Slide 1: Second Quarter 2013 Financial Results
Second Quarter 2013 Financial Results August 7, 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: Second Quarter 2013 Earnings Reconciliation
Second Quarter 2013 Earnings Reconciliation $0.8 $0.5 $0.9 $1.1 $0.3 ($1.1) ($1.0) ($0.5) $0.0 $1.0 $2.0 $3.0 $4.0 Q2 2012 G&A Other Natural Resources Real Estate Interest, Taxes & Other Expenses Share Based Comp Oil & Gas Q2 2013 ($ in millions) 3 $0.02 $0.03 $0.03 $0.01 ($0.03) ($0.03) ($0.01) $0.
Slide 4: Broadening Real Estate Demand Drives Improved Segment Operating Results
Broadening Real Estate Demand Drives Improved Segment Operating Results ($ in Millions) 2nd Qtr. 2013 2nd Qtr. 2012 Segment Earnings (Loss): Real Estate $8.1 $7.7 Oil and Gas 4.2 5.0 Other Natural Resources 1.0 (0.5) Total Segment Earnings $13.3 $12.2 4 • 2nd Qtr. 2013 real estate segment results in
Slide 5: Second Quarter 2013 Operating Highlights
Second Quarter 2013 Operating Highlights Invested $36 million in strategic and disciplined growth opportunities Pre-leasing at Eleven; began construction at Midtown Cedar Hill Sold 360 developed residential lots, average pricing up 29% vs. Q2 2012 Over 1,900 lots under option contracts Sold nearly 1
Slide 6: Real Estate Second Quarter 2013 Highlights
Real Estate Second Quarter 2013 Highlights Building Momentum By Accelerating Lot Sales and Building a Solid Multifamily Pipeline 6
Slide 7: Texas Housing Inventories Bolstering Recovery
- 0.50 1.00 1.50 2.00 2.50 3.00 3.50 - 5,000 10,000 15,000 20,000 25,000 30,000 4 Q 0 0 3 Q 0 1 2 Q 0 2 1 Q 0 3 4 Q 0 3 3 Q 0 4 2 Q 0 5 1 Q 0 6 4 Q 0 6 3 Q 0 7 2 Q 0 8 1 Q 0 9 4 Q 0 9 3 Q 1 0 2 Q 1 1 1 Q 1 2 4 Q 1 2 M o n th s o f Su p p ly Fini sh e d V ac an t U n it s FinVacant (FV) FVMos Equilib
Slide 8: Real Estate – Results On-Track
$7.7 $0.8 $0.5 ($0.7) ($0.2) $8.1 $0.0 $5.0 $10.0 $15.0 Q2 2012 Residential & Commercial Sales Operating Expenses Commercial & Income Producing Properties Undeveloped Land Sales Q2 2013 Real Estate – Results On-Track Q2 2013 Highlights • Sold 360 residential lots at average price of $57,600 per lot
Slide 9: Residential Lot Demand Tracking Housing Recovery
9 Note: Includes ventures 2013 average lot margin reflects YTD Q2 2013 A n n u al Lo t Sal e s 500 1,000 1,500 2,000 Q 4 1 0 Q1 1 1 Q2 1 1 Q3 1 1 Q4 1 1 Q1 1 2 Q2 1 2 Q3 1 2 Q4 1 2 Q1 1 3 Q2 1 3 R esi d en tial Lo ts Developed Lots Lots Under Development 2006 Peak Sales = 3,600 lots Residential Lots
Slide 10: Multifamily Developments On Track
Multifamily Developments On Track Site Vanderbilt University 10 Eleven (Austin) Now Pre-Leasing 360° (Denver) Pre-Leasing in August Key Metrics ($ in millions) Units 257 FOR Equity Commitment $4 Total Est. Project Costs $40 % Complete 65% Est. Proforma Stabilized NOI $3.3 Eleven – Austin, TX 360° –
Slide 11: Core Real Estate Business Strengthening
Note: Includes consolidated ventures Forestar Real Estate Revenues (Excluding Timberland & Multifamily Property Sales) Core Real Estate Business Strengthening 11 Growing lot sales and margin Repositioning lower-earning assets Executing higher-return multifamily business Accelerating Value Realizatio
Slide 12: Oil and Gas Second Quarter 2013 Highlights
Oil and Gas Second Quarter 2013 Highlights Building Momentum By Driving Leasing and Exploration to Increase Production and Reserves 12
Slide 13: Accelerating Value Realization Through Increased Oil Production
Accelerating Value Realization Through Increased Oil Production $5.0 $0.6 ($1.4) $4.2 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 Q2 2012 Oil & Gas Profit Operating Expenses Q2 2013 Se gme n t Ea rn ing s Q2 2013 Highlights • Oil production up nearly 170% or 104,200 barrels from Q2 2012, principally due to Credo
Slide 14: 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 8.0% Potential Units 50 Total Potential Gross Wells 400 2013 Activity Gross Wells Producing at End Q2 53 Wells Added in Q2 7 Dr
Slide 15: North Dakota Bakken / Three Forks Play Area: Wells Reaching Total Depth
North Dakota Bakken / Three Forks Play Area Second Quarter Wells Reaching Total Depth: Principally with Lower Working Interests Bakken / Three Forks Legend Forestar Bakken Well Forestar Three Forks Well Drilling or Completing Well For Berthold Reservation Boundary Forestar HBP Leases Forestar Undeve
