012 gas swaps with a weighted average hedged price per MMBtu of $5.30 are layered with a written put of $3.53 and a call spread of $4.00 to $4.50. Together with the put and call spread, we will receive the $5.30 swap price on 50 Bbtu per day except as follows: we will receive (i) NYMEX HH plus $1.77 when NYMEX HH is below $3.53; (ii) $5.30 plus the value of the call spread when NYMEX HH is between $4.00 and $4.50; and (iii) $5.80 when NYMEX HH is $4.50 or above. The fair value of the written put and call spread derivative instruments as of September 30, 2012 was a liability of $1 million. |
Commodity Options | ||||||||||||||||||||||||
Natural Gas (NYMEX HH) | Oil (NYMEX WTI) | |||||||||||||||||||||||
Underlying Term | Option Expiration | Underlying Bbtu Per Day | Underlying Hedged Price per MMBtu | Fair Value (In Thousands) | Underlying Barrels Per Day | Underlying Hedged Price per Bbl | Fair Value (In Thousands) | |||||||||||||||||
Gas Swaptions: | ||||||||||||||||||||||||
Calendar 2013 | December 2012 | 30 | $ | 4.02 | $ | (1,721 | ) | — | $ | — | $ | — | ||||||||||||
Calendar 2013 | December 2012 | 10 | 4.01 | (588 | ) | — | — | — | ||||||||||||||||
Oil Swaptions: | ||||||||||||||||||||||||
Calendar 2013 | December 2012 | — | — | — | 2,000 | 95.00 | (3,516 | ) | ||||||||||||||||
Calendar 2014 | December 2013 | — | — | — | 2,000 | 110.00 | (2,762 | ) | ||||||||||||||||
Calendar 2014 | December 2013 | — | — | — | 1,000 | 109.00 | (1,437 | ) | ||||||||||||||||
Calendar 2014 | December 2013 | — | — | — | 2,000 | 100.00 | (4,590 | ) | ||||||||||||||||
Calendar 2015 | December 2014 | — | — | — | 3,000 | 100.00 | (7,329 | ) | ||||||||||||||||
Oil Put Options: | ||||||||||||||||||||||||
Monthly Oct - Dec 2012 | Monthly Oct - Dec 2012 | — | — | — | 5,000 | 75.00 | (137 | ) |
Commodity Swaps | |||||||
Natural Gas (NYMEX HH) | |||||||
Swap Term | Bbtu Per Day | Weighted Average Hedged Price per MMBtu | |||||
Calendar 2014(1) | 40 | $ | 4.50 |
(1) | In connection with entering into these natural gas swaps with premium hedged prices, Forest granted options to the counterparties to enter into gas swaps with Forest for Calendar 2014 covering 40 Bbtu per day at a weighted average hedged price per MMBtu of $4.50, with such options expiring in December 2013. |
Interest Rate Swaps | |||||||||||||
Remaining Swap Term | Notional Amount (In Thousands) | Weighted Average Floating Rate | Weighted Average Fixed Rate | Fair Value (In Thousands) | |||||||||
October 2012 - February 2014 | $ | 500,000 | 1 month LIBOR + 5.89% | 8.50 | % | $ | 15,844 |
Fair Value of Derivative Contracts | |||||||||||
Commodity | Interest Rate | Total | |||||||||
(In Thousands) | |||||||||||
As of December 31, 2011 | $ | 50,543 | $ | 20,556 | $ | 71,099 | |||||
Net increase in fair value | 36,977 | 3,767 | 40,744 | ||||||||
Net contract gains realized | (78,637 | ) | (8,479 | ) | (87,116 | ) | |||||
As of September 30, 2012 | $ | 8,883 | $ | 15,844 | $ | 24,727 |
2013 | 2014(1) | 2019 | 2020 | Total | |||||||||||||||
(Dollar Amounts in Thousands) | |||||||||||||||||||
Senior notes: | |||||||||||||||||||
Principal | $ | 12 | $ | 600,000 | $ | 1,000,000 | $ | 500,000 | $ | 2,100,012 | |||||||||
Fixed interest rate | 7.00 | % | 8.50 | % | 7.25 | % | 7.50 | % | 7.67 | % | |||||||||
Effective interest rate(2) | 7.49 | % | 9.47 | % | 7.24 | % | 7.50 | % | 7.94 | % |
(1) | In September 2012, Forest irrevocably called $300 million (50% of the aggregate principal amount) of the 8½% senior notes due 2014 and redeemed those called notes in October 2012. |
(2) | The effective interest rates on the senior notes differ from the fixed interest rates due to the amortization of related discounts or premiums on the notes. |
Period | Total # of Shares Purchased | Average Price Paid Per Share | Total # of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum # (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs | |||||||||
July 2012 | 8,333 | $ | 6.83 | — | — | ||||||||
August 2012 | 940 | 6.89 | — | — | |||||||||
September 2012 | 178 | 8.04 | — | — | |||||||||
Third Quarter Total | 9,451 | $ | 6.85 | — | — |
(a) | Exhibits. | ||
