SWIFT ENERGY COMPANY 2000 ANNUAL REPORT

Supplemental Information (Unaudited)

Capitalized Costs. The following table presents our aggregate capitalized costs relating to oil and gas producing activities and the related depreciation, depletion, and amortization:

Of the $46,833,274 of domestic unproved property costs (primarily seismic and lease acquisition costs) at December 31, 2000, excluded from the amortizable base, $15,426,247 was incurred in 2000, $7,937,074 was incurred in 1999, $18,845,964 was incurred in 1998, and $4,623,989 was incurred in prior years. When we are in an active drilling mode, we evaluate the majority of these unproved costs within a two to four year time frame. In response to market conditions in 1998, we decreased our 1999 drilling expenditures when compared to prior years, which, when coupled with the $15.3 million of leasehold properties acquired in the Brookeland and Masters Creek areas in 1998, may extend the evaluation timeframe of such costs.

Of the $8,679,598 of net New Zealand unproved property costs at December 31, 2000, being excluded from the amortizable base, $5,177,122 was incurred in 2000, $925,623 was incurred in 1999, $417,521 was incurred in 1998, and $2,159,332 was incurred in prior years. We expect to continue drilling in New Zealand to delineate our prospects there, with four wells planned for drilling in 2001. We expect to complete our evaluation of current unevaluated costs over the next two to three years.

Costs Incurred. The following table sets forth costs incurred related to our oil and gas operations:

(1)These are actual amounts as incurred by year, including both proved and unproved lease costs. The annual lease acquisition amounts added to proved oil and gas properties in 2000, 1999, and 1998 were $16,791,834, $14,389,680, and $11,409,108, respectively.

(2)Includes capitalized general and administrative costs directly associated with the acquisition, exploration, and development efforts of approximately $10,300,000, $8,500,000, and $12,300,000 in 2000, 1999, and 1998, respectively. In addition, total includes $5,043,206, $4,142,098, and $3,849,665 in 2000, 1999, and 1998, respectively, of capitalized interest on unproved properties.

(3)Lease acquisitions for 1998 include expenditures of $421,602 relating to initiatives in Venezuela and $592,841 relating to initiatives in Russia.

 

Results of Operations. All of our oil and gas operations are domestic. New Zealand operations are expected to commence in 2001. The following table sets forth results of our domestic oil and gas operations:

Supplemental Reserve Information. The following information presents estimates of our proved oil and gas reserves. Domestic reserves were determined by us and audited by H. J. Gruy and Associates, Inc. ("Gruy"), independent petroleum consultants. New Zealand gross reserves were independently estimated by Gruy. The net reserves and cash flows for New Zealand were prepared by us. Gruy’s summary report dated February 7, 2001, is set forth as an exhibit to the Form 10-K Report for the year ended December 31, 2000, and includes definitions and assumptions that served as the basis for the audit of proved reserves and future net cash flows. Such definitions and assumptions should be referred to in connection with the following information:

(1)Proved reserves exclude quantities subject to our volumetric production payment agreement, which expired with the last required delivery of volumes in October 2000.

(2)Revisions of previous estimates are related to upward or downward variations based on current engineering information for production rates, volumetrics, and reservoir pressure. Additionally, changes in quantity estimates are affected by the increase or decrease in crude oil and natural gas prices at each year-end. Proved reserves, as of December 31, 2000, were based upon prices in effect at year-end. The weighted average of such year-end prices for total, domestic, and New Zealand were $9.86, $11.25, and $0.71 per Mcf of natural gas and $24.62, $25.50, and $22.30 per barrel of oil, respectively. This compares to $2.58 per Mcf and $23.69 per barrel as of December 31, 1999, all reserves of which were domestic.

(3)Natural gas production for 1998, 1999, and 2000 excludes 866,232, 728,235, and 405,130 Mcf, respectively, delivered under our volumetric production payment agreement.

 

Standardized Measure of Discounted Future Net Cash Flows. The standardized measure of discounted future net cash flows relating to proved oil and gas reserves is as follows:

