1993 ANNUAL REPORT 

Capital Formation

In recent years, Swift has accelerated its reserves growth by expanding and diversifying its access to investment capital. In 1992, for example, Swift used a production payment as an innovative vehicle for financing a major acquisition, completed a successful offering of common stock to institutional investors, and continued to raise funds through its highly successful limited partnership offering, Swift Depositary Interests (SDI). With increasing production from a growing reserves base, cash flow from operations was also an important source of capital.

Swift continued to build upon these successes in 1993. Subscriptions to SDI during the year totaled $42.7 million. The Company also launched a new private limited partnership fund called Swift Energy Drilling Ventures (SEDV), Swift's first drilling fund since 1985. About $1.4 million was raised through SEDV in 1993. To further enhance the effectiveness of Swift’s partnership fund-raising effort, during 1993 the offices of Swift Energy Marketing Company were moved to Houston.

Swift invested approximately $58.9 million in 1993 acquisitions on behalf of its limited partnerships. The capital for these acquisitions included SDI funds raised by partnerships formed in 1992 that were not invested in producing properties until 1993. Swift received general partner interests in these partnership acquisitions valued at approximately $9.3 million, which reflected both capital contributions made by the Company and earned interests in the properties derived from Swift’s role as the partnerships’ general partner. As the Company continues to diversify its sources of investment capital, non-cash earned interests represent a declining portion of Swift’s revenues and capital expenditures.

Swift also broadened and diversified its access to investment capital during 1993 by issuing $28,750,000 of 6.5% Convertible Subordinated Debentures due June 30, 2003. The debentures took advantage of historically low interest rates, and the proceeds are being used for acquisitions of producing properties, drilling activities, and other corporate purposes. Interest payments will be made semiannually, and the debentures are convertible into Swift common stock at a conversion price of $13.50, subject to certain adjustments. The debentures are listed on the New York Stock Exchange under the symbol "SFY 03."

The debenture offering continues a trend toward broadening Swift’s capital formation effort into the international arena, since a major portion of the offering was placed in Europe and Canada.

This page was last updated on Saturday, February 08, 2003, at 07:28:34 PM.

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