(RTTNews) - Monday, oil and gas producer Forest Oil Corp. (FST: News ), reported a sharp decline in the third-quarter profit, hurt by significantly on lower realized commodity prices during the quarter. Adjusted earnings plunged 62% coming in short of analysts' expectations, while quarterly revenues also plummeted, missing consensus estimate by a distance. Looking ahead, Forest Oil provided an update to its fiscal 2009 production guidance.

The Denver, Colorado-based company's net income for the third quarter plunged to $172.31 million or $1.53 per share from $429.01 million or $4.71 per share in the year-ago quarter.

Results for the quarter included unrealized losses on derivative instruments, net of tax of $50.6 million, unrealized foreign currency exchange gains, net of tax of $8.1 million, change in valuation allowance for deferred tax assets of $163.9 million and Rig stacking charges of $2.6 million net of tax.

Excluding items, the company's adjusted net income for the quarter dropped to $52.42 million or $0.48 per share from $110.79 million or $1.26 per share in the same quarter last year.

On average, 17 analysts polled by Thomson Reuters expected the company to earn $0.52 per share for the quarter. Analysts estimates typically exclude special items.

The company said that the lower adjusted net income was primarily due to significantly lower realized commodity prices for the three months ended September 30, 2009, compared to the corresponding 2008 period.

Total revenues for the quarter decreased to $177.14 million from $474.62 million in the prior-year quarter. Thirteen analysts had a revenue consensus of $252.10 million for the third quarter.

Oil and gas sales were $177.18 million, compared to $474.24 million last year. Interest and other revenues for the quarter were a negative of $0.04 million, compared to revenues of $0.38 million a year ago.
Revenues also includes realized gains on NYMEX derivatives of $88.28 million for the quarter.

Realized and unrealized losses on derivative instruments narrowed to $5.67 million from $449.34 million last year. Depreciation and depletion charges for the quarter dropped to $65.28 million from $136.73 million a year ago.

Average net sales volumes decreased 9% to 476 MMcfe/d compared to the third quarter of 2008, while total cash costs per-unit decreased 3% to $2.42 per Mcfe compared to the third quarter of 2008.

Average net sales for the quarter under review were negatively impacted by deferred production resulting from non-operated shut-ins and third party pipeline disruptions, Forest's divestiture activities, and lower capital expenditures in the third quarter compared to the third quarter budget.

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