Swift Energy is always seeking to enlarge and diversify its reserves volumes, focusing primarily on acquiring producing properties and/or developing exploration prospects within the regions in which it is already operating anchor properties. For producing properties, the criteria are that they have the potential for long-term growth through field improvements and exploratory or development drilling, that Swift become the operator of the properties by gaining majority interests, and that the field fits the Company’s operational expertise. Similarly, exploration prospects must logically fit into the Company’s overall operations.

SOUTH LOUISIANA In South Louisiana, where the Lake Washington Area in Plaquemines Parish is the anchor property, future growth activities are currently focusing on exploiting two newly acquired properties and developing exploration prospects both within and near the region’s Swift-operated properties.

Bay de Chene and Cote Blanche Island Fields. In late 2004 Swift acquired 100% working interests in two inland water fields that, like Lake Washington, each produce from Miocene sands surrounding a central salt dome. One property consists of 14,200 gross acres in the Bay de Chene Field about 30 miles northwest of Lake Washington along the common boundary of Lafourche Parish and Jefferson Parish. The other consists of 8,552 gross acres in the Cote Blanche Island Field about 100 miles west of Lake Washington in St. Mary Parish. At the time of purchase, their combined estimated proved reserves, primarily oil and only 9% developed, were 7.3 million BOE, with over 80% in the Cote Blanche Island Field. Their combined production was approximately 750 BOE per day. Bay de Chene had already produced over 142 million BOE since its discovery, and Cote Blanche Island had produced over 132 million BOE.

Both fields were initially shut in after purchase for necessary facility upgrades, with the Bay de Chene Field’s production restored in February 2005 and the Cote Blanche Island Field’s production restored in May 2005. By August they had a combined production of about 1,000 BOE per day, and plans had been made to drill in both fields during the second half of 2005. However, both fields experienced a series of shut-ins caused by Tropical Storm Cindy and Hurricane Dennis in July, Hurricane Katrina in August, and Hurricane Rita in September. Bay de Chene suffered damage from Katrina and Cote Blanche Island experienced damage from Rita. As a result, production from both fields was shut in for the remainder of the year, primarily because Swift was focusing on restoring operations in Lake Washington following Katrina’s damage and contract labor was in short supply. However, studies of the fields and workovers of existing wells continued, and by year-end 2005 the combined proved reserves of the two fields had increased to 12.6 million BOE, 73% higher than those originally purchased and equivalent to 10% of Swift’s total year-end proved reserves.

In late 2005, one unsuccessful well was drilled in Bay de Chene but was followed by a successful well completed in early 2006. In 2006, drilling will be resumed in both fields as they share two barge rigs. In Bay de Chene, two to four wells are planned, including at least one exploratory well partially based on Swift’s large three-dimensional seismic data base plus additional three-dimensional seismic data acquired with the purchase of the property. On-going studies of the seismic data will provide additional exploitation ideas. In Cote Blanche Island up to four development wells are tentatively scheduled. Exploratory drilling in this field will be deferred until results become available from a three-dimensional seismic survey to be completed in 2006 over approximately 50,000 acres of the field at a cost of approximately $11 million. Both fields will also undergo facility upgrades.

Prospect Development. As noted earlier, Swift is engaged in exploratory programs in its Lake Washington Area and its Bay de Chene Field based on its large three-dimensional seismic data base integrated with known geological information. The Company is also developing Miocene sand exploration prospects in South Louisiana outside its operated fields in three parishes—Plaquemines, Jefferson, and Lafourche—with an emphasis on depths from 12,000 to 20,000 feet.

SOUTH TEXAS In South Texas, where Swift’s anchor property is its large AWP Olmos Area, the Company has been developing and drilling exploration prospects in a contiguous seven-county area northeast of AWP and in a two-county area southeast of AWP.

Seven-County Wilcox Area. This area includes the Texas counties of Goliad, DeWitt, Victoria, Jackson, Lavaca, Colorado, and Wharton, and the formation of interest is the Wilcox sands at depths of 11,000 to 15,000 feet. To date, most of the drilled prospects have been located in Goliad County, where Swift drilled or participated in the drilling of six successful wells (three exploratory and three development) in the years 2000 to 2004. These included a successful 2001 exploratory well (the Post #1) that led to three successful development wells (Post #2-4) in 2003 and 2004. Through December 2005, the four wells had a combined cumulative production of 74,694 barrels of oil and 7,961 MMcf of gas.

No Wilcox wells were drilled in South Texas in 2005, but at year-end 2005 the Company had approximately 12 prospect leads and tentative plans to drill on three developed prospects in 2006, two in Goliad County and one in Victoria County. These prospects are partially based on the Company’s analyses of two- and three-dimensional seismic data previously acquired.

