To date in the first quarter 2012, two operated Eagle Ford wells, one operated Olmos well, and one non-operated well have been completed in the AWP field.

Initial Production Test Rates of AWP Horizontal Wells
Completed to Date in First Quarter 2012
(Operated and 100% Working Interest, unless footnoted otherwise)

November 3, 2011: PRESS RELEASE. In our AWP field during the third quarter of 2011, we drilled six operated horizontal development wells to the Eagle Ford shale. There are currently four operated rigs and one nonoperated rig drilling in our South Texas core area. A fifth contracted rig is undergoing repairs and should return to this area during the quarter.

Also in the AWP field, we completed seven wells: four operated Olmos wells, two operated Eagle Ford wells, and one nonoperated Eagle Ford well.

Initial Production Test Rates of South Texas Horizontal Wells
Completed in AWP Field in Third Quarter 2011

Initial Production Test Rates of South Texas Horizontal Wells
Completed to Date in Fourth Quarter 2011

September 29, 2011: PRESS RELEASE. Our third-quarter production will be negatively impacted by delays in the commissioning of dedicated transportation and processing through a newly constructed third-party pipeline handling natural gas production in McMullen County, TX, and periodic transportation and processing curtailments under existing interruptible natural gas agreements that we have in McMullen County.

We have obtained the additional planned rig for our South Texas area to drill Olmos and Eagle Ford horizontal wells. However, another rig currently under contract recently experienced a major mechanical problem and is expected to be out of service for much of the rest of the year. This will impact our drilling schedule until planned activity can be resumed or the rig replaced. The impact on our fourth-quarter production of this rig's absence cannot be fully determined at this time.

August 4, 2011: PRESS RELEASE; 2011 SECOND QUARTER 10-Q; 2011 SECOND QUARTER WEBCAST. During the second quarter of 2011 we drilled one operated and two non-operated horizontal development wells to the Eagle Ford shale and six operated horizontal development wells to the Olmos formation in our South Texas core area, all in the AWP field in McMullen County, TX.  We currently have four operated rigs drilling in the South Texas core area.   

As a result of more efficient operations and a faster than anticipated pace of well completions, we returned our dedicated frac fleet to its vendor for approximately 50 days during the second quarter.  By the end of the second quarter, when this frac fleet returned to Swift Energy operations, we had a backlog of seven drilled but not yet completed wells.  We do not anticipate releasing this frac fleet again in 2011, and with the current pace of drilling and completion activity in the South Texas area, we expect that 12 or more wells will be fracture stimulated during the third quarter—an average of at least four well completions per month.

Reviewing Swift Energy’s 2011 second-quarter results, CEO Terry Swift commented, “Swift Energy now has four, soon to be five, operated rigs running in South Texas, a dedicated frac fleet and crew, and additional dedicated natural gas processing and transportation coming online by the end of the third quarter.   We expect to grow our [company] 2011 production between 28% to 34% over 2010 levels, and are just beginning to see the benefits of a tightly coordinated project management and development program…….We expect to quickly ramp up our daily production rate once a previously announced pipeline that will provide up to 90 million cubic feet per day of dedicated processing and transportation capacity [for the AWP field] is completed by the end of the third quarter.”

AWP Olmos Wells (Operated). During the second quarter, we completed two operated horizontal development wells in the Olmos formation in the AWP field. The R Bracken 38H well, drilled during the second quarter, had an initial production rate of 7.5 MMcf of natural gas per day and 578 barrels of natural gas liquids per day, with a flowing casing pressure of 5,475 psi on an 18/64-inch choke.  The SMR 1H Olmos well, also drilled during the second quarter, had an initial production rate of 1.2 MMcf of natural gas per day and 552 barrels of oil per day, with a flowing casing pressure of 2,450 psi on a 20/64-inch choke.

Additional horizontal development wells have been fractured to date in the third quarter, including the following second-quarter AWP Olmos wells: the R Bracken 40H well that had an initial production rate of 6.2 MMcf of natural gas per day, 480 barrels of natural gas liquids per day, and 12 barrels of oil per day, with a flowing casing pressure of 5,800 psi on a 20/64-inch choke; the Siddons 3H well that had an initial production rate of 5.1 MMcf of natural gas per day and 398 barrels of natural gas liquids per day, with a flowing casing pressure of 5,400 psi on a 20/64-inch choke; and the Whitehurst 3H well that had an initial production rate of 608 barrels of oil per day, 1.4 MMcf of natural gas per day, and 106 barrels of natural gas liquids per day, with flowing casing pressure of 2,685 psi on a 20/64-inch choke.

