1997 FIRST QUARTER REPORTLetter to StockholdersSwift Energy Company’s outstanding performance during the first quarter of 1997 validates once again our current emphasis on an accelerated exploration and development program. For the first three months of 1997 we posted total revenues of $21.2 million and earnings of $6.8 million, reflecting increases of 90% and 120%, respectively, over our revenues and earnings for the first three months of 1996. Net income per share rose from $0.25 to $0.45, and net cash provided by operating activities more than tripled, increasing from $6.2 million to $19.5 million. The higher earnings are due to substantial increases in the Company’s production and sales, together with improved prices for both natural gas and oil. Our natural gas production rose 55% from the first quarter of 1996 to 4.9 billion cubic feet in the first quarter of 1997, with the average price we received for the gas increasing from $2.16 to $3.06 per thousand cubic feet (per Mcf). Our oil production rose 4% to 166,240 barrels, with a price increase from $17.78 to $20.13 per barrel. In the AWP Olmos Field in South Texas, the site of our largest drilling operation, we placed 49 new development wells (38.8 net wells) in production during the first quarter. At the end of the quarter our net daily production from the field was approximately 42 million cubic feet of natural gas equivalent, an amount that will increase as we add approximately 100 more new wells in the field before year end and continue drilling thereafter. To aid us in choosing locations for new wells in one relatively uncharted area in the field, we conducted a two-dimensional seismic survey over approximately 30 miles during the month of May. As we have stated previously, AWP wells have long productive lives and therefore can be expected to provide the Company with cash flows for 15 to 20 years. In the Texas Austin Chalk trend, where we have been drilling horizontal wells that have very high initial yields, we were active in two different counties during the first quarter. In Washington County, we had a 25% working interest in a successful exploratory well; and in Fayette County, we had working interests of 35% and 55%, respectively, in two successful development wells. We have been even more active in the Austin Chalk trend since the second quarter began. In Fayette County we have completed a dual-lateral development well in which we have a working interest of 34.5%, placing it in production at 11 million cubic feet of gas and 680 barrels of oil per day, and we are drilling or participating in three more development wells. We have also begun drilling an exploratory well to the Austin Chalk in Walker County on a 52,000-acre block in which we have a 68% working interest. This well, together with several other potential drilling locations, was based on the analysis of available seismic data; however, the full development of this acreage will be predicated on further extensive seismic surveys. Also during the first quarter we drilled a successful exploratory well to the Frio formation in Jackson County, Texas, and another to the Minnelusa formation in Campbell County, Wyoming, with working interests of 27% and 60%, respectively. On the international front, we completed a series of seismic surveys in New Zealand in early May that included a two-dimensional seismic line and a two-dimensional seismic swath, plus a 66-shot test of various charges and hole depths. Following several weeks of processing, analysis, and interpretation, the data will be used to identify promising well sites. The first well is expected to be drilled in 1998. While Swift Energy continues to meet or exceed expectations in performance, during the first quarter the Company, along with many other energy companies, experienced a significant decline in the price of its stock, which had grown by 149% in 1996. On March 3 the board of directors announced its approval to repurchase up to $20 million of Swift’s common stock in open market transactions throughout 1997. To date we have repurchased 383,900 shares at a total cost of $8.4 million, the last such purchase occurring on April 28. As we approach midyear, it appears that our strategy of "growth through technology
and teamwork" is working well and that by year end Swift Energy will have again set
new records in reserves growth and production. That continues to be our goal--not only for
1997 but also for the years that follow.
This page was last updated on Saturday, February 08, 2003, at 07:45:46 PM. Copyright © 1994-2008 by Swift Energy Company.
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