1.1 | Purchase Agreement, dated as of September 12, 2012, by and among Forest Oil Corporation, Forest Oil Permian Corporation and the Initial Purchasers named therein, incorporated by reference to Exhibit 1.1 to Form 8-K for Forest Oil Corporation filed September 17, 2012. | ||
3.1 | Restated Certificate of Incorporation of Forest Oil Corporation, as amended to date, incorporated herein by reference to Exhibit 3.2 to Form 8-K for Forest Oil Corporation filed October 12, 2012 (File No. 001-13515). | ||
3.2 | Bylaws of Forest Oil Corporation Restated as of February 14, 2001, as amended by Amendments No. 1, No. 2, No. 3, No. 4, and No. 5, incorporated herein by reference to Exhibit 3.6 to Form 10-K for Forest Oil Corporation for the year ended December 31, 2011 (File No. 001-13515). | ||
4.1 | Indenture, dated as of September 17, 2012, by and among Forest Oil Corporation, Forest Oil Permian Corporation and U.S. National Bank Association, incorporated by reference to Exhibit 4.1 to Form 8-K for Forest Oil Corporation filed September 17, 2012 (File No. 001-13515). | ||
4.2 | Registration Rights Agreement, dated as of September 17, 2012, by and among Forest Oil Corporation, Forest Oil Permian Corporation and J.P. Morgan Securities LLC, as representative of the Initial Purchasers, incorporated by reference to Exhibit 4.2 to Form 8-K for Forest Oil Corporation filed September 17, 2012 (File No. 001-13515). | ||
10.1 | Form of Restricted Stock Inducement Award Agreement, incorporated by reference to Exhibit 10.1 to Form 8-K for Forest Oil Corporation filed October 1, 2012 (File No. 001-13515). | ||
10.2 | Form of CEO Plan Performance Unit Award Agreement, incorporated by reference to Exhibit 10.2 to Form 8-K for Forest Oil Corporation filed October 1, 2012 (File No. 001-13515). | ||
10.3 | Form of Performance Unit Inducement Award Agreement, incorporated by reference to Exhibit 10.3 to Form 8-K for Forest Oil Corporation filed October 1, 2012 (File No. 001-13515). | ||
10.4 | Form of CEO Severance Agreement, incorporated by reference to Exhibit 10.4 to Form 8-K for Forest Oil Corporation filed October 1, 2012 (File No. 001-13515). | ||
10.5 | Form of CEO Plan Restricted Stock Award Agreement, incorporated by reference to Exhibit 10.5 to Form 8-K for Forest Oil Corporation filed October 1, 2012 (File No. 001-13515). | ||
10.6 | Agreement for Purchase and Sale of Assets, dated as of October 11, 2012, by and between Forest Oil Corporation and Texas Petroleum Investment Company, incorporated by reference to Exhibit 10.1 to Form 8-K for Forest Oil Corporation filed October 12, 2012 (File No. 001-13515). | ||
31.1* | Certification of Principal Executive Officer of Forest Oil Corporation as required by Rule 13a-14(a) of the Securities Exchange Act of 1934. | ||
31.2* | Certification of Principal Financial Officer of Forest Oil Corporation as required by Rule 13a-14(a) of the Securities Exchange Act of 1934. | ||
32.1+ | Certification of Principal Executive Officer of Forest Oil Corporation pursuant to 18 U.S.C. §1350. | ||
32.2+ | Certification of Principal Financial Officer of Forest Oil Corporation pursuant to 18 U.S.C. §1350. | ||
101.INS++ | XBRL Instance Document. | ||
101.SCH++ | XBRL Taxonomy Extension Schema Document. | ||
101.CAL++ | XBRL Taxonomy Calculation Linkbase Document. | ||
101.LAB++ | XBRL Label Linkbase Document. | ||
101.PRE++ | XBRL Presentation Linkbase Document. |
* | Filed herewith. |
FOREST OIL CORPORATION (Registrant) | ||
October 29, 2012 | By: | /s/ PATRICK R. MCDONALD |
Patrick R. McDonald Chief Executive Officer and Director (on behalf of the Registrant and as Principal Executive Officer) | ||
By: | /s/ MICHAEL N. KENNEDY | |
Michael N. Kennedy Executive Vice President and Chief Financial Officer (on behalf of the Registrant and as Principal Financial Officer) | ||
By: | /s/ VICTOR A. WIND | |
Victor A. Wind Senior Vice President, Chief Accounting Officer and Corporate Controller (Principal Accounting Officer) |
1.1 | Purchase Agreement, dated as of September 12, 2012, by and among Forest Oil Corporation, Forest Oil Permian Corporation and the Initial Purchasers named therein, incorporated by reference to Exhibit 1.1 to Form 8-K for Forest Oil Corporation filed September 17, 2012. | ||
