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SWIFT ENERGY COMPANY NEWSSee PDF fileSWIFT ENERGY ANNOUNCES:
HOUSTON, February 17, 2005 - Swift Energy Company (NYSE: SFY) announced today that net income for the fourth quarter of 2004 increased 182% to a record $26.8 million, or $0.93 per diluted share, compared to net income of $9.5 million, or $0.34 per diluted share, for the fourth quarter 2003. For the full-year 2004, Swift Energy saw net income increase 100% to a record $68.5 million, or $2.42 per diluted share, compared to $34.3 million ($1.24 per diluted share) in 2003 before a change in accounting principles. Before giving effect to the early debt retirement expenses amounting to $9.5 million ($6.1 million or $0.22 per diluted share after-tax), full-year net income increased 118% to $74.6 million, or $2.63 per diluted share. (See GAAP to Non-GAAP reconciliation for Net Income on page 8). As previously announced, Swift Energy had record 2004 production, which increased approximately 10% to 58.3 Billion cubic feet equivalent (“Bcfe”), with 42.1 Bcfe produced domestically and 16.3 Bcfe produced in New Zealand. This compares to 2003 production of 53.2 Bcfe (33.8 Bcfe domestic, 19.4 Bcfe New Zealand). Terry Swift, CEO, commented, “Swift Energy just completed its 25th anniversary year. We set new records and are planning to initiate new opportunities in 2005. Swift Energy will begin to evaluate strategic exploration potential in two of our growth areas, Southern Louisiana and New Zealand. In Lake Washington, Swift Energy will test several 3-D generated prospects while continuing with our highly successful exploitation activities in the area, including our first activity in the newly acquired Cote Blanche Island and Bay de Chene fields. In New Zealand, Swift Energy New Zealand will undertake a very meaningful exploration program with four to five exploration prospects being drilled in 2005. We believe that Swift’s projected production growth in 2005 along with a strong commodity environment should provide another good year for shareholders.” Revenues and Expenses Total revenues for the fourth quarter of 2004 increased 86% to a record $98.9 million from the $53.1 million of revenues generated in the fourth quarter of 2003. Total revenues for the full year 2004 were also record setting at $310.3 million, up 49% from $208.9 million of revenues in 2003. Swift Energy’s increased revenues for the fourth quarter and full year 2004 are attributable to higher commodity prices and increased levels of production. Lease operating expenses, before severance and ad valorem taxes, were $0.71 per thousand cubic feet equivalent (“Mcfe”) in 2004, an increase of 13% compared to $0.63 per Mcfe in 2003. The increase was predominately due to increased compression and chemical costs in Lake Washington and also due to higher currency exchange rates in New Zealand. General and administrative expenses increased to $0.30 per Mcfe during 2004 from $0.27 per Mcfe in 2003. This increase was primarily attributable to expenses related to ongoing Sarbanes-Oxley compliance initiatives. Depreciation, depletion and amortization expense was $1.40 per Mcfe in 2004 compared to $1.19 per Mcfe in 2003, and interest expense was $0.47 per Mcfe compared to $0.51 per Mcfe for the same periods. Also, severance and ad valorem taxes were up appreciably to $0.52 per Mcfe from $0.36 per Mcfe due to higher commodity prices and the higher severance tax rates on crude oil from our increased crude oil production in Louisiana. Production & Pricing For 2004, total production increased 10% to 58.3 Bcfe from 53.2 Bcfe in 2003. Domestically, 2004 production increased by 25% to 42.1 Bcfe compared to 33.8 Bcfe produced in 2003. New Zealand accounted for 28% of corporate production with 16.3 Bcfe produced in 2004, a decrease of 16% from the 19.4 Bcfe produced there in 2003. Total fourth quarter 2004 production of 15.9 Bcfe increased 19% from the 13.4 Bcfe produced in the same quarter of 2003 and increased 14% when compared to production in the immediately preceding quarter of 2004. Fourth quarter 2004 domestic production increased to 11.3 Bcfe, an increase of 28% from the 8.8 Bcfe produced in the same quarter in 2003, and 11% when compared to production in the third quarter 2004, primarily due to increased production from the Lake Washington area. Fourth quarter 2004 New Zealand production of 4.6 Bcfe increased 1% from production in the same quarter in 2003 and increased 23% from levels in the previous quarter. In 2004, Swift Energy realized substantially higher commodity prices with average domestic crude oil prices increasing 34% to $40.04 per barrel from $29.95 per barrel realized in 2003. Meanwhile, average domestic natural gas prices of $5.74 per thousand cubic feet (“Mcf”) increased 13% from the $5.07 per Mcf domestic average in 2003. Prices for natural gas liquids (“NGL”) domestically averaged $24.84 per barrel in 2004, a 26% increase over the 2003 NGL prices. In New Zealand, Swift Energy realized an average natural gas price of $2.38 per Mcf for 2004 under its long-term contracts, a 30% increase over the $1.83 per Mcf received in 2003. Also in New Zealand, the Company’s McKee blend crude oil sold for an average $42.15 per barrel, while its NGL contracts yielded an average price of $17.96 per barrel