Slide 1: Fourth Quarter & Full Year 2014 Financial Results
Fourth Quarter & Full Year 2014 Financial Results March 5, 2015
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: Focused On Delivering Shareholder Value in 2014
Focused On Delivering Shareholder Value in 2014 Delivering Record Real Estate Segment EBITDA of $100 Million Growing Oil and Gas Production and Reserves 20% Repurchasing almost $25 million of common stock Adding Two New Directors To The Board Proposing To Declassify Board of Directors Ev
Slide 4: Q4 and Full Year 2014 Results Impacted By Impairments Related To Lower Oil Prices
Fourth Quarter and Full Year 2014 Results Impacted By Impairments Principally Related To Lower Oil Prices 4 ($ in Millions, except per share data) Q4 2014 Q4 2013 Full Year 2014 Full Year 2013 Net Income (Loss) - As Reported ($11.8) $13.0 $16.6 $29.3 Earnings (Loss) Per Share - As Reported ($0.34) $
Slide 5: Delivering Record Real Estate Segment Results
Delivering Record Real Estate Segment Results Segment Earnings (Loss) Q4 2014 Q4 2013 Full Year 2014 Full Year 2013 Real Estate $30.0 $27.7 $96.9 $68.4 Oil and Gas (39.0) 1.0 (22.7) 18.9 Other Natural Resources 3.3 3.7 5.5 6.5 Total Segment Earnings (Loss) ($5.7) $32.4 $79.7 $93.8 • Q4 2014 real est
Slide 6: Real Estate
Real Estate Fourth Quarter & Full Year 2014 Highlights Morgan Farms - Tennessee
Slide 7: Delivering Higher Lot Margins and Increasing Lot Profits
1,707 $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 0 500 1,000 1,500 2,000 2,500 3,000 3,500 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Est.Bulk Lot Sales Lot Sales Average Lot Margin Average Lot Margin Excl. Bulk Sales Delivering Higher Lot Margins and Increasing Lot Profits Annual Lot
Slide 8: Lower Oil Prices Expected to Slow Texas Job Growth, But Real Estate Markets Well Positioned
Lower Oil Prices Expected to Slow Texas Job Growth, But Real Estate Markets Well Positioned With Low Housing Inventories and Increased Affordability 8 Texas Market Summary • Texas markets expected to experience slower job growth with recent decline in oil prices • Energy industry = 2.9% of TX employ
Slide 9: Delivering Record Real Estate Earnings
Delivering Record Real Estate Earnings $96.9 $68.4 $26.0 $19.5 $7.0 $1.4 ($11.9) ($11.3) ($2.2) $0 $25 $50 $75 $100 $125 FY 2013 Gain on Asset Purchase, Exchange and Sale Undeveloped Land Sales Lot Sales Asset Impairments Residential & Commercial Tract Sales Multifamily and Income Producing Properti
Slide 10: Real Estate - Accelerating Value Realization
Real Estate - Accelerating Value Realization $1.5 ($12.4)$27.7 $7.9 $4.6 $1.9 ($0.8) ($0.4) $30.0 $0 $10 $20 $30 $40 $50 Q4 2013 Gain on Asset Purchase, Exchange and Sale Undeveloped Land Sales Multifamily and Income Producing Properties Asset Impairments Residential & Commercial Tract Sales Lot Sal
Slide 11: Cibolo Canyons – Accelerating Value Realization
Cibolo Canyons – Accelerating Value Realization Cibolo Canyons Community Cibolo Canyons - Cumulative Cash Flows YE 2014 11 • 2,800 acre master plan community - San Antonio • 1st and 2nd move-up, custom, active adult, multifamily and condominium products Cibolo Canyons Special Improvement District (C
Slide 12: Solid Pipeline of Multifamily Developments
Solid Pipeline of Multifamily Developments Multifamily Development Projects Project Market % Complete Units FOR Ownership Expected Total Development Cost Expected Total FOR Contribution Eleven Austin 100% 257 100% $40 $25 Midtown Dallas 95% 354 100% 35 - 40 10 – 11 360° Denver 80% 304 20% 50 - 55 4
