Seeking Alpha

Forest Oil -6% following 2014 capex and cost guidance

  • Forest Oil (FST -6.1%) is maintained with a Sell rating at Goldman Sachs following the company's 2014 capital budget and guidance.
  • Goldman says production guidance of 120M-130M cfe/day was in line with its expectations, 2014 capex of $290M-$310M was slightly higher than expected, and cash and non-cash operating costs were higher than expected.
  • The scope for resource improvement in the Eagle Ford to take growth and rates of return to a higher level is key for greater credit, but with capex slightly higher and cash costs higher than expected, the firm continues to see sub-par corporate return on cash invested and ongoing free cash deficits.
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