Slide 1: Forestar Investor Presentation September 2013
Forestar Investor Presentation September 2013 Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value
Slide 2: Notice To Investors
Notice To Investors This presentation contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are typically identified by words or phrases such as “will,” “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe,” “target,”
Slide 3: Maximizing Long-Term Shareholder Value Through Oil and Gas and Real Estate
Maximizing Long-Term Shareholder Value Through the Development of Best of Class Oil and Gas and Real Estate Businesses 3
Slide 4: Maximizing Long-Term Shareholder Value
Maximizing Long-Term Shareholder Value 4
Slide 5: Execution of Initiatives and Strategic Acquisitions Positions Forestar With Stronger Portfolio
Execution of Initiatives and Strategic Acquisitions Positions Forestar With Stronger Portfolio of Assets Assets and Resources – Q2 2013 Oil and Gas • Fee and Leasehold Interests - 808,000 net acres* • Producing Gross Wells – 983** • Targeting 1.1 MM BOE production in 2013 Real Estate • Land - 133,00
Slide 6: Oil and Gas: Building Momentum
Oil and Gas Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 6
Slide 7: Recognizing and Responsibly Delivering the Greatest Value From Our Mineral Resources
Recognizing and Responsibly Delivering the Greatest Value From Our Mineral Resources 1. Acres as of Q2 2013. Includes approximately 590,000 owned net mineral acres and 218,000 net acres of leasehold mineral interests 2. Well estimate as of Q2 2013 7 V A L U E C R E A T I O N & R E A L I Z A T I O N
Slide 8: Mineral Interests Located In Prolific Oil & Gas Basins
8 Mineral Interests Located In Prolific Oil & Gas Basins 8 Net Mineral Interests* State Owned Leasehold Total Texas 252,000 11,000 263,000 Louisiana 144,000 2,000 146,000 Nebraska / Kansas - 164,000 164,000 North Dakota - 7,000 7,000 Georgia / Alabama 192,000 11,000 203,000 Other** 2,000 23,000 25,0
Slide 9: Target Specific Zones and Formations For Prospect Generation
Rodessa ~24,000 acres Oil / NGL’s / Natural Gas Target Specific Zones and Formations For Prospect Generation Pettet ~2,000 acres Oil / NGL’s / Natural Gas Glen Rose ~33,000 acres Oil / NGL’s / Natural Gas Bossier ~15,000 acres Natural Gas Austin Chalk ~50,000 acres Oil / NGL’s Tuscaloosa Marine Shal
Slide 10: Targeting Liquid-Rich Cleveland and Tonkawa Formations in Texas Panhandle
Targeting Liquid-Rich Cleveland and Tonkawa Formations in Texas Panhandle Cleveland (1,420 net mineral acres) Sue 14 HMH 1H TD: 13,381’MD; ~ 8,725’TVD WI/NRI: 43.33%/35.08% Current Daily Rate: 309 BO/D, 663 MCF/D Date of First Oil Production: 7/8/2013 Hext 60 1H TD: 13,992’MD; ~ 8,735’TVD WI/NRI: 21
Slide 11: Bakken / Three Forks Core Acreage Position
Leasehold Interests Drilling Locations Units Bakken Wells Historical Well Three Forks Well Modern Well after 2000 Horizontal Well Bakken / Three Forks Core Acreage Position Bakken Provides Significant Value Creation Potential 7,000 net mineral acres in core of Bakken & Three Forks Bakken / Three For
Slide 12: Bakken / Three Forks Drilling Activity Accelerating Production and Reserve Growth
Bakken / Three Forks Drilling Activity Accelerating Production and Reserve Growth Bakken / Three Forks Leasehold Interests Net Mineral Acres ~7,000 Average Working Interest 8.8% Total Potential Gross Wells 470 2013 Activity Gross Wells Producing at Q2 53 Wells Added in Q2 7 Drilling & Awaiting Frac
Slide 13: Second Quarter Wells with Initial Production: Showing Strong IP Rates
Bakken / Three Forks Legend Forestar Bakken Well Forestar Three Forks Well Drilling or Completing Well For Berthold Reservation Boundary Forestar HBP Leases Forestar Undeveloped Leases Forestar Spacing Unit HALCON Ft. Berthold 30A-31-3H FOR : 18.88% IP : 2,396 BOEPD WPX Good Bird 36-25HA FOR : 1.52%
Slide 14: Bakken / Three Forks Production and Type Curves
14 0 50 100 150 200 250 300 350 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 C umula ti v e M B O P rod u ce d Months on Production Forestar Bakken/Three Forks Cumulative Production from 53 Proved Developed Producing Wells Average Type Curve (53 Wells) 2013 Well Completions (18 Wells) Credo a
Slide 15: Kansas and Nebraska Exploration Model – Scalable Investment Opportunity
Kansas and Nebraska Exploration Model – Scalable Investment Opportunity with Solid Returns Kansas / Nebraska Leasehold Interests Net Mineral Acres ~164,000 Net Mineral Acres Leased YTD 2013 ~54,300 Identified Gross Well Locations 86 Working Interest Range 30 - 100% 2013 Success Rate* >50% 15 15 15 K
