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SWIFT ENERGY COMPANY NEWSSee PDF fileSWIFT ENERGY ANNOUNCES RECORD QUARTER:
HOUSTON, August 3, 2005 - Swift Energy Company (NYSE: SFY) announced today record net income of $27.9 million for the second quarter of 2005, or $0.96 per diluted share, a 116% increase compared to $12.9 million in net income, or $0.46 per diluted share, earned in the same quarter of 2004. Cash flow before working capital changes (*non-GAAP measure - see page 7 for reconciliation to net cash provided by operating activities of $64.6 million) increased 65% to $69.5 million, or $2.39 per diluted share, compared to $42.1 million, or $1.49 per diluted share, for the second quarter of 2004. Production increased 12% for the second quarter of 2005 to a record 15.9 billion cubic feet equivalent (“Bcfe”) from the 14.3 Bcfe produced in the second quarter of 2004 and increased 2% sequentially from the 15.5 Bcfe produced in the first quarter of 2005. Second quarter 2005 production included 12.0 Bcfe of domestic production, a 17% increase, and 4.0 Bcfe produced in New Zealand, a 2% decrease, in both cases when compared to production in the same period in 2004. The domestic increases were primarily due to higher levels of crude oil production at Lake Washington. The New Zealand production decline was the result of scheduled maintenance work at the Rimu Production Station, a delayed crude oil lifting now scheduled in the third quarter, as well as inherent production decline. Terry Swift, CEO of Swift Energy, commented, “Swift Energy has just completed its best first-half, both operationally and financially, in the history of the Company. We have had some very promising results with our first 3-D generated exploration prospect in the Lake Washington area and are encouraged with the early results of our exploration program in New Zealand. Our current drilling program is presenting the best opportunity set in our history, which we believe will be able to deliver meaningful reserves and production growth as we move forward with our strategic plan. Production for the first half of 2005 was up 10% over production in the first half of 2004 and the facility expansion in Lake Washington is on-track to be completed by the end of the third quarter of 2005. Due to this progress, Swift Energy is increasing its 2005 production guidance to 10% to 14% over 2004 production levels, or approximately 64.0 Bcfe to 66.5 Bcfe. As Swift continues to execute its strategic plan, bolstered by this strong commodity pricing environment, we believe this will again be a record year of value creation for Swift Energy and our stakeholders.” Six-Month Results for 2005 Through the first six months of 2005, Swift Energy had record production totaling 31.4 Bcfe, an increase of 10% from 28.5 Bcfe produced last year for the same period. Total revenues for the first six months of 2005 were $199.9 million, up 47% from $136.4 million during the same period last year. During the first half of 2005, net income increased 95% to $53.6 million ($1.86 per diluted share) from $27.5 million ($0.98 per diluted share) in the first half of 2004. Cash flow before changes in working capital (a non-GAAP measure, see reconciliation on page 7) increased 66% in the first half of 2005 to $134.6 million ($4.67 per diluted share) from $80.9 million ($2.85 per diluted share) in the same period in 2004. Net cash provided by operating activities for the first half of 2005 increased 68% to $129.3 million ($4.48 per diluted share) from $77.1 million ($2.72 per diluted share) in the 2004 period. Increased revenues, net income and cash flow in 2005 are primarily the result of higher commodity prices and our overall increased levels of production. Revenues and Expenses for the Second Quarter Total revenues for the second quarter of 2005 increased 47% to a record $104.3 million from the $71.0 million of revenues generated in the second quarter of 2004. This increase was attributable to higher commodity prices and overall increased levels of production. Production for 2005 is expected to increase 10% to 14%. Swift Energy’s previous guidance for reserves and production growth in 2005 was 7% to 12%. Swift Energy’s 2005 plan for reserves growth is primarily oriented towards exploration and exploitation activity in Lake Washington, Bay de Chene, Cote Blanche Island, South Texas and New Zealand, all of which is planned for the second half of the year. Based upon this planned activity, the Company estimates that 2005 reserves will increase 5% to 10%. Lease operating expenses (“LOE”), before severance and ad valorem taxes, were $0.73 per thousand cubic feet equivalent (“Mcfe”) in the second quarter of 2005, which was the same level for these expenses as in the second quarter of 2004. As was the case in the first quarter of 2005, this level of LOE expense was less than originally anticipated due to lower than expected chemical, repair and maintenance