FST » Topics » Acquisitions

This excerpt taken from the FST 10-Q filed May 7, 2009.

Acquisitions

Texas Properties Acquisition

        On September 30, 2008, Forest acquired producing oil and natural gas properties located in its Greater Buffalo Wallow and Ark-La-Tex core areas from Cordillera Texas, L.P. Forest paid approximately $570 million in cash, subject to customary post-closing adjustments to reflect an economic effective date of July 1, 2008, and issued 7.25 million shares of Forest's common stock, valued at approximately $360 million (based on a September 30, 2008 closing price), to the seller for the acquired assets. Forest funded the cash component of the purchase price primarily using advances under its credit facilities.

Ark-La-Tex Properties Acquisition

        On May 2, 2008, Forest acquired producing oil and natural gas properties located primarily in its core Ark-La-Tex region in East Texas and North Louisiana. Forest paid approximately $284 million, as adjusted to reflect an economic effective date of April 1, 2008, for the assets using funds advanced under its credit facilities.

This excerpt taken from the FST 8-K filed Oct 25, 2007.

Acquisitions

 

 

Objective

 

Measure on a yearly basis the amount of oil and gas, converted to Bcfe, acquired by the Company.

 

Definition

 

The target objective for 2007 Acquisitions is to replace the 2007 Production target.

 

Acquisitions are calculated by adding the volumetric amount of estimated proved reserves acquired by any method by the Company in 2007.

 

This excerpt taken from the FST 10-Q filed May 10, 2007.

Acquisitions

Pending Acquisition of Houston Exploration

        On January 7, 2007, Forest announced it had entered into a definitive agreement and plan of merger pursuant to which The Houston Exploration Company ("Houston Exploration") will merge with and into Forest in a stock and cash transaction totaling approximately $1.5 billion plus the assumption of debt. Houston Exploration is an independent natural gas and oil producer engaged in the exploration, development, exploitation, and acquisition of natural gas and oil reserves in North America with operations in the following four producing areas in the United States: South Texas, East Texas, the Arkoma Basin of Arkansas, and the Uinta and DJ Basins in the Rocky Mountains. The boards of directors of Forest and Houston Exploration have each unanimously approved the transaction. The transaction is subject to customary conditions, including both Forest shareholder and Houston Exploration stockholder approvals. Forest management and its board of directors will continue in their current positions with Forest following the completion of the merger. The merger is expected to close

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in early June 2007, as soon as practicable following Forest shareholder approval and Houston Exploration stockholder approval and satisfaction of the closing conditions.

        Under the terms of the merger agreement, Houston Exploration stockholders are to receive total consideration equal to 0.84 shares of Forest common stock and $26.25 in cash for each share of Houston Exploration common stock outstanding. This represents estimated merger consideration of 23.8 million shares of Forest common stock and cash of approximately $740 million, or $52.47 per share, to be received by the Houston Exploration stockholders (based on the closing price of Forest's common stock on January 5, 2007 and the number of shares of Houston Exploration common stock outstanding on April 30, 2007 and subject to increase in the event that any additional shares of Houston Exploration common stock are issued prior to the merger closing date in connection with the exercise of outstanding stock options pursuant to the terms of the merger agreement). The actual amount of total cash and stock consideration to be received by each Houston Exploration stockholder will be determined by elections, an equalization formula, and a proration procedure. It is anticipated that the transaction will be tax free to Houston Exploration and the stock portion of the consideration will be received tax free by its stockholders. The cash component of the acquisition is expected to be financed under an amended and restated revolving credit facility of up to $1.4 billion for which JPMorgan Chase Bank, N.A. has provided us a commitment letter. In connection with the pending acquisition of Houston Exploration, Forest may elect to access the debt capital markets to finance a portion of the cash component of the merger consideration and the related transactions or to refinance borrowings under its bank credit facilities.

Cotton Valley Acquisition

        On March 31, 2006, Forest completed the acquisition of oil and gas properties located primarily in the Cotton Valley trend in East Texas. Forest paid approximately $255 million, as adjusted to reflect an economic effective date of February 1, 2006, for properties with an estimated 110 Bcfe of estimated proved reserves at the time the acquisition was announced in February 2006 and production that averaged 13 MMcfe per day in January 2006. Forest acquired approximately 26,000 net acres in the fields, of which approximately 14,000 net acres were undeveloped. Forest funded this acquisition utilizing its bank credit facilities.

This excerpt taken from the FST 10-K filed Feb 28, 2007.

Acquisitions

Subsequent Event—Pending Acquisition of Houston Exploration

On January 7, 2007, Forest announced it had entered into a definitive agreement and plan of merger pursuant to which The Houston Exploration Company (“Houston Exploration”) will merge with and into Forest in a stock and cash transaction totaling approximately $1.5 billion plus the assumption of debt. Houston Exploration is an independent natural gas and oil producer engaged in the exploration, development, exploitation and acquisition of natural gas and oil reserves in North America with operations in the following four producing areas in the United States: South Texas, East Texas, the Arkoma Basin of Arkansas, and the Uinta and DJ Basins in the Rocky Mountains. The boards of directors of Forest and Houston Exploration have each unanimously approved the transaction. The transaction is subject to regulatory approvals and other customary conditions, as well as both Forest shareholder and Houston Exploration stockholder approvals. Forest management and its board of directors will continue in their current positions with Forest following the completion of the merger. The merger is expected to close in the second quarter of 2007.

