Costs Incurred. The following table sets forth costs incurred related to our oil and gas operations:

		Year Ended December 31, 2005
	Total			Domestic			New Zealand
Acquisition of proved and unproved properties	$	31,429,343		$	31,429,343		$	--
Lease acquisitions and prospect costs(1)		41,397,277			34,502,163			6,895,114
Exploration		52,350,339			38,424,995			13,925,344
Development		140,137,380			110,975,385			29,161,995
		---------------------			---------------------			---------------------
Total acquisition, exploration, and development (2)	$	265,314,339		$	215,331,886		$	49,982,453
		---------------------			---------------------			---------------------
Processing plants	$	928,919		$	67,628		$	861,291
Field compression facilities		14,932			14,932			--
		---------------------			---------------------			---------------------
Total plants and facilities	$	943,851		$	82,560		$	861,291
		---------------------			---------------------			---------------------
Total costs incurred(3)	$	266,258,190		$	215,414,446		$	50,843,744
		=============			=============			=============

		Year Ended December 31, 2004
	Total			Domestic			New Zealand
Acquisition of proved and unproved properties	$	31,771,094		$	31,771,094		$	--
Lease acquisitions and prospect costs(1)		34,545,393			27,713,059			6,832,334
Exploration		17,430,265			16,714,982			715,283
Development		105,947,485			78,163,289			27,784,196
		---------------------			---------------------			---------------------
Total acquisition, exploration, and development (2)	$	189,694,237		$	154,362,424		$	35,331,813
		---------------------			---------------------			---------------------
Processing plants	$	1,283,515		$	147,317		$	1,136,198
Field compression facilities		1,028,091			1,028,091			--
		---------------------			---------------------			---------------------
Total plants and facilities	$	2,311,606		$	1,175,408		$	1,136,198
		---------------------			---------------------			---------------------
Total costs incurred(3)	$	192,005,843		$	155,537,832		$	36,468,011
		=============			=============			=============

		Year Ended December 31, 2003
	Total			Domestic			New Zealand
Acquisition of proved and unproved properties	$	1,942,868		$	1,635,316		$	307,552
Lease acquisitions and prospect costs(1)		18,869,099			12,440,144			6,428,955
Exploration		14,467,455			11,789,700			2,677,755
Development		116,451,112			100,549,351			15,901,761
		---------------------			---------------------			---------------------
Total acquisition, exploration, and development (2)	$	151,730,534		$	126,414,511		$	25,316,023
		---------------------			---------------------			---------------------
Processing plants	$	6,192,199		$	907,771		$	5,284,428
Field compression facilities		3,521,522			3,521,522			--
		---------------------			---------------------			---------------------
Total plants and facilities	$	9,713,721		$	4,429,293		$	5,284,428
		---------------------			---------------------			---------------------
Total costs incurred(3)	$	161,444,255		$	130,843,804		$	30,600,451
		=============			=============			=============

 

(1)These are actual amounts as incurred by year, including both proved and unproved lease costs. The annual lease acquisition amounts added to proved oil and gas properties in 2005, 2004, and 2003 were $30.4 million, $17.8 million, and $20.7 million, respectively.

(2)Includes capitalized general and administrative costs directly associated with the acquisition, exploration, and development efforts of approximately $18.8 million, $13.1 million, and $11.5 million in 2005, 2004, and 2003, respectively. In addition, total includes $7.2 million, $6.5 million , and $6.8 million in 2005, 2004, and 2003, respectively, of capitalized interest on unproved properties.

(3)Asset retirement obligations incurred have been included in exploration, development and acquisition costs as applicable for the years ended December 31, 2005, 2004, and 2003, as we adopted SFAS No. 143 “Accounting for Asset Retirement Obligations” effective January 1, 2003.

 

Results of Operations. 

 

	Year Ended December 31, 2005
	Total			Domestic			New Zealand
Oil and gas sales	$	423,766,245		$	355,872,616		$	67,893,629
Lease operating cost		(47,321,841)			(34,941,430)			(12,380,411)
Severance and other taxes		(42,176,505)			(37,805,742)			(4,370,763)
Depreciation, depletion, and amortization		(106,037,775)			(79,926,245)			(26,111,530)
Accretion of asset retirement obligation		(761,042)			(626,134)			(134,908)
		------------------			------------------			------------------
		227,469,082			202,573,065			24,896,017
Provision for income taxes		79,878,043			74,953,611			4,924,432
		------------------			------------------			------------------
Results of producing activities	$	147,591,039		$	127,619,454		$	19,971,585
		===========			===========			===========
Amortization per physical unit of production
(equivalent Mcf of gas)	$	1.78		$	1.86		$	1.58
		===========			===========			===========

