May 6, 2010. At year-end 2009, Swift Energy had estimated proved reserves of 112.9 MMBoe (677.4 Bcfe) 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 geographical distribution of the proved reserves throughout the company’s operating properties is shown in the following table.

^aProved reserves are those for which there is a high degree of confidence that the quantities will be recovered—a 90% probability that the quantities recovered will equal or exceed the estimate.
^bLas Tiendas Field (Fasken) and other small South Texas properties.
^cBayou Penchant Field (nonoperated) and High Island Field.

Historically, we have added proved reserves through both drilling activities and acquisition activities within or near our core operating areas, and over the five-year period ending December 31, 2009, our year-end proved reserves increased from 108.8 MMBoe to 112.9 MMBoe. During this same period we have replaced 109% of our production on average.

Our year-end 2009 proved reserves of 112.9 MMBoe were 3% lower than our year-end 2008 reserves of 116.4 MMBoe due mainly to a change in how reserves are calculated under new regulations of the Securities and Exchange Commission effective in 2009 (see explanation below). Our year-end 2008 reserves of 116.4 MMBoe were also lower than our year-end 2007 reserves of 133.8 MMBoe, primarily because the SEC regulations then in effect required that we use the low commodity prices of December 31, 2008, in our calculations, and to a lesser extent because we had downward technical revisions in the Cote Blanche Island Field and the Bayou Sale Field during the year.

We are forecasting moderate corporate production and reserves growth targets for 2010 and anticipate that our reserves will grow 5% to 10% over 2009 levels. (See update below in 2010 reserves estimate from November 4, 2010, press release.) We believe that with our South Texas and South Louisiana opportunities we have positioned the company for future reserves and production growth from our core areas along the Gulf Coast.

Effect of SEC Changes in Reserves Estimates. In 2008 the SEC adopted its first changes to disclosure requirements for oil and gas reporting in 25 years, effective in 2009. Under the new guidelines, the December 31 prices previously used in reserves calculations were replaced with 12-month averages of prices on the first day of each month throughout the year. This reduces the impact of year-end price volatility on year-end reserves reports and smooths the effect of seasonal pricing. The SEC also now allows the use of new technologies for estimating proved reserves volumes, such as the seismic data technology that we employ (see Louisiana Geoscience Databases).

Under these new SEC reserves disclosure guidelines, our 2009 year-end proved reserves totaled approximately $1.3 billion of present value discounted at 10% per year (PV-10 is a non-GAAP measure; see press release for reconciliation to the GAAP measure). The 12-month average prices used for the 2009 PV-10 calculations were $59.76 per barrel for crude oil and $3.78 per Mcf for natural gas, which, because of price increases throughout the year, were lower than the December 31, 2009, prices that would have been used under the previous guidelines. If the previous guidelines had been followed, our 2009 year-end PV-10 value of proved reserves would have been approximately $2.0 billion. This is to be compared with the value of approximately $1.3 billion calculated for our 2008 year-end proved reserves under the previous guidelines.

2010 First Quarter Increase in Year-End Reserves Growth Guidance

With natural gas prices remaining weak in first quarter 2010, our 2010 production is weighted towards crude oil and natural gas liquids whose higher prices provide us with strong cash flows. This focus should add higher value production but slightly lower full-year production volumes than our guidance previously indicated. On the other hand, we have incorporated operational efficiencies in our drilling program, especially in South Texas, that by year-end should lead to higher proved reserves and support a recent increase in our year-end reserves growth guidance to a mean range of 8% to 12% rather than the 5% to 10% predicted at year-end 2009. (See update in 2010 reserves estimate below from November 4, 2010, press release.)

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)

February 23, 2012: PRESS RELEASE; 2011 Form 10-K. Our oil and gas proved reserves estimates at year-end 2011 were 159.6 MMBoe, 20.2% higher than our 2010 year-end proved reserves estimates of 132.8 MMBoe even after the reduction of approximately 16 MMBoe for proved reserves that were sold during the fourth quarter of 2011. This record level of year-end proved reserves for the company is primarily due to the activity level and performance of our South Texas core area.

