For the first quarter of 2005, Swift Energy Company once again exceeded consensus earnings predictions due to increased production and a strong commodity market. Our net income for the quarter rose 76% to $25.7 million (or $0.89 per diluted share) compared to $14.6 million (or $0.52 per diluted share) for the first quarter of 2004. Net cash provided by operating activities increased 63% to $64.7 million (or $2.24 per diluted share).

The Company’s total production for the first quarter of 2005 was 15.5 billion cubic feet of natural gas equivalent (Bcfe)—11.0 Bcfe from domestic production and 4.5 Bcfe from New Zealand production. It exceeded our total production in the first quarter of 2004 by 9% but was 2% lower than that in the fourth quarter of 2004 because of a third-party domestic pipeline interruption. Following a Company trend of the last two years, the production was predominantly crude oil and natural gas liquids (51% crude and 9% NGL). Domestic production was 72% oil and NGL, while New Zealand production was 71% natural gas.

The average price we received for all our production during the first quarter of 2005 was $6.16 per thousand cubic feet of natural gas equivalent (Mcfe), which was 33% above the average price of $4.62 per Mcfe we received during the first quarter of 2004. This higher price resulted from average prices of $4.25 for natural gas (a 17% increase), $47.66 per barrel for crude oil (a 40% increase), and $26.79 per barrel for NGL (a 20% increase). Domestically, we received an average of $5.41 per Mcf for natural gas, $47.20 per barrel for crude oil, and $31.79 per barrel of NGL. In New Zealand, we received $3.17 per Mcf for natural gas, $51.68 per barrel of oil, and $17.80 per barrel of NGL. As has been our practice for some time, we protect our domestic prices through a price risk management strategy that layers in price floors and our New Zealand prices by negotiations of short-term contracts.

We believe that commodity prices will remain higher throughout 2005 than they were in 2004, especially with the U.S., New Zealand, and numerous other world economies having increasing energy needs. This will help us carry out our diversified 2005 drilling program that includes exploration both in the United States and New Zealand, as well as considerable exploitation. We originally set our capital budget at $200 million to $220 million for this program, but with more and more competition for field services and climbing rig rates, we increased the capital budget to $220 million to $240 million. Even at the high end of our expenditures we should still be below our expected cash flow for the year, in which case we do not expect to borrow against our bank line to perform the planned projects.

In our domestic drilling operations, we are still focused in the Lake Washington Area in Plaquemines Parish, Louisiana, with a secondary emphasis in the AWP Olmos Area in McMullen County, Texas. In 2004, these two fields contributed 55% and 21%, respectively, of our domestic production, and in the first quarter of 2005 they contributed 62% and 18%, respectively. Lake Washington’s first-quarter production was lowered by approximately 0.25 Bcfe by the third-party pipeline interruption.

During the first quarter, we completed 13 of 17 wells drilled in these two fields: two of three exploratory wells and nine of twelve development wells in Lake Washington and two of two development wells in AWP. We have had two rigs operating in Lake Washington this year and plan to move a second rig to AWP this summer. A little later we will begin drilling in our latest acquisitions, the Cote Blanche Island and Bay de Chene fields near Lake Washington, and expect to be producing approximately 1,500 barrels of oil equivalent per day from these fields by year end. We’re also expecting to increase production from Lake Washington itself when work to expand the capacities of the field’s gas lift system and sour crude processing platform are completed in the third quarter. In the meantime, our continued drilling in the area is resulting in a backlog of wells awaiting completions.

In our work on the north island of New Zealand, we were recently awarded a new petroleum exploration permit (PEP-38495) for 240,000 acres located offshore in the southern portion of the Taranaki Basin south and west of our Rimu/Kauri Area, and we will likely conduct a three-dimensional seismic survey on the acreage to assist in our prospect evaluations. We have also recently been awarded a petroleum mining permit (PMP-38155) for 8,708 acres within the Rimu/Kauri Area that will allow us to develop Kauri sand gas reservoirs and Manutahi sand oil reservoirs for 30 years. During the first quarter, we drilled the Kauri-E8 development well, which was unsuccessful, and early in the second quarter, we completed the Kauri-E9 well, which is awaiting a fracture stimulation.

Increasing production from the Rimu/Kauri Area is helping to offset the natural decline in production from our TAWN Area. First-quarter production from the Rimu/Kauri Area was 136% higher than in the first quarter of 2004 and 18% higher than in the fourth quarter of 2004, and as new contracts are negotiated in a tightening market, we are receiving higher prices for our production. To accommodate the expected higher gas volumes, we are considering a 50% to 100% expansion of our Rimu Production Station in 2006.

We have now begun our exploration program in the Taranaki Basin with our new partner, Mighty River Power Limited (MRP), a state-owned utility. MRP will provide the capital for three wells, the Tawa prospect under the Rimu/Kauri exploration permit and the Goss and Trapper prospects under petroleum mining permits in our TAWN Area. Early in the first quarter we drilled an unsuccessful shallow exploration test in the northern portion of the basin with Ballance Agri-Nutrients Limited.

As we continue what we believe will be another highly successful year for Swift Energy, we have three new members on our Board of Directors recently elected to three-year terms: Deanna L. Cannon, president of Cannon & Company CPA’s PLC who filled a vacated position last year; Bruce H. Vincent, Swift Energy’s president; and Douglas J. Lanier, retired vice president of ChevronTexaco Exploration & Production Company. Outgoing directors are Virgil N. Swift, who has been vice chairman of the Board since its inception and will now have the title of director emeritus, and G. Robert Evans, who joined the Board in 1994. We have also recently announced two promotions within the Company: Laurent Baillargeon to chief general counsel and Karen Bryant to chief governance officer and secretary, while continuing in her position as general counsel–corporate. In addition, R. Alan Cunningham, president and chief operating officer of Swift Energy New Zealand (SENZ), was named the principal executive officer in New Zealand for SENZ. We welcome each of these individuals in their new roles on the Swift team and look forward to many productive collaborations in the future.