	Year Ended December 31, 2004
	Total			Domestic			New Zealand
Oil and gas sales	$	311,285,172		$	258,663,936		$	52,621,236
Lease operating cost		(41,214,256)			(30,191,889)			(11,022,367)
Severance and other taxes		(30,401,293)			(26,713,592)			(3,687,701)
Depreciation, depletion and amortization		(80,504,043)			(61,478,364)			(19,025,679)
Accretion of asset retirement obligation		(673,654)			(505,174)			(168,480)
		------------------			------------------			------------------
		158,491,926			139,774,917			18,717,009
Provision for income taxes		53,093,022			51,576,944			1,516,078
		------------------			------------------			------------------
Results of producing activities	$	105,398,904		$	88,197,973		$	17,200,931
		===========			===========			===========
Amortization per physical unit of production
(equivalent Mcf of gas)	$	1.38		$	1.46		$	1.17
		===========			===========			===========

	Year Ended December 31, 2003
	Total			Domestic			New Zealand
Oil and gas sales	$	211,032,639		$	164,167,390		$	46,865,249
Lease operating cost		(33,833,198)			(24,022,412)			(9,810,786)
Severance and other taxes		(19,033,604)			(15,290,669)			(3,742,935)
Depreciation, depletion and amortization		(62,037,680)			(43,818,709)			(18,218,971)
Accretion of asset retirement obligation		(857,356)			(623,948)			(233,408)
		------------------			------------------			------------------
		95,270,801			80,411,652			14,859,149
Provision for income taxes		32,321,635			29,696,023			2,625,612
		------------------			------------------			------------------
Results of producing activities	$	62,949,166		$	50,715,629		$	12,233,537
		===========			===========			===========
Amortization per physical unit of production
(equivalent Mcf of gas)	$	1.17		$	1.30		$	0.94
		===========			===========			===========

 

These results of operations do not include the losses from our hedging activities of $1.1 million, $1.3 million, and $2.8 million for 2005, 2004 and 2003, respectively. Our lease operating costs per Mcfe produced were $0.79 in 2005, $0.71 in 2004, and $0.64 in 2003.

The accretion of asset retirement obligation has been included in the 2005, 2004, and 2003 periods, as we adopted SFAS No. 143 “Accounting for Asset Retirement Obligations” effective January 1, 2003.

We used our effective tax rate in each country to compute the provision for income taxes in each year presented.

Supplementary Reserves Information. The following information presents estimates of our proved oil and gas reserves. Reserves were determined by us and audited by H. J. Gruy and Associates, Inc. (“Gruy”), independent petroleum consultants. Gruy has audited 100% of our proved reserves. Gruy’s audit was conducted according to standards approved by the Board of Directors of the Society of Petroleum Engineers, Inc. and included examination, on a test basis, of the evidence supporting our reserves. Gruy’s audit was based upon review of production histories and other geological, economic, and engineering data provided by Swift. Where Gruy had material disagreements with Swift reserves estimates, we revised our estimates to be in agreement. Gruy’s report dated January 25, 2006, is set forth as an exhibit to the Form 10-K Report for the year ended December 31, 2005, and includes definitions and assumptions that served as the basis for the audit of proved reserves and future net cash flows. Such definitions and assumptions should be referred to in connection with the following information:

