Forest Oil's asset sale raises valuation concerns


The downdraft in shares of Forest Oil (FST -6.1%) extends to a second day after Friday's disappointing reaction to the $1B sale of its Texas Panhandle assets.

A new Seeking Alpha blog says the recent deal has "left the cupboard looking bare... With high leverage and a multiple that doesn't match its asset quality, the shares could drop 25-45% more."

With only ~28K net acres in the Eagle Ford and east Texas economics subdued by low gas prices, the thinking is that FST will need to eventually pursue acquisitions to bolster its portfolio.

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