At its closing bell on November 8, 2004, the New York Stock Exchange will officially recognize the 25th anniversary of Swift Energy Company. As many of you know, the actual founding date of the company was October 11, and last month we celebrated that day in our Houston offices by viewing a slide show covering our history.

Looking at those pictures spanning the years 1979 to 2004 brought back many memories and intensified the pride I have always had in the company’s achievements. I hope I will be forgiven for boasting that everything is going according to plan.

When I started Swift Energy, I wanted to develop an independent company whose success would be assured by a competent and dedicated staff—people who would consistently meet the challenges presented to them by a highly volatile industry. I also wanted the employees and their families to feel that they were an integral part of the company and to benefit from that relationship. And finally, I wanted the company to be recognized for the positive impact it had on the communities in which it operated. In other words, I wanted Swift Energy to make a difference in the lives of the people it touched, and I truly believe that it has done that.

That’s not to say that things were ever easy. In our early years especially, we faced severe industry downturns. Despite the difficulties, we escaped the unfortunate fate of many of our peers and instead laid a strong foundation for the company we have today.

A few of you will remember that our first drilling program began in the mountains of West Virginia, an area that offered a lot of promise at the time because industry regulations permitted higher prices during a period of strong demand. Underwritten by private drilling fund partnerships, that drilling program grew quickly.

Given the increasing workload, I was greatly relieved when my brother Virgil joined the company as vice president of drilling and production in early 1981 and my son Terry joined us as a reservoir engineer later that year. Before the year ended we had drilled 54 wells with a 100% success rate and had become a publicly held entity listed with the National Association of Securities Dealers.

We continued drilling in West Virginia for several years, winning the state’s Category I award for conservation of soil and water in 1983, and also expanded our drilling program to several central states.

But dramatic changes began to occur in the industry. Whereas in 1979 the government had been encouraging drilling for natural gas, it suddenly began curtailing the use of gas, and the country had an oversupply that caused gas prices to plunge. Simultaneously oil prices turned sharply downward.

We soon recognized that the oil and gas industry was facing a prolonged crisis, and in 1983 we made a strategic shift in direction. Instead of focusing solely on drilling, we began acquiring and operating wells that were already producing and were available from companies needing cash. To fund the acquisitions program, we again turned to investors, this time by creating and managing public income fund partnerships in which we ourselves held interests.

That decision served us well throughout the next decade. We assembled expert acquisition teams comprised of reservoir engineers, geologists, geophysicists, landmen, and operations engineers who reviewed hundreds of potential acquisitions and recommended those we should purchase. In our property purchases, we sought to gain majority interests so that we could serve as the operator of the wells, in most cases adding the existing field personnel to our operations department and providing close technical oversight. By year-end 1986, we were operating over 350 wells in nine states and had interests in over 800 wells in 12 states. And despite the fact that oil prices had plunged to their lowest levels in a decade, we had revenues of $5 million. The magazine Financial World took note and recognized us as one of the fastest growing companies under $25 million in the United States. Two years earlier, in 1984, we had been listed on the American Stock Exchange under the symbol SFY.

With this change in direction, the need for internal oversight of our numerous partnership activities became apparent. In particular, we appointed an engineer with a business background as a partnership advocate. We also recruited a highly competent reservoir engineering staff to analyze and report on the reserves associated with the increasing number of properties we were operating or monitoring. In addition, because we were offering subscriptions to income partnerships, it was mandatory that we become heavily involved in the investment community and track the assets of the individual partnerships in minute detail. Not surprisingly, this meant we had to build strong investor relations and accounting departments. The passion for honesty and scrupulous accounting of all these members of our staff was unwavering and their continued dedication over the years has helped us earn the reputation of being a company whose reported numbers always agree with the facts.

The income fund partnerships grew rapidly and by 1994, Swift and its partners held interests in 4,172 wells in 15 states. We were operating 750 of those wells distributed among 111 fields in 10 states, and while oil and gas prices remained low, our increasingly higher production volumes pushed our revenues that year to a record $21.6 million.

Several moves we had made in previous years contributed to these continued successes. In particular, we always analyzed the potential for improved operations, resulting in the enhancement of production from existing properties. In 1987, this led to an increase in our development drilling.

We had also been thinking of the long term when increased oil and gas prices would revive exploratory drilling. When that time arrived we needed to be at the forefront of the information revolution, which we were convinced would introduce new advances not only in drilling technology but also in the identification of hydrocarbon-bearing reservoirs.