Slide 13: Real Estate Business Well Positioned
Real Estate Business Well Positioned $0 $20 $40 $60 $80 $100 $120 $140 $160 2011 2012 2013 2014 T o t a l R e v e n u e s ( $ i n m i l l i o n s ) Residential Lots Residential Tracts Commercial Tracts Income Producing Forestar Real Estate Revenues (Excluding Timberland & Multifamily Revenues) Note:
Slide 14: Other Natural Resources
< ee. a g eae teat as : > mee ee Others Natural Resources P Fourth Quarter & Full Year 2014 Highlights Georgia
Slide 15: Harvesting Value From Timberland and Water Rights
Harvesting Value From Timberland and Water Rights $6.5 ($3.5) $1.3 ($0.4) $1.6 $5.5 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 FY 2013 Operating Expenses Water Sales Fiber Sales Gain on Termination of Timber Lease FY 2014 S e g m e n t E a r n i n g s Segment Earnings Reconciliation FY 2013 vs. FY 2014 ($ in mi
Slide 16: The Bakken - North Dakota
The Bakken - North Dakota The Bakken - North Dakota
Slide 17: Working Interest Investments and Asset Sales Drive Higher EBITDAX
Working Interest Investments and Asset Sales Drive Higher EBITDAX $18.9 $7.2 ($32.2) $25.5 ($16.8) ($8.1) ($6.6) ($6.1) ($4.5) ($22.7)($30.0) ($20.0) ($10.0) $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 FY 2013 Working Interest Volume Gain on Sales Impairments Working Interest Cost of Sales Working Interest P
Slide 18: Non-Cash Asset Impairments Result in Fourth Quarter Segment Loss
Non-Cash Asset Impairments Driven By Lower Oil Prices Result in Fourth Quarter Segment Loss $1.0 ($30.1) $0.7 ($2.5) ($2.2) ($4.7) ($39.0)($1.8) ($50.0) ($40.0) ($30.0) ($20.0) ($10.0) $0.0 $10.0 Q4 2013 Working Interest Volumes Exploration Costs Impairment Costs Working Interest Pricing Working Int
Slide 19: Delivering Reserve Growth
Delivering Reserve Growth 2.4 3.0 5.6 8.5 10.1 2010 2011 2012 2013 2014 Year-End Proved Reserves (MMBOE) Note: MMBOE = million barrels of oil equivalent *PV-10 represents present value of estimated future oil and gas revenues, net of estimated direct expenses, discounted at an annual discount rate o
Slide 20: Reserve Growth Driven By Bakken / Three Forks
Reserve Growth Driven By Bakken / Three Forks Reserve Growth (MMBOE) Production Replaced (MMBOE) Net Reserve Increase (MMBOE) % Oil* 2.9 1.3 1.6 76% 4.0 1.1 2.9 69% 3.3 0.7 2.6 57% 1.0 0.4 0.6 36% 0.7 0.4 0.3 25% Proved Reserves (MMBOE) 2010 2011 2012 2013 2014 North Dakota Texas & Louisiana Other K
Slide 21: Bakken / Three Forks Driving Production and Reserve Growth
Bakken / Three Forks Driving Production and Reserve Growth 490 680 0 100 200 300 400 500 600 700 800 2013 2014 NSAI Avg. Bakken Reserves Per New PDP Well* (MBOE) * Based on YE 2013 and YE 2014 Proved Developed Producing wells based on reserve estimates prepared by independent petroleum engineering f
Slide 22: Oil and Gas Operating Plan
Oil and Gas Operating Plan Bakken/Three Forks Illustrative Returns* • Significant planned 2015 capital investment reductions, principally reflecting existing well commitments • 20 wells waiting on completion at year-end 2014 • Planned to reduce annual operating expenses by 50%*, focused on generatin
Slide 23: Strategic Review Update
FORESTAR Strategic Review Update
Slide 24: Focused On Maximizing Long-Term Shareholder Value
Focused On Maximizing Long-Term Shareholder Value Board, management and financial advisors exploring strategic alternatives to enhance shareholder value, including review of the oil and gas business Comprehensive strategic review driven by commitment to maximize long‐term shareholder value Concurren
