Forest Oil Corporation announced financial and operational results for the second quarter of 2008. For the quarter ended June 30, 2008, the Company reported the following highlights:
"As we had previously announced, the second quarter of 2008 was the first quarter of the Company's increased capital spending in our Focus Areas," said H. Craig Clark, President and CEO of Forest Oil. "This quarter's 6% sequential growth rate (4% organic) is the first data point on our stated goal to increase our annualized 2008 organic production growth rate to about 15% by increasing our capital spending. The sequential increase in production and flat cash costs of $2.47 per Mcfe, once again demonstrates Forest has proven itself as a highly successful and disciplined operator even in times of high commodity prices. We expect to continue to see the trend of solid production growth while controlling cash costs throughout the remainder of the year. I am also pleased that we are on schedule in our exploration efforts and in testing our significant shale acreage."
For the three months ended June 30, 2008, Forest reported a net loss of $68.0 million or $(.78) per basic share. This loss compares to Forest's net earnings of $76.8 million or $1.11 per basic share in the corresponding period in 2007. The net loss for the three months ended June 30, 2008 was affected by the non-cash effect of net unrealized losses relating to recording derivative instruments and investments at fair value and to foreign currency exchange, totaling $319.5 million ($203.1 million net of tax).
Without the effect of this item, Forest's adjusted net earnings were a record $135.1 million or $1.54 per basic share. This is an increase of 191% over Forest's adjusted net earnings of $46.5 million or $.67 per basic share in the corresponding 2007 period.
Forest's adjusted EBITDA increased 101% for the three months ended June 30, 2008 to a record $377.2 million compared to adjusted EBITDA of $187.5 million in the corresponding 2007 period. Forest's adjusted discretionary cash flow increased 118% for the three months ended June 30, 2008 to a record $344.1 million compared to adjusted discretionary cash flow of $157.9 million in the corresponding 2007 period.
The significant increase in adjusted net earnings, adjusted EBITDA and adjusted discretionary cash flow was primarily due to increased net sales volumes from successful drilling activity and acquisitions, including the acquisition of The Houston Exploration Company (Houston Exploration) in June 2007. Also contributing to the significant increase was higher per-unit price realizations and lower per-unit cash costs.
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