	Year Ended December 31, 2000
	Total	Domestic	New Zealand
	------------------------	------------------------	------------------------
Future gross revenues	$ 4,995,951,799	$ 4,737,560,630	$ 258,391,169
Future production costs	(817,127,348)	(807,436,139)	(9,691,209)
Future development costs	(204,620,116)	(180,320,116)	(24,300,000)
	------------------------	------------------------	------------------------
Future net cash flows before income taxes	3,974,204,335	3,749,804,375	224,399,960
Future income taxes	(1,321,061,952)	(1,243,731,594)	(77,330,358)
	------------------------	------------------------	------------------------
Future net cash flows after income taxes	2,653,142,383	2,506,072,781	147,069,602
Discount at 10% per annum	(1,075,183,917)	(1,017,995,158)	(57,188,759)
	------------------------	------------------------	------------------------
Standardized measure of discounted future net cash flows
relating to proved oil and gas reserves	$ 1,577,958,466	$1,488,077,623	$ 89,880,843
	============	============	============
	Year Ended December 31, 1999
	Total	Domestic	New Zealand
	------------------------	------------------------	------------------------
Future gross revenues	$ 1,371,541,850	$ 1,371,541,850	$                 ---
Future production costs	(353,594,258)	(353,594,258)	---
Future development costs	(156,738,446)	(156,738,446)	---
	------------------------	------------------------	------------------------
Future net cash flows before income taxes	861,209,146	861,209,146	---
Future income taxes	(226,725,033)	(226,725,033)	---
	------------------------	------------------------	------------------------
Future net cash flows after income taxes	634,484,113	634,484,113	---
Discount at 10% per annum	(195,540,279)	(195,540,279)	---
	------------------------	------------------------	------------------------
Standardized measure of discounted future net cash flows
relating to proved oil and gas reserves	$ 438,943,834	$ 438,943,834	$            ---
	============	============	============
	Year Ended December 31, 1998
	Total	Domestic	New Zealand
	------------------------	------------------------	------------------------
Future gross revenues	$ 972,852,038	$ 972,852,038	$            ---
Future production costs	(294,307,549)	(294,307,549)	---
Future development costs	(118,420,782)	(118,420,782)	---
	------------------------	------------------------	------------------------
Future net cash flows before income taxes	560,123,707	560,123,707	---
Future income taxes	(123,875,660)	(123,875,660)	---
	------------------------	------------------------	------------------------
Future net cash flows after income taxes	436,248,047	436,248,047	---
Discount at 10% per annum	(145,974,944)	(145,974,944)	---
	------------------------	------------------------	------------------------
Standardized measure of discounted future net cash flows
relating to proved oil and gas reserves	$ 290,273,103	$ 290,273,103	$            ---
	============	============	============

 

The standardized measure of discounted future net cash flows from production of proved reserves was developed as follows:

1. Estimates are made of quantities of proved reserves and the future periods during which they are expected to be produced based on year-end economic conditions.

2. The estimated future gross revenues of proved reserves are priced on the basis of year-end prices, except in those instances where fixed and determinable gas price escalations are covered by contracts limited to the price we reasonably expect to receive.

3. The future gross revenue streams are reduced by estimated future costs to develop and to produce the proved reserves, as well as certain abandonment costs based on year-end cost estimates and the estimated effect of future income taxes.

4. Future income taxes are computed by applying the statutory tax rate to future net cash flows reduced by the tax basis of the properties, the estimated permanent differences applicable to future oil and gas producing activities, and tax carry forwards.

The estimates of cash flows and reserves quantities shown above are based on year-end oil and gas prices for each period. Subsequent changes to such year-end oil and gas prices could have a significant impact on discounted future net cash flows. Natural gas prices have declined since December 31, 2000. Under Securities and Exchange Commission rules, companies that follow the full-cost accounting method are required to make quarterly Ceiling Test calculations, using prices in effect as of the period end date presented (see Note 1 to the Consolidated Financial Statements). Application of these rules during periods of relatively low oil and gas prices, even if of short-term seasonal duration, may result in write-downs.

The standardized measure of discounted future net cash flows is not intended to present the fair market value of our oil and gas property reserves. An estimate of fair value would also take into account, among other things, the recovery of reserves in excess of proved reserves, anticipated future changes in prices and costs, an allowance for return on investment, and the risks inherent in reserve estimates.

The following are the principal sources of change in the standardized measure of discounted future net cash flows:

	Year Ended December 31,
	2000	1999	1998
	------------------------	------------------------	------------------------
Beginning balance	$ 438,943,834	$ 290,273,103	$ 292,838,340
	------------------------	------------------------	------------------------
Revisions to reserves proved in prior years--
Net changes in prices, production costs, and future
development costs	1,523,487,598	123,447,890	(107,301,930)
Net changes due to revisions in quantity estimates	(36,102,814)	(23,746,974)	(47,924,995)
Accretion of discount	56,405,451	34,078,501	35,034,478
Other	(220,119,873)	2,032,696	(34,966,058)
	------------------------	------------------------	------------------------
Total revisions	1,323,670,362	135,812,113	(155,158,505)
New field discoveries and extensions, net of future
production and development costs	359,265,150	102,582,467	73,956,430
Purchases of minerals in place	160,240,785	39,282,292	87,628,829
Sales of minerals in place	(598,021)	(5,360,428)	(1,928,900)
Sales of oil and gas produced, net of production costs	(159,331,003)	(88,196,672)	(65,680,050)
Previously estimated development costs incurred	65,953,028	39,149,732	51,622,419
Net change in income taxes	(610,185,669)	(74,598,773)	6,994,540
	------------------------	------------------------	------------------------
Net change in standardized measure of discounted
future net cash flows	1,139,014,632	148,670,731	(2,565,237)
	------------------------	------------------------	------------------------
Ending balance	$1,577,958,466	$ 438,943,834	$ 290,273,103
	============	============	============

Quarterly Results. The following table presents summarized quarterly financial information for the years ended December 31, 1999 and 2000:

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