May 6, 2010. Swift Energy typically sells its oil and natural gas production at market prices near the wellhead or at a central point after gathering and/or processing. We usually sell our natural gas in the spot market on a monthly basis, while we sell our oil at prevailing market prices. We do not refine any oil we produce. Shell Oil Company and its affiliates accounted for approximately 48% and 28% of our gross oil and gas sales in 2009 and 2008, respectively. In 2008 Chevron and its domestic affiliates accounted for 25% of our gross oil and gas sales. No other purchasers accounted for more than 10% of our total oil and gas sales for the past two years. Due to the demand for oil and natural gas and availability of other purchasers, we do not believe that the loss of any single oil or natural gas purchaser or contract would materially affect our revenues.

During 2009, our marketed volume of hydrocarbons from our four core areas of operation plus a few non-core wells totaled 8,731 MBoe, which included 4,346 MBbl of oil, 1,183 MBbl of natural gas liquids, and 19,211 MMcf of natural gas (see table). Our total sales were $371.7 million, a decrease of 53%, or $422.1 million, from our sales in 2008. The decrease was due to price variances that had a $317.2 million unfavorable impact and volume variances that had a $104.9 million unfavorable impact.

Southeast Louisiana Area

The Southeast Louisiana core area consists of two fields: Lake Washington and Bay de Chene (see area overview).

Our oil production from the Lake Washington Field is delivered into ExxonMobil’s crude oil pipeline system or transported on barges for sales to various purchasers at prevailing market prices or at fixed prices tied to the then-current NYMEX crude oil contract for the applicable month(s). Our natural gas production from this field is either consumed on the lease or is delivered into El Paso’s Tennessee Gas Pipeline system and then sold in the spot market at prevailing prices. Natural gas delivered into Tennessee Gas Pipeline is processed at the Yscloskey plant. In 2008, we completed a connection which provides for the delivery of natural gas from this field to El Paso’s Southern Natural Gas pipeline system (Sonat) and the processing of gas delivered to Sonat at the Toca Plant.

Our oil production from the Bay de Chene Field is transported on barges for sales to various purchasers at prevailing market prices. Natural gas production is sold into an intrastate pipeline with prices tied to monthly and daily natural gas price indices.

This core area provided 52.8% of our total 2009 company production, including 63% of our total liquids production, with sales of 4.8 MMBoe for $232.5 million.

South Texas Area

The South Texas core area consists of the AWP Field plus three smaller fields: Sun TSH, Briscoe Ranch, and Las Tiendas (see area overview). It also includes several producing properties outside these fields.

In 2008, we entered into gas processing and gas transportation agreements for our natural gas production in the AWP field with Enterprise Hydrocarbons L.P. and Enterprise Texas Pipeline, replacing the ten-year agreements with Enterprise that expired in 2008. Processing revenues are received from Enterprise. The residue gas is sold at downstream connections with the Enterprise pipeline at prevailing market prices. Oil production is transported to market by truck or pipeline and sold at prevailing market prices.

In the Sun TSH, Briscoe Ranch, and Las Tiendas fields, our oil production is sold at prevailing market prices and transported to market by truck. Natural gas from the fields is delivered either to Enterprise South Texas Gathering or Regency Gas Services. For natural gas delivered to Enterprise, the natural gas is sold to Enterprise, with Swift receiving revenues from residue gas sales and processed liquids. For natural gas delivered to Regency, the natural gas production is transported to a downstream processing plant. We sell the residue gas at prevailing market prices and receive processing revenues from Regency.

This area provided 30.1% of our company's total 2009 production, including 43% of our total natural gas production, with sales of $77.4 million.

Central Louisiana/East Texas Area

The Central Louisiana/East Texas core area consists of four fields: Brookeland, Burr Ferry, Masters Creek, and South Bearhead Creek (see area overview).

Our oil production from all these fields is sold to various purchasers at prevailing market prices and transported by truck to market. Our natural gas production from Brookeland, Burr Ferry, and Masters Creek is processed under long-term gas processing contracts with Eagle Rock Operating, LLC. The processed liquids and residue gas production are sold in the spot market at prevailing prices. South Bearhead Creek natural gas production is sold into the interstate market on Trunkline Gas Company’s pipeline at prevailing market prices.

