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Company Profile: Spotlight on Value
(Excerpted from Swift Energy Company's
2007 Annual Report.)
The Value of Experience One of the first things anyone should know about Swift Energy Company—besides the fact that we are an independent oil and gas company headquartered in Houston, Texas—is that we have been around for a long time. As we look back at our 28-year history, we take pride in the tenacity we exhibited in weathering many turbulent events within our industry. When our founder, A. Earl Swift, first opened our doors back in late 1979, oil and gas prices were strong and supplies were tight, much as they are today. We were barely seven years old when oil prices fell off a cliff in 1986, spiraling down to historic lows from which our industry took nearly two decades to fully recover. It was a trial by fire in which over 85% of our competitors went out of existence.
We not only survived that ordeal, we prospered, and today we are one of the top 50 oil and gas companies in the United States in terms of total assets. At the end of 2007, we had approximately $2 billion of assets and the equivalent of 134 million barrels of domestic proved oil and gas reserves (MMBoe), almost all of which are located along the onshore and inland water areas of the Louisiana and Texas Gulf Coast. It is important to understand our history, because with that history comes some hard-won experience, and that experience has value. It takes time to build a sense of mission into an organization; it takes time to assemble the knowledge and capabilities needed to execute a strategy; and it takes time to instill a strong sense of values into an organization’s culture. Over the last three decades, we’ve done all of those things, and precisely because vision, capabilities, and values take a lot of time and effort to create, they provide us with a sustainable source of competitive advantage going forward. MISSION AND GOALS. Take our mission, for example. We’ve always said that we are a natural resource company committed to achieving efficient, sustained growth in the volume and value of our proved oil and gas reserves. It’s one thing to say that reserves growth is our mission, and it’s another to achieve reserves growth consistently over a long period of time. From our inception, we’ve been able to increase our proved reserves per share of common stock at a compounded annual rate of 18% per year and our production per share at a rate of 31% per year. Of course, as we get larger, maintaining high rates of growth becomes increasingly more difficult. In 2008, our goal is to increase our domestic proved reserves by 5% to 9% and our domestic production by 10% to 15%. Although we focus on growth—in reserves, production, cash flows and earnings—it isn’t the only thing that matters to us. Our mission statement also says that we will maintain high standards for ethical conduct, for the protection of health and safety, and for the preservation of environmental quality. Moreover, we are constantly working on improving the quality of our reserves, in addition to focusing on growth in overall quantity. Our mission statement says that we will seek to optimize stakeholder value by building a balanced portfolio of oil and gas properties—properties with diversified production profiles and an assortment of growth opportunities covering a range of risks and potential rewards. This portfolio approach is one of the reasons we have been able to prosper during both good times and bad. In 2007, we rebalanced our portfolio, acquiring additional properties in South Texas and selling properties in New Zealand’s Taranaki Basin. The agreement to sell our New Zealand assets qualifies those assets to be treated as discontinued operations, and they are represented as such throughout this report.
BUSINESS STRATEGY. Experience has taught us that building and maintaining a balanced portfolio also requires a balanced strategy. Our strategy is based upon a mix of exploratory and development drilling and producing property acquisitions, with a continual rebalancing of the specific mix of drilling and acquisitions in response to changing industry conditions and strategic opportunities. Our operations are generally focused in three regions—South Louisiana, South Texas, and Toledo Bend, a region spanning the Texas-Louisiana border. Within each of these regions are one or more key properties that give us a strong base for developing the surrounding area. These include our Lake Washington and Bay de Chene properties in South Louisiana, our AWP Olmos and Cotulla properties in South Texas, and our Austin Chalk and South Bearhead Creek properties in the Toledo Bend Region. Over the last several years, we have been focusing primarily on South Louisiana, and during the last three years, we have greatly enhanced our capabilities in that region by assembling and reprocessing a database of three-dimensional seismic data covering over 4,000 square miles. For 2008, we have prepared a $425 million to $475 million capital budget (excluding any acquisitions) that we believe will enable us to take advantage of the knowledge and capabilities we have now put together for South Louisiana. Our ongoing drilling program is complemented by our acquisition activities. We continually review opportunities to purchase strategic producing properties whose performance can be enhanced by our technical skill and experience or through improved operating efficiencies. In 2007, we acquired our Cotulla properties in the South Texas Region—a property that we believe has significant potential for future growth. PERFORMANCE COMPARISON. We focus on growth in the volume and value of our proved reserves because we believe that is the best way to create value for our stakeholders. Our policy has always been to reinvest our cash flows, rather than pay cash dividends, in order to promote long-term growth in the value of our common stock. Although industry cycles can have a substantial impact on year-to-year performance, we have achieved significant growth in shareholder value in recent years. At the end of 2007, the five-year cumulative growth in our year-end stock price was 355%, comparing favorably with the five-year increases in the AMEX Oil Index (249%), the Russell 2000 Index (100%), the S&P 500 Index (67%), and the Dow Jones Industrial Average (59%). INVESTOR INFORMATION. Our common stock has been traded under the symbol "SFY" on the New York Stock Exchange (NYSE) since 1991.
(For an archive of previous company profiles, click here.)
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This page was last updated on Sunday, April 06, 2008, at 02:33:29 PM. Copyright © 1994-2008 by Swift Energy Company. |
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