With future drilling in mind, we began assembling a technical team of geologists, geophysicists, petrophysicists, and computer scientists whom we challenged to integrate conventional and advanced development and exploration technologies. While they initially focused on sites for development wells, they also began developing exploratory prospects.

Confirming our foresight, the work of this team was greatly facilitated in the early 1990s when computer technology became affordable with the advent of workstation computers. Swift Energy was among the first in its peer group to begin in-house processing and interpretation of seismic data and integrating it with corresponding geological data for detailed reservoir analyses. Since that time, our geological and geophysical teams have demonstrated outstanding technical competence, contributing to our long-term track record of success.

By 1988, we had realized that our company’s rapid growth in size and complexity required more exact strategic planning to deal with the profound structural and cyclical changes occurring in the oil and gas industry and with the regulatory policies and political changes strongly affecting the industry. During that year we issued a seven-year strategic plan defining the company’s business units and operations and stating that our mission was "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." We adopted specific reserves growth targets and said that by 1995 we expected to have much greater emphasis on exploratory and development drilling. Concerned about some of the practices we were observing in the industry, we also stated in the plan that "the company and its employees will always act in a balanced, highly professional, and ethical manner." The fact that we have followed this simple rule is, I believe, one of our greatest attributes.

In following the strategic plan, we decided to target large properties within a limited number of geographic areas, gaining the advantages of proximity and economies of scale and eventually establishing core areas of operation in which we could concentrate our expertise and manpower. As we celebrated our 10th anniversary in 1989, one of our acquisitions led to our first core area. With a joint venture partner and some of the partnerships, we purchased our initial interests in the AWP Olmos Field in McMullen County, Texas, and became the operator of the property. We immediately began applying the formation fracturing techniques we had used in West Virginia to the tight Olmos sand, rejuvenating old wells and drilling new ones. As most of you know, in subsequent years we bought out our partners and acquired adjacent properties, drilling hundreds of wells on 28,000 net acres. As the field’s largest operator and with engineering and field staff surpassed by none, we introduced numerous innovative and advanced production and drilling techniques in the field. Today, after 16 years of operation this property remains one of our major core areas, still holding company reserves of 215 Bcfe at year-end 2003.

Also in 1989 we made an even larger acquisition in the Weatherford Field in Oklahoma. Typical of our hands-on strategy, we went about increasing the production and proved reserves in that field, continuing successful operations for several years on behalf of our partnerships.

Between 1988 and 1990, the company’s financial situation improved dramatically. Our total revenues went from $11.6 million to $18.2 million, net income rose from $4.7 million to $7.2 million, and net cash provided by operating activities increased from $0.4 million to $4.8 million. With these successes, together with a series of joint venture agreements, the company’s dependence on limited partnerships was reduced from 64% of total revenues in 1988 to 23% in 1990, a major step in our march toward a more diversified capitalization strategy. The bad news was that the improved prices we were receiving for oil and natural gas had again begun to spiral downward.

Despite increases in production and reserves, we experienced our first decrease in total revenues and net income in 1991, the same year that Swift Energy was accepted for listing on the New York Stock Exchange. In 1992, we more than rebounded, with an aggressive and experienced team of landmen facilitating the acquisition of additional properties totaling $35.0 million—including additions to the AWP and Weatherford properties—and also negotiating the arrangements for a 40-well drilling program.

The 1992 drilling program included two horizontal wells in the Austin Chalk trend of the Giddings Field in Fayette County, Texas. Long neglected, the Austin Chalk trend was experiencing a resurgence of drilling because of advances in information-based drilling technologies. Keeping up with the new innovations, our operations department was prepared to precisely target oil-filled fractures in the formation that had been pinpointed by the collaboration of our geologists and geophysicists. These successes led us to an eight-year horizontal well drilling program, both exploratory and developmental, with many drilled under joint venture agreements. The program included a total of 87 wells drilled with an 84% success rate.

In 1994, for the first time in many years, additions to our proved reserves through drilling exceeded the additions through property acquisitions, and by 1995, our strategic transition from an emphasis on acquisitions to an emphasis on drilling had been accomplished. An accelerated drilling program of 76 wells was launched, much higher than the average of about 25 wells per year drilled during the previous decade. With a 70% increase in the company’s total proved reserves from the previous year, we had exceeded the 1995 strategic reserves goal in our seven-year plan.