3.1 | Restated Certificate of Incorporation of Forest Oil Corporation, as amended to date, incorporated herein by reference to Exhibit 3.2 to Form 8-K for Forest Oil Corporation filed October 12, 2012 (File No. 001-13515). | ||
3.2 | Bylaws of Forest Oil Corporation Restated as of February 14, 2001, as amended by Amendments No. 1, No. 2, No. 3, No. 4, and No. 5, incorporated herein by reference to Exhibit 3.6 to Form 10-K for Forest Oil Corporation for the year ended December 31, 2011 (File No. 001-13515). | ||
4.1 | Indenture, dated as of September 17, 2012, by and among Forest Oil Corporation, Forest Oil Permian Corporation and U.S. National Bank Association, incorporated by reference to Exhibit 4.1 to Form 8-K for Forest Oil Corporation filed September 17, 2012 (File No. 001-13515). | ||
4.2 | Registration Rights Agreement, dated as of September 17, 2012, by and among Forest Oil Corporation, Forest Oil Permian Corporation and J.P. Morgan Securities LLC, as representative of the Initial Purchasers, incorporated by reference to Exhibit 4.2 to Form 8-K for Forest Oil Corporation filed September 17, 2012 (File No. 001-13515). | ||
10.1 | Form of Restricted Stock Inducement Award Agreement, incorporated by reference to Exhibit 10.1 to Form 8-K for Forest Oil Corporation filed October 1, 2012 (File No. 001-13515). | ||
10.2 | Form of CEO Plan Performance Unit Award Agreement, incorporated by reference to Exhibit 10.2 to Form 8-K for Forest Oil Corporation filed October 1, 2012 (File No. 001-13515). | ||
10.3 | Form of Performance Unit Inducement Award Agreement, incorporated by reference to Exhibit 10.3 to Form 8-K for Forest Oil Corporation filed October 1, 2012 (File No. 001-13515). | ||
10.4 | Form of CEO Severance Agreement, incorporated by reference to Exhibit 10.4 to Form 8-K for Forest Oil Corporation filed October 1, 2012 (File No. 001-13515). | ||
10.5 | Form of CEO Plan Restricted Stock Award Agreement, incorporated by reference to Exhibit 10.5 to Form 8-K for Forest Oil Corporation filed October 1, 2012 (File No. 001-13515). | ||
10.6 | Agreement for Purchase and Sale of Assets, dated as of October 11, 2012, by and between Forest Oil Corporation and Texas Petroleum Investment Company, incorporated by reference to Exhibit 10.1 to Form 8-K for Forest Oil Corporation filed October 12, 2012 (File No. 001-13515). | ||
31.1* | Certification of Principal Executive Officer of Forest Oil Corporation as required by Rule 13a-14(a) of the Securities Exchange Act of 1934. | ||
31.2* | Certification of Principal Financial Officer of Forest Oil Corporation as required by Rule 13a-14(a) of the Securities Exchange Act of 1934. | ||
32.1+ | Certification of Principal Executive Officer of Forest Oil Corporation pursuant to 18 U.S.C. §1350. | ||
32.2+ | Certification of Principal Financial Officer of Forest Oil Corporation pursuant to 18 U.S.C. §1350. | ||
101.INS++ | XBRL Instance Document. | ||
101.SCH++ | XBRL Taxonomy Extension Schema Document. | ||
101.CAL++ | XBRL Taxonomy Calculation Linkbase Document. | ||
101.LAB++ | XBRL Label Linkbase Document. | ||
101.PRE++ | XBRL Presentation Linkbase Document. |
* | Filed herewith. |
1. | I have reviewed this report on Form 10-Q of Forest Oil Corporation; |
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/ PATRICK R. MCDONALD | |
Patrick R. McDonald | |
October 29, 2012 | Chief Executive Officer |
1. | I have reviewed this report on Form 10-Q of Forest Oil Corporation; |
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/ MICHAEL N. KENNEDY | |
Michael N. Kennedy | |
October 29, 2012 | Executive Vice President and Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
/s/ PATRICK R. MCDONALD | |
Patrick R. McDonald | |
October 29, 2012 | Chief Executive Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report. |
/s/ MICHAEL N. KENNEDY | |
Michael N. Kennedy | |
October 29, 2012 | Executive Vice President and Chief Financial Officer |
FAIR VALUE MEASUREMENTS (Details 2) (USD $)
In Thousands, unless otherwise specified |
