Slide 1: Third Quarter 2011 Financial Results
THIRD QUARTER 2011 FINANCIAL RESULTS NOVEMBER 2, 2011 1
Slide 2: Forward Looking Statements
FORWARD LOOKING STATEMENTS This presentation contains "forward-looking statements" within the meaning of the federal securities laws. These statements reflect management's current views with respect to future events and are subject to risk and uncertainties. We note that a variety of factors and unc
Slide 3: Third Quarter 2011 Financial Results
THIRD QUARTER 2011 FINANCIAL RESULTS ($ in Millions, except per share data) 3rd Qtr 2011 3rd Qtr 2010 2nd Qtr 2011 Net Income (Loss) $36.4 $8.9 ($3.9) Earnings (Loss) Per Share $1.02 $0.25 ($0.11) Note: 3rd Qtr 2011 weighted average diluted shares outstanding were 35.8 million 3rd Qtr. 2011 results
Slide 4: Segment Earnings (Loss)
SEGMENT EARNINGS (LOSS) ($ in Millions) 3rd Qtr 2011 3rd Qtr 2010 2nd Qtr 2011 Mineral Resources $3.6 $6.2 $3.1 Fiber Resources 0.5 1.4 0.7 Real Estate (4.3) (1.9) 1.0 Total ($0.2) $5.7 $4.8 3rd Qtr. 2011 mineral resources segment results include $0.4 million in delay rental and lease bonus revenues
Slide 5: Third Quarter 2011 Results and Key Performance Indicators
THIRD QUARTER 2011 RESULTS AND KEY PERFORMANCE INDICATORS STRATEGY AND EXECUTION HAS FORESTAR WELL POSITIONED 5
Slide 6: Well Positioned for Market Recovery
WELL POSITIONED FOR MARKET RECOVERY Oil production up over 50% vs. Q3 2010 and Q2 2011 9 new wells completed - 510 total active wells Acquired 180 developed lots in mixed-use project in Houston Acquired two multifamily development sites in Texas Sold 311 residential lots - up 66% vs. Q3 2010 Sold 80
Slide 7: Realizing Increased Drilling Activity & Production Growth
REALIZING INCREASED DRILLING ACTIVITY & PRODUCTION GROWTH Forestar's Share of Oil & Gas Production Q3 2010 - Q3 2011 Growth in Drilling Activity & Well Count Q3 2010 - Q3 2011 Note: Includes ventures Note: Wells owned and operated by third party lessees / operators 7
Slide 8: Promoting Louisiana Exploration & Production Activity
PROMOTING LOUISIANA EXPLORATION & PRODUCTION ACTIVITY Note: Wells owned by third-party lessee / operator Leasing: 5,700 acres leased $345 / acre Seismic Agreements: 41,500 acres Exploration Agreements: 18,000 net mineral acres 2011 Louisiana Activity Acres Leased Available for Lease Held by Producti
Slide 9: Accelerating Production & Reserve Growth
ACCELERATING PRODUCTION & RESERVE GROWTH WORKING INTEREST INVESTMENT WEST GORDON FIELD - WILCOX FORMATION SOUTHERN LOUISIANA * Average EUR based on internal estimates ** Forestar has elected to take working interest in three wells to date, and potentially two more 9 Acres Leased Completing Well Avai
Slide 10: Growing Production & Reserves Through Investment
GROWING PRODUCTION & RESERVES THROUGH INVESTMENT WEST GORDON FIELD - UPPER WILCOX FORMATION PRELIMINARY ESTIMATES Estimate of Forestar's Share of Well #7-2 Economics Estimate of Forestar's Share of Well #7-2 Economics Estimate of Forestar's Share of Well #7-2 Economics Estimate of Forestar's Share o
Slide 11: Accelerate Marketing and Promotion of Minerals
ACCELERATE MARKETING AND PROMOTION OF MINERALS Rodessa Target Specific Zones and Formations For Prospect Generation Pettet Glen Rose Bossier Tuscaloosa Marine Shale Bossier-Haynesville Shale Austin Chalk Wilcox 11
