1997 ANNUAL REPORT 

Advanced Technologies for Exploration & Development

Information age technologies have made a tremendous impact on the exploration and development of U.S. oil and natural gas reserves, as is apparent from the large increases in drilling success rates during the last decade.

From 1984 to 1988, the nation’s exploratory success rate ranged between 27% and 36%. By 1997, however, it had increased to approximately 46%. The success rate for U.S. development wells similarly increased over the decade, rising from 78% in 1988 to 84% in 1997.

U.S. SUCCESS RATES FOR EXPLORATORY WELLS
		Information age technologies have helped lead to dramatic improvements in success rates for U.S. exploratory wells.

During 1997, Swift Energy’s exploratory success rate was 47%, slightly higher than the U.S. average, and its development success rate was 95%, well above the U.S. average.

These increasing success rates realized by Swift Energy and other U.S. companies are the direct result of the application of advanced technologies that have emerged in recent years, both for identifying probable hydrocarbon deposits and for siting, drilling, and completing wells targeting those deposits.

The advanced technologies making the greatest contributions to the selection of well sites have been those associated with the processing and interpretation of seismic data and their integration with geologic data. Only during the last decade have these high-tech systems become available to independent companies like Swift Energy.

As these new analysis capabilities were being developed, seismic data-acquisition technologies were also greatly improved. The well-known reflection seismic technique, first tested in 1921 (in the Arbuckle Mountains of Oklahoma), was significantly upgraded in the 1960s when digital recordings of the reflected data and successive multiple shots became possible. More importantly, two-dimensional data acquisitions were begun, yielding information from across a vertical slice of the subsurface. By the early 1990s, three-dimensional data acquisitions were possible with the development of systems capable of recording a greater number of subsurface points with greater fold coverage.

The first significant advances in the processing and interpretation of the field data occurred in the early 1970s when mainframe computers became available. For Swift Energy and other independents, however, affordable computer technology was not available until the early 1990s with the advent of workstation computers. Having anticipated their development, Swift was among the first in its peer group to begin in-house processing and interpretation of seismic data customized to its requirements.

As a result, Swift Energy now has the capability to interpret and analyze three-dimensional seismic data for geologic targets in conjunction with well log data. The initial outlines of the target structure are determined from geological interpretations between existing wells (when available), supplemented by various measurements (wireline logs, etc.) within the wells that are digitized and converted to seismic signatures. The subsequent analysis converts the recorded seismic data into graphical images, with color coding identifying various components of the stratigraphy.

With recent advances in seismic data-acquisition technology and the availability of workstation computers, Swift Energy can now integrate and analyze geological and geophysical data, generating three-dimensional images of targeted subsurface structures on computer screens to study potential hydrocarbon deposits. (Collage: A tangle of seismic geophones, at left, is interposed with a picture of geologists monitoring drilling operations on a rig floor.)

Swift also has the capability to study nonstructural attributes of the target formations. For example, velocity data analyzed through an inversion process provide additional information on the stratigraphy of certain rocks, and AVO (amplitude versus offset) analyses determine whether the identified anomalies have a high probability of containing hydrocarbons.

Swift Energy designed and conducted its first three-dimensional seismic acquisition in 1994 in Jackson County, Texas. Subsequent interpretation of the data has led to the siting of several successful wells, including two exploratory wells that were drilled to the Frio formation in 1997.

Swift has also interpreted sets of three-dimensional data that have been licensed or obtained from industry partners. One ongoing project is aimed at identifying trapping of deep targets in the Miogyp formation in Cameron Parish, Louisiana, with two exploratory wells tentatively scheduled for 1998.

For economic reasons, however, neither three-dimensional nor two-dimensional seismic surveys are undertaken if sufficient geological information is available from well-log data. Similarly, three-dimensional acquisitions are not undertaken if sufficient information can be obtained from two-dimensional surveys, which frequently include data acquisitions along several parallel lines (a seismic swath) or along several intersecting perpendicular lines (a cross swath), from which three-dimensional simulations can be realized.