AWP Eagle Ford Well (Operated).  During the second quarter we completed the first-quarter SMR EF 3H development well in the AWP field in the Eagle Ford shale. The well had a lateral length of 4,850 feet and an initial production rate of 1,230 barrels of oil per day, 0.78 MMcf of natural gas per day, and 60 barrels of natural gas liquids per day, with a flowing casing pressure of 1,975 psi on a 18/64-inch choke. 

AWP Eagle Ford Wells (Nonoperated). During the second quarter our joint venture partner completed two horizontal Eagle Ford development wells in the AWP field: the second-quarter Bracken JV 8H well that had an initial production rate of 10.9 MMcf of natural gas per day with a flowing casing pressure of 6,575 psi on a 20/64-inch choke; and the first-quarter Anthony JV 1H well that had an initial production rate of 8.2 MMcf of natural gas per day with a flowing casing pressure of 4,922 psi on a 20/64-inch choke.

July 25, 2011: PRESS RELEASE. Maintenance projects by a large pipeline operator that currently provides processing and transportation for our natural gas production in McMullen County caused a shut-in of Swift operated production there for approximately four days at the end of the quarter.  Additionally, this same pipeline operator experienced periodic capacity constraints throughout the quarter that also limited our natural gas production. 

Construction of a pipeline related to a previously announced long-term processing and transportation agreement with a new midstream provider is well underway, and we expect to have up to 90 MMcf of gas per day of firm capacity available to us by the end of the third quarter.  Until then, we expect continued pressure on natural gas sales volumes in McMullen County, limiting the amount of our production which can be sold.  Even as second quarter volumes were (and third quarter production volumes potentially could be) limited by capacity constraints, we still expect 2011 production to grow considerably over 2010 levels and will widen the range of our full-year production forecast by 2% to accommodate the current short-term uncertainties in the pipeline capacity situation in McMullen County.  We now expect production for 2011 to be 10.7 to 11.2 MMBoe, 28% to 34% above 2010 production.

Because we had returned the dedicated frac fleet to the vendor for approximately six weeks in order to balance our drilling and completion schedule, only two operated and two non-operated wells were completed in McMullen County during the second quarter. When the frac fleet was returned at the end of the second quarter, a backlog of seven drilled but not yet completed wells existed.  We do not anticipate releasing this frac fleet again in 2011 and expect to have four to five operated drilling rigs running in South Texas by the end of the year.

In McMullen County, one operated Eagle Ford horizontal well and one operated Olmos horizontal well were completed during the quarter.  The SMR EF 3H was completed in the Eagle Ford and had an initial production rate of 1,230 barrels of oil per day, 0.78 MMcf of gas per day, and 60 barrels of natural gas liquids per day with flowing casing pressure of 1,975 psi on a 18/64-inch choke.  This well was drilled to a lateral length of 4,850 feet.  As a result of the liquids-rich production and strong performance of the wells in this area, an additional drilling rig has been contracted and will drill horizontal Eagle Ford and Olmos wells in this area for the remainder of 2011.

The R Bracken 38H Olmos well had an initial production rate of 7.5 MMcf of gas per day and 578 barrels of natural gas liquids per day, with flowing casing pressure of 5,475 psi on an 18/64-inch choke. 

Also in McMullen County, our joint venture partner completed the Bracken JV 8H and the Anthony JV 1H during the second quarter.  The initial production rate of the Bracken JV 8H was 10.9 MMcf of gas per day with flowing casing pressure of 6,575 psi on a 20/64-inch choke.  The initial production rate of the Anthony JV 1H was 8.2 MMcf of gas per day with flowing casing pressure of 4,922 psi on a 20/64-inch choke. 

May 5, 2011: PRESS RELEASE. During first quarter 2011 we drilled six horizontal wells in the AWP field. Of these, two were completed during the first quarter and one early in the third quarter. In addition, we completed four wells that had awaited fracture stimulation since 2010. With the availability of a dedicated fracturing stimulation fleet since fourth quarter 2010, we have substantially reduced our backlog of drilled but not completed wells.