This area provided 9.5% of our total 2009 company production with sales of $37.0 million.

South Louisiana Area

The South Louisiana core area consists of six fields: Cote Blanche Island, Bayou Sale, Horseshoe Bayou, Jeanerette, High Island, and Bayou Penchant (see area overview).

Our oil production from the Cote Blanche Island Field is transported on barges for sales to various purchasers at prevailing market prices. Natural gas production is sold into intrastate pipelines with prices tied to monthly and daily natural gas price indices.

In the fields of Bayou Sale, Horseshoe Bayou, High Island, and Jeanerette, the oil production is transported to market by truck and is sold to various purchasers at prevailing market prices. Natural gas production for each of these fields is sold into one or more interstate pipelines at prevailing market prices. (Bayou Penchant is a nonoperated field.)

This area provided 7.2% of our total 2009 company production with sales of $24.1 million.

First Quarter 2010 Sales

During the first quarter of 2010, the production volume of hydrocarbons from our four core areas of operation plus a few non-core wells totaled 2,045 MBoe and consisted of 945 MBbl of oil, 303 MBbl of NGL, and 4.8 Bcf of natural gas. Our total first quarter sales were $110.0 million, an increase of 44%, or $33.6 million, from our sales in first quarter 2009.

The company realized an aggregate average price of $53.81 per Boe during first quarter 2010, an increase of 67% from the $32.29 per Boe received in first quarter 2009 and an increase of 4% from the $51.75 per Boe received in fourth quarter 2009. Average crude oil prices increased 90% to $78.10 per barrel from $41.15 per barrel in first quarter 2009; average natural gas prices increased 13% to $4.74 per Mcf from $4.19 per Mcf in first quarter 2009; and natural gas liquids (NGL) increased 99% to $44.71 per barrel from $22.52 per barrel in first quarter 2009.

During first quarter 2010, we recorded a net loss of $0.5 million related to our derivative activities. Had this loss been recognized in the oil and gas sales account, our average oil price would have been $78.09 per barrel for first quarter 2010, and our average natural gas price would have been $4.64 per Mcf.

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 (in reverse chronological order)

May 3, 2012: PRESS RELEASE. Total oil and gas sales for first-quarter 2012 decreased $8.1 million, or 6%, to $136.1 million from the $144.1 million generated in first-quarter 2011, primarily because of lower realized natural gas prices during the 2012 period. The relative volumes of the first-quarter production components and the prices received for each are compared with those for first-quarter 2011 and fourth-quarter 2011 in the following table.

2012 FIRST QUARTER FORM 10-Q.In first-quarter 2012, crude oil provided 32% of our production and 73% of our sales; natural gas provided 55% of our production and15% of our sales; and natural gas liquids accounted for  the remaining production and sales. The contributions to the first-quarter 2012 production and sales from our three core areas are shown in the following table, along with those for the same period in 2011.

Our $8.1 million decrease in oil and natural gas sales in first-quarter 2012 from first-quarter 2011 resulted from:
 
• Price variances – net decrease = $4.6 million
  $1.3 million decrease due to the 7% decrease in NGL prices,
  $15.1 million decrease attributable to the 43% decrease in natural gas prices,
  $11.8 million increase due to 14% increase in average oil prices received.

• Volume variances – net decrease = $3.4
  $10.0 million decrease due to the 0.1 million barrel decrease in oil production volumes,    $1.4 million increase attributable to the less than 0.1 million barrel increase in NGL    production volumes,
  $5.2 million increase due to the 1.4 Bcf increase in natural gas production volumes.

During the first quarter of 2012, we recorded a net loss of $0.4 million related to our derivative activities, compared to a net loss of $0.2 million during first-quarter 2011. This activity is recorded in “Price-risk management and other, net” on our condensed statements of operations. Had these amounts been recognized in the oil and gas sales account, our average oil price would have been $111.55 and $98.31 for the first quarters of 2012 and 2011, respectively, and our average natural gas price would have been $2.18 and $3.83 for the first quarters of 2012 and 2011, respectively.