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This excerpt taken from the FST 10-Q filed Nov 9, 2006.

Acquisitions

On March 31, 2006, Forest completed the acquisition of oil and gas properties located primarily in the Cotton Valley trend in East Texas. Forest paid approximately $255 million, as adjusted to reflect an economic effective date of February 1, 2006, for properties with an estimated 110 Bcfe of estimated proved reserves at the time the acquisition was announced in February 2006 and production that averaged 13 MMcfe per day in January 2006. Forest acquired approximately 26,000 net acres in the fields, of which approximately 14,000 net acres were undeveloped. Forest funded this acquisition utilizing its bank credit facilities.

This excerpt taken from the FST 10-Q filed Aug 9, 2006.

Acquisitions

On March 31, 2006, Forest completed the acquisition of oil and gas properties located primarily in the Cotton Valley trend in East Texas. Forest paid approximately $255 million, as adjusted to reflect an economic effective date of February 1, 2006, for properties with an estimated 110 Bcfe of estimated proved reserves at the time the acquisition was announced in February 2006 and production that averaged 13 MMcfe per day in January 2006. Forest acquired approximately 26,000 net acres in the fields, of which approximately 14,000 net acres were undeveloped. Forest funded this acquisition utilizing its bank credit facilities.

This excerpt taken from the FST 8-K filed May 11, 2006.

Acquisitions

 

Objective

 

Measure on a yearly basis the amount of oil and gas, converted to Bcfe, acquired by the Company.

 

Definition

 

The target objective for 2006 Acquisitions is to replace the 2006 Production target of 114.0 Bcfe.

 

Acquisitions are calculated by adding the volumetric amount of estimated proved reserves acquired by any method by the Company in 2006. Acquisition metrics shall not be less favorable than an average of $2.00 per Mcfe (prior to deferred tax gross-up) for total acquired proved reserves in 2006.

 

This excerpt taken from the FST 10-Q filed May 10, 2006.

Acquisitions

On March 31, 2006, Forest completed the acquisition of oil and gas properties located primarily in the Cotton Valley trend in East Texas. Forest paid approximately $255 million, as adjusted to reflect an economic effective date of February 1, 2006, for properties with an estimated 110 Bcfe of estimated proved reserves at the time the acquisition was announced and production that averaged 13 MMcfe per day in January 2006. Forest acquired approximately 26,000 net acres in the fields, of which approximately 14,000 net acres are undeveloped. Forest funded this acquisition utilizing its bank credit facilities.

This excerpt taken from the FST 10-K filed Mar 16, 2006.

Acquisitions

Cotton Valley Acquisition—Pending

        On February 13, 2006, Forest announced its plans to acquire assets located primarily in the Cotton Valley trend in East Texas. Forest agreed to pay approximately $255 million, subject to customary adjustments, for properties with an estimated 110 Bcfe of proved reserves (unaudited) and production

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that averaged 13 MMcfe per day (unaudited) in January 2006. In addition to the reserves and production, Forest will also gain approximately 26,000 net acres (unaudited) in the fields, of which approximately 14,000 net acres (unaudited) are undeveloped. The transaction is expected to close on March 31, 2006 and is subject to customary closing conditions.

Buffalo Wallow Acquisition

        On April 1, 2005, Forest purchased a private company whose primary assets are located in the Buffalo Wallow field in Texas and include approximately 33,000 gross acres (unaudited) located primarily in Hemphill and Wheeler Counties, Texas ("the Buffalo Wallow Acquisition"). At the time of acquisition, the Buffalo Wallow Acquisition also included approximately 120 Bcfe of estimated proved reserves (unaudited). The purchase price was allocated to assets and liabilities, adjusted for tax effects, based on their estimated fair values at the date of acquisition. The acquisition was accounted for using the purchase method of accounting and has been included in the consolidated financial statements of Forest since the date of acquisition.

        The net cash consideration paid for the Buffalo Wallow Acquisition was allocated as follows:

 
  Purchase Price
Allocation

 
 
  (In Thousands)

 
Current assets   $ 9,434  
Oil and gas properties     305,005  
Goodwill     22,959  
Other assets     68  
Current liabilities     (27,251 )
Derivative liability—current     (6,373 )
Long-term debt     (35,000 )
Asset retirement obligations     (705 )
Deferred income taxes     (71,492 )
   
 
Net cash consideration   $ 196,645  
   
 

        Goodwill of $23.0 million has been recognized to the extent that cost exceeded the fair value of net assets acquired. Goodwill is not expected to be deductible for tax purposes. The goodwill was assigned to Forest's Western business unit. The principal factors that contributed to the recognition of goodwill include the mix of complementary high-quality assets in one of our existing core areas, lower-risk exploitation opportunities, expected increased cash flow from operations available for investing activities, and opportunities for cost savings through administrative and operational synergies.

