1989: The Company's 10th Anniversary Spawns New Initiatives

Swift Energy celebrated its 10th anniversary in 1989 with several new initiatives and continued financial success. Total revenues were $14.9 million (up 18%) and net income was $5.7 million (up 22%).

In 1990, the Weatherford area of Oklahoma had become the Company’s largest producing property. With the acquisition of producing properties in the Weatherford area, Swift also acquired the Weatherford Area Gas Gathering System (WAGGS). Swift increased revenues by reversing the flow of the WAGGS system to take advantage of lower transportation costs and a favorable agreement with a nearby processing plant for the removal of marketable liquids.

A milestone during the year was a large acquisition of producing properties in the AWP Olmos Field in McMullen County, Texas, adding to earlier interests acquired in the field in 1988. Interests were purchased in 67 wells from Shell Western E&P for $36.6 million, with a joint venture partner (Manville Corporation) providing 75% of the funds. It was the largest joint venture yet to be negotiated by the Company. As compensation for services rendered during the acquisition, Manville paid Swift a cash fee and transferred to the Company a portion of its working interests. Several of Swift’s limited partnerships also participated in the acquisition.

Before the year ended, Swift Energy, as operator of the AWP properties, had drilled six additional development wells in the field, all successful and all increasing both the volume of proven reserves in the field and the daily production.

Another milestone for the year was the purchase of interests in 114 producing wells from Amoco in the Weatherford Area of Oklahoma. Acquired on behalf of the Company’s limited partnerships and potential joint venture partners, the acquisition totaled $32.1 million.

Two additional acquisitions, from Union Pacific and Cairn Energy, secured interests for the partnerships in 309 wells in 11 states.

Altogether, the Company’s acquisitions during the year totaled $119.8 million, with Swift Energy’s share increasing its reserves base to 3.91 million barrels of oil equivalent (BOEs). Reflecting Swift Energy’s intentional focus on natural gas, 64% of the reserves were gas reserves.

Funds to cover the acquisitions were obtained in part from limited partnership subscriptions in previous years and in part from 1989 subscriptions, the latter totaling $47 million.

Drilling activities during the year included participation in a total of 21 wells, 17 of them development wells. Of these, 15 were successful, including two in South Texas and one in Oklahoma that enhanced the reserves base of some of the limited partnerships. Other reserves enhancements for the partnerships occurred when reservoir reanalyses performed by Swift Energy resulted in the reclassification of probable reserves to proven reserves.

In its preparations for future drilling, the Company entered into a joint agreement with the exploration subsidiary of a large corporation with interests in South Arkansas and Northern Louisiana. This agreement gave Swift access to a 5,400-mile seismic data base. Also, in preparation for future drilling, Swift Energy began focusing on horizontal drilling technology and obtained leasehold acreage in North Dakota.

When the year ended, the Company and its partners had interests in 2,116 producing wells located in 17 states, with Swift Energy operating 579 wells having gross production rates of 2,600 barrels of oil and 43 million cubic feet of gas per day. In addition, the Company, on behalf of its partnerships, had oversight responsibilities for another 1,500 barrels of oil and 21 million cubic feet of gas per day produced by other operators. These tasks and others were conducted by a total of 131 employees.

Finally, to increase its capital for future activities, Swift Energy made an offering during the year of 660,000 additional shares of its common stock, realizing proceeds of approximately $6.1 million.

This page was last updated on Wednesday, July 11, 2007, at 04:32:24 PM.

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