Boston, MA 10/07/2013 (wallstreetpr) – The independent energy company Forest Oil Corporation (NYSE:FST) has recently announced the sale of its Texas Panhandle oil and gas assets, Templar Energy LLC, for a consideration of $1 billion for the purpose of reducing its debt burden.
The oil and gas company has been in a mission to cut down its leverage in the balance sheet by disposing assets, since last year.
The company President and CEO, Patrick R. McDonald also added, “This divestiture sharpens our operational focus and enables us to maintain development efforts in our core Eagle Ford Shale asset, where oil production is projected to show notable growth over the next several years. Looking ahead, we have initiated our 2014 capital budget process and will provide further details regarding our future development plans later this year.”
As per the company press release, the transaction is anticipated to end on or before 25 November, 2013, while the effective date of will be 1 October, 2013. Besides, the deal will be coming to a conclusion only after fulfilling certain customary purchase price adjustments and other closing conditions.
For the year ending 31 December, 2013, the disposed asset had manufactured nearly 100 MMcfe/d with an EBITDA of about $180 million with an estimated proved reserve of 517 Bcfe. Besides, the company stated that it not likely to incur any federal and state income taxes on the deal.
Initially, the shares of Forest Oil tanked decent gains after the release of the event; however it ended the Friday trade 9.6% down to $5.7 as many investors opined that the deal was undervalued as per industrial average.
Further, Forest Oil’s target price has been revised to $5.0 from $4.0 on 5 October, 2013 by the rating agency, Credit Suisse, which had also spiked the selling activity on the stock. As per the agency, the stock rated at ‘underperform’. Besides, the current price of the stock is still 14.8% lower than the latest target price of $5.0.