AWP Olmos Wells (Operated). Two of the newly completed operated wells were the R Bracken 37H and the AFP 5H, which were drilled in the Olmos formation in fourth quarter 2010 and first quarter 2011, respectively. The R Bracken 37H well had an initial production rate of 4.8 MMcf of natural gas, 226 barrels of natural gas liquids, and 8 barrels of oil per day, with flowing casing pressure of 5,525 psi on a 16/64-inch choke after it was completed with a nine-stage fracture stimulation.  The AFP 5H well had an initial production rate of 2.7 MMcf of natural gas and 216 barrels of oil per day, with flowing casing pressure of 3,705 psi on a 20/64-inch choke after it was completed with a 16-stage fracture stimulation. 

AWP Eagle Ford Wells (Operated). A third newly completed operated well was the SMR EF 2H, which was drilled in the Eagle Ford shale in the northern portion of the field during first quarter 2011. It was completed with a 16-stage fracture stimulation and had an initial production rate of 1,080 barrels of oil and 0.6 MMcf of natural gas per day with flowing casing pressure of 2,300 psi on a 18/64-inch choke.  This well was drilled to a lateral length of 5,660 feet and was our first operated extended-lateral completion. A second operated SMR well, the SMR EF 3H, also drilled in first quarter 2011, was completed in the second quarter (April) with a lateral length of 4,850 feet.  The initial production rate of this well was 1,300 barrels of oil and 1.2 MMcf of natural gas with flowing casing pressure of 2,900 psi on a 16/64-inch choke.  As a result of the better-than-modeled performance of these recently drilled SMR Eagle Ford wells in the northern portion of the AWP field, an additional rig may be contracted in 2011 and dedicated to drill Eagle Ford and Olmos oil wells full time in this part of the AWP field. 

AWP Eagle Ford Wells (Nonoperated). Of the three nonoperated wells completed during first quarter 2011, all had been drilled to the Eagle Ford shale by our joint venture partner in late 2010. The Bracken JV 5H and the Bracken JV 6H were completed using a newly designed fracture stimulation technique.  The initial production rate of  the Bracken JV 5H was 7.6 MMcf of natural gas, 437 barrels of natural gas liquids, and 48 barrels of oil per day, with flowing casing pressure of 5,800 psi on a 20/64-inch choke after a 19-stage fracture stimulation.  The initial production of the Bracken JV 6H was 5.1 MMcf of natural gas with flowing casing pressure of 6,520 psi on a 16/64-inch choke after a 16-stage fracture stimulation. 

The third joint venture well was completed by our contracted fracture stimulation fleet.  This well, the Whitehurst JV 1H, had an initial production rate of 8.4 MMcf of natural gas with flowing casing pressure of 6,300 psi on an 18/64-inch choke after a 16-stage fracture stimulation.

AWP Refracturing Program. We also continued our production optimization and refracturing program in the AWP field during first quarter 2011. This program mitigates base production declines and improves overall project economics.

February 24, 2011: PRESS RELEASE. In the company’s AWP Field in McMullen County, one operated horizontal development well was drilled to the Eagle Ford shale and two operated horizontal development wells and one vertical well were drilled to the Olmos sand during the fourth quarter of 2010. One non-operated horizontal development well was drilled by a joint venture partner to the Eagle Ford shale.

During the fourth quarter and through the date of this release (February 24), the company fracture stimulated 10 operated wells and one non-operated well drilled to the Eagle Ford shale formation and seven wells drilled to the Olmos formation all in South Texas.

Completion efficiencies realized by a contracted fracture stimulation crew have reduced the company’s current backlog of uncompleted wells to three operated and one nonoperated. While drilling activity is accelerated to build a sufficient inventory to maintain full utilization of this crew, the crew and equipment have been returned to the service provider (as contractually allowed) for a period of approximately one month. This will assist Swift Energy in balancing its drilling and completion activity for the rest of the year while at the same time providing a slight financial benefit to the Company.

The company is currently drilling three operated horizontal wells in McMullen County, with two wells targeting the Eagle Ford shale and one well targeting the Olmos tight sand.

November 4, 2010: PRESS RELEASE; 2010 THIRD QUARTER 10-Q. During the third quarter of 2010, we drilled 15 wells in our South Texas AWP Field: five horizontal wells drilled to the Eagle Ford shale, five horizontal wells drilled to the Olmos sand, and five vertical wells drilled to the Olmos sand. One horizontal Olmos well was unsuccessful.

