1997 ANNUAL REPORTA Profile of Swift Energy CompanySwift Energy Company is an independent oil and natural gas company engaged in the exploration, development, acquisition, and operation of oil and gas properties, with a focus on U.S. onshore natural gas reserves. Founded in 1979 with headquarters in Houston, Texas, the Company has achieved an average compounded growth rate in proved oil and gas reserves of approximately 44% per year during the last five years. Reserves growth of 40% in 1997 replaced over 500% of the year’s production.
Company Mission. As a natural resource company, Swift Energy’s mission has always been to achieve growth in the volume and net present value of its proved reserves. The underlying premise is that reserves growth leads to increases in oil and gas production and sales, which in turn lead to higher cash flows and earnings and ultimately to increases in shareholder value. Swift’s success in exceeding its reserves growth targets has enabled it to achieve five-year compounded annual growth rates of 41% in oil and gas sales, 54% in cash flows from operating activities, and 40% in net income. Swift’s primary strategic goal for the next several years is to continue increasing its oil and gas reserves at a rate of approximately 40% per year. Common Stock Performance. Swift’s policy is to reinvest earnings in order to promote growth in proved reserves, which over time promotes growth in the value of the Company’s common stock. Over the last five years, the year-end price of Swift Energy’s common stock has increased at a compounded annual rate of approximately 23% per year, compared to five-year compounded annual growth rates of 8% for an index of peer companies (the Dow Jones U.S. Oil Secondary Index) and 17% for the Standard & Poor’s 500. Business Strategy. Swift’s reserves growth is primarily accomplished through a focused exploration and development drilling program utilizing a number of innovative applications of technology—including three-dimensional and two-dimensional seismic analyses, improved fracturing techniques, coiled tubing technology, slim-hole drilling, and horizontal drilling. Teams of professionals from various disciplines apply appropriate tools to identified areas of opportunity where the Company believes it can achieve a competitive advantage. Current focus areas include the AWP Olmos Field in South Texas and the Texas Austin Chalk trend. In addition, Swift is pursuing drilling opportunities in other parts of Texas, as well as in Arkansas, Louisiana, Wyoming, and other states.
During 1997, Swift Energy drilled 182 gross wells. The resulting success rates of 47% for exploratory wells and 95% for development wells provided an overall success rate of 91%, which exceeded the industry average of approximately 78%. In addition to implementing its aggressive drilling program, the Company continuously reviews acquisition opportunities for strategic producing properties where performance can be enhanced through development drilling or improved operating efficiencies. Swift is also pursuing long-term international initiatives in New Zealand, Venezuela, and Russia.
The Natural Gas Industry. Because Swift Energy’s reserves are predominantly natural gas (approximately 87% at year end), trends in the natural gas industry can impact the Company’s revenues from oil and gas sales. During 1997, for example, a 4% increase in prices received for natural gas, combined with a 36% increase in the Company’s gas production, helped to significantly boost Swift’s oil and gas sales, in spite of an 11% decrease in prices received for oil. Demand for clean-burning natural gas continues to rise in the United States, having increased to near record levels in 1996 and 1997. Increases in U.S. production and Canadian imports have failed to keep pace with demand, leading to price appreciation. Market fundamentals suggest a continuation of strong gas prices in the future. Swift Energy, however, does not assume high price levels in establishing its strategy, believing instead that it must remain positioned to respond to price volatility. Investor Information. Swift Energy’s common stock is traded on the New York Stock Exchange (NYSE) and the Pacific Exchange, Inc., (PCX) under the symbol "SFY." Swift Energy’s 6.25% Convertible Subordinated Notes due in 2006 are listed on the NYSE under the symbol "SFY 06."
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This page was last updated on Saturday, February 08, 2003, at 07:28:45 PM. Copyright © 1994-2008 by Swift Energy Company. |
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