Slide 12: Proving Up the Value of Our Minerals, Oil & Gas
12 PROVING UP THE VALUE OF OUR MINERALS, OIL & GAS Formation Prospective Forestar Acreage Oil and/or Gas Liquids Natural Gas Targeted Well Production Wilcox 44,000 X X 2 - 3 Bcfe Austin Chalk 9,400 X X 4 - 5 Bcfe Bossier 10,700 X 3 - 8 Bcf Bossier-Haynesville 22,000 X 5 - 10 Bcf Rodessa 24,000 X X 2
Slide 13: Increased Drilling Activity
13 INCREASED DRILLING ACTIVITY Target Formations Acres Leased Available for Lease Held by Production Acres with Option New Oil Wells New Gas Wells Q4 2010 - Q3 2011 Drilling Activity East Texas & Louisiana* * Map excludes one well located in Barnett Shale in North Texas and one well in Colorado
Slide 14: East Texas Bossier-Haynesville Drilling Activity
EAST TEXAS BOSSIER-HAYNESVILLE DRILLING ACTIVITY Note: Wells owned by third-party lessee / operator Acres Leased Available for Lease Held by Production Haynesville Well Permits Haynesville Drilling Activity Producing Bssr-Hysv Wells Waiting on Completion Forestar Royalty Interest Q3 2011 Bossier-Hay
Slide 15: Mineral Resources Highlights
MINERAL RESOURCES HIGHLIGHTS Segment Earnings Reconciliation Q3 2010 vs. Q3 2011 Third Quarter 2011 & Other Highlights: Nine oil and gas wells completed by exploration and production lessees Oil production up over 50% vs. Q3 2010 and Q2 2011 510 active wells, up 19 wells vs. Q3 2010 Leased 380 net m
Slide 16: Fiber Resources Highlights
FIBER RESOURCES HIGHLIGHTS Segment Earnings Reconciliation Q3 2010 vs. Q3 2011 Third Quarter 2011 & Other Highlights: Sold over 108,000 tons of fiber Almost 99% of land available leased for recreational purposes Harvest down vs. Q3 2010 due to sale of 30,000 acres of timberland during 2010 and postp
Slide 17: Texas Markets Poised to Benefit from Housing Recovery
TEXAS MARKETS POISED TO BENEFIT FROM HOUSING RECOVERY Texas U.S. Avg. Job Growth (Q3 2011 vs. Q3 2010) 249k jobs (+2.4%) 1,490k jobs (+1.1%) Unemployment 8.5% 9.1% New Home Inventory (Months of Supply) 2.7 6.2 Delinquency 4.4% 7.4% Real Estate Investment in Texas Markets $461 million; 55 projects Ov
Slide 18: Houston Texas - Market Health Improving
HOUSTON TEXAS - MARKET HEALTH IMPROVING Forestar Investment in Houston, TX $109 million 5,410 acres* 5,059 residential lots* 434 commercial acres* 12 projects 8 residential and mixed-use projects 2 projects in entitlement 1 multifamily project 1 loan secured by real estate Houston market fundamental
Slide 19: Increased Residential Lot Sales Activity
INCREASED RESIDENTIAL LOT SALES ACTIVITY 19 Note: Includes ventures Residential Lot Sales* Q3 2010 - Q3 2011 Residential Lots Under Option Contracts Q3 2010 - Q3 2011 * Excludes sale of undeveloped paper lots
Slide 20: Real Estate Highlights
REAL ESTATE HIGHLIGHTS Third Quarter 2011 Highlights: Sold 311 residential lots, up 66% vs. Q3 2010 and up 10% vs. Q2 2011 Sold 80 entitled paper lots for $1.9 million (25 acres sold for $79,000 per acre) Sold 550 acres of land for $2,800 / acre Acquired 180 developed lots for $9 million including $
Slide 21: Strategic and Disciplined Investment in Our Business
