1996 ANNUAL REPORT 

Other Focus Areas in the United States   Swift is also pursuing exploration and development opportunities in other areas of Texas and in Arkansas, Louisiana, and Wyoming.

In addition to the Olmos sand and the Austin Chalk trend, Swift Energy’s 1996 exploration and development program targeted other formations in the Gulf Coast Dome Basin, as well as various formations in the North Louisiana Salt Basin (Ark-La-Tex region) and in Wyoming’s Powder River Basin.

As has been typical of the Swift team approach since 1991, the initial definition of a drilling prospect in these and other areas is provided by the team’s geologists, who project formation trends between existing wells from their studies of well log data. As the geologic representation develops, the Company’s landmen work to obtain the necessary leaseholds, and the operations engineers determine the drilling and production procedures for the area. In the absence of sufficient well log data to adequately define the area, the team’s geophysicists collect and analyze corresponding seismic data. Using Swift’s state-of-the-art computer system, the two sets of data are then integrated to generate detailed three-dimensional depictions of subsurface structures. For regions where the seismic data appear to be substandard or nonexistent, the geophysicists conduct their own seismic surveys, both two-dimensional and three-dimensional, and when appropriate, they gather data for AVO (amplitude versus offset) analysis to determine whether identified anomalies have a high probability of containing hydrocarbons. This iterative process involving all the team members, and at times their counterparts in other participating companies, leads to the determination of specific drilling locations.

During 1996, Swift Energy participated in 10 exploratory wells and 10 development wells in these regions, with six exploratory wells and six development wells successfully completed.

The sequence of computer-generated maps at the left demonstrates how three-dimensional seismic processing can refine the location of drilling prospects.

Gulf Coast Basin Areas. Swift’s 1996 drilling program in other areas in the Gulf Coast Basin included participation in two successful development wells (one drilled to the Queen City formation in Jim Hogg County, Texas, and another to the Abbeville Sand formation in Cameron Parish, Louisiana) and one successful exploratory well (drilled to the Frio formation in Lavaca County, Texas).

In recent years, Swift has performed extensive seismic analyses for the Frio, Yegua, and Wilcox formations along the Texas coast, and based on this effort, one exploratory well is scheduled to be drilled in Tyler County in 1997 and, pending further analysis, another is planned for Lavaca County. A third exploratory well, to the Queen City formation in Duval County, will follow analysis of a two-dimensional seismic swath to be conducted by Swift during the year. Two other exploratory wells in the Gulf Coast Basin are also planned for 1997.

Ark-La-Tex Region. In southwestern Arkansas and northwestern Louisiana, the Company had four exploratory successes out of four wells drilled in 1996: three to the Smackover formation in Columbia County, Arkansas, Lafayette County, Arkansas, and Claiborne Parish, Louisiana, and one to the Cotton Valley formation in Union Parish, Louisiana. A development well drilled to the Haynesville formation in Columbia County, Arkansas, was also successful.

This region was the focus of several seismic surveys conducted by Swift during 1996, including a three-dimensional survey in Claiborne Parish, Louisiana; a two-dimensional seismic swath in Hempstead County and Lafayette County, Arkansas; and two two-dimensional seismic lines, one in Lafayette County and another in Columbia County, Arkansas. In addition, Swift conducted an airborne magnetic survey over Nevada County, Arkansas, for correlation with existing seismic data. During 1997, two additional seismic surveys will be conducted in Lafayette County, Arkansas, and one will be performed in Webster Parish, Louisiana.

During 1996, Swift Energy drilled 141 successful wells and sold interests in over 2,600 older, low-value wells. This contributed to a 29% increase in the Company’s average production per net well, which, together with higher prices, was an important factor in Swift’s achieving a 686% increase in gross margin per unit of production.

Five exploratory wells targeting the Smackover formation are scheduled for 1997: one in Columbia County, Arkansas, two in Lafayette County, Arkansas, and two in Nevada County, Arkansas. Two other wells--in Claiborne Parish and Webster Parish, Louisiana--will target the Haynesville formation.

Powder River Basin. During 1996, Swift successfully completed one of three exploratory wells drilled to the Minnelusa formation in and around Campbell County, Wyoming. It also participated in three development wells in the area, one of which was successful.

The Minnelusa formation in the Powder River Basin continues to be the subject of intense geological and geophysical studies by the Company. Two seismic surveys were conducted in 1996, and at least two are scheduled for 1997.

Also in 1997, three exploratory wells will be drilled to the Minnelusa formation in Campbell County. Another exploratory well will target the Sussex/Parkman formation in Converse County, Wyoming, following the analysis of data from one or more seismic lines in the area.

(a) Includes 1,802 producing wells and 26 service wells. Swift is the operator of 823 of the producing wells and 19 of the service wells.
(b) Texas natural gas reserves of approximately 3.0 Bcf that are dedicated to a Company volumetric production payment agreement are excluded from Corporate reserves; however, the above table includes 1,156,361 Mcf of natural gas production delivered under the terms of that production payment agreement during 1996.
(c) Includes Kansas, Nebraska, Nevada, and New Mexico. Nebraska and Nevada each have a single low-value well for which no reserves were carried based on year-end oil and gas prices.

This page was last updated on Saturday, February 08, 2003, at 07:28:43 PM.

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