FIRST QUARTER 2004 RESULTS
For the first three months of 2004, Forest's sales volumes increased by 10% compared to the first quarter of 2003. Natural gas volumes increased 5% and liquids volumes increased 16% in the 2004 period compared to the 2003 period. Netbacks (oil and gas sales revenue less production expense) of approximately $135 million for the first three months of 2004 were slightly higher than those reported in the first quarter of 2003. Year-over-year revenue increases were offset by exceptional charges relating to acquisition transition activities and workovers on properties acquired in the fourth quarter of 2003. Significant reductions were achieved in general and administrative expense, resulting in a 7% increase in EBITDA to approximately $129 million in the first quarter of 2004 compared to approximately $120 million in the corresponding period in 2003. Capital expenditures for the first three months of 2004 decreased 18% to approximately $59 million compared to approximately $73 million in the first three months of 2003, resulting in EBITDA in excess of capital expenditures of approximately $70 million in the 2004 period compared to $48 million in 2003.
During the first quarter, cash flow from operations was approximately $98 million, net of approximately $18 million attributable to increases in working capital items. The cash flow from operations was used primarily to fund capital expenditures and to reduce long-term debt. At March 31, 2004, net debt (long-term debt minus cash) decreased $57 million to $861 million compared to $918 million at December 31, 2003.
For the quarter ended March 31, 2004, Forest reported net earnings from continuing operations of $19.6 million or $.37 per basic share and net earnings of $19.1 million or $.36 per basic share, a decrease of 51% compared to net earnings of $38.9 million or $.81 per share in the corresponding 2003 period. Lower earnings for the quarter ended March 31, 2004 compared to the corresponding period of 2003 were due primarily to increases in depreciation and depletion expense offset partially by higher EBITDA.
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