Sep. 30, 2012
|
Dec. 31, 2011
|
||||||
---|---|---|---|---|---|---|---|---|
Fair value and carrying value of financial instruments | ||||||||
Derivative instruments assets | $ 49,126 | |||||||
Derivative instruments liabilities | 24,399 | |||||||
Credit Facility | 105,000 | |||||||
Credit Facility, fair value | 105,000 | [1] | ||||||
8 1/2% Senior Notes due 2014
|
||||||||
Fair value and carrying value of financial instruments | ||||||||
Notes payable, carrying value | 591,980 | 587,611 | ||||||
Notes payable, fair value | 651,000 | [2] | 653,250 | [1] | ||||
Interest rate (as a percent) | 8.50% | 8.50% | ||||||
7 1/4% Senior Notes due 2019
|
||||||||
Fair value and carrying value of financial instruments | ||||||||
Notes payable, carrying value | 1,000,379 | 1,000,421 | ||||||
Notes payable, fair value | 990,000 | [2] | 1,025,000 | [1] | ||||
Interest rate (as a percent) | 7.25% | 7.25% | ||||||
7 1/2% Senior Notes due 2020
|
||||||||
Fair value and carrying value of financial instruments | ||||||||
Notes payable, carrying value | 500,000 | |||||||
Notes payable, fair value | 497,190 | [2] | ||||||
Interest rate (as a percent) | 7.50% | 7.50% | ||||||
Carrying Amount
|
||||||||
Fair value and carrying value of financial instruments | ||||||||
Derivative instruments assets | 49,126 | 100,043 | ||||||
Derivative instruments liabilities | 24,399 | 28,944 | ||||||
Fair Value
|
||||||||
Fair value and carrying value of financial instruments | ||||||||
Derivative instruments assets | 49,126 | [2] | 100,043 | [1] | ||||
Derivative instruments liabilities | 24,399 | [2] | 28,944 | [1] | ||||
Using Quoted Prices in Active Markets for Identical Assets (Level 1) | 8 1/2% Senior Notes due 2014
|
||||||||
Fair value and carrying value of financial instruments | ||||||||
Notes payable, fair value | 651,000 | |||||||
Using Quoted Prices in Active Markets for Identical Assets (Level 1) | 7 1/4% Senior Notes due 2019
|
||||||||
Fair value and carrying value of financial instruments | ||||||||
Notes payable, fair value | 990,000 | |||||||
Using Quoted Prices in Active Markets for Identical Assets (Level 1) | 7 1/2% Senior Notes due 2020
|
||||||||
Fair value and carrying value of financial instruments | ||||||||
Notes payable, fair value | 497,190 | |||||||
Using Significant Other Observable Inputs (Level 2) | Fair Value
|
||||||||
Fair value and carrying value of financial instruments | ||||||||
Derivative instruments assets | 49,126 | |||||||
Derivative instruments liabilities | $ 24,399 | |||||||
|
DEBT (Components of Debt) (Details) (USD $)
|
1 Months Ended | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2012
|
Dec. 31, 2011
|
Sep. 30, 2012
Credit Facility
|
Dec. 31, 2011
Credit Facility
|
Sep. 30, 2012
7% Senior Subordinated Notes due 2013
|
Dec. 31, 2011
7% Senior Subordinated Notes due 2013
|
Sep. 30, 2012
8 1/2% Senior Notes due 2014
|
Dec. 31, 2011
8 1/2% Senior Notes due 2014
|
Sep. 30, 2012
7 1/4% Senior Notes due 2019
|
Dec. 31, 2011
7 1/4% Senior Notes due 2019
|
Sep. 30, 2012
7 1/2% Senior Notes due 2020
|
Sep. 17, 2012
7 1/2% Senior Notes due 2020
|
Dec. 31, 2011
7 1/2% Senior Notes due 2020
|
Oct. 29, 2012
Subsequent Event
8 1/2% Senior Notes due 2014
|
|||||||
Debt | ||||||||||||||||||||
Interest rate (as a percent) | 7.00% | 7.00% | 8.50% | 8.50% | 7.25% | 7.25% | 7.50% | 7.50% | ||||||||||||
Credit Facility | $ 105,000,000 | $ 0 | $ 105,000,000 | |||||||||||||||||
Debt, Principal | 2,100,012,000 | 1,705,012,000 | 12,000 | 12,000 | 600,000,000 | [1] | 600,000,000 | [1] | 1,000,000,000 | 1,000,000,000 | 500,000,000 | 500,000,000 | 0 | |||||||
Debt, Unamortized Premium (Discount) | (7,641,000) | (11,968,000) | 0 | 0 | 0 | 0 | (8,020,000) | [1] | (12,389,000) | [1] | 379,000 | 421,000 | 0 | 0 | ||||||
Total debt | 2,092,371,000 | 1,693,044,000 | 12,000 | 12,000 | 591,980,000 | [1] | 587,611,000 | [1] | 1,000,379,000 | 1,000,421,000 | 500,000,000 | 0 | ||||||||
Less: current portion of debt, principal | (300,012,000) | [1] | 0 | [1] | ||||||||||||||||
Less: current portion of debt, unamortized premium (discount) | 4,010,000 | [1] | 0 | [1] | ||||||||||||||||
