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FORM 10-K FOR FISCAL YEAR ENDED DECEMBER 31, 2007

Supplementary Information
Swift Energy Company and Subsidiaries
Oil and Gas Operations (Unaudited)

 

Capitalized Costs. The following table presents our aggregate capitalized costs relating to oil and natural gas producing activities and the related depreciation, depletion, and amortization (in thousands):

   
Total
    
Domestic
    
Discontinued Operations
  
December 31, 2007:
                  
Proved oil and gas properties
   $ 2,951,712     $ 2,610,469     $ 341,243  
Unproved oil and gas properties
     107,095       106,643       452  
      3,058,807       2,717,112       341,695  
Accumulated depreciation, depletion, and amortization
     (1,234,401 )     (981,449 )     (252,952 )
Net capitalized costs
   $ 1,824,406     $ 1,735,663     $ 88,743  
December 31, 2006:
                        
Proved oil and gas properties
   $ 2,264,831     $ 1,932,336     $ 332,495  
Unproved oil and gas properties
     112,137       95,569       16,568  
      2,376,968       2,027,905       349,063  
Accumulated depreciation, depletion, and amortization
     (915,397 )     (808,708 )     (106,689 )
Net capitalized costs
   $ 1,461,571     $ 1,219,197     $ 242,374  

 

 

Of the $106.6 million of domestic Unproved property costs (primarily seismic and lease acquisition costs) at December 31, 2007, excluded from the amortizable base, $42.6 million was incurred in 2007, $49.2 million was incurred in 2006, $4.5 million was incurred in 2005, and $10.3 million was incurred in prior years. When we are in an active drilling mode, we evaluate the majority of these unproved costs within a two to four year time frame.

Of the $0.5 million of New Zealand Unproved property costs at December 31, 2007, excluded from the amortizable base, $0.1 million was incurred in 2007, $0.1 million was incurred in 2006, $0.1 million was incurred in 2005, and $0.2 million was incurred in prior years.

Capitalized asset retirement obligations have been included in the Proved properties as of December 31, 2007, 2006, and 2005.

 

 

Costs Incurred. The following table sets forth costs incurred related to our oil and natural gas operations (in thousands):


   
Year Ended December 31, 2007
  
   
Total
    
Domestic
    
Discontinued Operations
  
Acquisition of proved and unproved properties
   $ 253,573     $ 253,573     $ --  
Lease acquisitions and prospect costs1
     62,380       56,901       5,479  
Exploration
     65,815       65,815       ---  
Development 2
     330,866       326,879       3,987  
Total acquisition, exploration, and development 3, 4
   $ 712,634     $ 703,168     $ 9,466  

   
Year Ended December 31, 2006
  
   
Total
    
Domestic
    
Discontinued Operations
  
Acquisition of proved and unproved properties
   $ 212,499     $ 212,499     $ --  
Lease acquisitions and prospect costs1
     79,183       68,594       10,589  
Exploration
     29,286       13,225       16,061  
Development 2
     261,143       231,086       30,057  
Total acquisition, exploration, and development 3, 4
   $ 582,111     $ 525,404     $ 56,707  

   
Year Ended December 31, 2005
  
   
Total
    
Domestic
    
Discontinued Operations
  
Acquisition of proved and unproved properties
   $ 31,429     $ 31,429     $ --  
Lease acquisitions and prospect costs1
     41,397       34,502       6,895  
Exploration
     52,350       38,425       13,925  
Development 2
     141,082       111,058       30,024  
Total acquisition, exploration, and development 3, 4
   $ 266,258     $ 215,414     $ 50,844  

 

(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 2007, 2006, and 2005 were $50.2 million, $70.5 million, and $30.4 million, respectively. Domestic costs for seismic data acquisition, included above, were $11.6 million, 23.1 million, and $4.2 million in 2007, 2006 and 2005, respectively. New Zealand costs for seismic data acquisition, included above were $0.5 million in 2007 and $3.8 million in 2006.

(2)Facility construction costs and capital costs have been included in development costs, and totaled $71.3 million, $16.5 million, and $26.9 million for the years ended December 31, 2007, 2006 and 2005.

(3)Includes capitalized general and administrative costs directly associated with the acquisition, exploration, and development efforts of approximately $30.6 million, $28.3 million, and $18.8 million in 2006, 2005, and 2004, respectively. In addition, the total includes $9.5 million, $9.2 million, and $7.2 million in 2007, 2006, and 2005, respectively, of capitalized interest on unproved properties.

(4)Asset retirement obligations incurred have been included in exploration, development and acquisition costs as applicable for the years ended December 31, 2007, 2006, and 2005.

 

Results of Operations (in thousands). 


   
Year Ended December 31, 2007
  
   
Total
    
Domestic
    
Discontinued Operations
  
                   
Oil and gas sales
   $ 695,250     $ 652,856     $ 42,394  
Lease operating cost
     (84,670 )     (70,893 )     (13,777 )
Severance and other taxes
     (76,647 )     (73,813 )     (2,834 )
Depreciation, depletion, and amortization
     (208,757 )     (186,086 )     (22,671 )
Accretion of asset retirement obligation
     (1,625 )     (1,437 )     (188 )
Write down of oil and gas properties
     (143,152 )     ---       (143,152 )
      180,399       320,627       (140,228 )
Provision for income taxes
     (108,056 )     (121,518 )     13,462  
Results of producing activities
   $ 72,343     $ 199,109     $ (126,766 )
Amortization per physical unit of production(equivalent bbl of oil)
   $ 17.39     $ 17.53     $ 16.34  


   
Year Ended December 31, 2006
  
   
Total
    
Domestic
    
Discontinued Operations
  
                   
Oil and gas sales
   $ 601,552     $ 537,513     $ 64,039  
Lease operating cost
     (62,475 )     (49,948 )     (12,527 )
Severance and other taxes
     (65,452 )     (61,235 )     (4,217 )
Depreciation, depletion, and amortization
     (166,518 )     (136,826 )     (29,692 )
Accretion of asset retirement obligation
     (1,035 )     (885 )     (150 )
      306,072       288,619       17,453  
Provision for income taxes
     (117,493 )     (113,139 )     (4,354