Because of our drilling reemphasis and a sharp decline in property acquisition opportunities in 1995, we discontinued our offerings of subscriptions to income fund partnerships and relied on other capital formation strategies. At the same time, we made the decision to diversify our operations internationally, forming a wholly owned subsidiary, Swift Energy International Inc., which immediately received a Petroleum Exploration Permit from the New Zealand Minister of Energy to begin the initial phase of a work plan on acreage in the Taranaki Basin on that country’s north island.

In 1996 and 1997, as prices were beginning to rise, we deployed large domestic drilling programs that were highly successful, significantly increasing our reserves. In 1998, we continued the accelerated drilling program early in the year, but drastic price decreases—down to average prices of $11.86 per barrel for oil and $2.08 per Mcf for gas—forced us to curtail drilling for the remainder of the year.

To our good fortune, the prevailing low prices again resulted in the availability of producing properties, and in mid-1998 we made the largest acquisition in our history, an $87 million purchase of properties in the Austin Chalk trend concentrated on opposite sides of the Texas-Louisiana border—the Brookeland Field (in Texas) and the Masters Creek Field (in Louisiana).

As had become common practice for our technical teams, they immediately embarked on work programs in the fields, together with geological and engineering studies, that increased the properties’ reserves from their audited value of 91.1 Bcfe at purchase to 130.5 Bcfe at year-end, even after producing 11.6 Bcfe from the fields. The increase in 1999 was even more dramatic, reaching a year-end total of 198.9 Bcfe after producing 23.2 Bcfe. Today, these two fields have each become core areas of operation, collectively holding 106.9 Bcfe of proved reserves at year-end 2003.

In 1999, after four years of preparatory work, we drilled our first discovery well in the Rimu prospect in the Taranaki Basin on the north island of New Zealand. It was successfully tested in the Upper Tariki sandstone, with additional hydrocarbon shows in lower horizons. Continuing to drill several additional Rimu wells, in 2001 we also began drilling on the nearby Kauri prospect, where we had discoveries in the shallow Manutahi sand and the deeper Kauri sand. These two areas, in which drilling is still on going, are now known as the Rimu/Kauri Area, our first core operating area in New Zealand. Demonstrating their expertise and dedication, our technical staff in New Zealand began commercial production from the area in 2002 after building and commissioning a production station in record time.

Also in 2002, we added a second core area in the Taranaki Basin with the acquisition of 19 wells in four adjacent producing fields. Called the TAWN Area and operated by a highly proficient staff, this area has sophisticated infrastructure that includes two processing plants and pipelines extending to export terminals and interior markets. In 2002, TAWN accounted for approximately 4%

of the country’s oil production and 5 to 6% of its gas production. At year-end 2003, our New Zealand properties held 176.0 Bcfe of our proved reserves.

Our most recent domestic core area is, of course, the Lake Washington Area, which consists of 12,911 net acres in inland waters along the Louisiana coast. Its production is mainly oil found in multiple Miocene sand layers radiating outward and downward from the surface of a centrally located salt dome. Once again our in-house technical personnel and field personnel have collaborated to perform what many of us view as a near miracle. When we acquired interests in the field in early 2001 for $30.5 million, our gross production from the field was less than 1,000 BOE per day and net reserves were estimated at 7.7 million BOE. By year-end 2004, we expect to have a daily production of 12,000 BOE from reserves that were estimated at year-end 2003 to be 43.5 million BOE. The increases are due to an intensive drilling program in which we have found new productive sands and to the upgrading and addition of infrastructure. We recently conducted a large seismic survey over the area to assist in the planning of extended drilling in the future.

Looking back on the last 25 years, I am reminded of a quote from Harry S. Truman hanging on my office wall, which reads, "Men make history and not the other way around. In periods where there is no leadership, society stands still. Progress occurs where courageous, skillful leaders seize the opportunity to change things for the better."

I can say that together we have seized most of the opportunities that have come our way. Thanks to all of you, as well as many others who went before you, we can be proud of our past accomplishments. As I had hoped when I founded the company, we have made a difference for our shareholders, for each other, and for those communities in which we operate.

We also have a bright future. With our dedicated employees and an experienced and capable management team, we can sustain growth in value for all our stakeholders. And having established a corporate culture that believes in honesty, integrity, and responsibility, we can serve as a good example to society at large.

I see Swift Energy as a company of role models, an organization filled with people who consistently work to change things for the better. I want each of you to know that I am proud to be your chairman and have every confidence that you will continue to do great things in the future.