Current portion of debt | (296,002,000) | [1] | 0 | [1] | ||||||||||||||||
Long-term portion of debt, principal | 1,800,000,000 | 1,705,012,000 | ||||||||||||||||||
Long-term portion of debt, unamortized premium (discount) | (3,631,000) | (11,968,000) | ||||||||||||||||||
Long-term portion of debt | 1,796,369,000 | 1,693,044,000 | ||||||||||||||||||
Redeemed Principal Amount of Senior Notes | 300,000,000 | |||||||||||||||||||
Percentage Of The Principal Amount Of Senior Notes Called For Redemption (as a percent) | 50.00% | |||||||||||||||||||
Redemption Price As Percentage Of Principal Amount (as a percent) | 110.24% | |||||||||||||||||||
Gain (Loss) On Redemption Of Senior Notes | $ (36,300,000) | |||||||||||||||||||
|
FAIR VALUE MEASUREMENTS (Tables)
|
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
|
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of assets and liabilities measured at fair value on a recurring basis | The Company’s assets and liabilities measured at fair value on a recurring basis at September 30, 2012 and December 31, 2011 are set forth in the table below.
|
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Schedule of fair values and carrying amounts of financial instruments | The fair values and carrying amounts of the Company’s financial instruments are summarized below as of the dates indicated.
__________________________________________
__________________________________________
|
DERIVATIVE INSTRUMENTS (Details 3) (USD $)
|
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
counterparty
|
Sep. 30, 2011
|
Sep. 30, 2012
counterparty
|
Sep. 30, 2011
|
|
Derivative contracts not designated as hedging instruments and the location of gain or (loss) recognized in income statement | ||||
Realized gains on commodity derivatives | $ (26,242,000) | $ (8,639,000) | $ (78,637,000) | $ (21,478,000) |
Unrealized losses (gains) on commodity derivatives | 50,231,000 | (51,886,000) | 41,659,000 | (36,113,000) |
Realized gains on interest rate derivatives | (2,758,000) | (2,774,000) | (8,479,000) | (8,616,000) |
Unrealized losses (gains) on interest rate derivatives | 1,564,000 | (2,662,000) | 4,713,000 | (4,425,000) |
Realized and unrealized losses (gains) on derivative instruments, net | 22,795,000 | (65,961,000) | (40,744,000) | (70,632,000) |
Credit Risk | ||||
Derivative, Net Asset Position, Aggregate Fair Value | 28,700,000 | 28,700,000 | ||
Number of counterparties to whom derivative liabilities are owed (in counterparties) | 3 | 3 | ||
Derivative, Net Liability Position, Aggregate Fair Value | 4,000,000 | 4,000,000 | ||
Maximum exposure of entity to risk, if the netting provisions of the ISDA Master Agreements did not exist | 49,126,000 | 49,126,000 | ||
Maximum exposure of counterparties to risk, if the netting provisions of the ISDA Master Agreements did not exist | $ 24,399,000 | $ 24,399,000 |
INCOME TAXES (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Income Tax Disclosure [Abstract] | ||||
Federal income tax rate percentage (as a percent) | 35.00% | 35.00% | 35.00% | 35.00% |
Federal income tax at 35% of earnings (loss) from continuing operations before income taxes | $ (157,945) | $ 32,958 | $ (289,495) | $ 54,507 |
State income taxes, net of federal income tax benefits | (5,442) | 1,107 | (9,983) | 1,830 |
Canadian dividend tax, net of U.S. tax benefit | 0 | 0 | 0 | 18,460 |
Effect of federal, state, and foreign tax on permanent items | 342 | 1,397 | 997 | 2,243 |
Change in valuation allowance | 170,065 | 0 | 472,569 | 0 |
Other | 260 | (906) | 1,181 | (100) |
Total income tax | $ 7,280 | $ 34,556 | $ 175,269 | $ 76,940 |
CONDENSED CONSOLIDATING FINANCIAL INFORMATION (Details 3) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 9 Months Ended | ||||
---|---|---|---|---|---|---|
Sep. 30, 2012
|
Jun. 30, 2012
|
Mar. 31, 2012
|
Sep. 30, 2011
|
Sep. 30, 2012
|
Sep. 30, 2011
|
|
Revenues: | ||||||
Oil, natural gas, and natural gas liquids sales | $ 156,014 | $ 174,012 | $ 450,609 | $ 526,915 | ||
Interest and other | 54 | 109 | 123 | 939 | ||
Equity earnings in subsidiaries | 0 | 0 | 0 | 0 | ||
Total revenues | 156,068 | 174,121 | 450,732 | 527,854 | ||
