1988: Swift Energy Develops a Seven-Year Strategic Plan

In 1988 Swift Energy developed a strategic plan that defined the Company and specified its goals for the next seven years. The plan named three strategic business units (SBUs): Exploration & Joint Ventures, Operations, and Funds Management. It also outlined a matrix structure in which the SBUs supported each other and were also supported by the Company’s areas of specialization (geology, land management, engineering, and administration).

In presenting the Company’s mission, the plan stated: "Swift Energy seeks to increase the proven oil and gas reserves owned by the Company and its partners and to maximize the net present value of those reserves. In accomplishing this task, the Company and its employees will always act in a balanced, highly professional, and ethical manner."

The plan further stated: "Swift Energy exists to serve its stakeholders. Accordingly, Swift seeks to earn a reasonable return for the investments of its stockholders and partners, to provide challenging and rewarding jobs for its employees, to enhance the economic vitality of those communities where it resides, and to make a contribution toward meeting energy needs."

In 1988, Swift adopted a series of aggressive reserves-growth targets for the years 1989 through 1995, reflecting the Company’s overall mission of reserves growth. By the end of 1995, those growth targets had been exceeded.

A major goal specified by the strategic plan was to increase the Company’s oil and natural gas reserves at a rate that would reach a net present value of $250 million by the end of the seven-year period, at which time the value of the reserves should be equal to 10 times the level of the Company’s annual earnings. The plan pointed out that with respect to domestic reserves, natural gas reserves would become more important than oil reserves because more gas reserves remained to be found in the United States.

In a significant advance toward meeting its reserves goal, Swift Energy’s natural gas reserves increased from 7.2 Bcf in 1987 to 11.3 Bcf in 1988 (up 56%). At the same time, its oil reserves increased from 597,000 barrels to 840,000 barrels (up 41%).

The reserves additions resulted in part from the drilling of three successful development wells (nine exploratory wells were nonproductive). However, the largest increases were due to reserves accrued as the managing general partner’s share of those reserves acquired for the Company’s public limited partnerships, both in the income series and in the pension assets series.

During 1988, the acquisitions for the limited partnerships totaled $56 million and consisted of 17 property packages from over 700 packages reviewed by the Swift Energy teams. The packages contained fractional interests in over 500 producing wells. With these purchases, the partnerships at year end had interests in approximately 1,200 wells located in 15 states.

Together with these and other partners, Swift Energy held interests in 1,348 wells located in 16 states. The Company was the designated operator of 491 of the wells located in nine states, which together had an average gross production of 2,400 barrels of oil and 42 million cubic feet of gas per day. As part of its operation, the Company initiated its first secondary recovery project in the state of Wyoming.

Subscriptions to Swift Energy’s limited partnerships during the year totaled $46.1 million. This prompted the Company to make two additional offerings: Swift Energy Income Partners IV and Swift Energy Managed Pension Assets Fund II, each registered at $75 million.

At year end, Swift Energy had once again achieved new record highs in total revenues (up 8% to $12.6 million) and net income (up 16% to $4.6 million), it had become listed (in May 1988) under the Pacific Stock Exchange, and its number of employees had risen to 116.

This page was last updated on Wednesday, July 11, 2007, at 04:32:20 PM.

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