Average Net Sales Volumes: Forest expects 2013 net sales volumes to average 220 to 230 MMcfe/d, excluding average net sales volumes associated with the South Texas property divestiture that closed on February 15, 2013, and is estimated to be comprised of approximately 60% natural gas and 40% liquids (20% oil and 20% natural gas liquids). The Company currently projects average oil net sales volumes to grow organically in excess of 30% in 2013 as compared to 2012 (adjusting for the impact of asset sales) and for the liquids component to increase from approximately 35% of average equivalent net sales volumes in the first quarter of 2013 to approximately 45% in the fourth quarter of 2013. Based on current projections and planned activity, the Company believes that second half of 2013 average net sales volumes will be higher than first half of 2013 average net sales volumes on a pro forma basis. Forest’s average net sales volumes guidance does not include approximately 25-30 MMcfe/d in the first quarter of 2013 associated with the South Texas property divestiture.
Price Differentials: 2013 price differential guidance does not include the effects of natural gas and oil derivatives that Forest currently has in place.
Based on current prices, Forest expects natural gas price differentials in 2013 will average $0.45 to $0.55 per MMbtu less than the NYMEX Henry Hub price.
Based on current prices, Forest expects oil price differentials in 2013 will average $0.00 to $2.00 per Bbl greater than the NYMEX West Texas Intermediate (WTI) price.Based on current prices, Forest expects natural gas liquids realizations in 2013 will average 30-35% of the WTI price. Production Expense: Forest expects production expense, which includes lease operating expense, ad valorem taxes, production taxes, and product processing, gathering and transportation, will be $1.30 to $1.35 per Mcfe. General and Administrative (G&A) Expense: Forest expects G&A expense will be $35 million to $40 million, not including stock-based compensation expense, or $0.40 to $0.50 per Mcfe. Income Tax Expense: Forest’s effective income tax rate associated with its 2013 operations is expected to be 38% to 39% (inclusive of applicable federal and state taxes), and Forest’s current tax is expected to be 1% to 2% of the total income tax expense. Stock-Based Compensation Expense: Forest expects non-cash stock-based compensation expense will be $14 million to $16 million, or $0.17 to $0.19 per Mcfe. Depreciation, Depletion and Amortization (DD&A) Expense: Forest expects its DD&A rate will be $2.30 to $2.50 per Mcfe. FORWARD-LOOKING STATEMENTS This news release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements, other than statements of historical facts, that address activities that Forest assumes, plans, expects, believes, projects, estimates or anticipates (and other similar expressions) will, should or may occur in the future are forward-looking statements. The forward-looking statements provided in this press release are based on management's current belief, based on currently available information, as to the outcome and timing of future events. Forest cautions that future natural gas and liquids production, revenues, cash flows, liquidity, plans for future operations, expenses, outlook for natural gas and liquids prices, timing of capital expenditures, and other forward-looking statements relating to Forest are subject to all of the risks and uncertainties normally incident to their exploration for and development and production and sale of natural gas and liquids.