Garcia Ranch. In Kenedy County and Willacy County, in an area referred to as Garcia Ranch, the Company has been focusing on the Frio formation at depths of 10,000 to 16,500 feet, drilling or participating in the drilling of nine successful wells (six exploratory and three development) in the years 2000 to 2004. Two additional development wells (the Vaughn #3 and the Thomas #1) were drilled in Willacy County in late 2005 to depths of approximately 13,700 feet. Although the Company has no plans to drill in Garcia Ranch during 2006, it is developing additional prospect leads based on geological projections and its analyses of three-dimensional data acquired in earlier years.

TOLEDO BEND The Toledo Bend Region, anchored by the Masters Creek Area in Rapides Parish and Vernon Parish, Louisiana, and the Brookeland Area in Newton County and Jasper County, Texas, has recently expanded with Swift’s purchase of producing properties in a new field in close proximity.

South Bearhead Creek Field. In two separate acquisitions in the fourth quarter of 2005, Swift purchased interests in South Bearhead Creek Field in Beauregard Parish, Louisiana, covering approximately 5,800 gross acres located about 50 miles south of Swift’s Masters Creek Area. The acquired reserves, which are produced from the upper and lower Wilcox sands at depths from 10,600 to 13,700 feet and from the Cockfield sands at depths from 8,000 to 8,500 feet, were estimated at 28.9 Bcfe, or 4.8 million BOE. Approximately 30% of the reserves are proved developed, and current production is mostly oil. Swift operates all the wells in the field, holding 100% working interests in those acquired in the first acquisition and up to 62.5% working interests in those from the second acquisition.

Swift will launch an exploitation program in the field during the first half of 2006, with four development wells and several well workovers planned for the year. The first production from this field began in 1966, with extensive additional drilling starting in 1990. Gross production in the field in July 2005, the month before it was acquired by Swift, was 10,032 barrels of oil and 44,076 Mcf of gas.

NEW ZEALAND Swift has several future growth opportunities in New Zealand’s Taranaki Basin outside its areas of existing operations, the Rimu/Kauri Area and the TAWN Area.

PEP 38495 Over the Tasman Sea. A new focus for Swift’s exploration program is a 600-square-mile offshore area in the waters of the Tasman Sea off the southern coast of the Taranaki Basin. Awarded a petroleum exploration permit (PEP 38495) by the New Zealand government in April 2005 for a period of five years, Swift will explore this area in partnership with Mighty River Power Ltd., a government-owned utility that provides approximately 20% of New Zealand’s total electricity demand. An analysis of the area is to begin in the first quarter of 2006 with the Kaheru three-dimensional marine seismic survey. Initial plans call for the survey to cover 30,270 acres and to target several formations, including the Kauri and Tariki sands. Mighty River Power is funding 50% of these seismic operations in return for a 50% interest in the permit area as part of a farm-in agreement.

PEP 38742 on the Northern Coast. In December 2005, Swift increased its interest to 80% in PEP 38742, which covers 16,794 acres on the northern coast of the Taranaki Basin. The remaining interest is held by Swift’s joint venture partner, Ballance Agri-Nutrients Ltd., which is in search of natural gas as replacement feedstock for a manufacturing plant. Several major oil and natural gas pipelines cross the permit area and connect it to key processing facilities and markets.

Under a farm-in agreement with Ballance, Swift is the operator of all wells drilled in the permit area. The first was an unsuccessful 2005 test well, the Karaka-A1 targeting the Mount Messenger sands. Another exploratory well, the Kowhai-A1, will be drilled in early 2006 targeting Eocene-aged Kapuni Group sands in the Mangahewa Field. Swift also plans to conduct geological and geophysical studies of PEP 38742 in 2006 in partnership with Ballance.

PEP 38719. In PEP 38719, which covers 50,000 net acres that include Swift’s Rimu/Kauri Area, Swift conducted a two-dimensional transitional zone survey during the second quarter of 2005. The survey covered 112 linear kilometers and may have identified a northern extension to the Kauri Field. Seismic data obtained from this survey will aid in selecting potential sites for future wells.

For 2006, one exploratory well targeting the Manutahi sand at a depth of approximately 3,500 feet may be drilled in PEP 38719. In 2005, as part of the Tarata Thrust exploratory program, a joint venture with Mighty River Power Ltd., Swift drilled an unsuccessful exploratory well, the Tawa-B1, to the northwest of the Rimu/Kauri Area during the fourth quarter. The well targeted the Kauri sands, Tariki sands, and Kapuni Group sands and was drilled to a depth of 18,688 feet.