Swift Energy Company 2004 Annual Report: Proud Past / Bright Future

Shareholder Value: Delivering Results

1981
Initial public offering of 1.3 million shares of common stock at $2.50 per share.
1989
Public offering of 0.66 million shares of common stock at $10.625 per share.
1992
Institutional offering of 0.99 million shares of stock with net proceeds of $6.4 million.
1994
A 10% stock dividend declared.
1995
Public offering of 5.75 million shares of common stock at $8.50 per share.
1996
Stockholders’ equity increased $27.65 million with the conversion of debentures into 2.34 million shares of common stock.
1997
A second 10% stock dividend declared.
1999
Public offering of 4.6 million shares of common stock at $9.75 per share.
2000
Approximately $100 million of convertible notes converted into 3.16 million shares of common stock.
2002
Public offering of 1.725 million shares of common stock issued at $18.25 per share.
     


A 1992 seismic survey in Oklahoma.

In 2004, Swift Energy’s shareholders again enjoyed strong appreciation of Swift Energy’s common stock. For the second year in a row, the year-end stock price increased over 70%, having risen 74% from $9.67 at year-end 2002 to $16.85 at year-end 2003 and then rising 72% to $28.94 at year-end 2004. These increases were made possible by substantial improvements in diluted earnings per share, which rose 140% in 2003 and 123% in 2004.

Although operating in a cyclical oil and gas industry, Swift has built a legacy of steady growth in shareholder value. Since its first full year of operations in 1980, it has achieved a compounded growth rate of 24% a year in proved oil and gas reserves per share of common stock, with proved reserves of 28 Mcfe per share at year-end 2004. To accomplish this growth, it uses the industry’s cyclical nature to its own advantage. By emphasizing drilling when prices are high and producing property acquisitions when oil and gas prices are low, the Company adds reserves in a cost-effective manner. Over the past five years, its reserves replacements have averaged approximately 240% of production with an average replacement cost of approximately $1.47 per Mcfe. In addition, the Company has maintained a disciplined capital structure with a strong liquidity position, giving it stability in industry downturns and providing the flexibility needed to pursue opportunities as they arise.

Another important measure of value creation is the percentage of total reserves classified as developed. At year-end 2004, Swift’s proved developed reserves amounted to 56% of total proved reserves, down from 59% at year-end 2003, but up from 50% at the end of 2001.

Swift has also kept costs within the range of its strategic goals, which include limiting the three-year averages for replacement costs ($1.48 per Mcfe) and production costs ($1.03 per Mcfe) to one-third of the three-year average for wellhead prices.

From 2002 to 2004, Swift’s wellhead prices averaged $4.12 per Mcfe. Over that same time period, the Company’s replacement costs averaged 36% of wellhead prices, and its production costs averaged 25%.

With this excellent track record of growth, Swift remains confident that it has laid a strong foundation for building shareholder value in the years ahead.


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Last modified: Monday, February 20, 2012 1:52 PM