Swift Energy Company is an independent oil and natural gas company engaged in the development, exploration, acquisition, and operation of oil and gas properties, with a focus in the United States on onshore and inland water areas of the Louisiana and Texas Gulf Coast and a focus in New Zealand on onshore areas of the north island’s Taranaki Basin. Currently celebrating its 25th anniversary, the Company was founded in October 1979 and has its principal headquarters in Houston, Texas.

MISSION & GOALS

As a natural resource company, Swift Energy is committed to achieving efficient, sustained growth in the volume and value of its proved oil and gas reserves, while simultaneously maintaining high standards for ethical conduct, the protection of health and safety, and the preservation of environmental quality. In all of its activities, the Company focuses on optimizing stakeholder value by building a balanced portfolio of oil and gas properties with diversified production profiles and an assortment of growth opportunities covering a range of risks and potential rewards.

Over the last five years, the Company has achieved an average compounded growth rate in proved oil and gas reserves of approximately 12% per year. Swift’s success in sustaining reserves growth in a volatile pricing environment has enabled it to achieve five-year compounded growth rates of approximately 6% per year in production, 23% per year in oil and gas sales, 20% per year in cash flows from operating activities, and 18% per year in diluted earnings per share.

During 2004, year-end proved reserves decreased by 3% from the previous year to about 800 billion cubic feet equivalent (Bcfe). This slight reduction largely resulted from a strategic decision to slow down drilling in South Louisiana during 2004 in order to acquire three-dimensional seismic data for that area and to implement significant facilities improvements. Although the slowdown contributed to lower reserves additions and increased finding and development costs in the short-term, the seismic data will benefit the Company’s future long-term drilling program.

Over the next five years, Swift’s primary strategic goals are to increase its proved reserves at an average rate of 5% to 10% per year and its production at an average rate of 7% to 12% per year.

BUSINESS STRATEGY

Swift’s reserves growth is primarily accomplished through a mix of exploratory and development drilling and producing property acquisitions. The specific mix of drilling and acquisitions is continually adjusted in response to changing industry conditions.

Development drilling is generally focused in the Company’s core areas of operation. Domestically, these include the Lake Washington Area and Masters Creek Area in Louisiana and the AWP Olmos Area and Brookeland Area in Texas. In New Zealand, they include the Rimu/Kauri Area and the TAWN Area.

Exploratory drilling is conducted both in these core areas and in other regions that Swift believes have potential for becoming core areas of operation. In 2004, Swift primarily focused its drilling activities in the Lake Washington Area in South Louisiana and plans to continue to do so in 2005.

In its acquisitions activities, the Company continually reviews opportunities to purchase strategic producing properties where performance can be enhanced through development drilling or improved operating efficiencies. This approach led to the purchase of the Company’s initial reserves in the AWP Olmos Area in 1988, the Brookeland and Masters Creek Areas in 1998, the Lake Washington Area in 2001, and the TAWN Area in 2002.

In 2004, Swift purchased interests in what is anticipated to become two additional core areas in South Louisiana —the Cote Blanche Island Field in St. Mary Parish and the Bay de Chene Field in Lafourche Parish and Jefferson Parish. Swift Energy plans to initiate a multiyear exploitation program in these areas beginning in the second half of 2005.

INDUSTRY ENVIRONMENT

In New Zealand, Swift Energy received an average of $42.15 per barrel for its crude oil, an increase of 42% from 2003 prices. Average NGL prices increased 33% to $17.96 per barrel, and natural gas prices rose 30% to $2.38 per Mcf. Unlike crude oil sales, which are denominated in U.S. dollars, New Zealand natural gas and NGL prices are denominated in New Zealand dollars, which strengthened in relation to the U.S. dollar over the course of 2003 and 2004, leading to some of the appreciation in New Zealand product prices received by Swift.

PERFORMANCE COMPARISON

Swift’s policy is to reinvest cash flows rather than pay cash dividends in order to promote long-term growth in the value of the Company’s common stock. Although industry price cycles can have a substantial impact on year-to-year performance, over the longer term Swift has achieved consistent growth in shareholder value. At the end of 2004, the five-year cumulative appreciation in Swift’s year-end stock price totaled 152%, comparing favorably with five-year increases in the AMEX Oil Index (43%), the Russell 2000 index (29%), the Dow Jones Industrial Average (-6%), and the S&P 500 index (-18%).

Swift Energy’s common stock has been traded under the symbol "SFY" on the New York Stock Exchange (NYSE) since 1991.