Swift Energy Company 1999 Annual Report: Notes to Consolidated Financial Statements

MANAGING GROWTH IN A
VOLATILE ENVIRONMENT

1998 ANNUAL REPORT

Notes to Consolidated Financial Statements
Swift Energy Company and Subsidiaries

9. Acquisition of Properties

In the third quarter of 1998, the Company purchased from Sonat Exploration Company ("Sonat"), a subsidiary of Sonat Inc., the Toledo Bend Properties located in Texas and Louisiana in the vicinity of Toledo Bend Lake for approximately $87.0 million in cash, with approximately $56.8 million of the total spent for producing properties, approximately $15.0 million to purchase an interest in two gas processing plants, and approximately $15.2 million to acquire leasehold properties. Post-closing purchase price adjustments are still being determined, but management does not expect that these adjustments will be material to the Company’s financial statements.

As of December 31, 1998, estimated proved reserves for the Toledo Bend Properties were 130.5 Bcfe, of which approximately 58% was natural gas, and 59% was proved undeveloped. At such date the properties include 162 producing oil and natural gas wells in the Brookeland Field in Southeast Texas and the Masters Creek Field in Western Louisiana, 23 saltwater disposal wells, a 20% interest in two natural gas plants, associated production facilities, working interests in approximately 200,875 gross undeveloped (125,378 net undeveloped) acres, and approximately 114,000 undeveloped fee mineral acres. The Company has become operator of 115 of the 162 wells. The two gas plants are operated by a third party and have combined capacity of 250 MMcfe per day.

The Toledo Bend Properties extend one of the Company’s core areas by adding producing reserves that the Company believes will significantly increase its production on a short-term basis. The Company’s production on these properties amounted to approximately 11.6 Bcfe, of which 44% was natural gas. Furthermore, as a result of the Company’s extensive experience in other parts of the Austin Chalk trend, the Company believes that it can successfully exploit incremental drilling opportunities in the future.

This acquisition was accounted for by the purchase method and was incorporated into the Company’s results of operations in the third quarter of 1998. The following unaudited pro forma supplemental information presents consolidated results of operations as if this acquisition had occurred on January 1, 1997:

	Year Ended
	December 31,

	1998	1997

(Thousands, except per share amounts)	(Unaudited)
Revenue	$115,394	$139,584
Non Income Before Non-Cash Charge	$19,098	$38,528
Net Income (Loss)	$(40,812)	$38,528
Net Income (Loss) Per Share Amounts--
Basic	$(2.48)	$2.34
Diluted	$(2.48)	$2.04

MANAGING GROWTH IN A VOLATILE ENVIRONMENT

1998 ANNUAL REPORT

Notes to Consolidated Financial Statements Swift Energy Company and Subsidiaries

9. Acquisition of Properties

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MANAGING GROWTH IN A
VOLATILE ENVIRONMENT

Notes to Consolidated Financial Statements
Swift Energy Company and Subsidiaries