STRATEGIC AND DISCIPLINED INVESTMENT IN OUR BUSINESS DISTRESSED ACQUISITION IN PREFERRED LOCATION Houston Barrington Acquisition Infill location in 14,000 acre Kingwood master-planned community in Houston, Texas 117 acres 286 residential lots (90 occupied homes) Acquired 180 developed lots (44 acres
Slide 22: Multifamily Market Conditions Continuing to Improve
MULTIFAMILY MARKET CONDITIONS CONTINUING TO IMPROVE 22 Broadstone Memorial 401 unit Class A multifamily property Located in energy corridor of Houston, TX Q3 2011 property performance: Occupancy = 95% 2011 rent growth = 7.2% Broadstone Memorial Multifamily Property Las Brisas 414 unit Class A multif
Slide 23: Recognizing and Creating Value Through Multifamily Acquisitions
RECOGNIZING AND CREATING VALUE THROUGH MULTIFAMILY ACQUISITIONS Robertson Hill Multifamily Site Austin, Texas 23 Locator Map Robertson Hill - Austin, Texas Downtown Austin University of Texas Robertson Hill Site Robertson Hill Multifamily Site Overlooks downtown Austin, TX central business district
Slide 24: Cibolo Canyons Special Improvement District Cash Flows Stabilizing
CIBOLO CANYONS SPECIAL IMPROVEMENT DISTRICT CASH FLOWS STABILIZING Cibolo Canyons Special Improvement District Payments to Forestar Cibolo Canyons Special Improvement District Payments to Forestar ($ in millions) Est. 2011 Received through Q3 2011* $2.1 Received in October 2011 3.5 Estimated Receipt
Slide 25: Positioned to Focus on Strategic Initiatives
POSITIONED TO FOCUS ON STRATEGIC INITIATIVES 25 ($ in Millions) 2nd Qtr End 2011 3rd Qtr Net Activity 3rd Qtr End 2011 Credit Facility Borrowings $181 ($51) $130 Other Consolidated Debt* $80 $14 $94 Total Debt $261 ($37) $224 Total Debt / Capital 34% 29% Cash $6 $23 $29 Credit Availability $111 $65
Slide 26: Outlook - Proving It Up
OUTLOOK - PROVING IT UP 26 Oil production and reserves expected to benefit from recent drilling results Over 67,000 net mineral acres in play in Louisiana and Texas to drive future leasing and exploration and ultimately additional production and reserves Recent acquisitions of distressed properties
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Slide 28: Third Quarter 2011 Financial Results Appendix
28 THIRD QUARTER 2011 FINANCIAL RESULTS APPENDIX
Slide 29: Mineral Resources Segment Results
MINERAL RESOURCES SEGMENT RESULTS 3rd Qtr 2011 3rd Qtr 2010 2nd Qtr 2011 Leasing Activity Net Acres Leased 380 9,600 2,500 Avg. Bonus / Acre $265 $274 $187 Royalties* Natural Gas Produced (MMCF) 408.0 436.6 373.5 Average Price / MCF $4.27 $4.11 $3.92 Oil Produced (Barrels) 42,300 27,700 27,900 Avera
Slide 30: Fiber Resources Segment Results
FIBER RESOURCES SEGMENT RESULTS 3rd Qtr 2011 3rd Qtr 2010 2nd Qtr 2011 Fiber Sales Pulpwood Tons Sold 85,800 116,900 70,700 Average Pulpwood Price / Ton $7.57 $9.41 $9.22 Sawtimber Tons Sold 22,900 37,500 12,700 Average Sawtimber Price / Ton $14.32 $17.79 $15.69 Total Tons Sold 108,700 154,400 83,40
Slide 31: Real Estate Segment Results
REAL ESTATE SEGMENT RESULTS 3rd Qtr 2011 3rd Qtr 2010 2nd Qtr 2011 Residential Lot Sales * Lots Sold 311 187 283 Average Price / Lot $46,200 $48,800 $52,400 Gross Profit / Lot $16,400 $17,100 $20,600 Commercial Tract Sales * Acres Sold - 0.4 4.0 Average Price / Acre - $623,400 $185,300 Land Sales *
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