Slide 16: North Dakota Bakken / Three Forks Play Area: Wells with Initial Production
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 17: Bakken / Three Forks Production and Type Curves
17 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 18: Kansas and Nebraska Exploration Model
Kansas and Nebraska Exploration Model – Scalable Investment Opportunity with Solid Returns Kansas / Nebraska Leasehold Interests Net Mineral Acres ~164,000 Net Mineral Acres Leased in Q2 ~16,500 Net Mineral Acres Leased YTD 2013 ~54,300 Identified Well Locations 86 Working Interest Range 30 - 100% 2
Slide 19: 2013 Capital Investment - Drilling Program
2013 Capital Investment - Drilling Program Est. FY 2013 Q1 2013 Q2 2013 State Formation Capital Capital Capital North Dakota Bakken / Three Forks $43.7 $7.1 $5.5 Kansas & Nebraska Lansing – Kansas City 14.5 3.7 2.9 Texas, Louisiana & Other Cleveland / Rodessa / Glenrose / James Lime 12.9 1.2 2.7 Okl
Slide 20: 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 21: Other Natural Resources Second Quarter 2013 Highlights
Other Natural Resources Second Quarter 2013 Highlights Building Momentum Through Sustainable Harvests and Maximizing Recreational Lease Activity 21
Slide 22: Increased Harvest Activity Driving Improved Financial Results
Increased Harvest Activity Driving Improved Financial Results ($0.5) ($0.1) $1.0 $1.6 -$1.0 -$0.5 $0.0 $0.5 $1.0 $1.5 Q2 2012 Fiber Sales Operating Expenses Q2 2013 S e gm e n t E a rning s Q2 2013 Highlights • Sold nearly 185,000 tons of fiber, up over 79,200 tons vs. Q2 2012 • Average fiber pricin
Slide 23: Second Quarter 2013 Triple in FOR Initiatives
Second Quarter 2013 Triple in FOR Initiatives Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 23
Slide 24: Triple in FOR Initiatives
Triple in FOR Initiatives Focus on Accelerating Value Realization Optimize Transparency & Disclosure Raise NAV Through Strategic and Disciplined Investments 24 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 25: For questions, please contact
For questions, please contact: Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 25 Anna Torma SVP Corporate Affairs Forestar Group Inc. 6300 Bee Cave Road Building Two, Suite 500 Austin, TX 78746 512-433-5312 annatorma@forestargroup.com
Slide 26: Appendix - Segment KPI's - Reconciliation of Non-GAAP Financial Measures
Second Quarter 2013 Appendix - Segment KPI’s - Reconciliation of Non-GAAP Financial Measures Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value 26
Slide 27: Real Estate Segment KPI's
Q2 2013 Q2 2012 YTD Q2 2013 YTD Q2 2012 Residential Lot Sales Lots Sold 360 427 806 712 Average Price / Lot $57,600 $44,700 $54,400 $48,000 Gross Profit / Lot $24,600 $14,800 $22,700 $17,200 Commercial Tract Sales Acres Sold 34 38 37 38 Average Price / Acre $103,100 $47,000 $125,700 $47,000 Land Sal
Slide 28: Oil & Gas Segment KPI's
Q2 2013 Q2 2012 YTD Q2 2013 YTD Q2 2012 Leasing Activity Net Fee Acres Leased 515 -- 825 805 Avg. Bonus / Acre $343 -- $333 $357 Total Oil and Gas Interests* Oil Produced (Barrels) 165,800 61,600 313,700 130,700 Average Price / Barrel $85.55 $94.64 $87.26 $96.19 Natural Gas Produced (MMCF) 505.3 420
Slide 29: Other Natural Resources Segment KPI's
29 Q2 2013 Q2 2012 YTD Q2 2013 YTD Q2 2012 Fiber Sales Pulpwood Tons Sold 128,100 80,800 248,700 105,200 Average Pulpwood Price / Ton $10.84 $9.24 $11.26 $9.46 Sawtimber Tons Sold 56,900 24,900 127,800 29,300 Average Sawtimber Price / Ton $23.87 $19.46 $23.04 $19.47 Total Tons Sold 185,000 105,700 3
Slide 30: Total Segment EBITDA Reconciliation
30 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 31: Oil and Gas Segment EBITDAX Reconciliation
31 Forestar’s Oil and Gas Segment EBITDAX for the quarters ended June 30, 2013 and June 30, 2012 are non-GAAP financial measures within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally
Slide 32: For questions, please contact
For questions, please contact: Building Momentum By Accelerating Value Realization, Optimizing Transparency and Growing Net Asset Value Anna Torma SVP Corporate Affairs Forestar Group Inc. 6300 Bee Cave Road Building Two, Suite 500 Austin, TX 78746 512-433-5312 annatorma@forestargroup.com 32