February 23, 2012: PRESS RELEASE; 2011 FORM 10-K; 2011 FOURTH QUARTER WEBCAST. We produced 2.70 MMBoe during the fourth quarter of 2011, a 24% increase over fourth quarter 2010 production, and a 6% sequential increase compared to third quarter 2011 production of 2.54 MMBoe.

This production growth combined with stronger oil prices resulted in a 22% increase in net income from third quarter 2011. And for the full-year 2011, production was up 26% while income increased 82%.

In the fourth quarter of 2011, our average crude oil price increased 31% to $111.79 per barrel from $85.52 per barrel realized in the same period in 2010. For the same periods, average natural gas prices were $3.39 per Mcf, a decrease of 5% from the $3.57 per Mcf average price realized a year earlier. The price for NGL averaged $52.86 per barrel in the fourth quarter, a 23% increase from fourth quarter 2010 NGL prices of $42.81 per barrel.

For the full year of 2011, our net company sales consisted of 3,865 MBbl of oil at an average sales price of $107.00 per barrel, 1,362 MBbl of natural gas liquid at $52.13 per Bbl,  and 29,901 MMcf of natural gas at $3.94 per Mcf, for total sales of 10,211 MBoe. Of this amount, 2,775 MBoe was produced from the AWP Olmos field, 1,100 MBoe was produced from the AWP Eagle Ford field, and 1,438 MBoe was produced from the Fasken field.

November 3, 2011: PRESS RELEASE; 2011 THIRD QUARTER FORM 10-Q. As a result of increased activity levels in South Texas, our third-quarter 2011 production was 2.54 MMBoe, an increase of 23% when compared to 2010 third-quarter production of 2.07 MMBoe. Natural gas production increased 67% (to 8.15 Bcf), while crude oil production decreased 7% (to 937 MBbl) and NGL production decreased 4% (to 247 MBbl) from the same period in 2010. Third-quarter sales from the three core areas are shown in the following table.

Sequentially, our production decreased 4% from the 2.64 MMBoe produced in the second quarter of 2011. Events affecting production volumes during the third quarter include: Tropical Storm Lee shutting in production across South Louisiana, delays in the commissioning of a third-party natural gas pipeline and processing plant in McMullen County, TX, periodic transportation and processing curtailments under existing interruptible agreements (also in McMullen County) and the failure in late September of a third-party operated natural gas gathering line in Webb County, TX. Additionally, late in the third quarter, a contracted drilling rig went out of service to undergo significant repairs. The loss of drilling activity caused by this rig being out of service will also affect our fourth-quarter production volumes and our year-end exit rate. These events negatively impacted production by approximately 120,000 Boe in the third quarter and are expected to negatively impact full-year 2011 production by approximately 530,000 Boe.

During the first week of November, Swift Energy resumed production and sales of natural gas from the Eagle Ford shale in the Fasken field in Webb County, TX. This production had been shut in as a result of a third-party pipeline failure, which was announced on September 29. Intermittent production curtailments are expected in this area as work necessary to ensure the integrity of the system is performed by the operator.

Our year-end production exit rate is expected to be 31,000 – 33,000 Boe/day. We still anticipate some temporary third-party service, infrastructure, and transportation delays, which will affect the on-line dates of certain wells that were included in our previous exit rate target of 34,000 – 36,000 Boe/day. This revised exit rate target represents a 17% - 24% increase over our 2010 production exit rate.

We realized an aggregate average price of $56.31 per Boe during the third quarter, up from the $51.06 per Boe average price received in the third quarter of 2010. In the third quarter of 2011, average crude oil prices increased 38% to $105.55 per barrel from $76.39 per barrel realized in the same period in 2010. For the same periods, average natural gas prices were $3.68 per Mcf, a decrease of 5% from the $3.87 per Mcf domestic average price realized a year earlier. Prices for NGLs averaged $57.76 per barrel in the third quarter, a 45% increase from third-quarter 2010 NGL prices of $39.88 per barrel.