Costs, expenses, and other: | ||||||
Lease operating expenses | 27,426 | 23,480 | 82,167 | 70,593 | ||
Other production expenses | 12,422 | 11,123 | 38,102 | 42,450 | ||
General and administrative | 13,416 | 19,942 | 45,221 | 49,122 | ||
Depreciation, depletion, and amortization | 73,845 | 54,323 | 213,802 | 155,227 | ||
Ceiling test write-down of oil and natural gas properties | 329,957 | 349,000 | 34,800 | 0 | 713,750 | 0 |
Impairment of properties | 79,529 | 0 | 79,529 | 0 | ||
Interest expense | 36,223 | 37,225 | 103,932 | 113,081 | ||
Realized and unrealized losses (gains) on derivative instruments, net | 22,795 | (65,961) | (40,744) | (70,632) | ||
Other, net | 11,727 | (177) | 42,102 | 12,280 | ||
Total costs, expenses, and other | 607,340 | 79,955 | 1,277,861 | 372,121 | ||
Earnings (loss) from continuing operations before income taxes | (451,272) | 94,166 | (827,129) | 155,733 | ||
Income tax | 7,280 | 34,556 | 175,269 | 76,940 | ||
Net earnings (loss) from continuing operations | (458,552) | 59,610 | (1,002,398) | 78,793 | ||
Net earnings from discontinued operations | 0 | 28,108 | 0 | 44,569 | ||
Net earnings (loss) | (458,552) | 87,718 | (1,002,398) | 123,362 | ||
Less: net earnings attributable to noncontrolling interest | 0 | 4,923 | 0 | 4,987 | ||
Net earnings (loss) attributable to Forest Oil Corporation common shareholders | (458,552) | 82,795 | (1,002,398) | 118,375 | ||
Comprehensive income (loss) | (458,367) | 49,577 | (1,001,840) | 95,910 | ||
Parent Company
|
||||||
Revenues: | ||||||
Oil, natural gas, and natural gas liquids sales | 119,588 | 128,849 | 326,209 | 382,211 | ||
Interest and other | 1,694 | 348 | 3,381 | 1,696 | ||
Equity earnings in subsidiaries | (73,712) | 39,093 | (81,311) | 90,828 | ||
Total revenues | 47,570 | 168,290 | 248,279 | 474,735 | ||
Costs, expenses, and other: | ||||||
Lease operating expenses | 23,115 | 20,218 | 69,087 | 60,487 | ||
Other production expenses | 12,546 | 11,816 | 36,937 | 37,160 | ||
General and administrative | 12,341 | 18,672 | 42,300 | 45,726 | ||
Depreciation, depletion, and amortization | 55,978 | 40,675 | 157,381 | 115,738 | ||
Ceiling test write-down of oil and natural gas properties | 324,155 | 0 | 673,131 | 0 | ||
Impairment of properties | 0 | 0 | 0 | 0 | ||
Interest expense | 36,224 | 37,225 | 103,932 | 113,081 | ||
Realized and unrealized losses (gains) on derivative instruments, net | 17,883 | (73,757) | (33,044) | (77,929) | ||
Other, net | 8,692 | (1,895) | 35,259 | 8,354 | ||
Total costs, expenses, and other | 490,934 | 52,954 | 1,084,983 | 302,617 | ||
Earnings (loss) from continuing operations before income taxes | (443,364) | 115,336 | (836,704) | 172,118 | ||
Income tax | 15,188 | 27,618 | 165,694 | 48,756 | ||
Net earnings (loss) from continuing operations | (458,552) | 87,718 | (1,002,398) | 123,362 | ||
Net earnings from discontinued operations | 0 | 0 | 0 | 0 | ||
Net earnings (loss) | (458,552) | 87,718 | (1,002,398) | 123,362 | ||
Less: net earnings attributable to noncontrolling interest | 0 | 0 | 0 | 0 | ||
Net earnings (loss) attributable to Forest Oil Corporation common shareholders | (458,552) | 87,718 | (1,002,398) | 123,362 | ||
Comprehensive income (loss) | (458,367) | 49,577 | (1,001,840) | 95,910 | ||
Guarantor Subsidiary
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Revenues: | ||||||
Oil, natural gas, and natural gas liquids sales | 36,002 | 44,529 | 123,093 | 142,775 | ||
Interest and other | 1,278 | 76 | 1,850 | 138 | ||
Equity earnings in subsidiaries | 0 | 0 | 0 | 0 | ||
Total revenues | 37,280 | 44,605 | 124,943 | 142,913 | ||
Costs, expenses, and other: | ||||||
Lease operating expenses | 4,195 | 3,161 | 12,774 | 9,789 | ||
Other production expenses | (165) | (735) | 1,026 | 5,188 | ||
General and administrative | 689 | 881 | 2,040 | 2,094 | ||
Depreciation, depletion, and amortization | 17,433 | 13,251 | 55,116 | 38,193 | ||
Ceiling test write-down of oil and natural gas properties | 0 | 0 | 0 | 0 | ||
Impairment of properties | 0 | 0 | 0 | 0 | ||
Interest expense | 706 | (159) | 894 | (351) | ||
Realized and unrealized losses (gains) on derivative instruments, net | 4,848 | 7,780 | (7,603) | 7,282 | ||
