1987: The Company's Size Increases

During 1987, Swift Energy was viewed as a paradox: a growing oil and gas company in a domestic industry that was struggling to survive. When the year ended, its revenues had further increased (by 135% to $11.7 million), and so had its net income (by 263% to $4.0 million).

Other measurements also revealed the changing status of the Company. Its proved natural gas reserves jumped from 1.9 billion cubic feet (Bcf) in 1986 to 7.2 Bcf in 1987, and its oil reserves increased from 425,000 barrels to 597,000 barrels. In addition, the number of people employed by the Company rose from 55 to 94.

In 1987, the Company’s emphasis on producing property acquisitions reflected its long-term strategy—which was based upon the cyclical nature of the oil and gas industry. Swift continued to focus on property acquisitions in times of low product prices, but it also began to assemble strong technical teams of engineers, geologists, geophysicists, and petrophysicists, anticipating a re-emphasis on drilling in the future.

These increases resulted from management’s adherence to a long-term strategy based on its own statistical analysis of the cyclical nature of the oil and gas industry. While oil and gas prices remained low, the Company would continue limiting its drilling activities and emphasizing its acquisition activities. At the same time it would anticipate a re-emphasis on drilling in the future. To ensure that Swift Energy would have a large number of excellent prospects developed when the re-emphasis occurred, the Company began assembling a strong technical team of geologists, geophysicists, petrophysicists, and computer scientists for exploration and development. They also began increasing the number of operations and accounting personnel required to oversee the increasing assets of the Company and its partnerships.

During 1987, Swift Energy embarked upon a program of development drilling to enhance the properties in which its income partners had invested. Two wells were drilled in Wyoming, five in Mississippi, and one in Texas, all of which were productive. In addition, through SWENCO-Western, the Company drilled six exploratory wells in Wyoming, one of which was successful.

With increasing subscriptions to its income partnerships, the Company introduced its third series, Swift Energy Income Partners III—a $150 million offering. Subscriptions to four partnerships during the year totaled $71.7 million.

In concert with the income funds, the Company also began offering an additional series of limited partnerships for the acquisition of net profits and royalty interests in producing properties, principally for investments by tax-exempt pension and retirement plans. This fund, identified as Swift Energy Managed Pension Assets Fund I, was also a $150 million offering.

During 1987, Swift’s property acquisition teams reviewed over 600 packages of available producing properties that contained more than 30,000 individual wells. On behalf of its income partnerships, the Company purchased 22 packages with interests in a total of 262 producing wells at a total cost of approximately $52 million. At year end, the partnerships since their inception had acquired fractional interests in over 700 wells located in Alabama, Arkansas, Kansas, Louisiana, Michigan, Mississippi, Montana, New Mexico, Oklahoma, Texas, Utah, and Wyoming.

With these and other wells in which Swift Energy had interests, the Company had oversight responsibilities for 952 wells in 12 states, and it was the designated operator for 405 of these wells in nine states. Total gross production operated and/or monitored by the Company’s engineers and field production supervisors averaged 2,100 barrels of oil and 33 million cubic feet of gas per day.

This page was last updated on Tuesday, June 10, 2008, at 10:03:01 AM.

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