August 4, 2011: PRESS RELEASE; 2011 SECOND QUARTER FORM 10Q. Our 2011 second-quarter production was 2.64 MMBoe, an increase of 30% when compared to our 2010 second-quarter production of 2.03 MMBoe. Natural gas production increased 70%, while crude oil production increased 2% and NGL production increased 20%. Sequentially, our 2011 second-quarter production decreased slightly from the 2.65 MMBoe produced in the first quarter of 2011, as natural gas production, primarily from our South Texas AWP field, was periodically curtailed throughout the quarter by a large pipeline operator and completely shut in for approximately four days at the end of June. We expect to 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 from the AWP field is completed by the end of the third quarter.

We realized an aggregate average price of $60.29 per Boe in sales of our production during the second quarter of 2011, up 16% from an average price of $51.80 per Boe received in the second quarter of 2010.  In the second quarter of 2011, average crude oil prices increased 44% to $112.09 per barrel from $77.83 per barrel realized in the same period in 2010; average natural gas prices increased 6% to $3.93 per Mcf from $3.72 per Mcf; and average natural gas liquids prices increased 20% to $50.41 per barrel from $41.92 per barrel. 

Our total sales for the second quarter of 2011 were $159.2 million, up 52% from our sales in the second quarter of 2010. Sales from the core areas of operation in the second quarter of 2011 were $77.7 million for the Southeast Louisiana area, $54.7 million for the South Texas area, $26.1 million for the Central Louisiana/East Texas area, and $0.7 million for non-core properties. (Note: The Central Louisiana/East Texas area now includes the former South Louisiana area.) 

During the second quarter of 2011, we recorded a net loss of $0.8 million related to our derivative activities.  Had this amount been recognized in the oil and gas sales account, our average oil price during the quarter would have been $111.82 and our average natural gas price would have been $3.86. We have purchased natural gas floors that will cover more than 30% of our currently expected 2011 third-quarter natural gas production at an average NYMEX strike price of $4.62 per MMBtu. 

May 5, 2011: PRESS RELEASE; 2011 FIRST QUARTER 10-Q. Swift Energy’s first quarter 2011 production was 2.65 MMBoe, an increase of 29% (or 0.6 MMBoe) when compared to 2010 first quarter production of 2.04 MMBoe.

Oil production accounted for 37% of our first quarter 2011 production and 67% of our oil and gas revenues, and combined production for both oil and NGL made up 50% of our first quarter 2011 production and 79% of our oil and gas sales. This emphasis has allowed us to benefit from better margins for oil production than natural gas production during the quarter.

Oil and gas sales for first quarter 2011 increased by 31%, or $34.2 million, from the level of those revenues for the comparable 2010 period. The Company realized an aggregate average price of $54.51 per Boe during first quarter 2011, up from the $53.81 per Boe average price received in first quarter 2010. Average crude oil prices increased 26% to $98.61 per barrel from $78.10 per barrel realized in the same period in 2010. Average natural gas prices were $3.82 per Mcf, a decrease of 19% from the $4.74 per Mcf domestic average price realized a year earlier. Prices for NGLs averaged $48.87 per barrel in the first quarter, a 9% increase from first quarter 2010 NGL prices of $44.71 per barrel.

Total sales for first quarter 2011 were $144.2 million. Sales from the core areas of operation were $71.0 million for the Southeast Louisiana area, $49.6 million for the South Texas area, $23 million for the Central Louisiana/East Texas area, and $0.6 million for the non-core properties. (Note: The Central Louisiana/East Texas area now includes the former South Louisiana area.)

March 8, 2011: PRESS RELEASE. Swift Energy announced that it has entered into a long-term agreement for natural gas gathering, processing and transportation services in South Texas  with Southcross Energy GP LLC and its affiliates.  This agreement will involve the construction of a new pipeline to the company’s AWP Field in McMullen County that is expected to be in service mid-2011.  Swift will have up to 90 million cubic feet of gas per day of firm capacity for those services.

Swift Energy has also executed a long-term sales contract with Southcross Marketing Ltd for the natural gas liquids extracted during the processing of the gas and a portion of the residue gas that is indexed to market.

February 24, 2011: PRESS RELEASE; 2010 FORM 10-K. Swift Energy produced 2.18 million barrels of oil equivalent (MMBoe) during the fourth quarter of 2010, a 5% increase compared to third quarter 2010 production, and a 1% decrease compared to fourth quarter 2009 production of 2.21 MMBoe.

