1994 THIRD QUARTER REPORTLetter to StockholdersSwift Energy Company’s cash flows from operating activities reached record levels during the third quarter of 1994, rising 37% above the third quarter of last year to $3.6 million and bringing the cash flows for the first three quarters of 1994 to a total exceeding all of 1993. The increase marked the 20th quarter in six years that cash flows have exceeded the levels reported for the corresponding period of the previous year. During that six-year period, cash flows have risen more than 460%--from $1.5 million for the first nine months of 1989 to almost $8.5 million for the first nine months of 1994. In contrast, earnings for the third quarter were down. Earnings were $768,000 (or $0.12 per share) compared to $1,442,000 (or $0.22 per share) in 1993. However, the decrease resulted almost entirely from changes in two non-cash components of revenues and expenses: lower earned interests from limited partnerships and joint ventures; and increased depreciation, depletion, and amortization. As in previous quarters, the Company’s increasingly strong cash flow position is due to its rising oil and natural gas sales. During the third quarter of 1994, sales were 36% higher than for the same period of 1993 despite a 5% decline in the average price of natural gas between the two quarters. The impact of the lower gas prices was somewhat offset by an increase in oil prices, which rose 9% from the previous year. Even with this increase, however, overall third-quarter prices on an Mcf equivalent basis (Mcfe) remained relatively flat. The increase in revenues from oil and gas sales therefore resulted almost entirely from increases in production. The production of natural gas, which comprised 70% of the sales on a Btu basis, rose 29% to approximately 1.8 billion cubic feet, while the production of oil and condensates increased about 51% to 129,000 barrels. The higher production was made possible by the continued success of Swift's reserves growth strategy. As has been pointed out repeatedly in recent years, the Company’s two-pronged strategy (property acquisitions and drilling) is increasingly focusing on drilling activities, both exploratory and developmental. Through September of this year, the Company participated in 11 exploratory wells (compared to 12 during all of 1993) and 25 development wells (compared to 22 during all of 1993). With a number of additional wells to be completed before year end, 1994 could be the most successful year in the Company’s history for adding reserves through drilling. This expectation is reinforced by Swift’s recent announcement that a development well drilled in October had initial production rates of 1,247 barrels of oil per day and 406 Mcf of gas per day. This well, the Rightmer-Seale #1-H, is one of 11 successful wells drilled since late 1992 in Fayette County, Texas. Swift plans to drill as many as 13 more wells in that area within the next two years. With this increased emphasis upon drilling, the Company’s proved reserves and cash flows from operations continue to grow. However, at the same time, earned interests from limited partnerships and joint venture acquisitions now provide a much smaller component of Swift’s total revenues, which primarily accounts for the decreased earnings this quarter versus last year. During the first nine months of 1994, earned interests from limited partnerships and joint ventures provided approximately $650,000 in total revenues, compared to approximately $2,441,000 during the first nine months of 1993. Swift's management remains confident in and committed to its long-term growth strategy. For the first time in its 15-year history, the Company has declared a 10% stock dividend payable on its outstanding shares of common stock. This stock dividend, which resulted in the issuance of an aggregate of 606,262 shares of common stock to shareholders of record on September 19, rewards the shareholders through a nontaxable transaction and increases the stock’s liquidity by increasing the number of outstanding shares. Finally, during the third quarter, it was our pleasure to welcome to the Swift team our newest director, G. Robert Evans, Chairman of the Board and Chief Executive Officer of Material Sciences Corporation. We look forward to his advice and assistance as Swift Energy strives to achieve even higher goals in the years ahead.
This page was last updated on Saturday, February 08, 2003, at 07:45:43 PM. Copyright © 1994-2008 by Swift Energy Company.
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