Unexpected and uncontrollable delays in obtaining well fracturing services in South Texas during the third quarter resulted in 12 horizontal wells not being fracture stimulated before the end of the quarter. Beginning in the fourth quarter, we began receiving dedicated fracturing services from our exclusive 24-month contract with a large oil field service company (announced in the second quarter), and in October our fracturing performance increased from one per month during the third quarter to four per month. Even so, with the backlog of wells awaiting completions, we expect to have a number of wells still awaiting stimulation at year end, which will result in a lower full-year production volume and a lower year-end exit production rate than previously expected

Third Quarter 2010 AWP Eagle Ford Shale Activities. The five horizontal AWP wells drilled in the Eagle Ford shale during the third quarter were all development wells. Three of them were drilled by the company: the Quintanilla Me-You 1-H, the PCQ 2-H, and the PCQ 3-H. Following a 12-stage fracture stimulation performed on the Quintanilla Me-You 1-H, the well’s initial production rate was 494 barrels of oil per day and 1.3 MMcf of gas per day, with a flowing casing pressure of 2,100 psi on an 18/64-inch choke. The PCQ 2-H and PCQ 3-H wells are awaiting completion operations.

Two of the horizontal Eagle Ford development wells in the AWP Field were drilled by our joint venture partner Petrohawk: the Whitehurst JV 1-H and the Bracken JV 6-H. Both wells are awaiting completion operations.

Two horizontal Eagle Ford wells drilled in the AWP Field by the company in the second quarter were completed in the third quarter: the Discher 1-H and PCQ 4-H. A 14-stage fracture stimulation was performed on the Discher 1-H, and the well’s initial production rate was 448 barrels of oil per day and 1.6 MMcf of gas per day with a flowing casing pressure of 3,275 psi on a 12/64-inch choke. A 13-stage fracture stimulation was performed on the PCQ 4-H, and the well’s initial production rate was 528 barrels of oil per day and 1.9 MMcf of gas per day with a flowing casing pressure of 4,903 psi on a 14/64-inch choke.

One horizontal well drilled by our joint venture partner in the AWP Field in the second quarter, the Bracken JV 3-H, was also completed in the third quarter. A 10-stage fracture was performed on this well, and its initial production rate was 5.8 MMcf of gas per day with a flowing casing pressure of 5,753 psi on a 16/64-inch choke. Another second-quarter well drilled by our joint venture partner, the Bracken JV 2-H, is currently undergoing stimulation.

Third Quarter 2010 AWP Olmos Sand Activities—Horizontal Wells. The five horizontal development wells drilled to the Olmos sand in the AWP Field during the third quarter were all drilled by the company. Of the five wells, four were successful. The fifth well encountered mechanical difficulties and was completed as a water source well.

The four successful Olmos horizontal wells were the AFP 3-H, the SBR 1-H, the AAFP 4-H, and the Whitehurst 1-H, all of which are awaiting fracture stimulation.

Third Quarter 2010 AWP Olmos Sand Activities—Vertical Wells. The five vertical wells drilled to the Olmos sand in the AWP Field during third quarter 2010 represented a continuation of our production optimization program consisting of shallow vertical oil wells in the northern portion of the field. At the end of the third quarter, three of the wells were completed and waiting to be put on production. The initial production rate of the most recently completed well, the SMR 7, was 318 barrels of oil per day and 0.8 MMcf of gas per day with a flowing tubing pressure of 1,900 psi on a 12/64-inch choke. This 2010 vertical drilling program was concluded with a sixth well drilled early in the fourth quarter.

September 23, 2010: PRESS RELEASE. Swift Energy has entered into a long-term agreement for natural gas gathering and treating services in South Texas with Meritage Midstream Services’ subsidiary, Eagle Ford Escondido Gathering.  This agreement will involve the construction of a new pipeline to our Fasken operating area (Las Tiendas Field) in Webb County, TX. We will have up to 40 million cubic feet of gas per day of firm capacity on this new pipeline, which is expected to be completed by December 1, 2010.

We have also agreed to a long term sales contract with Kinder Morgan Texas Pipeline LLC that is indexed to market and will be delivered to a new connection with the Kinder Morgan system.

In addition, we have extended contracts for two horizontal rigs currently drilling for us by 12 and 15 months from their current terms due to expire in December 31, 2010. With these contracts in place, we will enter 2011 with three South Texas horizontal drilling rigs under long term contracts.