(a)See definitions of proved reserves, proved developed reserves, and proved undeveloped reserves on page 48.
(b)Texas natural gas reserves of 2.0 Bcf that are dedicated to a Company volumetric production payment agreement are excluded from corporate reserves.
(c)For a discussion of these areas, see pages 10-13 and pages 41-42.

In recent years, Swift has carried out a number of two-dimensional acquisitions, primarily seismic swaths, in several of the geographic areas in which it is currently focusing. One resulted in a successful 1997 exploratory well drilled by Swift to the Minnelusa formation in Campbell County, Wyoming.

Having operated in the Rocky Mountains region for years, Swift in 1997 expanded its leaseholds in Wyoming by acquiring an additional 38,688 net acres in Campbell County and the adjacent Converse County. Based on geological projections, the Company has included in its 1998 program one exploratory well and five development wells to be drilled to the Parkman formation in Campbell County, one exploratory well to the Teapot formation in Converse County, and three development wells to the Parkman and Sussex formations in Converse County.

In addition, the 1998 Rocky Mountains program includes one exploratory well to be drilled to the Nisku formation in Daniels County, Montana, the well location being based on the analyses of licensed two-dimensional seismic data integrated with geological data from logs in an offset well.

Along the Texas Gulf Coast, a successful 1997 exploratory well was based on Swift’s analyses of licensed two-dimensional seismic data. Drilled to the Frio formation in Lavaca County, Texas, the well was followed by a successful development well.

As a result of additional analyses of licensed two-dimensional seismic data, three other Texas Coast exploratory wells are planned for 1998: one to the Cotton Valley Lime formation in Freestone County, one to the Edwards Lime formation in Austin County, and one to the Wilcox formation in McMullen County.

Also in 1998, Swift will conduct a two-dimensional seismic cross swath survey in Pointe Coupee Parish, Louisiana, to augment licensed two-dimensional data used to identify trapping of deep targets in the Wilcox formation, as well as in the Sparta sands. Two exploratory wells are planned for this area in 1998, as well as three development wells.

Three other development wells planned for 1998 include one targeting the Clark sand in Cameron Parish, Louisiana, and two targeting the Norphlet formation in Escambia, Alabama. These are based on the analyses of licensed three-dimensional and two-dimensional data integrated with geological data enhanced with vertical seismic profiles (VSPs) conducted by the Company in nearby wells.

(a) Includes 1,551 producing wells and 16 service wells. Swift is the operator of 641 of the producing wells and nine of the service wells.
(b) Texas natural gas reserves of approximately 2.0 Bcf that are dedicated to a Company volumetric production payment agreement are excluded from Corporate reserves; however, the above table includes 1,015,226 Mcf of natural gas production delivered under the terms of that production payment agreement during 1997.
(c) Includes Arkansas, 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.

In the Ark-La-Tex region, where Swift has drilled numerous successful wells based on the analyses of integrated geological and geophysical data, the Company participated in two successful 1997 development wells, one drilled to the Smackover formation in Webster Parish, Louisiana, and one drilled to the Haynesville formation in Columbia County, Arkansas.

Two additional two-dimensional seismic swath surveys, each 12 miles in length, were conducted by the Company in Lafayette County, Arkansas, during 1997. Based on the analyses and integration of these data, Swift’s 1998 exploratory program includes two wells targeting the Smackover formation in Lafayette County and one well targeting the Smackover and Haynesville formations in an adjacent area in Bossier Parish, Louisiana.

Also in the Ark-La-Tex region, the analyses of licensed two-dimensional seismic data and geological information led to the scheduling of an exploratory well targeting the Smackover and Haynesville formations in Webster Parish, Louisiana, to be followed by two development wells.

As discussed later in this report, the Company also relies heavily on the analyses of two-dimensional seismic data integrated with or supplemented by geological information in other regions in which Swift holds large leasehold acreages.

This page was last updated on Saturday, February 08, 2003, at 07:28:45 PM.

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