Acquisition of The Wiser Oil Company

        In June 2004, the Company completed its acquisition of the common stock of The Wiser Oil Company ("Wiser"), which held oil and gas assets located in the Company's Gulf Coast, Western U.S., and Canada business units (the "Wiser Acquisition"). The Wiser Acquisition provided potential for increased production, reserves, and undeveloped acreage as well as diversification in terms of both

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current production and long-term growth opportunities. At the time the acquisition was closed, the net oil and gas reserves were estimated to be approximately 186 Bcfe (unaudited), of which 85% (unaudited) were classified as proved developed and the remaining amounts were classified as proved undeveloped. Average production from the Wiser properties at the time of acquisition was 64 MMcfe (unaudited) per day. The acquisition also included working capital and certain other financial assets and liabilities of Wiser. The purchase price was allocated to assets and liabilities, adjusted for tax effects, based on the fair values at the date of acquisition. The acquisition was accounted for using the purchase method of accounting and has been included in the consolidated financial statements of Forest since the date of acquisition.

        The total cash purchase price, including transaction costs, of $171 million was allocated to the assets acquired and the liabilities assumed based on the estimated fair values set forth in the table below.

 
  Purchase Price
Allocation

 
 
  (In Thousands)

 
Current assets   $ 24,432  
Proved properties     301,103  
Other plant and equipment assets     2,450  
Undeveloped leasehold costs     45,803  
Goodwill     64,109  
Current liabilities     (37,872 )
Derivative liability—current     (8,028 )
Long-term debt     (163,325 )
Asset retirement obligations     (7,997 )
Other liabilities     (3,489 )
Deferred income taxes     (46,631 )
   
 
Total cash consideration   $ 170,555  
   
 

        Goodwill of $64.1 million ($63.6 million before effects of foreign currency exchange) has been recognized to the extent that cost exceeded the fair value of net assets acquired. See Note 13 for the allocation of goodwill between operating segments. Goodwill is not expected to be deductible for tax purposes. The principal factor that contributed to the recognition of goodwill was opportunities for cost savings through administrative and operational synergies.

Other Acquisitions

        Throughout 2005 and 2004, Forest made several other acquisitions of oil and gas properties for cash consideration totaling $8.5 million and $86.4 million, respectively. Total estimated proved reserves acquired in these other acquisitions totaled approximately 7 Bcfe (unaudited) and 63 Bcfe (unaudited) in 2005 and 2004, respectively.

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This excerpt taken from the FST 10-Q filed May 9, 2005.

Acquisitions

Recent Acquisition

        On April 1, 2005, Forest purchased a private company whose primary assets are located in the Buffalo Wallow Field in Texas and includes approximately 33,000 gross acres located primarily in Hemphill and Wheeler Counties, Texas. Forest paid $200 million in cash for the stock and assumed approximately $35 million of debt (net of working capital).

Acquisition of The Wiser Oil Company

        In June 2004, Forest completed its acquisition of the common stock of The Wiser Oil Company ("Wiser"), which held oil and gas assets located in the geographic areas of Forest's Gulf Coast, Western, and Canada business units ("the Wiser Acquisition").

        The following unaudited pro forma consolidated statements of operations information assumes that the Wiser Acquisition occurred as of January 1, 2004. The pro forma results of operations is not

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necessarily indicative of the results of operations that would have actually been attained if the transaction had occurred as of January 1, 2004.

 
  Three Months Ended
March 31, 2004

 
  (In Thousands)

Total revenue   $ 222,651
Net earnings from continuing operations     18,288
Net earnings     17,713
Basic earnings per share     .30
Diluted earnings per share     .30
This excerpt taken from the FST 10-K filed Mar 15, 2005.

Acquisitions

        During 2004, we made approximately $425 million of oil and gas asset acquisitions (including $51 million of deferred tax gross up). Our largest acquisition was of The Wiser Oil Company ("Wiser") in June 2004, which included oil and gas assets valued at $347 million. At the time the acquisition was closed, the acquired assets included 186 Bcfe of estimated proved reserves, producing 64 MMcfe per day, as well as approximately 285,000 net undeveloped acres. The Wiser acquisition primarily enhanced the asset base of our Canadian and Western business units. The acquisition increased our Canadian business unit's estimated proved reserves and production in the Canadian Plains area. This acquisition also increased our Western business unit's estimated proved reserves and production by 29% and 26%, respectively, and enlarged our Permian Basin position. Finally, the Wiser acquisition added significant exploration acreage in the Gulf Coast area and Canada.

        During 2003, we made approximately $424 million (including $33 million of deferred tax gross up) of oil and gas acquisitions of properties located in the Gulf of Mexico, Gulf Coast, South Texas, and the Permian Basin with estimated proved reserves totaling 322 Bcfe. The largest acquisition in 2003 was of oil and gas properties in South Louisiana and the Gulf of Mexico in the fourth quarter from Union Oil Company of California ("Unocal"). In this transaction, we paid $207 million in cash to acquire approximately 141 Bcfe of estimated proved reserves producing 66 MMcfe per day as well as approximately 93,000 net undeveloped acres.

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