While the Forest Oil Corp. (NYSE:FST) was able to barely beat analysts' estimates, earnings for the second quarter still dropped 10 percent, as the company cited lower natural gas prices as the reason for the poor performance.
Earnings for the quarter reached $33.3 million, or 29 cents a share, falling from the $37.1 million, or 36 cents a share last year in the same quarter.
The market was looking for revenue of $220 million, but Forest was oil able to generate $208.1 million. Even so, that was a 14 percent gain.
Forest President and Chief Executive Officer H. Craig Clark, said, “We have the ability to annually grow net sales volumes at double digit rates at attractive rates of return while spending near our cash flow. The growth from the Texas Panhandle, along with the other core assets in the portfolio, has resulted in an increase to our net sales volume guidance for 2010. As a result of a significant project inventory in our core areas we expect the asset base to continue to yield growth well into the future.”
The challenge in the natural gas sector isn't going to be sales, it's the abundance of supply which will challenge pricing in the years ahead, and all those with a large exposure to natural gas will have to deal with that.
Forest Oil closed Monday's session at $29.80, gaining $1.21, or 4.23 percent.
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