We, along with the industry, continues to feel the effects of lower natural gas prices this year. Due to this, Forest recorded a ceiling test write-down of $345 million in the second quarter. The write-down was primarily a result of the significant decline in the 12 months trailing natural gas price used in the ceiling test calculation from $3.73 per Mcfe last quarter to $3.15 per Mcfe this quarter. Given the current pricing environment, we expect the ceiling test write-down in the third quarter as well. We also recorded a deferred tax asset valuation allowance of $290 million due primarily to the ceiling test write-down.As the natural gas environment has remained depressed, our hedge position continues to work in our favor, as we realized a 73% uplift to our unhedged realized price. This translated into $28 million realized gain on our second quarter gas hedges.
Forest Oil Management Discusses Q2 2012 Results - Earnings Call Transcript
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