|Core Areas Overview
Swift Energy’s oil and gas operations are focused along the U.S. Gulf Coast in the onshore and inland-water areas of Louisiana and Texas. We have three core areas of operation, each consisting of a group of parishes or counties within which we operate producing oil and natural gas fields and maintain a program of development and exploratory drilling. The areas are identified as (1) South Texas, (2) Southeast Louisiana, and (3) Central Louisiana.
Each of our core areas of operation has resulted from our long-term strategy of gaining majority interests in multiple fields within a specific geographical area. The three areas are sufficiently separated to provide a balance of reserves with respect to oil vs. natural gas, developed vs. undeveloped, and short-lived vs. long-lived. We serve as operator of the fields, thereby capitalizing on economy of scale, minimizing costs, and better utilizing our technical and operational expertise. Each core area has its own multidisciplinary asset development team responsible for managing the fields within the core area.
South Texas Core Area
Operations in our South Texas core area began in 1989 when we obtained majority interests in a number of wells producing from the tight Olmos sand in the AWP field in McMullen County. We subsequently enlarged our presence in the field and drilled hundreds of vertical wells in the Olmos sand through 2008. Thereafter, we largely converted to horizontal drilling prompted by the increasing availability of advanced horizontal drilling technologies, together with improvements in the hydraulic fracturing and geoscience technologies. In 2007, we expanded our South Texas area with the acquisition of interests in other wells producing primarily from the Olmos sand in the Las Tiendas field in Webb County and the Sun TSH field in La Salle County, as well as other interests that we subsequently sold.
In 2009, we initiated a horizontal drilling program to the Eagle Ford shale formation lying below the Olmos formation in the AWP field in McMullen County. At the same time we initiated a horizontal drilling program to the Eagle Ford formation below the Olmos formation in the Las Tiendas field in Webb County, with the Eagle Ford formation being identified as the Fasken field. Subsequently, in 2010, we began a horizontal drilling program to the Eagle Ford formation below the Olmos formation of the Sun TSH field in LaSalle County, with the Eagle Ford formation in that location being identified as the Artesia Wells field.
The reserves in the Eagle Ford formation in the Fasken field consist of dry natural gas, while those in the Artesia Wells field consist of oil and condensate. The AWP field has a mixture of reserves in both the Olmos formation and the Eagle Ford formation, but current drilling programs are focused only on the liquids-rich reserves.
As of December 31, 2012, we have 27,727 gross and 25,700 net developed acres and 64,542 gross and 50,192 net undeveloped acres in the Eagle Ford. In the Olmos we have 50,532 gross and 50,041 net developed acres and 52,893 gross and 48,919 net undeveloped acres.
Our 2012 year-end proved reserves from continuing operations in our South Texas core area consisted of 52.0 MMBoe developed and 104.6 MMBoe undeveloped reserves, for total proved reserves of 156.6 MMBoe, or 81.6% of our 2012 year-end total proved reserves. Our Artesia Wells Eagle Ford, AWP Eagle Ford, and AWP Olmos fields in South Texas accounted for approximately 71% of the company's proved reserves at year-end 2012.
During 2012, we successfully drilled 55 wells in our South Texas core area: 22 wells in our Artesia Wells Eagle Ford field, 22 wells in our AWP Eagle Ford field, nine wells in our AWP Olmos field, and two wells in our Fasken Eagle Ford field. Our South Texas area provided 73.1% of our 2012 annual production of 11.7 MMBoe.
We have begun conducting downspacing tests to optimize the development of many of our Eagle Ford acreage positions. During 2013, we plan to drill approximately 13 wells in the Artesia Wells field, 16 wells in the AWP field (six in the Olmos sand and 10 in the Eagle Ford shale), and two wells in the Fasken field.
See South Texas Core Area.
Southeast Louisiana Core Area
Our Southeast Louisiana core area of operations includes two principal fields: the Lake Washington field located in the northwest corner of Plaquemines Parish and the Bay de Chene field located along the common boundary of Lafourche Parish and Jefferson Parish. Both fields are inland-water fields that produce liquids-rich reserves from multiple stacked Miocene sand layers radiating outward and downward from the surface of a centrally located salt dome. Drilling and completion operations in the fields, which are highly faulted, are conducted from barge-based rigs.