Other, net | 96 | 186 | 293 | 165 | ||
Total costs, expenses, and other | 27,802 | 24,365 | 64,540 | 62,360 | ||
Earnings (loss) from continuing operations before income taxes | 9,478 | 20,240 | 60,403 | 80,553 | ||
Income tax | (842) | 7,825 | 19,075 | 30,497 | ||
Net earnings (loss) from continuing operations | 10,320 | 12,415 | 41,328 | 50,056 | ||
Net earnings from discontinued operations | 0 | 0 | 0 | 0 | ||
Net earnings (loss) | 10,320 | 12,415 | 41,328 | 50,056 | ||
Less: net earnings attributable to noncontrolling interest | 0 | 0 | 0 | 0 | ||
Net earnings (loss) attributable to Forest Oil Corporation common shareholders | 10,320 | 12,415 | 41,328 | 50,056 | ||
Comprehensive income (loss) | 10,320 | 12,415 | 41,328 | 50,056 | ||
Combined Non-Guarantor Subsidiaries
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Revenues: | ||||||
Oil, natural gas, and natural gas liquids sales | 424 | 634 | 1,307 | 1,929 | ||
Interest and other | 0 | 0 | 0 | 0 | ||
Equity earnings in subsidiaries | 0 | 0 | 0 | 0 | ||
Total revenues | 424 | 634 | 1,307 | 1,929 | ||
Costs, expenses, and other: | ||||||
Lease operating expenses | 116 | 101 | 306 | 317 | ||
Other production expenses | 41 | 42 | 139 | 102 | ||
General and administrative | 386 | 389 | 881 | 1,302 | ||
Depreciation, depletion, and amortization | 434 | 397 | 1,305 | 1,296 | ||
Ceiling test write-down of oil and natural gas properties | 5,802 | 0 | 40,619 | 0 | ||
Impairment of properties | 79,529 | 0 | 79,529 | 0 | ||
Interest expense | 2,211 | 474 | 4,214 | 1,246 | ||
Realized and unrealized losses (gains) on derivative instruments, net | 64 | 16 | (97) | 15 | ||
Other, net | 2,939 | 1,532 | 6,550 | 3,761 | ||
Total costs, expenses, and other | 91,522 | 2,951 | 133,446 | 8,039 | ||
Earnings (loss) from continuing operations before income taxes | (91,098) | (2,317) | (132,139) | (6,110) | ||
Income tax | (7,066) | (887) | (9,500) | (2,313) | ||
Net earnings (loss) from continuing operations | (84,032) | (1,430) | (122,639) | (3,797) | ||
Net earnings from discontinued operations | 0 | 28,108 | 0 | 44,569 | ||
Net earnings (loss) | (84,032) | 26,678 | (122,639) | 40,772 | ||
Less: net earnings attributable to noncontrolling interest | 0 | 4,923 | 0 | 4,987 | ||
Net earnings (loss) attributable to Forest Oil Corporation common shareholders | (84,032) | 21,755 | (122,639) | 35,785 | ||
Comprehensive income (loss) | (84,032) | 26,678 | (122,639) | 40,772 | ||
Eliminations
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Revenues: | ||||||
Oil, natural gas, and natural gas liquids sales | 0 | 0 | 0 | 0 | ||
Interest and other | (2,918) | (315) | (5,108) | (895) | ||
Equity earnings in subsidiaries | 73,712 | (39,093) | 81,311 | (90,828) | ||
Total revenues | 70,794 | (39,408) | 76,203 | (91,723) | ||
Costs, expenses, and other: | ||||||
Lease operating expenses | 0 | 0 | 0 | 0 | ||
Other production expenses | 0 | 0 | 0 | 0 | ||
General and administrative | 0 | 0 | 0 | 0 | ||
Depreciation, depletion, and amortization | 0 | 0 | 0 | 0 | ||
Ceiling test write-down of oil and natural gas properties | 0 | 0 | 0 | 0 | ||
Impairment of properties | 0 | 0 | 0 | 0 | ||
Interest expense | (2,918) | (315) | (5,108) | (895) | ||
Realized and unrealized losses (gains) on derivative instruments, net | 0 | 0 | 0 | 0 | ||
Other, net | 0 | 0 | 0 | 0 | ||
Total costs, expenses, and other | (2,918) | (315) | (5,108) | (895) | ||
Earnings (loss) from continuing operations before income taxes | 73,712 | (39,093) | 81,311 | (90,828) | ||
Income tax | 0 | 0 | 0 | 0 | ||
Net earnings (loss) from continuing operations | 73,712 | (39,093) | 81,311 | (90,828) | ||
Net earnings from discontinued operations | 0 | 0 | 0 | 0 | ||
Net earnings (loss) | 73,712 | (39,093) | 81,311 | (90,828) | ||
Less: net earnings attributable to noncontrolling interest | 0 | 0 | 0 | 0 | ||
Net earnings (loss) attributable to Forest Oil Corporation common shareholders | 73,712 | (39,093) | 81,311 | (90,828) | ||
Comprehensive income (loss) | $ 73,712 | $ (39,093) | $ 81,311 | $ (90,828) |
EARNINGS (LOSS) PER SHARE