costs, as well as no significant domestic workover activity taking place during the quarter. Significant workover activity is expected to take place in the second half of 2005, however, particularly in the Bay de Chene and Cote Blanche Island fields where recompletion efforts will be underway in several existing wells. Depreciation, depletion and amortization expense increased to $1.81 per Mcfe in the second quarter of 2005 from $1.37 per Mcfe in the comparable period in 2004, primarily as a result of increased estimates for future development costs and additional capital expenditures during the year. General and administrative expenses increased to $0.31 per Mcfe during the second quarter 2005 from $0.29 per Mcfe in the same period in 2004. This increase was primarily attributable to increases in Swift Energy’s workforce, to accommodate the increased activity level. Interest expense per unit decreased 21% to $0.40 per Mcfe in the second quarter 2005 compared to $0.50 per Mcfe for the same period in 2004. Also, severance and ad valorem taxes were up appreciably to $0.67 per Mcfe from $0.49 per Mcfe in the comparable periods due to higher commodity prices and the higher severance tax rates on crude oil from our increased crude oil production in Louisiana. Production & Pricing Domestically, second quarter 2005 total production increased by 17% to 12.0 Bcfe compared with 10.2 Bcfe produced in the same 2004 period and increased 9% sequentially compared to the 2005 first quarter production of 11.0 Bcfe. This year-to-year production growth is primarily a result of the Company’s drilling efforts in the Lake Washington area. New Zealand accounted for 25% of total production with 4.0 Bcfe produced in the second quarter of 2005. This 2% decrease from the 4.1 Bcfe produced in the second quarter of 2004 and 13% decline from first quarter 2005 production levels was in line with the Company’s guidance. Lower production in New Zealand was the result of annual maintenance work at the Rimu Production Station, only two of three scheduled crude oil tanker liftings in the second quarter taking place and inherent production decline. In the second quarter of 2005, Swift Energy realized an aggregate global average price of $6.60 per Mcfe, an increase of 31% from second quarter 2004 price levels when this price averaged $5.04 per Mcfe. Domestically, the Company realized an aggregate average price of $7.53 per Mcfe, an increase of 28% over the $5.86 received in the second quarter of 2004. In New Zealand, the Company received an aggregate average price of $3.79 per Mcfe for the second quarter in 2005, an increase of 27% over the $2.98 per Mcfe realized in the same period of 2004. Swift Energy’s average domestic crude oil prices increased 35% to $50.21 per barrel from $37.22 per barrel realized in the same period of 2004. Meanwhile, second quarter 2005 average domestic natural gas prices of $6.13 per thousand cubic feet (“Mcf”) in the second quarter of 2005 increased 1% from the $6.09 per Mcf received during the same period in 2004. Prices for natural gas liquids (“NGLs”) domestically averaged $25.74 per barrel in the second quarter of 2005, a 33% increase over second quarter 2004 NGL prices of $19.42. In New Zealand, the sales price of Swift Energy’s crude oil averaged $50.82 per barrel in the second quarter of 2005, a 36% increase over prices for the same period in 2004. Also in New Zealand, the Company received an average natural gas price of $3.05 per Mcf for the second quarter of 2005 under its long-term contracts, a 43% increase over the $2.13 per Mcf received in the same 2004 period. The Company’s NGL contracts yielded an average price of $19.30 per barrel for the second quarter of 2005. New Zealand natural gas and NGL price contracts are remitted in New Zealand dollars, which has remained strong during the second quarter 2005 against the U.S. dollar compared to the same period in 2004, but weakened when compared to first quarter 2005 levels. Operations Update Swift Energy successfully completed 13 of 17 wells in the second quarter of 2005. Domestically, the Company completed 12 of 15 development wells for a success rate of 80% for the quarter and was 1 for 1 with an exploration success in Lake Washington. The Company successfully completed 5 of 8 development wells in the Lake Washington area in Plaquemines Parish, Louisiana and successfully completed 6 development wells in the AWP Olmos area in McMullen County, Texas. Swift Energy also participated in a successful non-operated development well in the Brookeland field in Newton County, Texas. In New Zealand, the Company was unsuccessful on the Kauri-E10 development well. Swift Energy has three wells waiting to be completed in the Lake Washington area. The Company currently has two drilling rigs operating in Lake Washington and has recently contracted for a third barge rig that will operate in the Lake Washington, Bay de Chene and Cote Blanche