Swift has established a proven track record for building shareholder value. From 1991 through 2001, the Company’s year-end stock price rose at an average compounded rate of 15% per year, compared to 12% for the Dow Jones Industrial Average, 11% for the S&P 500, and 10% for the Russell 2000.

2001 Industry Environment. Long-term yardsticks are critical for fully measuring the value of a company operating in an environment of volatile price cycles. On December 27, 2000, natural gas futures prices on the New York Mercantile Exchange (NYMEX) reached an all-time record high of $9.98 per MMBtu, but by year-end 2001, prices had fallen to $2.57 per MMBtu, a 74% decline. NYMEX oil futures prices fell 38% from a January 19 high of $32.19 per barrel to $19.84 per barrel at the end of the year.

A major cause of falling product prices was the nation’s first economic downturn in a decade, which deepened following the September 11 tragedy. The economic slowdown helped cause U.S. oil consumption to decline slightly for the first time in 10 years and helped push down natural gas consumption by 5%.

Even as consumption began to fall, high commodity prices triggered a surge in finding and operating costs, as companies competed for equipment and manpower. When commodity prices continued to decline, companies were slow to react because of prior commitments, causing oilfield service costs to remain elevated. In mid-July, when the number of active U.S. natural gas drilling rigs reached a long-term high, natural gas prices were already down over 70% from their peak.

Swift’s response to these challenges has been to build a balanced portfolio of long- and short-lived properties with identified future drilling locations that position the Company to take advantage of product pricing cycles.

Long-Term Outlook. Over the long-term, the outlook for the oil and gas industry in the United States and abroad is quite promising. As the economy recovers and energy demand revives, oil and gas prices are expected to rebound from current lows.

The nation’s use of natural gas is expected to continue growing faster than that of any other fuel, driven by natural gas-fired electricity generation. Between 1999 and 2020, the U.S. Energy Information Administration estimates that electric utilities will account for more than half of the projected increase in U.S. natural gas consumption. As demand grows, the most pressing question will be whether supply can keep pace. Growth in Canadian imports, which accounted for over half of the growth in U.S. consumption during the last decade, is expected to slow over the next 10 years, and challenges for finding new domestic reserves became apparent in 2001 when the industry success rate for exploratory wells fell to 31%, one of the lowest levels in several years.

Many industry sources project world oil production to peak within a range of five to 25 years, and before the peak is reached, growth in global production rates will slow. Meanwhile, demand is projected to grow significantly in developing regions such as Asia and Central and South America.