As stated by Swift's CEO Terry Swift, “These separate agreements for dedicated gathering and drilling services further reduce Swift Energy’s exposure to the continuing tightness of oilfield services and gathering outlets facing operators in South Texas.  We expect an increase in operating activity in 2011 and have taken numerous steps to ensure that we can drill, complete and produce our wells without interruption due to third party service constraints.”

August 5, 2010: PRESS RELEASE; 2010 SECOND QUARTER 10-Q.  During second quarter 2010, we drilled six successful operated horizontal wells and participated in two successful non-operated horizontal wells in our South Texas AWP Field. The operated wells consisted of four wells drilled to the Eagle Ford shale and two wells drilled to the Olmos sand. The non-operated wells consisted of two horizontal wells drilled to the Eagle Ford shale by Petrohawk, our joint venture partner for the development of the Eagle Ford shale in a 26,000-acre region of the field.

We currently have five operated rigs and one non-operated rig drilling in our South Texas core area (primarily in the AWP Field) with three capable of horizontal drilling and two used for vertical drilling. According to CEO Terry Swift, “The addition of two drilling rigs…in South Texas will result in increased activity targeted towards growing oil and natural gas liquids production.” Explaining the continued focus on oil and NGL, he said, “Gas versus oil volume equivalence is reported using a 6 to 1 ratio. Current market pricing comparisons, however, reflect a 17 to 1 ratio. Our higher liquid yield areas provide slightly lower equivalent production rates compared with our dry gas activities, but better relative economic results.”

Swift also pointed out that increased industry activity in South Texas has caused a shortage of critical services, in particular, fracture stimulation services needed for well completions. To alleviate this problem, the company has executed an exclusive 24-month contract for fracture stimulation services with a large oil field service company. “By committing to this strategic contract,” Swift says, “we expect to complete three to four wells per month beginning in the fourth quarter and significantly reduce our per well completion costs.”

Second Quarter 2010 AWP Eagle Ford Shale Activities. The four operated horizontal wells we drilled to the Eagle Ford shale in the AWP Field during second quarter 2010 were the Hayes 1H, the San Miguel Ranch 1H, the Discher 1H, and the PCQ 4H.

The Hayes 1H underwent a seven-stage fracture stimulation and had an initial production rate of 336 barrels of oil per day and 0.5 MMcf of natural gas per day with a flowing casing pressure of 920 psi on a 22/64-in. choke.

The San Miguel Ranch 1H was completed with a 12-stage fracture stimulation and had an initial production rate of 775 barrels of oil per day and 1.1 MMcf of natural gas per day with a flowing casing pressure of 2,940 psi on a 22/64-inch choke.

The PCQ 4H is awaiting completion.

The two non-operated horizontal wells drilled by our joint venture partner to the Eagle Ford shale in the AWP Field were the Bracken Family 2H and 3H. Both wells are awaiting fracture stimulation.

We now have five horizontal Eagle Ford wells on production in South Texas (four operated and one non-operated) that have had average initial production rates of 1,152 Boe per day (or 6.9 MMcfe per day), with approximately 40% of the initial production volumes being oil. Except for one operated well in the Las Tiendas Field, all these wells are located in the AWP Field.

In total, our Eagle Ford Shale position now encompasses 100,312 gross and 80,658 net acres prospective in our South Texas area. A portion of this Eagle Ford acreage is below existing Olmos acreage that we also hold.

Second Quarter 2010 AWP Olmos Sand Activities—Horizontal Wells. The two operated horizontal wells we drilled to the Olmos sand in the AWP Field during second quarter 2010 were the Huff 1H and the AFP 2H.

The Huff 1H was located in a developed portion of the AWP Field to test field drainage assumptions and the opportunity of drilling infill wells in this field in the future. The Huff 1H underwent an eight-stage fracture stimulation and had an initial production rate of 5.4 MMcf of natural gas per day with a flowing casing pressure of 2,700 psi on a 26/64-in. choke.

The AFP 2H was drilled on undeveloped acreage and has undergone eight stages of a 14-stage fracture stimulation. The AFP 2H had an initial production rate of 6.4 MMcf of natural gas per day and 51 barrels of condensate per day with a flowing casing pressure of 4,450 psi on a 19/64-inch choke. The six stages not stimulated in this well will be pumped at a later date.

