Geological well data are used to
evaluate the exploration and
development potential of strategic
acquisitions. In the above illustration,
a two-dimensional geological map
(top) is projected into three dimensions
(bottom) using sophisticated
computer-based mapping tools.

The acquisition of producing properties now plays a smaller role in Swift Energy's activities following the Company's successful transition to a drilling emphasis. However, Swift and its co-investors continue to derive important mutual competitive advantages from the Company's management of their combined properties, including economies of scale and greater operational control.

In the future, the Company will acquire producing properties for its own account only when it is strategically beneficial to do so, such as in areas where it enjoys economies of scale.

During 1995, Swift's capital expenditures for producing property acquisitions totaled $3.5 million, including its general partner contributions to new partnerships. These acquisitions added 5.7 Bcfe to Swift's proved reserves at a cost of $0.61 per Mcfe.

The Company's acquisition activities included two purchases on behalf of itself and its limited partnerships--one in McMullen County, Texas, and another in the Wyoming counties of Campbell, Crook, and Niobrara.

As less of Swift's reserves growth has come from partnership acquisitions, the management of properties for co-investors has become a smaller, but still important, element of the Company's overall activities. By the end of 1995, the volume of proved reserves that Swift managed on behalf of others was only slightly larger than the Company's own reserves, a major change from 1991 when co-investor reserves were roughly 3.5 times larger than Swift's reserves. Consistent with this trend, the portion of Swift's proved reserves derived from its general partner interests in limited partnerships has declined sharply, accounting for only 18% of the Company's year-end reserves in 1995 compared to 51% in 1991.

As part of its strategic shift to drilling, Swift discontinued the offering of its public acquisition limited partnership program, Swift Depositary Interests (SDI), in December 1995. As a result, except for acquisitions to be undertaken on behalf of partnerships formed in 1995, Swift Energy will no longer act as a buyer of oil and natural gas properties on behalf of public limited partnerships.

Because the advantages of combined property management diminish as producing properties age, the liquidation of older partnerships is an important component of Swift's assets management strategy. Currently, the Company is planning for the liquidation of 10 of its oldest income partnerships and anticipates completing this process by the third quarter of 1996. Swift is also planning for the liquidation of eight of its earliest drilling partnerships.

In addition, Swift continues to sell low-value wells in order to improve the economic performance of managed properties. During 1995, Swift sold 45 low-value wells to reduce operating costs for its investors. Compared to year-end totals, these wells represented 1.1% of the wells in which Swift had interests but only 0.04% of the Company's proved reserves.