Forest Oil puts more Texas assets on the block
DENVER (AP) — Forest Oil put more of its assets in Texas on the block Monday.
The Denver energy company said it had received several unsolicited offers and decided to bring J.P. Morgan Securities LLC aboard to help market the acreage.
Shares of Forest Oil have been in decline since the start of the year, falling more than 30 percent to date.
In January, the company said that it would sell most of its south Texas properties and receive after-tax proceeds of $325 million, which it will use to pay down debt.
But Moody's Investors Service still downgraded its credit rating in May, saying that its credit measurements were still weak even after paying off debt. Moody's noted that the company had reduced its debt by about $460 million since 2012's third quarter. However, it said the sales have further reduced the company's production and reserves, which will make it hard for the company to keep reducing its leverage.
Moody's lowered its rating to "B2" from "B1" and maintained a negative outlook, meaning further downgrades are possible.
That land that is being put up for sale now in the Texas Panhandle, according to CEO Patrick McDonald, offers large-scale, low-risk development opportunity.
Proceeds from any sale would be used to lower debt, and would also give the company more flexibility to develop other assets, McDonald said.
If a sale is completed, Forest's remaining assets will be anchored by its ongoing oil developments in the Eagle Ford Shale near Dallas, where oil production is projected to more than double in 2014, the company said.
Forest Oil Corp. also owns 111,000 net acres in East Texas.
Company shares rose almost 2 percent in premarket trading.