1994 FIRST QUARTER REPORTLetter to StockholdersSwift Energy’s reserves growth strategy continues to provide increasing revenues from oil and natural gas sales. During the first quarter of 1994, sales increased to $4.8 million, which is 38% above those for the same period of 1993. This is an especially noteworthy achievement in a climate of sharp declines in crude oil prices. Oil prices averaged only $11.80 per barrel during the first three months of 1994, the lowest since 1988. During the same period in 1993, they averaged $15.69 per barrel. For Swift, the negative impact of the low oil prices was somewhat cushioned by rising natural gas prices, which averaged $2.21 per thousand cubic feet (Mcf) during the first quarter of 1994 compared with $1.91 per Mcf during the first quarter of 1993. Of the total reserves marketed by the Company during the first quarter of 1994, natural gas accounted for 73% of the volume and 75% of the sales. This reflects Swift’s emphasis on acquiring natural gas reserves in anticipation of increasingly higher consumer demand. Still, had oil prices remained at their 1993 levels, the Company’s total first-quarter product sales would have been higher by approximately $400,000, or about 8%, with oil’s percentage of the total revenues increasing accordingly. With these sales, Swift Energy’s overall revenues for the first quarter of 1994 increased 15% from 1993, rising from $5.3 million to $6.1 million. At the same time, cash flow from operating activities increased 72%, rising from $1.56 million to $2.68 million. Despite these positive developments, the Company’s 1994 first-quarter earnings were down slightly, totaling $814,000, or $0.14 per share, compared to $988,000, or $0.17 per share, during the first quarter of 1993. This decrease was partially due to the lower oil revenues failing to offset higher operating costs associated with higher production volumes. However, another contributing factor was a one-month interruption in Swift’s limited partnership sales under the Company’s SDI program (Swift Depositary Interests). During this period, Swift was awaiting a review of documentation submitted to the Securities & Exchange Commission regarding specific properties Swift had purchased for placement in the limited partnerships. Once the SEC’s review was completed, sales were immediately resumed, but partnerships that normally would have been closed in March were delayed until mid-April, as were the Company’s earned interests from the partnerships. In the meantime, Swift Energy embarked upon its 1994 exploration and development program as described in the Company’s 1993 annual report. An important part of that program is two large seismic surveys in two Texas Gulf Coast counties, both of which have now been completed. One of the surveys, located in Fayette County on a large farmout acreage block that Swift obtained from the Lower Colorado River Authority (LCRA) and the city of Austin, is expected to identify up to 20 new drilling sites. The LCRA area is already contributing significantly to the Company’s production. Five horizontal wells drilled there in recent months provided about 8% of Swift’s average daily production of roughly 4,000 barrels of oil equivalent (BOEs) during the month of April. An additional horizontal well placed in production in May, also in Fayette County but outside the LCRA area, added 430 BOEs per day to the Company’s production. Altogether, Swift has interests in 10 horizontal wells producing from the prolific Austin Chalk trend in Fayette County. Four exploratory wells placed in production around the first of the year are also significant producers. These wells, one in Arkansas and three along the Texas Gulf Coast, contributed approximately 7% of the Company’s daily production in April. A fifth successful well is awaiting connection to a pipeline. Swift’s second seismic survey, designed to yield three-dimensional data on the Frio and Yegua trends, was carried out in Jackson County in the general vicinity of three of these producers. As the year progresses, Swift plans to drill a number of additional wells in these same
regions and also in Wyoming and Louisiana. We are optimistic we will have continued
success, and, fortunately, oil prices appear to have bottomed out, which is good news to
both Swift Energy and all its investors.
This page was last updated on Saturday, February 08, 2003, at 07:45:43 PM. Copyright © 1994-2009 by Swift Energy Company.
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