Of the 2011 year-end reserves, 123.8 MMBoe (or 77.6%) were located in South Texas, with 41.0 MMBoe developed; 17. 3 MMBoe (10.8%) were located in Southeast Louisiana, with 8.9 MMBoe developed; and 18.4 MMBoe (11.5%) were located in Central Louisiana/East Texas, with 5.7 MMBoe developed. The composition of the company’s total reserves was 35.6% oil and natural gas liquids. Our current 2012 goal is to increase proved reserves volumes by 10% to 15%.

Our year-end 2011 proved reserves were valued at approximately $1.9 billion of present value discounted at 10% per year (PV-10), compared to a PV-10 value of $1.8 billion for the company's 2010 year-end proved reserves. Pricing for 2011 reserves and PV-10 calculations utilized $103.87 per barrel for crude oil and $3.89 per Mcf for natural gas, compared to $78.31 per barrel and $4.08 per Mcfe used for reserves valuation at year-end 2010. (See page 7 of February 23, 2012, press release for a reconciliation of PV-10 value at year-end 2011, a non-GAAP measure, to the GAAP standardized measure of discounted future cash flows).

November 15, 2011: PRESS RELEASE. Our preliminary plans for 2012 anticipate capital expenditures of $575 to $625 million. These expenditures will be allocated primarily towards drilling and completion activities, with approximately 75%–80% of expected expenditures focused on the company’s liquids-rich acreage in the Eagle Ford shale and the Olmos sands in South Texas. The remainder of the 2012 expenditures are expected to be directed towards drilling oil wells in our Southeast Louisiana core area and Austin Chalk oil and natural gas development wells in our Central Louisiana/East Texas core area.

Based upon these preliminary spending plans for next year, the company is targeting production to grow 20%–25% and reserves to grow 15%–20% over 2011 levels.

February 10, 2011: PRESS RELEASE. Swift Energy announced that its year-end estimate of proved reserves as of December 31, 2010, was 132.8 MMBoe, 18% higher than 2009 year-end proved reserves of 112.9 MMBoe.  These 2010 proved reserves are 47% crude oil and natural gas liquids, with 45% classified as proved developed. 

Swift Energy’s year-end 2010 proved reserves were valued at approximately $1.8 billion of present value discounted at 10% per year (PV-10), compared to a PV-10 value of $1.3 billion for the company’s 2009 year-end proved reserves.  Pricing for reserves and PV-10 calculations utilized $78.30 per barrel for crude oil and $4.07 per thousand cubic feet (Mcf) for natural gas at year-end 2010, compared to $59.76 per barrel and $3.78 per Mcf used for reserves valuation at year-end 2009.

As previously guided, year-end 2011 reserves volumes are expected to grow 15% to 20% over 2010 levels as a result of increased development drilling activity in the company’s South Texas and Central Louisiana/East Texas core areas.

November 10, 2010: PRESS RELEASE. Swift Energy announced a preliminary 2011 capital budget of $430 million to $450 million to cover an accelerated drilling program with a production growth goal of 25% to 30% and a reserves growth goal of 15% to 20%. Approximately 75% to 80% of the capital budget will be spent in our South Texas core area, much of it on drilling oil and condensate development wells on acreage proved up in 2010 in the Eagle Ford shale and Olmos sands. The remainder will be directed towards oil production in our Southeast Louisiana core area and high-rate Austin Chalk oil and natural gas development wells in our Central Louisiana/East Texas core area. This program will be partially funded by proceeds from a public offering of 3 million shares of the company’s common stock also announced on November 10.

November 4, 2010: PRESS RELEASE. Our projected estimate of an increase in reserves at year-end 2010 remains at 15% to 20% above the 2009 year-end level of 112.9 MMBoe (677.4 Bcfe).

August 5, 2010: PRESS RELEASE. With the addition of two drilling rigs in our South Texas area (see E&D section), together with a dedicated fracture enhancement crew during the latter part of the year, we now expect our proven reserves at year-end 2010 to be 15% to 20% higher than the 112.9 MMBoe reported at year-end 2009. Our previous guidance had predicted an 8% to 12% increase.

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