We acquired our first properties in Lake Washington in 2001, purchasing additional reserves in 2006. We purchased 100% working interests in Bay de Chene in 2004 and 2005. Between the two fields is a region where we drilled a successful exploratory well in 2008 (the Shasta prospect). Our early wells in Lake Washington were drilled to depths of approximately 6,000 feet, but after 2004, when we conducted a three-dimensional seismic survey over the field and subsequently developed a proprietary geoscience database over 700 square miles, we began drilling to depths exceeding 16,000 feet. When drilling began in Bay de Chene in 2006, it was also covered by the database and Bay de Chene wells reached depths of approximately 15,000 feet.
Both Lake Washington and Bay de Chene have undergone significant infrastructure development to upgrade the fields and also to repair extensive hurricane damage. Hurricane Katrina inflicted damage on both fields in 2005, and Hurricane Gustav and Hurricane Ike destroyed vital facilities in Bay de Chene in 2008, resulting in the shut-in of the field's production for an extended period. Large new production processing facilities were constructed in both fields, with the Lake Washington facility commissioned in mid-2008 and the Bay de Chene facility commissioned in mid-2009. Following the collapse of commodity prices in late 2008 and our subsequent focus on horizontal drilling in South Texas, we deferred drilling deeper wells in these fields; however, we launched a shallow well drilling program in Lake Washington in 2009 that, together with other production optimization activities, has consistently added to the field's production.
As of December 31, 2012, we owned drilling and production rights in 15,231 net acres in Lake Washington and 14, 253 net acres in Bay de Chene. All our acreage is covered by our proprietary geoscience database. Our 2012 year-end reserves in Southeast Louisiana consisted of 7.9 MMBoe of developed and 7.1 MMBoe of undeveloped reserves, for total proved reserves of 15.0 MMBoe, or 7.8% of the company’s 2012 year-end total proved reserves. Our Southeast Louisiana core area provided 19.0% of our company’s 2012 total production of 11.7 MMBoe.
During 2012, we drilled 10 development wells and conducted numerous production enhancement operations in Lake Washington, and we drilled one well in the Bay de Chene field. During 2013, we plan to drill three wells and continue our enhancement projects in Lake Washington. In addition, we are preparing to drill a sub-salt well in our Lake Washington field in the future.
See Southeast Louisiana Core Area.
Central Louisiana Area
Our Central Louisiana core area includes two fields producing from the Austin Chalk trend and one field producing primarily from the Wilcox sands. The two fields producing from the Austin Chalk trend, both acquired in a large company acquisition in 1998, are the Masters Creek field, which is located at the adjoining southern corners of Rapides Parish and Vernon Parish in Louisiana; and the Burr Ferry Field, which lies along the western border of Vernon Parish and is subdivided into North Burr Ferry and South Burr Ferry. The field producing from the Wilcox sands, acquired in 2005, is the South Bearhead Creek field in Beauregard Parish.
We pursued a vigorous horizontal drilling program in the Austin Chalk fields from 1998 to 2001, but because of drastic changes in the industry environment we shifted our focus from the short-lived Austin Chalk reserves to long-lived reserves in other core areas. From 2006–2008, we conducted a 100% successful drilling program of 19 vertical wells in the Bearhead Creek field, but also suspended that program when commodity prices dropped sharply in 2008. In 2010, with the advancement in horizontal drilling technologies, especially in geosteering, we resumed drilling in the Austin Chalk trend with a 50% joint venture partner, focusing on the liquids-rich Burr Ferry field.
As of year-end 2012, we owned drilling and production rights in 118,638 net acres in Burr Ferry, 37,458 net acres in Masters Creek, and 5,901 net acres in South Bearhead Creek. During 2012, we drilled four non-operated and one operated well in Burr Ferry and plan to drill approximately three wells in the field in 2013. Also in 2012, we spudded a horizontal well in South Bearhead Creek field that will be completed in 2013. (Note: On May 2, 2013, the company announced that it had sold its interests in the Brookeland field.)
Our 2012 year-end reserves in the Central Louisiana area consisted of 5.7 MMBoe of developed and 14.7 MMBoe of undeveloped reserves, for total proved reserves of 20.4 MMBoe, or 10.6% of the company’s total proved reserves. The area contributed 7.7%, or 898 MBoe, of the company’s total 2012 production.
(Note: The name of this area changed from Central Louisiana/East Texas area to Central Louisiana area following our divestiture of the East Texas Brookeland Field on May 1, 2013. On August 1, 2013, we announced that we have decided to sell all the Central Louisiana properties to increase our focus on our assets in South Texas.)
See Central Louisiana Core Area.
For additional information, please see the latest Form 10-K and Form 10-Q.