Island areas through the rest of 2005. The Company has also contracted for a fourth barge rig to work in these areas that will be available for approximately two to three months during the second half of 2005. An additional workover rig is also scheduled to begin working in Bay de Chene and Cote Blanche Island in the second half of 2005. Additionally, the Company has plans to move a rig to the Garcia Ranch area in South Texas later in the third quarter 2005. The Newport prospect, Swift Energy’s first exploration well resulting from its recent 3-D generated prospects at Lake Washington, was drilled in the second quarter of 2005 and encountered 44 feet of net pay. The well tested at average rates of approximately 1,100 barrels of oil per day and 545 Mcf per day of natural gas on a 16/64th inch choke with flowing tubing pressure of 1940 psi. A flow line will be laid to this well, with production expected to commence later in the third quarter 2005. Offset locations have already been identified and are planned for drilling later in the year to further delineate this new discovery. Production facility upgrades in Lake Washington were delayed somewhat due to Tropical Storm Cindy and Hurricane Dennis, but they are still expected to be completed later in the third quarter 2005, as planned. As previously announced, Swift Energy had shut-in production for a few days at Bay de Chene and Lake Washington based on threats posed from both these storms. Operations were resumed as soon as the storms had passed. No damages were incurred during either event. The result of these two shut-in periods deferred production of approximately 0.3 to 0.4 Bcfe, and is reflected in the Company’s new production guidance for the third quarter and the full year 2005. In New Zealand, Swift Energy successfully drilled the Piakau North A-1 well (100% working interest) in the TAWN area to a total vertical depth of 9,623 feet in this third quarter of 2005 and preliminary analysis indicates that 76 feet of net pay was encountered in an Eocene aged sand. The well is being completed and will be connected to nearby facilities for testing and production. The Piakau well is an additional 2005 exploration well, which was moved forward into the 2005 drilling schedule due to increased capital availability in the Swift Energy New Zealand budget. The Company is also currently drilling the first well in the Tarata Thrust joint venture, the Tawa-B1 well, to an expected total depth of approximately 18,000 feet. The Company expects to begin drilling the Goss Prospect exploration well with this same rig later in the third quarter, which should be followed by the Trapper Prospect. These two wells are also part of the 2005 Tarata Thrust exploration program with Mighty River Power. Also late in the second quarter of 2005, Swift Energy conducted a successful fracture stimulation program on four Kauri sand wells. The Rimu Production Station underwent routine maintenance in the second quarter of 2005, and as a result, Swift Energy had reduced production levels for five days in May. Price Risk Management Swift Energy also announced that since its last price risk management update on May 8, 2005, it has continued to enter into price risk management transactions and reports the following current positions. The Company now has approximately 8% to 12% of its estimated third quarter domestic crude oil production sold at an average NYMEX strike price of $56.55 per barrel. These NYMEX crude oil strike prices do not take into account transportation charges or crude oil quality differentials that could result in price reductions ranging from $2.00 to $3.00 per barrel. Swift Energy has purchased floors covering 45% to 50% of estimated third quarter 2005 domestic natural gas production at an average NYMEX strike price of $5.60 per Mcf. For the fourth quarter 2005, Swift has 15% to 20% of its estimated domestic natural gas production covered by floors at an average NYMEX strike price of $5.91 per Mcf. Details of Swift Energy’s complete price risk management activities can be found on the Company’s website (www.swiftenergy.com). Earnings Conference Call Swift Energy will conduct a live conference call today, August 3, at 9:00 a.m. CDT to discuss second quarter 2005 financial results. To participate in this conference call, dial 973-339-3086 five to ten minutes before the scheduled start time and indicate your intention to participate in the Swift Energy conference call. A digital replay of the call will be available later on August 3 until August 10, by dialing 973-341-3080 and using pin #6156356. Additionally, the conference call will be available over the Internet by accessing the Company’s website at www.swiftenergy.com and by clicking on the event hyperlink. This webcast will be available online and archived at the Company’s website. Swift Energy Company, founded in 1979 and headquartered in Houston, engages in developing, exploring, acquiring and