A record level of production and relatively high commodity prices combined to give Swift Energy a second quarter 2003 net income of $7.2 million ($0.26 per diluted share), an increase of 101% from the second quarter of 2002 and an increase of 18% from the first quarter of 2003. Net cash provided by operating activities for the second quarter of 2003 was $26.7 million compared to $24.8 million for the same period in 2002.

For the six months ending June 30, 2003, net income increased 102% to $13.3 million ($0.49 per diluted share) after a $4.4 million charge for an accounting change in the first quarter. Net cash provided by operating activities for the first half of 2003 was $53.5 million compared to $35.6 million for the same period in 2002.

Total production in the second quarter of 2003 was 13.3 billion cubic feet of natural gas equivalent (Bcfe), which was 5% higher than the 12.7 Bcfe produced in the second quarter of 2002 and 3% higher than the 12.9 Bcfe produced in the first quarter of 2003. For the first six months of 2003, production was 26.1 Bcfe, a 5% increase from the 25.0 Bcfe produced in the first six months of 2002.

Revenues from oil and gas sales totaled $50.9 million in the second quarter of 2003, compared to $38.3 million in the second quarter of 2002 and $54.9 million in the first quarter of 2003. For the first six months of the year, sales were $105.8 million in 2003 and $64.9 million in 2002. These numbers reflect the impact of generally higher average commodity prices in 2003 than in 2002 but a decline in prices from the first quarter to the second quarter of 2003. The numbers also reflect the impact of the mix of Swift’s total production with respect to the increasing domestic oil-to-gas ratio, the increasing proportion of natural gas production contributed by New Zealand, and the spread between U.S. and New Zealand gas prices. Domestic production, which in the second quarter totaled 8.5 Bcfe and was 58% oil and natural gas liquids, sold at an average price of $4.71 per thousand cubic feet of natural gas equivalent (per Mcfe), while New Zealand production, which totaled 4.8 Bcfe and was 73% natural gas, sold at $2.28 per Mcfe.

Although New Zealand natural gas prices have consistently been lower than U.S. gas prices, the average prices received by Swift Energy New Zealand (SENZ) have increased for the last six quarters, partially because of the strengthening of the New Zealand dollar relative to the U.S. dollar, but also because of the tightening New Zealand market caused by the decline of that country’s Maui Field. Based on current conditions, we expect the price appreciation in New Zealand to continue.

Our second quarter 2003 domestic production decreased 4% compared to second quarter 2002 production, primarily because of the continued interruption in pipeline transportation that began in March of this year in the Lake Washington Field in Plaquemines Parish, Louisiana, but also because of the ongoing effect of our temporary suspension in late 2001 of drilling activity in areas that target the initially high-deliverability Austin Chalk trend. However, our domestic production was 10% higher in the second quarter than in the first quarter of 2003 and is expected to keep increasing as a result of our successful drilling activity and facility expansion in the Lake Washington Field, together with our resumption of drilling activity in other core areas.

Our second quarter 2003 New Zealand production was up 26% compared to second quarter 2002 production, but was down 7% from first quarter 2003 production, primarily because of scheduled maintenance downtime at the processing facilities in both the TAWN Area and the Rimu/Kauri Area.

In our drilling activities during the second quarter, we successfully completed 19 consecutive domestic wells. Of these, two exploratory wells and 12 development wells were in the Lake Washington Field, one of which (the Cockrell-Moran 263) found 222 feet of true vertical net pay in seven different sands along the southeast side of the field’s salt dome. Four of the 19 wells were part of a new 10-well drilling program in the AWP Olmos Field in McMullen County, Texas, and one was a non-operated well (the Burns #2) drilled in the Garcia Ranch region in Kenedy County, Texas.

In New Zealand, we successfully completed the Kauri-E1 well in the Kauri sands and began drilling the Kauri-E2 well. We also placed in production the Kauri-F1 well completed earlier this year in the shallow Manutahi sand. In addition, we concluded production tests on the 2002 Kauri-A4 well and began flowing its production to the Rimu Production Station in mid-July at an average of approximately 3.0 million cubic feet (MMcf) of natural gas and 140 barrels of condensate per day.

Supported by our recent operational successes and improved cash flow, on July 8 we announced an increase in our 2003 capital budget from $130 million to $150 million. The increased budget will allow us to drill up to 70 wells in the Lake Washington Field this year (10 more than originally planned) and also to accelerate facility capacity additions. During the first half of 2003, we drilled 38 wells in the Lake Washington Field, for a total of 70 wells since we acquired the field in late 2001. At the end of the second quarter, oil production from the field was averaging 8,500 gross barrels (7,000 net barrels to Swift) per day. With two rigs operating and some of the wells targeting deeper sands, together with the continuing facility upgrades, we expect by year-end to be producing 10,000 gross barrels per day and to have a gross facility capacity of 20,000 barrels per day. Also, we expect to resume pipeline transportation from the Lake Washington Field in the fourth quarter, with crude oil barging continuing as well. Finally, we will begin preparations for a Lake Washington seismic survey to be conducted next year.

We also intend to drill six more wells in the AWP Olmos Field, to continue drilling in the Garcia Ranch region, and to return to drilling in the Austin Chalk trend. The first 2003 Austin Chalk well was spudded in the Brookeland Area in Newton County, Texas, on August 17, and a second well will follow in the Masters Creek Area in Vernon Parish, Louisiana.

In New Zealand, we expect to initiate a fracture stimulation program before year-end to improve overall production in the Rimu/Kauri Area. We also anticipate drilling a development well in the Tariki Field to further exploit the TAWN Area. Finally, we plan to re-enter and deepen the Tuihu exploratory well to the Tariki and Eocene sands. Drilled in permit area PEP 38718, this well was temporarily abandoned by the former operator in 2001.

Overall, we are very pleased with our operational results for the first half of the year and believe that Swift Energy is headed for a solid financial performance in the year 2003.