May 6, 2010. Swift Energy focuses its operational activities within four geographic areas of the United States: two areas along the Louisiana coast, one area in South Texas, and one area that includes portions of Central Louisiana and East Texas. Through exploratory and development drilling within these areas, together with the acquisition of additional producing properties, our oil and gas reserves and production have steadily increased over time in spite of periodic temporary setbacks caused by the cyclical nature of the oil and gas industry.

Our 2009 operational activities and the results they achieved are summarized below, with links given to more detailed discussions:

Exploration and Development. During 2009, we drilled 20 wells with a 90% success rate, compared to 126 wells drilled in 2008 with an 87% success rate. The reduced drilling program in 2009 was in keeping with the company’s intentional reduction of operational expenses during 2009 following the sharp decrease in commodity prices in 2008. Of the 20 wells drilled, seven wells with five successes (including two exploratory wells with one success) were drilled in the Southeast Louisiana core area (Lake Washington Field) and 13 wells with 13 successes (all development wells) were drilled in the South Texas core area—11 in the AWP Field, one in the Briscoe Ranch Field, and one in the Sun TSH Field. The drilling of these wells and other exploration and development activities during 2009 are discussed more fully in Exploration and Development.

Acquisitions. All four of our core areas of operation began with the acquisition of producing properties that were subsequently expanded through additional purchases and/or exploration and development drilling. We have not acquired any new properties since September 2008 when we obtained additional oil and natural gas interests in the Briscoe Ranch Field in our South Texas core area. (See Acquisitions.)

Reserves. At year-end 2009, Swift Energy had estimated proved reserves of 112.9 MMBoe with an estimated discounted present value (PV-10 value) of $1.3 billion. These reserves were classified as 50% proved developed and were comprised of approximately 39% crude oil, 43% natural gas, and 18% natural gas liquids (NGL), with 56% located in Louisiana, 43% in Texas, and 1% in other states. The reserves included 8.3 MMBoe of proved undeveloped reserves added during 2009 based on the results of the horizontal drilling program conducted in the AWP Field during the year. The distribution of these reserves is presented under Oil and Gas Reserves.

Production. Our total production in 2009 was 9,055 MBoe, a 10% decrease from our production of 10,049 MBoe in 2008. Factors contributing to this decrease were the collapse of product prices in 2008 that precluded any new drilling activity until the last half of 2009, the continued shut-in of producing wells in our Bay de Chene Field until August 2009 due to 2008 hurricane damage, and natural production declines. Our 2009 production volumes consisted of 48% crude oil, 39% natural gas, and 13% natural gas liquids. The contributions to the 2009 production from the core areas of operation were 52.8% from Southeast Louisiana, 30.1% from South Texas, 9.5% from Central Louisiana/East Texas, and 7.2% from South Louisiana. Contributions to the production by Swift’s individual fields, together with the number of producing wells in each field, are given under Production.

Marketing. We typically sell our oil and natural gas production at market prices near the wellhead or at a central point after gathering and/or processing—oil at prevailing market prices and natural gas in the spot market on a monthly basis. Oil from the Lake Washington Field in our Southeast Louisiana area is either delivered to ExxonMobil’s pipeline system or transported on barges to various purchasers, while the field’s surplus natural gas is delivered to El Paso’s Tennessee Gas Pipeline system. Oil from the area’s Bay de Chene Field is transported by barges to various purchasers and its natural gas is sold into intrastate pipelines. Oil from our South Texas area is transported to market by trucks, while natural gas from AWP is delivered to Enterprise Hydrocarbons L.P. and Enterprise Texas Pipeline, and natural gas from the three other South Texas fields is delivered to Enterprise South Texas Gathering or to Regency Gas Services. Oil from our Central Louisiana/East Texas area is sold to various purchasers, while gas from the Austin Chalk fields is processed under long-term contracts with Eagle Rock Operating, LLC and gas from the South Bearhead Creek Field is sold into the interstate market on Trunkline Gas Company’s pipeline. Oil from the Cote Blanche Island Field in our South Louisiana area is transported on barges to various purchasers and the field’s natural gas is sold into intrastate pipelines. Oil from other fields in the area is sold to various purchasers and natural gas is sold into interstate pipelines. (See Marketing.)

Financing. We maintain a financial flexibility that has enabled our company to survive repeated volatile pricing cycles in the oil and gas industry, including the one in 2008-2009. Our strategy is to mainly operate within cash flows, relying on our revolving credit facility with a 10-member bank group as needed. After a regular semiannual review of our $500 million credit facility with a syndicate of ten banks, Swift Energy’s borrowing base was affirmed at $277.5 million effective May 1, 2010. The company had no borrowings outstanding on this facility as of April 30, 2010. The borrowing base and commitment amount had been reset earlier at $277.5 million, a reduction from previous levels due to the issuance of our senior notes due 2020. The next scheduled borrowing base review is November 2010. To protect against commodity declines, we have a price-risk policy to use derivative instruments (hedges) that resulted in a net loss of $1.4 million for the company in 2009. To protect against hurricane damage, we have insurance coverage. Also, to better position our company, we issued a public stock offering in August 2009. We closed this offering of 6,210,000 shares of common stock at a price of $18.50 per share, with net proceeds of approximately $108.8 million after deducting associated expenses. We also engaged in several other transactions to improve our financial position in 2009. (See Financing.)

Health, Safety, and Environment. Swift Energy’s Health and Safety Program Handbook states that the company pledges to “maintain high standards for environmental, health, and safety compliance” in all its operational activities (see Health, Safety, and Environment).

This web page may contain "forward-looking statements" as defined in Section 21E of the Securities Exchange Act of 1934, as amended. Any opinions, forecasts, projections, or other statements other than statements of historical fact are forward-looking statements. Although Swift Energy 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. (See Terms of Use.)

Updates

Refer to the reports on the individual operational activities for updates.

For additional information, please see the latest Form 10-K and Form 10-Q.