                  Estimates of Proved Reserves

	Total				Domestic				New Zealand
	---------------------------------------------------------				---------------------------------------------------------				---------------------------------------------------------
			Oil, NGL, and				Oil, NGL, and				Oil, NGL, and
	Natural Gas		Condensate		Natural Gas		Condensate		Natural Gas		Condensate
	(Mcf)		(Bbls)		(Mcf)		(Bbls)		(Mcf)		(Bbls)
Proved reserves as of December 31, 2002	326,731,672		70,438,963		239,824,062		59,029,640		86,907,610		11,409,323
Revisions of previous estimates(1)	(6,445,114)		4,975,920		(1,418,312)		3,497,022		(5,026,802))		1,478,898
Purchases of minerals in place	273,623		35,472		273,623		35,472		--		--
Sales of minerals in place	(3,984,209)		(228,505)		(3,984,209)		(228,505)		--		--
Extensions, discoveries, and other additions	47,231,609		9,730,665		21,370,151		8,018,766		25,861,458		1,711,899
Production	(28,002,719)		(4,192,612)		(13,744,040)		(3,336,702)		(14,258,679)		(855,910)
	---------------------		---------------------		---------------------		---------------------		---------------------		---------------------
Proved reserves as of December 31, 2003	335,804,862		80,759,903		242,321,275		67,015,693		93,483,587		13,744,210
Revisions of previous estimates(1)	(3,306,705)		(1,117,715)		(1,619,531)		695,274		(1,687,174))		(1,812,989)
Purchases of minerals in place	9,808,953		5,602,508		9,808,953		5,602,508		--		--
Sales of minerals in place	(2,524,760)		(44,803)		(2,524,760)		(44,803)		--		--
Extensions, discoveries, and other additions	2,205,670		830,111		2,205,670		830,111		--		--
Production	(23,741,726)		(5,762,796)		(12,299,772)		(4,959,740)		(11,441,954)		(803,056)
	---------------------		---------------------		---------------------		---------------------		---------------------		---------------------
Proved reserves as of December 31, 2004	318,246,294		80,267,208		237,891,835		69,139,043		80,354,459		11,128,165
Revisions of previous estimates(1)	(21,461,605)		(2,199,673)		(13,751,124)		(1,023,808)		(7,710,481)		(1,175,866)
Purchases of minerals in place	9,336,088		3,262,761		9,336,088		3,262,761		--		--
Sales of minerals in place	(3,737,714)		(100,121)		(3,737,714)		(100,121)		--		--
Extensions, discoveries, and other additions	8,699,329		3,819,595		7,275,207		3,722,744		1,424,122		96,851
Production	(23,609,242)		(5,996,714)		(11,739,485)		(5,217,343)		(11,869,757)		(779,371)
	---------------------		---------------------		---------------------		---------------------		---------------------		---------------------
Proved reserves as of December 31, 2005	287,473,150		79,053,056		225,274,807		69,783,276		62,198,343		9,269,779
	=============		=============		=============		=============		=============		=============
Proved developed reserves: (2)
December 31, 2002	233,514,572		35,928,395		149,731,562		26,530,112		83,783,010		9,398,283
December 31, 2003	210,119,927		45,525,366		138,173,341		38,767,983		71,946,586		6,757,383
December 31, 2004	193,310,761		42,037,852		140,549,052		36,628,873		52,761,709		5,408,979
December 31, 2005	152,001,133		37,989,821		125,367,690		35,298,324		26,633,443		2,691,497

 

(1)Revisions of previous estimates are related to upward or downward variations based on current engineering information for production rates, volumetrics, and reservoir pressure. Additionally, changes in quantity estimates are affected by the increase or decrease in crude oil, NGL, and natural gas prices at each year-end. Proved reserves, as of December 31, 2005, were based upon prices in effect at year-end. Our hedges at year-end 2005 consisted of natural gas price floors with strike prices mostly lower than the period end price and thus would not materially affect prices used in these calculations. The weighted average of 2005 year-end prices for total, domestic, and New Zealand were $8.94, $10.36, and $3.79 per Mcf of natural gas, $60.12, $60.00, and $60.98 per barrel of oil, and $31.40, $33.28 and $19.20 per barrel of NGL, respectively. This compares to $5.16, $5.87, and $3.07 per Mcf of natural gas, $41.07, $42.21, and $33.60 per barrel of oil, and $25.48, $26.49 and $20.48 per barrel of NGL as of December 31, 2004, for total, domestic, and New Zealand, respectively. The weighted average of 2003 year-end prices for total, domestic, and New Zealand were $4.56, $5.53, and $2.04 per Mcf of natural gas, $30.16, $30.88, and $26.78 per barrel of oil, and $20.61, $21.81, and $14.10 per barrel of NGL, respectively.

(2)At December 31, 2005, 50% of our reserves were proved developed, compared to 56% at December 31, 2004, 59% at December 31, 2003, and 60% at December 31, 2002.

 

Standardized Measure of Discounted Future Net Cash Flows. The standardized measure of discounted future net cash flows relating to proved oil and gas reserves is as follows:

	Year Ended December 31, 2005
	Total			Domestic			New Zealand
Future gross revenues	$	6,917,103,123		$	6,194,560,214		$	722,542,909
Future production costs		(1,334,822,738)			(1,122,637,935)			(212,184,803)
Future development costs		(710,343,331)			(667,526,650)			(42,816,681)
		-------------------			----------------------			----------------------
Future net cash flows before income taxes		4,871,937,054			4,404,395,629			467,541,425
Future income taxes		(1,538,799,956)			(1,461,577,946)			(77,222,010)
		-------------------			----------------------			----------------------
Future net cash flows after income taxes		3,333,137,098			2,942,817,683			390,319,415
Discount at 10% per annum		(1,173,767,635)			(1,048,193,951)			(125,573,684)
		-------------------			----------------------			----------------------
Standardized measure of discounted future net cash flows
relating to proved oil and gas reserves	$	2,159,369,463		$	1,894,623,732		$	264,745,731
		=============			=============			=============

	Year Ended December 31, 2004
	Total			Domestic			New Zealand