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9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2012
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EARNINGS (LOSS) PER SHARE | EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share is computed using the two-class method by dividing net earnings (loss) attributable to common stock by the weighted average number of common shares outstanding during each period. The two-class method of computing earnings (loss) per share is required to be used since Forest has participating securities. The two-class method is an earnings allocation formula that determines earnings (loss) per share for each class of common stock and participating security according to dividends declared (or accumulated) and participation rights in undistributed earnings. Holders of restricted stock issued under Forest’s stock incentive plans have the right to receive non-forfeitable cash and certain non-cash dividends, participating on an equal basis with common stock. Holders of phantom stock units issued to directors under Forest’s stock incentive plans also have the right to receive non-forfeitable cash and certain non-cash dividends, participating on an equal basis with common stock, while phantom stock units issued to employees do not participate in dividends. Stock options issued under Forest’s stock incentive plans do not participate in dividends. Performance units issued under Forest’s stock incentive plans do not participate in dividends in their current form. Holders of performance units participate in dividends paid during the performance units’ vesting period only after the performance units vest and common shares have been earned by the holders of the performance units. Performance units may vest with no common shares being earned, depending on Forest’s shareholder return over the performance units’ vesting period in relation to the shareholder returns of specified peer companies. See Note 3 for more information on Forest’s stock-based incentive awards. In summary, restricted stock issued to employees and directors and phantom stock units issued to directors are participating securities, and earnings are allocated to both common stock and these participating securities under the two-class method. However, these participating securities do not have a contractual obligation to share in Forest’s losses. Therefore, in periods of net loss, none of the loss is allocated to these participating securities. Under the treasury stock method, diluted earnings (loss) per share is computed by dividing (a) net earnings (loss), adjusted for the effects of certain contracts that provide the issuer or holder with a choice between settlement methods, by (b) the weighted average number of common shares outstanding, adjusted for the dilutive effect, if any, of potential common shares (e.g., stock options, unvested restricted stock grants, unvested phantom stock units that may be settled in shares, and unvested performance units). No potential common shares are included in the computation of any diluted per share amount when a net loss exists, as was the case for the three and nine months ended September 30, 2012. Unvested restricted stock grants were not included in the calculation of diluted earnings per share for the three and nine months ended September 30, 2011 as their inclusion would have an antidilutive effect. Unvested performance stock units were not included in the calculation of diluted earnings per share for the three and nine months ended September 30, 2011 as no shares would have been earned under the performance stock unit agreements if September 30, 2011 had been the end of the vesting period under these agreements. The following reconciles net earnings (loss) as reported in the Condensed Consolidated Statements of Operations to net earnings (loss) used for calculating basic and diluted earnings (loss) per share for the periods presented.
The following reconciles basic weighted average common shares outstanding to diluted weighted average common shares outstanding for the periods presented.
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