1995 THIRD QUARTER REPORTLetter to StockholdersDuring the third quarter of 1995, Swift Energy's earnings rose to $1.3 million, a 12% increase over the earnings for the same period in 1994. Cash flows were $3.7 million, representing a 5% increase for the period. These gains in earnings and cash flows were realized in spite of lower oil and natural gas prices, which had decreased 7% and 12%, respectively, from the third-quarter prices of 1994. The low prices were partially offset by a 10% increase in production, which totaled 2.9 billion cubic feet of natural gas equivalent for the period. Net income per share for the three months ending September 30 was $0.12, down from $0.17 for the same period in 1994. The reduction can be attributed to the 59% increase in the number of weighted average shares outstanding following our successful equity offering in July. For the first nine months of 1995, earnings were $2.5 million, compared with $3.4 million for the same period in 1994 (before the cumulative effect of a change in accounting principle). Revenues from oil and gas sales for the nine-month periods were slightly higher in 1995, $15.2 million versus $15.0 million in 1994, again reflecting the compensating effect of higher production volumes in 1995 against lower product prices. As had been planned, our development drilling program, facilitated by funds from the equity offering, was greatly accelerated during the third quarter of 1995. We drilled 20 new development wells with 19 successes during the three-month period, which is approximately the same number of successful development wells drilled during the first half of the year. Thirteen of the successful wells were drilled to the Olmos sand in Two Rivers, our new leasehold acreage located adjacent to our AWP Field in McMullen County, Texas. With the production from these wells, plus an early fourth-quarter well, Two Rivers has become our largest producing field. Nine additional wells on the acreage, all successful, are currently in various stages of completion. We plan to have drilled a total of 29 wells in the Two Rivers program by year end, and to add another 40 wells on the acreage in 1996. Swift Energy has a 100% working interest in the field. In addition, we expect before year end to begin drilling on another McMullen County lease, the Encino Ranch, also to the Olmos sand. We anticipate that the wells completed on this acreage will be similar to those in our AWP lease, which are expected to produce for 15 to 20 years, providing the Company with a steady long-term income. During the third quarter, we also drilled a successful development well on our LCRA farmout acreage in Fayette County, where horizontal drilling in the Austin Chalk formation yields initially high production rates that lead to strong cash flows. Selecting our drilling sites based on data we obtained during a 1994 seismic survey, together with geological data, we have to date drilled six consecutive successful horizontal wells on the LCRA acreage. Two are fourth-quarter wells, one of which is currently drilling although already a producer. We plan to begin a seventh LCRA well before year end, as well as a horizontal well on our East Muldoon acreage in Fayette County. This latter well will offset a highly productive dual-lateral well drilled on the acreage in 1994. With developmental drilling activities also under way in other areas, we expect to have drilled a total of 64 development wells by year end, which is more than double the number of development wells (30) drilled in 1994. Our exploratory drilling program is also progressing. A third-quarter exploratory well drilled in Union Parish, Louisiana, tested at approximately 600 barrels of oil and 725,000 cubic feet of gas per day. The Company holds a 25% working interest in the well, which was our sixth exploratory well drilled and our third success for the year. Additional exploratory wells drilled before year end will include two in Wyoming and two in Arkansas. The execution of our accelerated drilling program, which was designed to rely heavily
on developmental drilling with carefully selected exploratory sites included, is
proceeding according to plan. During my 40 years in the industry, I can't recall such a
well-defined drilling program, nor as much enthusiasm and confidence among a technical
staff. We expect to set new Company records in 1995 and to lay the foundation for
increasing drilling successes in the years that follow.
This page was last updated on Saturday, February 08, 2003, at 07:45:44 PM. Copyright © 1994-2009 by Swift Energy Company.
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