We now have seven operated horizontal Olmos wells on production in the AWP Field that have had average initial production rates of 1,248 Boe per day (or 7.5 MMcfe per day), with approximately 35% of the initial production volumes being liquids, mostly NGL.

Second Quarter 2010 AWP Olmos Sand Activities—Vertical Wells. No new wells were drilled during second quarter 2010 in our production optimization program consisting of drilling shallow vertical oil wells in the Olmos sand in the northern portion of our AWP; however, in anticipation of resuming this program, we contracted for an additional rig that will be active in this program for the remainder of the year.

Second Quarter 2010 South Texas Seismic Data Additions. We are continuing to enlarge our seismic data acquisitions in South Texas. Most recently, in and around the AWP Field, we plan to obtain a total of 304 square miles of additional three-dimensional seismic data, which includes 79 square miles of existing non-exclusive data and 225 square miles of new non-exclusive data. To date, we have taken delivery of about 160 square miles and plan to receive the remainder of the data before the end of 2010. These new data are aimed at imaging our leases in the area.

May 6, 2010: PRESS RELEASE; 2010 FIRST QUARTER 10-Q. In first quarter 2010 we finished drilling and completed one AWP horizontal exploration well in the Eagle Ford shale with 100% working interest and prepared to assume operation of the first AWP horizontal exploration well that our joint venture partner finished drilling in the Eagle Ford shale with a 50% working interest. We also drilled one shallow vertical well and continued refracturing previously drilled vertical wells to boost production.

Reviewing Swift Energy’s drilling program, Chief Executive Officer Terry Swift reported that “While our activity levels have picked up recently in South Texas, much of the first quarter was spent optimizing the project management processes we believe are necessary to maximize the value of our assets, particularly in the Eagle Ford and Olmos formations. These processes include batch drilling techniques, large scale water handling systems and stronger alliances with our service providers and vendors, all of which should improve our drilling and completion efforts.”

South Texas Eagle Ford Shale Horizontal Drilling Program. Our horizontal drilling program in the South Texas Eagle Ford shale begun in fourth quarter 2009 is continuing in several locations, primarily in the AWP Field in McMullen County but also in the Las Tiendas Field in Webb County. In total, our Eagle Ford shale position encompasses 97,670 gross and 79,164 net acres, some of which exist below prospective Olmos acreage that we also hold.

In our February 18 update we noted that the company had finished drilling two horizontal discovery wells in the Eagle Ford shale early in first quarter 2010, both with 100% working interests. These wells—the Fasken EF 1H in the Las Tiendas Field (see Las Tiendas update) and the PCQ 1H well in the AWP Field—were later completed during the first quarter.

The PCQ 1H discovery well had an initial production rate of 1,134 Bbl/day of oil and 1.1 MMcf/day of gas with a flowing casing pressure of 1,750 psi on a 24/64-inch choke. This well requires additional facilities to be installed and will be producing to sales in early May.

An Eagle Ford shale discovery well drilled by the company’s joint venture partner, Petrohawk, also finished drilling in first quarter 2010 on the 26,000-acre portion of the AWP Field covered by the joint venture. This well, the Bracken JV 1H well, was completed in April and had an initial production rate of 9.0 MMcf/d of gas with a flowing casing pressure of 5,815 psi on a 24/64-inch choke. The well has been on production for 30 days, but has been temporarily restricted to 6.4 MMcf/day of gas and a choke setting of 17/64-inch while awaiting the installation of further production facilities. Swift holds a 50% working interest in the well and will assume its production operations.

A second horizontal joint venture well drilled by Petrohawk in the AWP Eagle Ford shale has recently finished drilling (in the second quarter) and is awaiting completion, and a third joint venture well will soon commence drilling.

Other early second quarter activity has included the drilling by Swift of its next Eagle Ford shale horizontal well in the AWP Field, the Hayes 1H. This well, which is awaiting completion, set a new technical limit for the company’s drilling operations. The company is currently drilling two additional horizontal wells targeting the Eagle Ford shale. The surface portion of both of these wells was drilled by a lower cost, lower horsepower rig to improve drilling efficiency. This approach will continue throughout the 2010 drilling program in South Texas.

AWP Horizontal Olmos Wells. After completing an initial five-well horizontal drilling program targeting the AWP Olmos sand (see February 18 update below), we began the second phase of this program during first quarter 2010 with the drilling of a sixth well, the Huff 1H well. This well will be completed during the second quarter.