for the year 2004. New Zealand natural gas and the NGL price contracts are denominated in New Zealand dollars, which has continued to strengthen during 2004 against the U.S. dollar. In the fourth quarter of 2004, Swift Energy realized an aggregate global average price of $6.23 per Mcfe, an increase of 57% from fourth quarter 2003 price levels, when the price averaged $3.97 per Mcfe. Domestically, the Company realized an aggregate average price of $7.17 per Mcfe, an increase of 56% over the $4.59 received in the fourth quarter of 2003. In New Zealand, the Company received an aggregate average price of $3.93 per Mcfe for the fourth quarter in 2004, an increase of 41% over the $2.78 per Mcfe realized in the same 2003 period. This was mainly attributable to a 53% increase in the crude oil price to $47.57 for the fourth quarter 2004 compared to prices during the same period in 2003 and a 33% increase in the average realized natural gas price of $2.86 per Mcf for the fourth quarter of 2004 compared to the $2.15 realized in the same period of 2003. 2004 Reserves and Capital Spending Year-end 2004 proved reserves of 800 Bcfe were 49% crude oil, 40% natural gas and 11% NGLs, compared to year-end 2003 proved reserves of 820 Bcfe, which were 47% crude oil, 41% natural gas, and 12% NGLs. Proved developed reserves dropped slightly to 56% of total reserves at year-end 2004 due to the previously discussed year-end acquisition which consisted of predominately proved undeveloped reserves, compared to 59% at the previous year-end. The majority of proved undeveloped reserves at year-end 2004 were located in the Lake Washington area (15% of total reserves) and in the AWP Olmos area (8% of total reserves), both of which are characterized as long reserve life fields. Domestic proved reserves increased at year-end 2004 to 653 Bcfe, driven mainly by the reserves increase in the Lake Washington Field, which increased 5% to 272 Bcfe (45 million barrels of oil equivalent) up from 261 Bcfe (43.5 million barrels of oil equivalent) at year-end 2003. Domestic proved reserves at year-end were 52% crude oil, 37% natural gas and 11% NGLs. Domestic proved reserves, making up 82% of total proved reserves at year-end 2004, are located in the Lake Washington area (34% of total reserves), AWP Olmos area (24% of total reserves), Masters Creek area (7% of total reserves), Brookeland area (6% of total reserves), recently acquired Bay de Chene and Cote Blanche Island areas (6% of total reserves), and other domestic properties (5% of total reserves). In New Zealand, 2004 year-end proved reserves decreased 16% to 147 Bcfe, 58% of which are categorized as proved developed reserves. New Zealand reserves constitute 18% of the Company’s total proved reserves with 13% of total reserves attributable to the Rimu/Kauri area and 5% to the TAWN area. New Zealand proved reserves consist 55% natural gas, 35% crude oil and 10% NGLs. Capital Expenditures in 2004 were $192.0 million, with $155.5 million spent domestically and $36.5 million spent in New Zealand. Operations Update Swift Energy successfully completed 52 of 66 wells in 2004. Domestically, the Company completed 37 of 44 development wells for a success rate of 84% and completed 4 of 10 exploration wells. A total of 30 wells were drilled in Lake Washington area and 15 wells in the AWP Olmos area. In New Zealand, the Company completed 11 of 12 wells, consisting of 5 Kauri sand wells drilled, 5 of 6 Manutahi sand wells and one Tariki-D1 well. To date in the first quarter of 2005, the Company has completed 4 of 6 wells successfully in the Lake Washington area. The Company currently has two rigs operating in Lake Washington and is scheduled to have a rig moved to the AWP Olmos area next week. In New Zealand, the Company is currently drilling the Kauri-E8 well and was unsuccessful on a shallow exploration well on petroleum exploration permit 38742 in the first quarter of 2005. It should also be noted that Swift Energy’s recently acquired interests at Cote Blanche Island are currently shut-in but expected to resume production early in the second quarter. This field was shut-in just prior to the acquisition due to a supply disruption in natural gas for the gas-lift system. Efforts are currently underway to restore this gas supply as well as arrange for additional markets for future natural gas production in excess of that needed for gas-lift. Production at the time of shut-in was averaging approximately 500 barrels of oil equivalent per day. Swift Energy also shut-in Bay de Chene field for approximately two weeks immediately after closing for certain facility upgrades that were deemed important with respect to safety and environmental risks. The Bay de Chene field is back in operation, while Cote Blanche Island field is awaiting restoration of the natural gas supply for gas lift operations in the field. Price Risk Management Swift Energy also announced that since its last price risk management update on November 4, 2004, it has continued to enter into price risk management transactions and reports the following current positions. The Company now has approximately 30% to 35% of its currently estimated domestic crude oil barrels protected for the first quarter 2005. This protection consists of a $37.00 per barrel floor and several forward sales transactions