SWIFT ENERGY COMPANY 2000 ANNUAL REPORTAppreciation of the Company's Common Stock Price
Shareholders enjoyed a marked appreciation of Swift Energy’s stock in 2000. Based on year-end prices, the Company’s stock price rose 227% from $11.50 in 1999 to $37.63 in 2000, while its average daily stock price increased 139% from $10.30 in 1999 to $24.64 in 2000. Other key measurements of shareholder value also improved from year-end 1999 to year-end 2000. Return on stockholders’ equity increased from 14% to 24%, return on assets rose from 4% to 12%, and earnings per share were up 161% from $1.07 in 1999 to $2.79 in 2000. Although Swift operates in an industry known for volatile price cycles, the Company has consistently built shareholder value over the long term. During the wide price swings of the past five years, which included 50-year-low oil prices in 1998 on an inflation-adjusted basis and significant highs in natural gas prices in 2000, Swift’s stock price rose at an average compounded rate of 28% per year from year-end 1995 to year-end 2000, exceeding major indexes such as the S&P 500, which averaged a 16% per year increase. Over the Company’s entire 21-year history, it has achieved an average compounded growth rate of 29% per year in proved reserves volumes per share of common stock. One area in which the industry’s volatile pricing cycles have a dramatic effect is on the estimated present value of Swift’s proved oil and gas reserves, which must be based on year-end product prices according to the U.S. Securities and Exchange Commission’s regulations. At year-end 2000, natural gas prices were $9.86 per Mcf and oil prices were $24.62 per barrel, which are higher than what is likely to be received in 2001. Based on these prices, Swift’s present value of its proved reserves, discounted at 10% per year, were $94.00 per share at year-end 2000, up 247% from $27.09 per share at year-end 1999. When this estimate is calculated using average prices received in 2000 (as opposed to year-end prices), the present value of proved reserves discounted at 10% would have been $45.72 per share. Looking ahead, the next decade may see cyclical prices varying along a more steeply sloping upward trend. Several sources project that global oil production could peak from within a few years to around 20 years from now, with oil supplies growing more slowly relative to demand before the peak actually occurs. The end result should be a positive long-term outlook for oil prices, though the industry’s inherent pricing cycles are likely to continue. Similarly, U.S. natural gas prices appear to be entering a more positive pricing environment. The nation’s natural gas supplies are growing more slowly than its fast-paced demand for the clean-burning fuel. Demand growth is especially strong in the power generation sector. Over the last decade, natural gas supplies from Canada have risen to meet the majority of the increases in U.S. consumption, but Canadian resources are beginning to encounter constraints. The limited areas of U.S. supply growth, such as the Gulf of Mexico, have also slowed, all of which indicates a strengthened price trend for natural gas over the next decade and beyond. Swift believes its financial strength and flexibility position it for further growth in shareholder value in this changing price environment. As the Company moves ahead domestically and in New Zealand, two of its strategic goals for 2001 are to increase reserves by 15% to 20% and production by 13% to 27% as it pursues its identified growth opportunities. Over the next few years, Swift’s strategic goal is to increase both reserves and production at an average rate of 10% to 15% per year.
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This page was last updated on Saturday, February 08, 2003, at 07:28:56 PM. Copyright © 1994-2008 by Swift Energy Company. |
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