Total production in 2010 was 8,330 MBoe (see Production), with sales from the core areas as follows:

Oil and gas sales in 2010 increased by 17%, or $64.9 million, from the level of those revenues for 2009, and our net production volumes in 2010 decreased by 8%, or 0.7 MMBoe, over net production volumes in 2009. Average prices for oil increased to $79.45 per barrel in 2010 from $60.07 per barrel in 2009. Average natural gas prices increased to $3.96 per Mcf in 2010 from $3.48 per Mcf in 2009. Average NGL prices increased to $42.44 per Bbl in 2010 from $31.36 per Bbl in 2009.

During the fourth quarter, the company realized an aggregate average price of $52.98 per Boe, an increase of 2% from the $51.75 per Boe average price received in the same quarter of 2009, and improved sequentially, as fourth quarter average prices were 4% higher than average prices realized in the third quarter of 2010. 

In the fourth quarter of 2010, average crude oil prices increased 14% to $85.52 per barrel from $75.09 per barrel realized in the same period in 2009. Average natural gas prices were $3.57 per thousand cubic feet (Mcf) during the fourth quarter 2010, a decrease of 5% from the $3.75 per Mcf average price realized in the comparable period a year earlier. Prices for natural gas liquids (NGL) averaged $42.81 per barrel in the fourth quarter, a 6% increase from fourth quarter 2009 NGL prices of $40.45 per barrel.

November 4, 2010: PRESS RELEASE; 2010 THIRD QUARTER 10-Q. During the third quarter of 2010, our net oil and gas production volume of hydrocarbons from our four core areas of operation plus a few non-core wells totaled 2,072 MBoe and consisted of 1,005 MBbl of oil, 256 MBbl of natural gas liquids (NGL), and 4.87 Bcf of natural gas. This volume was lower than our third quarter 2009 volume by 147 MBoe, or 7%.

Our total third quarter sales were $105.8 million, an increase of 8% over our sales of $97.9 million in third quarter 2009. The company realized an aggregate average price of $51.06 per Boe during third quarter 2010, an increase of 16% from the $44.14 per Boe received in third quarter 2009 and a decrease of 1% from the $51.80 per Boe received in second quarter 2010. Average crude oil prices increased 12% to $76.39 per barrel from $68.15 per barrel in third quarter 2009; average natural gas prices increased 36% to $3.87 per Mcf from $2.84 per Mcf in third quarter 2009; and natural gas liquids (NGL) increased 14% to $39.88 per barrel from $35.09 per barrel in third quarter 2009.

During the third quarter of 2010, we recorded a net loss of $0.2 million related to our derivative activities. Had this loss been recognized in the oil and gas sales account, during the third quarter of 2010 our average oil price would have been $76.44 per barrel and our average natural gas price would have been $3.81 per Mcf.

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.

August 5, 2010: PRESS RELEASE; 2010 SECOND QUARTER 10-Q. During the second quarter of 2010, our production volume of hydrocarbons from our four core areas of operation plus a few non-core wells totaled 2,028 MBoe and consisted of 979 MBbl of oil, 279 MBbl of NGL, and 4.6 Bcf of natural gas. This volume was lower than our second quarter 2009 volume by 227 MBoe, or 10%.

Our total second quarter sales were $105.1 million, an increase of 27%, or $22.3 million, from our sales in second quarter 2009. The company realized an aggregate average price of $51.80 per Boe during second quarter 2010, an increase of 41% from the $36.71 per Boe received in second quarter 2009 and a decrease of 4% from the $53.81 per Boe received in first quarter 2010. Average crude oil prices increased 40% to $77.83 per barrel from $55.42 per barrel in second quarter 2009; average natural gas prices increased 19% to $3.72 per Mcf from $3.11 per Mcf in second quarter 2009; and natural gas liquids (NGL) increased 48% to $41.92 per barrel from $28.26 per barrel in second quarter 2009.

During the second quarter of 2010, we recorded a net gain of $1.5 million related to our derivative activities. Had this gain been recognized in the oil and gas sales account, during the second quarter of 2010 our average oil price would have been $78.10 per barrel and our average natural gas price would have been $3.99 per Mcf.

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