UPDATE: Societe Generale Downgrades Forest Oil on Concerns Over Debt Leverage, Drilling Inventory

In a report published Tuesday, Societe Generale analyst John Herrlin downgraded the rating on

from Buy to Hold, and lowered the price target from $9.00 to $7.00. In the report, Societe Generale noted, “As part of our 3Q E&P sector preview note published today, we downgrade FST to Hold and lower our target price to $7 (from $9) to reflect our belief that it will take quite some time for FST to grow their reduced asset base enough to remove investor concerns over debt leverage, a new management team, and their development drilling inventory. With a reduced 2014 hedge position vs 2013, FST may be more exposed to volatile commodity prices than in the past, and with a smaller asset base there are fewer options for FST if they happen to breach their trailing 12-month 4.5x debt/EBITDA covenant.” Forest Oil Corporation closed on Monday at $6.10.