AWP Shallow Vertical Olmos Wells. In the northern portion of the AWP Field in the South Texas core area of operations, we drilled and completed an additional shallow vertical development well, the Henry #1, in the Olmos sand and placed it on line. This program was begun in third quarter 2009.

AWP Fracture Stimulation Program. Our program of applying additional fracture stimulations to existing vertical well bores in the Olmos sand of the AWP Field was continued with six wells refractured in first quarter 2010. We plan to perform 24 additional vertical refracture operations in 2010.

February 25, 2010: 2009 FORM 10-K. At year-end 2009, 29.6 MMBoe, or 26.2%, of the company’s total reserves were in the AWP Field. Of the total, 44.6% were undeveloped reserves. We recorded 8.3 MMBoe of additional proved undeveloped reserves in the AWP Field during 2009 based on the results of the horizontal drilling program conducted in the area during the year.

The AWP Field provided 1,666 MBoe, or 18.4%, of the company’s total 2009 production of 9,055 MBoe and 1,630 MBoe, or 18.7%, of its sales production of 8,731 MBoe, the latter excluding produced gas that was consumed in operations. The field’s sales production consisted of 197 MBoe of oil (12.1%), 496 MBoe of NGLs (30.4%), and 937 MBoe of natural gas (57.5%). Average sales prices received during 2009 for the field’s production were $58.52 per barrel for oil, $29.68 per barrel for NGLs, and $3.63 per Mcf for natural gas.

During 2009, we drilled 11 development wells with 11 successes in the AWP Field—four horizontal wells and seven shallow vertical wells. We also performed fracture enhancements on 29 wells to stimulate production. At year-end the field had 569 producing wells, with Swift holding 100% interest in nearly all of them. Also at year-end, we had identified a  total of 83 PUDs for future drilling in the field and more than 150 wells as candidates for additional fracture stimulation. Our planned 2010 capital expenditures include drilling up to four horizontal wells in the Olmos formation in the AWP Field and performing approximately 30 additional fracture enhancements.

Our 2010 capital plans also include horizontal wells that will target  the Eagle Ford shale formation in the AWP Field, up to six wells with 100% Swift working interests and up to nine wells through our 50% joint venture with Petrohawk that covers an approximately 26,000-acre portion of our Eagle Ford shale formation in the field. The first well under the joint venture agreement began drilling in December 2009.

February 18, 2010: PRESS RELEASE; WEBCAST. In the fourth quarter of 2009, we completed eight of eight wells drilled in the AWP Field in our South Texas core area. We currently have one operated rig and one non-operated rig drilling in the South Texas core area and we expect to maintain this minimum level of activity throughout 2010.

AWP Horizontal Olmos Wells. Our fourth quarter 2009 activities included drilling and completing the last two wells—the R Bracken 36H well and the AFP 1H well— in our initial five-well horizontal drilling program in the Olmos formation in the southern portion of our South Texas AWP Field.

The first well drilled in the program, the R. Bracken 33H, has now been on line for over 12 months and has recovered over 1.1 Bcfe. Its current average daily rate is still over 1.5 MMcf of gas per day and ultimate recovery is now anticipated to be between 4 and 5 Bcfe.  The second well in the series, the Bracken 34H, is now expected to recover less than 3 Bcfe. The third well, the R Bracken 35H, experienced mechanical failure after completion that led to a refinement in our well construction and completion design. The problem was diagnosed as a parting of the production liner. We are now employing premium thread connections and are cementing our liners in place. We have also changed the fracture stimulation technique to a perk and plug design as opposed to the open hole swellable packer design. We believe this change in process has reduced the risk of mechanical failure and allows us to extend the reach of our laterals and potentially add more frac stages to our completion design in the future.

This perk and plug completion design was used in both the R Bracken 36H well and the AFP 1H well. The R Bracken 36H well had a horizontal leg that extended 3,300 feet and was fractured in 11 stages. The initial production rate for the R Bracken 36H was 11.5 MMcf/d of natural gas with a flowing casing pressure of 5,300 psi on a 20/64-inch choke. After 30 days, its production rate was 9.9 MMcf/d with flowing casing pressure of 3,800 psi. We estimate the well will ultimately recover close to 5 Bcf of natural gas, and it has extended our field at least two miles to the south. We collected core samples from this well whose analysis will help us to further refine and optimize our development drilling program in this part of the field.

