1999 THIRD QUARTER REPORTLetter to StockholdersDuring the third quarter of 1999, Swift Energy Company’s revenues from the sale of oil and natural gas reached $30.7 million, an all-time high that was 29% above the revenues from sales during the same period in 1998. The higher sales pushed net income for the quarter up to $7.1 million, or $0.37 per share. This compares with a third quarter 1998 net income of $2.5 million before a non-cash charge to earnings that resulted in a net loss of $3.50 per share. Net cash provided by operating activities in the third quarter of 1999 rose to $20.3 million ($1.06 per share), up 61% from last year. For the nine-months period ending September 30, 1999, revenues from sales increased 36% to $75.4 million compared to the same period in 1998, net income rose 34% to $11.5 million ($0.67 per share), and net cash provided by operating activities increased 28% to $48.6 million ($2.84 per share). These increases in performance are primarily attributable to increases in the prices we received for our oil and gas, which, in turn, were due to an oil price turnaround that began in the second quarter of this year when the Organization of Petroleum Exporting Countries (OPEC) held fast in its determination to push prices up by limiting production. The average price we received for oil during the third quarter increased 55% to $18.46 per barrel, a price not seen since the first quarter of 1997. The accompanying increase in the average price for gas was 48% to $2.84 per Mcf, a price not seen since the fourth quarter of 1997. The combined average price we received for our production rose 50% to $2.92 per thousand cubic feet of natural gas equivalent (Mcfe) in the third quarter and 11% to $2.31 per Mcfe for the nine-months period. With the low oil and gas price environment that persisted throughout 1998, we made a decision late last year to reduce the Company's pace of development drilling in 1999 and to manage our production for an overall annual increase of approximately 10%. As a result, our third-quarter production was down from last year. For the nine-months period, we had a production increase of 23% to 32.7 Bcfe. Our major producing fields continue to be the two large Austin Chalk fields we acquired last year, the Masters Creek Field in Louisiana and the Brookeland Field just across the border in Texas. Together they provided 52% of our production for the quarter and 53% for the first nine months of the year. During the third quarter, we added a new development well in which we have a 100% working interest in the Brookeland Field (Jasper County) and benefited from our working interests of 26% and 8% in two other development wells drilled in the Masters Creek Field (Vernon Parish) by Union Pacific Resources. We are currently drilling two additional wells in the Masters Creek Field, one begun in the third quarter and the other in the fourth quarter, that will test the Saratoga formation as well as the Austin Chalk formation. We also had third-quarter successes in two other Austin Chalk fields, both of which were mentioned in our second-quarter report. In Fayette County, Texas, an exploratory well in which we have a 31.5% working interest was placed on line early in the fourth quarter at 4,900 Mcf of gas and 1,200 barrels of oil per day, with the operator, Bellwether Exploration Company, planning to drill an offset well in the near future. In Colorado County, Texas, we completed a development well in which we have a 44.8% working interest. Also in Colorado County, we have recently begun drilling an exploratory well to the Edwards formation. In our AWP Olmos Field in McMullen County, Texas, our on-going fracture-extension program resulted in the technique being applied to 31 wells during the third quarter, with an average net incremental production increase of 176 Mcfe per day per well. In addition, we installed coiled tubing in 19 wells that increased their production by an average of 30 Mcfe per day per well. And with commodity prices appearing to be stabilizing at higher levels, in October we resumed in-fill drilling in the AWP Field. At least six development wells should be completed before year end. Finally, we recently completed our first operated well outside the United States. We announced on October 4 that the Rimu-A1 well drilled to a depth of 16,493 feet in the onshore Taranaki Basin in New Zealand would undergo production testing during the fourth quarter. While the well was being drilled, hydrocarbon shows were encountered in four zones between 11,700 feet and 14,800 feet. Swift Energy celebrated its 20th anniversary on October 11, and it is with considerable satisfaction that we review our successful operation within a period characterized by highly volatile product prices. Just this past year we experienced the lowest oil prices in a half century (when adjusted for inflation). Anticipating a much improved environment in the year 2000, we can now expect to once again accelerate our drilling program, both to further develop the fields from which we are currently producing and to explore the numerous prospects we have in inventory. We look forward to the challenge.
This page was last updated on Saturday, February 08, 2003, at 07:45:49 PM. Copyright © 1994-2008 by Swift Energy Company.
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