Forest Oil surges on Texas asset sale

Forest Oil (FST) +12.1% premarket after yesterday's post-close announcement of a $1B sale of its Texas Panhandle oil and gas assets to a company backed by PE firm First Reserve.

The sales price is greater than FST's ~$770M market cap.

FST says the sale enables it to focus development of its core Eagle Ford Shale assets; it doesn't expect to incur any income taxes on the sale and intends to use the proceeds primarily to reduce debt and bolster financial flexibility.

The properties sold have produced ~100M cf/day YTD and have estimated proved reserves of 517B cf of gas; FST had said earlier that it was seeking a buyer for the assets after receiving unsolicited offers.

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