Slide 16: 2013 Capital Investment – Drilling & Completion
2013 Capital Investment –Drilling & Completion ($ in millions) State Formation Operation Capital Exploration & Drilling ND Bakken / Three Forks Non-Operated $43.7 KS & NE Lansing – Kansas City Operated & Non-Operated 14.5 TX Cleveland/Rodessa/ Glen Rose/James Lime Operated & Non-operated 23.1 OK Dee
Slide 17: Forestar Oil and Gas Reserves
1 7 17 17 2.4 3.0 5.9 FY 2010 FY 2011 FY 2012 MMBO E Forestar Proven Reserves (MMBOE) 25% 36% 57% 75% 64% 43% FY 2010 FY 2011 FY 2012 Natural Gas (BOE) Oil Forestar Proven Reserves % Oil (MMBOE) * Excludes 0.8 million BOE of Probable and Possible reserves Note: MMBOE = million barrels of oil equival
Slide 18: Accelerating Value Realization and Growing Net Asset Value
Accelerating Value Realization and Growing Net Asset Value Building Momentum By Accelerating Value Realization and Growing Net Asset Value Capitalizing on investments to accelerate earnings and cash flow Increasing oil production and proven reserves Focused on integration and execution of Credo acqu
Slide 19: Real Estate: Building Momentum
Real Estate Building Momentum By Accelerating Lot Sales and Growing Net Asset Value through Strategic and Disciplined Investments 19
Slide 20: Delivering The Greatest Value From Every Acre of Our Real Estate
C R E A T I O N R E A L I Z A T I O N Real Estate Greatest Value Development Entitled Entitle Timberland Pipeline (Acres) 1 Activity – Uses Financials 2 2,000 1,008 Residential Acres 3,204 lots 767 Commercial Acres $50K per lot $90K per acre (avg sales price) 12,000 Approved Uses, Ready for Developm
Slide 21: Texas Markets Represent Almost 70% of Our Investment in Real Estate
Note: MSA performance based on Employment, Gross Metropolitan Product (GMP) and House Price Index Source: Brookings Institute- Q1 2013 Salt Lake City 1 - $1 Oakland 1 - $9 Strongest Quartile Weakest Quartile Los Angeles 2 - $16 Kansas City 1 - $3 Atlanta 31 - $87 San Antonio 4 - $89 Projects and inv
Slide 22: Annual Lot Sales & Average Lot Margin
$0 $5,000 $10,000 $15,000 $20,000 $25,000 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2008 2009 2010 2011 2012 2013 Est. Lot Sales Average Lot Margin 22 Note: Includes ventures 2013 average lot margin reflects YTD Q2 2013 A n n u al Lo t Sal e s 500 1,000 1,500 2,000 Q 4 1 0 Q1 1 1 Q2 1 1
Slide 23: Core Real Estate Business Strengthening
Note: Includes consolidated ventures Forestar Real Estate Revenues (Excluding Timberland & Multifamily Property Sales) Core Real Estate Business Strengthening 23 Growing lot sales and margin Repositioning lower-earning assets Executing higher-return multifamily business Accelerating Value Realizatio
Slide 24: Triple in FOR Initiatives
Triple in FOR Initiatives Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 24
Slide 25: Triple in FOR Initiatives
Triple in FOR Initiatives Focus on Accelerating Value Realization Optimize Transparency & Disclosure Raise NAV Through Strategic and Disciplined Investments 25 Triple Residential Lot Sales Triple Oil and Gas Production 0 500 1,000 1,500 2,000 2,500 2008-2011 Average 2012 2013 Lo ts S o ld Triple in
Slide 26: Forestar Group Inc. Contact
Forestar Investor Presentation Forestar Group Inc. 6300 Bee Cave Road Building Two, Suite 500 Austin, TX 78746 512-433-5312 annatorma@forestargroup.com Anna Torma SVP Corporate Affairs For Questions Please Contact: 26
Slide 27: Financial Tools and Additional Disclosures Available on our Website
27 Financial Tools and Additional Disclosures Available on our Website • Historical Financials • Segment Disclosures • At-A-Glance • Corporate • Oil and Gas • Real Estate • Multifamily • Water • Videos • 101 Learning Tools 2008-Q 2 2013 2008-Q 2 2013 Assets State Market Ownership Total Remaining Acr
Slide 28: Total Segment EBITDA Reconciliation
28 Forestar’s Total Segment EBITDA for the quarters ended June 30, 2013 and March 31, 2013 and for the years ended December 31, 2012, 2011, 2010, 2009 and 2008 are non-GAAP financial measures within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures ar
Slide 29: Forestar Group Inc. Contact
Forestar Investor Presentation Forestar Group Inc. 6300 Bee Cave Road Building Two, Suite 500 Austin, TX 78746 512-433-5312 annatorma@forestargroup.com Anna Torma SVP Corporate Affairs For Questions Please Contact: 29