operating oil and gas properties, with a focus on onshore and inland waters oil and natural gas reserves in Louisiana and Texas and oil and natural gas reserves in New Zealand. Over the Company’s 25-year history, Swift Energy has consistently shown long-term growth in its proved oil and gas reserves, production and cash flow through a disciplined program of acquisitions and drilling, while maintaining a strong financial position. This press release includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The opinions, forecasts, projections, guidance or other statements other than statements of historical fact, are forward-looking statements. These statements are based upon assumptions that are subject to change and to risks, especially the uncertainty of finding, replacing, developing or acquiring reserves, availability of services and supplies, hurricanes or tropical storms affecting operations, and volatility in oil or gas prices. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Certain risks and uncertainties inherent in the Company’s business are set forth in the filings of the Company with the Securities and Exchange Commission. Estimates of future financial or operating performance provided by the Company are based on existing market conditions and engineering and geologic information available at this time. Actual financial and operating performance may be higher or lower. Future performance is dependent upon oil and gas prices, exploratory and development drilling results, engineering and geologic information and changes in market conditions. |
SWIFT ENERGY COMPANY
(In Thousands Except Per Share and Price Amounts)
Three Months Ended June 30,
Six Months Ended June 30,
2005
2004
Percent Change
2005
2004
Percent Change
Revenues:
Oil & Gas Sales
$ 104,922
$ 71,825
46%
$ 200,444
$ 137,779
45%
Other
(622)
(781)
20%
(523)
(1,379)
62%
Total Revenue
$ 104,300
$ 71,044
47%
$ 199,921
$ 136,399
47%
Net Income
$ 27,882
$ 12,898
116%
$ 53,571
$ 27,486
95%
Basic EPS
$ 0.98
$ 0.46
111%
$ 1.90
$ 0.99
91%
Diluted EPS
$ 0.96
$ 0.46
111%
$ 1.86
$ 0.98
90%
Net Cash Provided By Operating Activities
$ 64,632
$ 37,493
72%
$ 129,283
$ 77,089
68%
Net Cash Provided By Operating
Activities, Per Diluted Share
$ 2.23
$ 1.32
68%
$ 4.48
$ 2.72
65%
Cash Flow Before Working Capital
Changes(1) (non-GAAP measure)
$ 69,476
$ 42,110
66%
$ 134,612
$ 80,872
67%
Cash Flow Before Working Capital
Changes, Per Diluted Share
$ 2.39
$ 1.49
61%
$ 4.67
$ 2.85
64%
Weighted Average Shares Outstanding
28,377
27,742
2%
28,269
27,648
2%
EBITDA(1) (non-GAAP measure)
$ 77,030
$ 46,814
65%
$ 147,525
$ 92,267
60%
Production (Bcfe):
15.9
14.3
12%
31.4
28.5
10%
Domestic
12.0
10.2
17%
22.9
20.6
11%
New Zealand
4.0
4.1
(2%)
8.5
7.9
7%
Realized Price ($/Mcfe):
$6.60
$5.04
31%
$6.38
$4.83
32%
Domestic
$7.53
$5.86
28%
$7.27
$5.55
58%
New Zealand
$3.79
$2.98
27%
$3.97
$2.95
21%
(1)See reconciliation on page 7. Management believes that the non-GAAP measures EBITDA and cash flow before working capital changes are useful information to investors because they are widely used by professional research analysts in the valuation, comparison, rating and investment recommendations of companies within the oil and gas exploration and production industry. Many investors use the published research of these analysts in making their investment decisions.
SWIFT ENERGY COMPANY
RECONCILIATION OF GAAP(a) TO NON-GAAP MEASURES
(UNAUDITED)
(In Thousands)Below is a reconciliation of EBITDA to Net Income and a reconciliation of Cash Flow Before Working Capital Changes to Net Cash Provided by Operating Activities.
Three Months Ended
June 30, 2005
June 30, 2004
NET INCOME TO EBITDA RECONCILIATIONS:
Net Income
$ 27,882
$ 12,898
116%
Provision for Income taxes
13,896
7,103
Interest Expense, Net
6,287
7,143
Depreciation, Depletion & Amortization & ARO (b)
28,965
19,669
EBITDA
$ 77,030
$ 46,814
65%
Six Months Ended
June 30, 2005
June 30, 2004
Net Income
$ 53,571
$ 27,486
95%
Provision for Income taxes
27,966
12,602
Interest Expense, Net
12,631
14,045
Depreciation, Depletion & Amortization & ARO (b)
53,357
38,135
EBITDA
$ 147,525
$ 92,267
60%
Three Months Ended
June 30, 2005
June 30, 2004
NET CASH FLOW RECONCILIATIONS:
Net Cash Provided by Operating Activities
$ 64,632
$ 37,493
72%
Increases and Decreases In:
Accounts Receivable
4,721
1,424
Accounts Payable and Accrued Liabilities
(1,717)
568
Accrued Interest
1,840
2,624
Cash Flow Before Working Capital Changes
$ 69,476
$ 42,110
66%
Six Months Ended
June 30, 2005
June 30, 2004
Net Cash Provided by Operating Activities
$ 129,284
$ 77,089
68%
Increases and Decreases In:
Accounts Receivable
4,739
3,446
Accounts Payable and Accrued Liabilities
(113)
(963)
Accrued Interest
702
1,300
Cash Flow Before Working Capital Changes
$ 134,612
$ 80,872
67%
(a) GAAP—Generally Accepted Accounting Principles
(b) Includes accretion of asset retirement obligation
Note: Items may not total due to rounding
SWIFT ENERGY COMPANY
(UNAUDITED)