Slide 25: For questions, please contact:
For questions, please contact: 1a Torma Building Two, Sulte 500 Austin, TX 78746 512-433-5312 j|a@forestergroup.com FORESTAR
Slide 26: Fourth Quarter & Full Year 2014 Appendix
Foul yeh Quarier & Full Year 2014 Appendix - Segment - Earnings Re Reconeliations ~ Proved Reserves: FORESTAR
Slide 27: Real Estate Segment KPI's
Real Estate Segment KPI’s Q4 2014 Q4 2013 FY 2014* FY 2013** Residential Lot Sales Lots Sold 509 530 2,343 1,883 Average Price / Lot $71,800 $66,000 $58,100 $58,300 Gross Profit / Lot*** $35,700 $27,700 $25,600 $25,000 Commercial Tract Sales Acres Sold 25 115 32 171 Average Price / Acre $227,500 $21
Slide 28: Oil and Gas Segment KPI's
Oil and Gas Segment KPI’s Q4 2014** Q4 2013 FY 2014*** FY 2013 Fee Leasing Activity Net Fee Acres Leased 40 800 3,905 9,200 Avg. Bonus / Acre $200 $310 $320 $270 Total Oil and Gas Interests* Oil Produced (Barrels) 236,900 184,400 869,700 648,000 Average Price / Barrel $63.91 $88.97 $83.43 $93.74 NGL
Slide 29: Other Natural Resources Segment KPI's
Other Natural Resources Segment KPI’s Q4 2014 Q4 2013 FY 2014 FY 2013 Fiber Sales Pulpwood Tons Sold 52,000 60,800 209,900 375,200 Average Pulpwood Price / Ton $9.49 $10.01 $10.62 $9.26 Sawtimber Tons Sold 20,000 31,600 120,000 234,300 Average Sawtimber Price / Ton $22.94 $21.26 $22.47 $22.31 Total
Slide 30: Full Year 2014 Earnings Reconciliation
Full Year 2014 Earnings Reconciliation $29.3 $16.6 $8.7 $18.5 ($27.0) ($11.8) ($0.7) ($0.4) $0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 2013 Real Estate Share Based Comp Oil & Gas Interest, Taxes & Other Expenses Other Natural Resources G&A 2014 N e t I n c o m e ($ in millions) Net Income Reconciliati
Slide 31: Fourth Quarter 2014 Earnings Reconciliation
Fourth Quarter 2014 Earnings Reconciliation $13.0 ($11.8) $1.5$1.7 $0.2 ($26.0) ($1.9) ($0.3) ($15.0) ($10.0) ($5.0) $0.0 $5.0 $10.0 $15.0 $20.0 Q4 2013 Share Based Comp Real Estate G&A Oil & Gas Interest, Taxes & Other Expenses Other Natural Resources Q4 2014 N e t I n c o m e ( L o s s ) Net Incom
Slide 32: Reconciliation of Non-GAAP Financial Measures (Unaudited)
Reconciliation of Non-GAAP Financial Measures (Unaudited) Forestar’s Segment EBITDA is a non-GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally Accepted Acco
Slide 33: Reconciliation of Non-GAAP Financial Measures (Unaudited)
Reconciliation of Non-GAAP Financial Measures (Unaudited) Forestar’s Oil and Gas Segment EBITDAX is a non-GAAP financial measure within the meaning of Regulation G of the Securities and Exchange Commission. Non-GAAP financial measures are not in accordance with, or an alternative to, U.S. Generally
Slide 34: Proved Reserves Summary
Proved Reserves Summary ($ in millions) 2014 2013 2012 2013-2014 % Change 2012-2013 % Change Proved Developed Producing Reserves1 Oil and NGL Reserves MBBL 4,588.4 3,224.6 2,105.2 42% 53% Gas Reserves BCF 12.2 13.3 12.2 (8%) 9% Future Net Revenues* $282.5 $222.6 $162.2 27% 37% PV-10 3* $174.6 $140.5
Slide 35: Reconciliation of Non-GAAP Financial Measures (Unaudited)
Reconciliation of Non-GAAP Financial Measures (Unaudited) In our full year and fourth quarter 2014 earnings release and conference call presentation materials furnished to the Securities and Exchange Commission on Form 8-K on March 5, 2015, we used certain non-GAAP financial measures. The non-GAAP f
Slide 36: For questions, please contact:
For questions, please contact: 1a Torma Building Two, Sulte 500 Austin, TX 78746 512-433-5312 j|a@forestergroup.com FORESTAR