With one of its strengths lying in its operation of core areas containing large volumes of proved oil and natural gas reserves, Swift continues to search for new core areas—through discovery or acquisition—that have long-term growth opportunities and logically fit into the Company’s overall operations. Its search remains focused on the Texas and Louisiana Gulf Coast and the Taranaki Basin in New Zealand. Both regions have a tremendous potential for exploitation in a mix of geological environments with low political risk. Both regions also are proximate to growing markets that face tight future supplies, particularly for natural gas, and independents such as Swift are the primary responders to the increasing demands for this valuable energy source. DOMESTIC EXPLORATION ACTIVITIES. In its pursuit of additional oil and gas reserves in the United States during 2003, Swift drilled eight exploratory wells with five completions. During 2004, the Company plans to drill or participate in four wells along the Texas Coast and four wells along the Louisiana Coast, with a potential for three additional Texas Coast wells to be drilled if industry partners are found. The Frio Trend (Garcia Ranch). Swift’s inventory of domestic prospects for 2004 and 2005 includes nine prospects in the deep sands of the Frio formation (10,000 to 16,500 feet) in Kenedy County and Willacy County in the southern tip of Texas, a region that the Company hopes to develop into a new core operating area. Most of the prospects are in a project area known as Garcia Ranch, which straddles the border of the two counties. After an initial discovery in the Garcia Ranch region in 2000, on the Florence prospect in Kenedy County, Swift had two discoveries in 2001, one on the Rome prospect in Willacy County at a depth of 16,388 feet and the other on the Siena prospect in Kenedy County at a depth of 16,300 feet, with Swift retaining a 72% working interest in each. In 2002, the Company participated with a 33% working interest in a fourth discovery well (the Burns #1) drilled to a depth of 13,800 feet on a prospect that Swift had developed—the Milan prospect in Kenedy County. In 2003, Swift participated in one Frio development well that was successfully completed. Two additional Frio prospects drilled by Swift during the year were not successful. In 2004, Swift plans to drill up to four of the Frio prospects: a second well on the Rome prospect in Willacy County, one well each on two other prospects in Willacy County (the Crane and Mallard prospects), and one on a prospect in Kenedy County (the Pisa prospect). The Mallard prospect will target a 12,000-foot Frio sand, while the other three prospects will target sands at depths of 12,000 to 14,000 feet. In addition, Swift is seeking an industry partner for a fifth Frio prospect, the Giovanni prospect in Willacy County targeting a 13,000-foot Frio sand. All the Frio prospects have been developed by the analysis of three-dimensional seismic data and geological projections based on well-bore data from producing wells in the area. The Wilcox Sands. Swift has several prospects in the deep Wilcox sands in Goliad County, Texas, all based on the Company’s analysis of two- and three-dimensional seismic data. After participating in a discovery well in the Wilcox sands in 2000, Swift had two discoveries in 2001, one on the Nita prospect at a depth of approximately 15,000 feet, and the other on the Brandon prospect at a depth of about 13,000 feet. Swift’s working interests in the two wells were 73% and 60%, respectively. During 2003, the Company drilled a successful development well to a depth of 13,751 feet on the Nita prospect (the Post #2), retaining a 61% working interest. Another prospect in Goliad County, the DeZavala prospect that has a target depth of 15,000 feet in the Wilcox sands, is awaiting exploration. The Woodbine Formation. The Woodbine trend in Polk County, Texas, has also been under study by Swift for potential prospects, particularly in the region of the Double A Wells Field that has successfully produced from the Woodbine sands since 1985. The Jaguar prospect, identified in this area in earlier years by Swift’s analysis of the same three-dimensional data used in the development of the Double A Wells Field, remains of interest and may be drilled in 2004 if a working interest partner joins Swift for the project. Its target depth is projected to be 14,500 feet. The Miocene Sands. Swift continues to identify prospects in the Miocene sands in the Company’s Lake Washington Area located in Plaquemines Parish in Louisiana. Acquired in 2001, the Lake Washington Area was the site of two of Swift’s discoveries in 2002 and five discoveries in 2003. One 2003 exploration well was not successful. The five 2003 exploration wells were drilled in previously unexploited areas around the field’s central salt dome and are producing from several sands: the CM #255 well from the Li series sands on the west flank of the dome; the SL 212 #139 ST2 from the 8,500-foot sand on the northwest flank; the CM #218 from the E sand on the southeast flank; the SL 1464 #1 from the F sand on the east flank; and the SL 17721 #1 from the SP-4 sand on the south flank. The last well led to a nearby development well, the SL 17721 #3, that is producing from the L sand. (See also page 7.) Up to four exploratory wells are scheduled in the Lake Washington Area during 2004, all on the west flank of the dome. Two wells will target the H to K sand series and the other two will target the Li and CC sands. Also scheduled in 2004 is a three-dimensional seismic survey focusing on depths of 6,000 to 12,000 feet all around the salt dome, which will help identify and/or support both exploratory and development locations in 2005.
NEW ZEALAND EXPLORATION ACTIVITIES. In the Taranaki Basin of New Zealand, Swift still anticipates collaborating with industry partners to drill the Tawa prospect identified earlier in PEP 38719 northwest of the Company’s Rimu-Kauri Area (see page 13). The Tawa prospect is a stratigraphic trap located on the flank of the prolific Kapuni Field and was developed on the basis of Swift’s analysis of available two- and three-dimensional seismic data plus two-dimensional data acquired during Company surveys in 1997 and 2000. The Tawa prospect may also include a shallower target located on its southeast flank that was originally identified on the basis of the analysis of two-dimensional seismic data Swift acquired in 2000 and was further analyzed on the basis of additional two-dimensional seismic data obtained over 17 kilometers early in 2002. Three other prospects are located in the Company’s TAWN Area and are identified as the Waihapa Deep prospect, the Toko Deep prospect, and the Ahuroa Flank prospect. All three prospects will have the Kapuni group sands (the major reservoir in the basin) as their main target, but as these wells are drilled they will also pass through the Tariki sandstone and other productive sandstones in the basin. In the future, Swift’s on-going program to identify additional New Zealand prospects will also include two exploration permits (38759 and 38756) in which Swift was awarded 100% working interests in 2002. These permits cover acreage adjacent to Rimu-Kauri (see map on page 13). The Company’s re-entry of the Tuihu #1 well in PEP 38718 in 2003 was not successful. ACQUISITIONS OF PRODUCING PROPERTIES. Swift’s overall policy for long-term growth is to balance its resources between drilling and acquisitions of producing properties, with selective dispositions for efficient operations. When pursuing acquisition opportunities, Swift focuses on properties in which it can obtain significant working interests and serve as the operator. As Swift’s track record has shown in acquisitions such as the AWP Olmos Field and the Lake Washington Field, having operational control allows the Company to better employ its technical and operational expertise to exploit the fields. Swift generally seeks properties within a limited number of geographic areas, which enables it to better manage a greater amount of acreage, thereby minimizing the incremental costs associated with increased development drilling and production in newly acquired properties. During 2003, Swift continued to seek properties that meet its criteria for a core area; however, no large acquisitions were made. In property dispositions, Swift sold interests in five fields in Arkansas, Louisiana, and Texas (primarily in the Giddings Field) with reserves totaling 5.1 Bcfe. The weighted average sales price was $2.25/Mcfe, for a total of $11.5 million, exceeding the goal of $10 million for dispositions in 2003.
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This page was last updated on Monday, April 26, 2004, at 03:27:59 PM. Copyright © 1994-2008 by Swift Energy Company. |
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