1994 SECOND QUARTER REPORTLetter to StockholdersSwift Energy Company posted an increase of approximately 12% in total revenues for the second quarter of 1994—$6.8 million compared to $6.0 million for the second quarter of 1993. The Company also had a 35% increase in cash flow from operations during the second quarter—$2.3 million compared to $1.7 million in 1993. The increase in 1994 revenues and cash flow is primarily attributable to a 17% increase in oil and natural gas sales, which rose to approximately $4.7 million from $4.0 million during the second quarter of 1993. This increase occurred in spite of lower oil and gas prices. On average, oil prices received by the Company during the second quarter of 1994 decreased from 1993 second-quarter prices by 16%, and gas prices decreased by 2%. These declines were more than offset, however, by substantially higher oil and gas production. Oil and condensate output rose 30% to approximately 1,165 barrels per day and natural gas production rose 25% to about 17,400,000 cubic feet per day. Swift Energy’s strategy continues to be predicated on the assumption that over the long term both the prices and the volumes of oil and gas sold by the Company will increase. Recent trends indicate that oil prices are indeed on the rise. The average price received by the Company during the first quarter was $11.80 per barrel, whereas it was $14.47 per barrel during the second quarter. While this is substantially lower than the 1993 second-quarter price of $17.32 per barrel, early third-quarter prices are continuing the upward trend. We anticipate that gas prices, which dropped from an average of $2.21 per thousand cubic feet (Mcf) during the first quarter to $1.98 per Mcf during the second quarter, will also rise in the future. With the current prices still relatively low, however, costs associated with the higher production volumes, including increased depreciation, depletion, and amoritization, reduced second-quarter earnings from $1.2 million in 1993 to $1.1 million in 1994. The corresponding earnings per share were $0.20 in 1993 and $0.19 in 1994. Despite the earnings decrease, our strong cash flow position, together with our diversified capital formation strategy, has permitted our reserves growth activities to continue according to plan. On June 28, we announced our most recent producing property acquisition on behalf of the Company and its limited partnerships. The acquisition totaled $18.1 million and covered the purchase of net revenue interests in proved oil and natural gas reserves totaling approximately 28.8 billion cubic feet of gas equivalent (Bcfe). About 8.4 Bcfe is located in Cameron Parish, Louisiana, and 20.4 Bcfe in Mobile County, Alabama. The Company’s net share of these new reserves, which are approximately 64% natural gas, will be about 7.8 Bcfe. Our ambitious exploration and development program logged 21 wells during the first half of the year—five exploratory wells with two successes and 16 development wells with 14 successes. Swift Energy was the operator of approximately one-half of the wells, including all the exploratory wells. Four more exploratory wells, including two in Wharton County, Texas, are currently under way, together with two development wells. One of the development wells is an offset of a second-quarter well in Fayette County, Texas, that is currently producing 1,000 barrels of oil and 700,000 cubic feet of gas per day. Swift has high percentage interests in all six of these wells, which could make sizeable additions both to the Company’s corporate reserves and to its production. Additional wells in Fayette County and in other regions along the Texas Gulf are scheduled for later in the year, together with a number of wells in the Rocky Mountains, in the Ark-La-Tex region, and in Oklahoma and West Texas. Altogether, 21 more exploratory wells and 15 more development wells are planned for drilling prior to year end. With the additional corporate reserves obtained by our acquisition and drilling activities and the increasing U.S. demand for both natural gas and oil, Swift’s strategy for reserves growth appears increasingly sound. We accept the challenge of meeting our goals for 1994.
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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