with an average NYMEX strike price of $48.25 per barrel. The Company has approximately 4% to 8% of its second quarter domestic crude oil sold at an average NYMEX strike price of $49.95 per barrel. These NYMEX crude oil strike prices do not take into account transportation charges or crude oil quality differentials that could result in price reductions ranging from $2.00 to $3.00 per barrel. For natural gas, Swift Energy has purchased floors covering 35% to 40% of the Company’s currently estimated first quarter 2005 domestic natural gas at an average NYMEX strike price of $6.20 per Mcf. The Company has approximately 50% to 55% of its domestic natural gas protected with floors in the second quarter of 2005 at an average NYMEX strike price of $5.68 per Mcf and approximately 35% to 40% of third quarter 2005 production covered by floors at an average NYMEX strike prices of $5.56 per Mcf. For the fourth quarter of 2005, the Company has floors protecting approximately 15% to 20% of its domestic natural gas volumes at an average NYMEX strike of $5.63 per Mcf. Details of Swift Energy’s complete price risk management activities can be found on the Company’s website. Earnings Conference Call Swift Energy will conduct a live conference call today, February 17, at 8:30 a.m. CST to discuss fourth quarter and full year 2004 financial results. To participate in this conference call, dial 973-339-3086 five to ten minutes before the scheduled start time and indicate your intention to participate in the Swift Energy conference call. A digital replay of the call will be available later on February 17 until February 25, by dialing 973-341-3080 and using pin #5652029. Additionally, the conference call will be available over the Internet by accessing the Company’s website at www.swiftenergy.com and by clicking on the event hyperlink. This webcast will be available online and archived at the Company’s website. Analyst Meeting Swift Energy will also be hosting its 2005 Annual Analyst/Investor Meetings in a series of meetings with financial analysts, portfolio managers and investors beginning Tuesday, February 22 in Houston and continuing on Wednesday, February 23, in New York City and concluding on Thursday, February 24 in Boston. At each meeting, members of Swift Energy’s management team will provide an annual briefing that will include an update on certain 2004 results as well as cover the operational and financial plans and guidance for the first quarter and full year 2005. An audio (listen-only) webcast of the Houston presentation, accompanied by slides, will be broadcast on February 22 with a slight time delay, accessible on the Company’s website www.swiftenergy.com by clicking on the event hyperlink. The meeting in Houston will begin at 8:00 a.m. CST on Tuesday February 22 and is being held at the Wyndham Greenspoint Hotel at 12400 Greenspoint Drive, Houston, Texas. The meeting in New York City will begin at 8:00 a.m. EST on Wednesday, February 23 at the Four Seasons Hotel on 57th Street. The meeting in Boston will begin at 10:00 a.m. EST on Thursday, February 24, at the Langham Hotel on Franklin Street. Anyone interested in attending any of these meetings should contact the Company’s Investor Relations Department at 1-800-777-2412. Celebrating its 25th anniversary in 2004 and headquartered in Houston, Swift Energy engages in developing, exploring, acquiring and operating oil and gas properties, with a focus on onshore and inland waters oil and natural gas reserves in Louisiana and Texas and onshore oil and natural gas reserves in New Zealand. The Company has consistently shown long-term growth in its proved oil and gas reserves, production and cash flow through a disciplined program of acquisitions and drilling, while maintaining a strong financial position. This material includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The opinions, forecasts, projections, guidance or other statements other than statements of historical fact, are forward-looking statements. These statements are based upon assumptions that are subject to change and to risks, especially volatility in oil or gas prices, and availability of services and supplies. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Certain risks and uncertainties inherent in the Company’s business are set forth in the filings of the Company with the Securities and Exchange Commission. Estimates of future financial or operating performance provided by the Company are based on existing market conditions and engineering and geologic information available at this time. Actual financial and operating performance may be higher or lower. Future performance is dependent upon oil and gas prices, exploratory and development drilling results, engineering and geologic information and changes in market conditions. Swift Energy is in the process of drafting its Form 10-K, which the Company expects to be filed by March 15, 2005. As a result, the financial information contained herein should be considered preliminary until such time as the Company receives its financial statement and internal controls audit reports from its external auditor and files its Form 10-K for the year ended December 31, 2004.
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SWIFT ENERGY COMPANY
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