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Well Positioned To Benefit from Increasing Oil Production and Declining Finished Lot Inventories in Texas Markets
“During third quarter, a substantial increase in our share of oil production generated the highest quarterly royalty revenues over the last two years, as we began to realize the benefit of increased oil production related to 2,800 acres in the Upper Wilcox formation located in Beauregard Parish, Louisiana. These wells are expected to significantly increase our reserves, a driver of future cash flow and earnings growth. In addition, our increased residential lot sales activity reflects declining finished lot inventories and relatively stable demand in the major markets of Texas. In addition, we sold 57,000 acres of timberland for approximately $87 million, generating a pre-tax gain on sale of almost $62 million, essentially completing the timberland sales portion of our near-term strategic initiatives,” said Jim DeCosmo, president and chief executive officer of Forestar Group.
Third Quarter Significant HighlightsMinerals – Oil & Gas
Nine new oil and gas wells completed; 510 active wells producing oil and natural gas operated by exploration and production lessees at quarter-end
Oil production up over 50% compared with third quarter 2010 and second quarter 2011
Sold 311 finished residential lots, a 66% increase compared with third quarter 2010 and a 10% increase compared with second quarter 2011 – Over 1,500 lots under option contracts
Sold 25 acres of raw entitled land for $1.9 million, representing the remaining 80 undeveloped lots in a residential community located near Dallas, Texas
Sold 50,000 acres of timberland in Georgia and Alabama to Plum Creek for $75 million
Sold 7,000 acres of timberland in Texas to The Conservation Fund for $12 million
Forestar Group Inc. (NYSE: FOR) today reported third quarter 2011 net income of approximately $36.4 million, or $1.02 per diluted share, compared with third quarter 2010 net income of $8.9 million, or $0.25 per diluted share outstanding. Third quarter 2011 results include a gain of $1.12 per diluted share, after-tax, from the sale of about 57,000 acres of timberland for approximately $87 million.