During 2003, Swift Energy increased its year-end proved reserves by 9% from the previous year to 820.4 billion cubic feet equivalent (Bcfe), replacing 234% of its 2003 production with a reserves replacement cost of $1.17 per thousand cubic feet equivalent (Mcfe).

Over the last five years, the Company has achieved an average compounded growth rate in proved oil and gas reserves of approximately 13% per year. Swift’s success in sustaining reserves growth in a volatile pricing environment has enabled it to achieve five-year compounded growth rates of approximately 6% per year in production, 21% per year in oil and gas sales, and 15% per year in cash flows from operating activities.

Swift’s primary goals for the next five years are to increase its proved oil and gas reserves at an average rate of 5% to 10% per year and its production at an average rate of 7% to 12% per year.

Development drilling is generally focused in the Company’s core areas of operation. Domestically, these include the Lake Washington Area and Masters Creek Area in Louisiana and the AWP Olmos Area and Brookeland Area in Texas. In New Zealand, they include the Rimu/Kauri Area and the TAWN Area. Exploratory drilling is conducted both in these core areas and in other regions that Swift believes have potential for becoming core areas of operation. In 2003, Swift primarily focused its drilling activities in the Lake Washington Area and plans to continue to do so in 2004.

In its acquisitions activities, the Company continually reviews opportunities to purchase strategic producing properties where performance can be enhanced through development drilling or improved operating efficiencies. This approach led to the purchase of the Company’s initial reserves in the Lake Washington Area in 2001 and in the TAWN Area in 2002, as well as to the purchase of interests in other core areas during previous years.

In New Zealand, Swift Energy received an average of $29.58 per barrel for its crude oil, an increase of 22% from 2002. Average natural gas prices rose 38% to $1.83 per Mcf, and NGL prices increased 22% to $13.50 per barrel. Unlike crude oil sales, which are denominated in U.S. Dollars, New Zealand natural gas and NGL prices are denominated in New Zealand Dollars, which significantly strengthened in relation to the U.S. Dollar over the course of 2002 and 2003, leading to some of the appreciation in New Zealand product prices received by Swift.

Since that time, the environment has improved considerably, and many of the efficiency improvements and other strategic adjustments implemented during the last two years have added to a strong foundation upon which to build shareholder value in the future.

The Company’s confidence in the future is also based upon its track record, which suggests that it can build long-term value even during difficult times. During the last five years, industry price cycles and an economic downturn had a substantial impact on year-to-year performance, but in spite of these challenges, Swift was able to achieve significant long-term increases in shareholder value. By the end of 2003, the five-year cumulative appreciation in Swift’s year-end stock price totaled 129%, comparing favorably with five-year increases in the Russell 2000 index (32%), the Dow Jones Industrial Average (14%), the Nasdaq Composite Index (-9%), and the S&P 500 index (-10%).