The AFP 1H well had a horizontal leg that extended 4,100 feet and was fractured in 13 stages. The initial production rate of the AFP 1H well was 6.4 MMcf/d of natural gas and 280 Bbls/d of condensate, or 8.1 MMcfe/d, with a flowing casing pressure of 3,500 psi on a 24/64-inch choke. After 30 days, this well’s production rate was 5.3 MMcf/d and 172 Bbls/d of condensate, or 6.3 MMcfe/d, with a flowing casing pressure of 2,290 psi. We estimate this well will recover reserves of 4 to 5 Bcfe and has extended our prospective field limit by at least two miles to the west.

We plan to begin the next phase of our Olmos horizontal drilling program this quarter.

South Texas Eagle Ford Shale Horizontal Drilling Program. Also in South Texas, we have begun evaluating through the drill bit the company’s sizable acreage position that is prospective for Eagle Ford shale development.  During the first quarter of 2010, we finished drilling two horizontal wells in the Eagle Ford shale with a 100% working interest, one in McMullen County and one in Webb County, and both are scheduled for completion operations in March. The company is also participating, with a 50% working interest, in another Eagle Ford well currently being drilled in McMullen County by our joint venture partner Petrohawk.

AWP Shallow Vertical Olmos Wells. In the northern portion of the AWP Field, we drilled six wells in a shallow vertical-well drilling program during fourth quarter. Although three of these wells have yet to be completed and brought on production, field wide oil production has increased by approximately 300 gross barrels per day since June 2009. The last well drilled in this program, the Henry #2, was drilled to a true vertical depth of 9,242 feet and encountered 17 feet of pay. This was the fastest well from spud to total depth that the company has ever drilled in this field. The results of this program will be assessed and additional drilling opportunities will be developed in this area.

AWP Fracture Stimulation Program. Our program of applying additional fracture stimulations to existing vertical well bores in the Olmos sand in the AWP Field was also continued during the fourth quarter. The average production rate after this operation is performed has been 0.543 MMcfe/d per well, which equates to a 10% higher rate than the average initial production rates of the same wells when they were first completed. Since September 2009, we have performed 29 of these procedures for an average cost below $250,000 per well.

November 3, 2009: PRESS RELEASE; WEBCAST. The R Bracken 33H well, the first horizontal well drilled to the Olmos sand in the AWP Field, has been on line for over ten months and continues to perform above expectations. The estimated ultimate recovery of this well is now anticipated to be at the high end of our original estimate of 3 to 5 billion cubic feet of gas equivalent.

During the third quarter of 2009 we finished drilling and completed the R Bracken 34H horizontal well in the Olmos formation in the southern portion of the AWP Field and placed the well on production. We also drilled, completed and placed on production the R Bracken 35H well and began the R Bracken 36H well, the second and third wells in a three-well series.

In the northern portion of the field, we drilled a shallow vertical well in the Olmos formation (the Gonzalez #2) in the third quarter and two additional shallow vertical wells (the Quintanilla #2 and #3 wells) early in the fourth quarter. Since September 1, we have also fracture stimulated 11 wells in the field to increase their production.

In addition to its previously announced joint venture with Petrohawk to develop a 26,000-acre Eagle Ford Shale prospect in the AWP Field, Swift has a sizable acreage position of prospective Eagle Ford Shale acreage outside of this joint venture that it owns 100%. Plans to evaluate and appraise these acreage positions include drilling a horizontal test well before year-end.

November 2, 2009: PRESS RELEASE. Swift Energy and Petrohawk Energy Corporation agreed to jointly develop and operate an approximately 26,000-acre portion of Swift’s Eagle Ford Shale acreage in its AWP Field in South Texas, with Swift retaining a 50% interest. Swift received approximately $26 million in cash consideration upon closing of the agreement. Petrohawk will also fund approximately $13 million of capital expenditures on Swift Energy’s behalf within the first 12 months of the joint venture.  If any portion of this amount is not expended during the first twelve months, it will be paid to Swift Energy as cash consideration. The joint venture covers leasehold interests beneath the Olmos formation extending to the base of the Pearsall formation. Petrohawk will serve as operator during the drilling and completion phase of the joint development and Swift will operate the wells drilled once they have entered the production phase subject to theterms of the agreement. The appraisal drilling program covered by the agreement will begin before the end of 2009 with an acceleration of activity anticipated in 2010.

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