At the end of 1993, Swift was operating oil and gas wells distributed throughout counties in nine contiguous states plus West Virginia and North Dakota (counties highlighted in yellow).

Of the 15 million BOEs of oil and natural gas reserves held by Swift Energy Company at the end of 1993, approximately 11.6 million BOEs, or 77%, was classified as proved developed reserves. These reserves can be recovered through existing wells and equipment under current operating conditions, or with relatively small additional capital investment.

The remaining reserves, which are not yet in production, were classified as proved undeveloped reserves. These reserves can be recovered when capital funds are expended for projects such as: (1) drilling new wells on undrilled acreage, (2) recompleting existing wells that require relatively large investments, (3) instituting secondary recovery projects (such as water injection) that have already been proved effective by actual tests, or (4) undertaking some other major enhancement project. During 1993, Swift’s drilling program increased the Company’s proved undeveloped reserves by approximately 890,000 BOEs. Additional increases in this category resulted from changes in estimates derived from new information.

Although not included in any of the above categories, at year end Swift also maintained an inventory of unproved oil and gas properties. These properties are moved into the proved reserves categories (developed or undeveloped) as sufficient information becomes available—generally as the result of drilling exploratory or development wells.

As of December 31, 1993, the Company’s proved developed reserves were being produced from 4,037 oil and natural gas wells located in 288 fields in 17 states. Of these, Swift was the operator for 718 wells in 116 fields in 11 states on properties that contained 64% of the Company’s total proved reserves. The remaining wells were operated by other companies.

Of the 2.3 million BOEs added to the Company’s reserves in 1993 through exploration and development, 1.4 million BOEs was immediately placed into production, with the remaining reserves being classified as proved undeveloped. Also placed into production during the year was 206,000 BOEs previously booked as proved undeveloped reserves, as well as 100,000 BOEs of previously proved behind-pipe reserves.

Swift Energy's oil and gas production reached approximately 1 million BOEs in 1993.

As these additional reserves came on line, they contributed to the Company’s 1993 production, which totaled approximately 964,000 BOEs (excluding the production to fulfill a production payment agreement) and included about 640,000 BOEs of natural gas. While this production came from all 17 states in which the Company has interests in producing wells, production from the two states of Texas and Oklahoma dominated, and Swift-operated wells accounted for 82% of the total.

The greatest production from a single field came from the AWP Olmos Field in McMullen County, Texas, where the Company currently operates 79 wells and where its largest volume of reserves is located. Swift’s South Texas operations in McMullen County and the surrounding area increased substantially early in 1993 as the Company assumed operation of over 50 additional producing wells in the area, primarily in the Green Branch Area. With these and Swift’s interests in other nearby wells, 53% of the Company’s 1993 production came from the South Texas region.

The Company is also operating numerous wells in other fields throughout the state of Texas, particularly in West Texas and in the Gulf Coast region. With Swift’s recent exploration and development successes in the Gulf Coast’s Austin Chalk formation in Fayette County, Texas, and its plans for further rapid development of its Austin Chalk reserves, the Company’s operations in that region of the state are fast emerging as a major center of production. During 1993, these and other Texas fields not associated with the South Texas operations accounted for 20% of the production from the Company’s reserves.

In Oklahoma, the greatest production came from the Weatherford Area, where the Company’s second largest volume of reserves is located. The Weatherford Area includes 142 wells scattered within the converging corners of the counties of Custer, Caddo, and Washita. These wells, 43 of which are operated by Swift, provided 16.5% of the Company’s 1993 production, with other Oklahoma wells outside the Weatherford Area contributing another 3.5%.

The combined production from Texas and Oklahoma during 1993 was approximately 895,000 BOEs, or 93% of the Company’s total production.

In general, the fields operated by Swift Energy are those in which the Company and its co-investors have majority interests. As operator, Swift can move quickly to install needed equipment or institute improved operational procedures. Examples are its early installation of coiled tubing velocity strings in wells in the AWP Field to increase gas production and reduce costs, and its reversal of the flow of gas in a gathering system in the Weatherford Area to take advantage of better gas markets. During 1993, immediately after taking over operations in the Green Branch Area, Swift replaced an old compressor, installed a new pipeline, and devised techniques for monitoring the production of each well, all designed to improve production and facilitate marketing.

Marketing of the produced reserves is coordinated by a marketing staff in the Company’s Houston offices. The strategy for natural gas is to develop mutually beneficial relationships with purchasers who have long-term needs. While sales to intrastate customers have remained the most profitable to date, the marketing staff is increasingly targeting interstate markets now that the Federal Energy Regulatory Commission’s Order No. 636 allows producers to sell directly to out-of-state customers and provide supply-related services.

The Company’s marketing department also seeks to increase cash flow and earnings by lowering the costs for intrastate transportation of crude oil and natural gas and negotiating contracts with favorable pricing provisions.

With its oil and gas sales increasing annually, Swift Energy’s field operations have significantly improved the Company’s cash flow position, enhancing its ability to acquire additional oil and gas reserves.

Environmental Program

In its oil and gas operations, Swift Energy has long prided itself on maintaining high standards for environmental compliance. In 1983, the Company won an environmental award from the state of West Virginia for drilling location reclamation. Swift continues to build upon its strong environmental record.

During 1993, the Company added an environmental manager to its staff, who immediately began developing an Environmental, Health, and Safety Handbook for employees’ quick reference. Updated periodically as local, state, and national regulations change, the handbook includes information such as how to protect the habitat of endangered wildlife and birds, what to do in the event of an oil spill on land or water, how to handle naturally occurring hazardous materials encountered when drilling, and how to restore areas disturbed by drilling. Other environmental initiatives include performing annual audits to assure compliance with government regulations and routinely training employees in environmental, health, and safety requirements. In 1993, Swift further illustrated its commitment to the environment by converting one of the Company’s cars to clean-burning natural gas fuel. The conversion reduced the vehicle’s exhaust emissions by 80% and fuel costs by 30%.

Swift Energy will continue these efforts, believing that the world’s standard of living depends not only on an adequate energy supply but also on a clean and life-supporting environment.