To date in the first quarter 2012, we have completed the following wells: two operated Eagle Ford wells, one operated Olmos well, and one non-operated Eagle Ford well in the AWP field; two operated Eagle Ford wells in the Fasken field; and one operated Eagle Ford well in the Artesia Wells field.

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

For 2012, Swift Energy is targeting production to increase 14% to 20% and proved reserves to increase 10% to 15%, over respective 2011 levels, with a focus on oil and liquid rich opportunities.

November 15, 2011: PRESS RELEASE. Swift Energy announced preliminary plans for 2012 capital expenditures of $575 to $625 million. These expenditures will be allocated primarily towards drilling and completion activity, 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 2012 expenditures is expected to be directed towards drilling oil wells in Southeast Louisiana 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.

November 3, 2011: PRESS RELEASE; 2011 THIRD QUARTER 10-Q. In our South Texas area during the third quarter of 2011, we drilled ten operated horizontal development wells to the Eagle Ford shale: six wells in the AWP field in McMullen County, three in the Fasken field in Webb County and one in the Artesia Wells field in LaSalle County. We currently have 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 South Texas during the third quarter, we completed nine operated wells and one nonoperated well: four operated Olmos wells, two operated Eagle Ford wells, and one nonoperated Eagle Ford well in the AWP field in McMullen County; two operated Eagle Ford wells in the Fasken field in Webb County; and one operated Eagle Ford well in the Artesia Wells field in LaSalle County.

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

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

During the first week of November, we 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 production in the South Texas area during the third quarter was 1,449 MBoe as compared to 796 MBoe in the third quarter of 2010.

During the third quarter, we sold our interest in six fields in South Louisiana, two in Texas, and one in Alabama to EnergyQuest II, LLC effective August 1, 2011. The sales price was $48.8 million, net of $4.7 million in purchase price adjustments and the buyer’s assumption of approximately $27.7 million of asset retirement related to these properties. The sale closed in October, with the sales prices subject  to customary post-closing adjustments that are not expected to be material. The fields in Louisiana include Horseshoe Bayou/Bayou Sale, High Island, Bayou Penchant, Jeanerette and Cote Blanche Island. The Texas fields include Bego South and Briscoe Ranch. The Alabama field includes Chunchula.

We will use the net cash proceeds from this transaction (as adjusted for cash flows from effective date through the closing date) to fund a portion of our 2011 capital expenditures. 

September 29, 2011: PRESS RELEASE. Failure of a third party operated gathering line earlier this week halted natural gas sales from our Fasken field in Webb County, TX. Gross natural gas sales volumes in the Fasken field were averaging approximately 40 million gross cubic feet per day before the failure occurred, and continued well productivity above initial expectations in this area led us to recently raise our expected well recovery estimates to 10 billion cubic feet per well. While we expect pipeline services to resume in the near future, the estimation of a service restoration date requires that the pipeline operator complete a full review of the damages and determine a specific repair timeline. This incident will result in our third-quarter production being slightly below the low end of our previous guidance of 2.56 – 2.76 million barrels of oil equivalent (MMBoe).

Our third-quarter production will also 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.

Finally, 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 combined with the pipeline service outage in Webb County 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.

South Texas Second-Quarter and Six-Months Production. Production from the South Texas core area during the second quarter of 2011 totaled 1,372 MBoe, equaling 52% of the company's total second-quarter production. The area's daily production during the second quarter averaged 15,242 net Boe per day. The area’s total production for the first six months of 2011 was 2,733 MBoe, equaling 52% of the company’s total six-months production.

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; 2011 FIRST QUARTER 10Q; 2011 FIRST QUARTER WEBCAST. During first quarter 2011 we continued to focus on further development of our liquids-rich South Texas core area, and we have been extending the lateral lengths of our horizontal wells in the area from approximately 4,000 feet to 6,000 feet. As a result of better than expected performance of the dedicated fracturing fleet we have had since fourth quarter 2010, the year-end drilled but not completed well backlog was reduced substantially during the quarter. This allowed us to return the dedicated fracturing fleet to its vendor for a period of approximately 30 days during the quarter.  As we bring our drilling and completion capabilities into balance during the year, we expect to return the fleet to the vendor one more time for approximately four to six weeks.  We have added a smaller, “spudder” rig in the area, and we are evaluating accelerating our drilling pace further by adding a fourth rig capable of drilling horizontal wells. 

Our first quarter 2011 drilling activities in the South Texas area were limited to the AWP field in McMullen County and included wells drilled both to the Olmos tight sand and to the Eagle Ford shale. A total of eight wells were drilled, two of which were nonoperated. Our well completion activities were performed in both the AWP field and the Fasken field in Webb County. A total of nine wells were completed in the fields—three drilled during first quarter 2011 and six wells drilled in 2010.

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.

Fasken Eagle Ford Wells (Operated). During first quarter 2011, we completed two operated horizontal wells in the Eagle Ford shale in the Fasken field in Webb County, both of which had been drilled during fourth quarter 2010. The first well, the Fasken EF 4H, had an initial production rate of 9.3 MMcf of natural gas per day with flowing casing pressure of 4,610 psi on a 20/64-inch choke after a 12-stage fracture stimulation was performed.  The second well, the Fasken EF 5H, had an initial production rate of 10.7 MMcf with flowing casing pressure of 4,600 psi on a 13/64-inch choke after a 13-stage fracture stimulation.  Both of these wells have performed above expectations. 

Production. Production from the South Texas core area during first quarter 2011 totaled 1,361 MBoe, equaling 51% of the company's total production. The area's production averaged 15,123 net Boe per day, or about 91 million cfe per day, a 52% increase compared to its fourth quarter 2010 production, primarily due to the additional wells brought on line.

February 24, 2011: PRESS RELEASE; 2010 FORM 10-K. Drilling activity in the company's South Texas core area in McMullen County (AWP Field) consisted of one operated horizontal development well drilled to the Eagle Ford shale and two operated horizontal development wells and one vertical well drilled to the Olmos sand. In addition, one nonoperated horizontal development well was drilled by a joint venture partner to the Eagle Ford shale. In Webb County, four operated horizontal development wells were drilled to the Eagle Ford shale. In LaSalle County, one operated horizontal exploration well was drilled to the Eagle Ford shale.

Swift Energy currently has three operated rigs drilling in its South Texas core area and is making plans to contract a shallow drilling rig in this area during the first quarter of 2011. The three rigs are drilling horizontal wells in McMullen County, with two wells targeting the Eagle Ford shale and one well targeting the Olmos tight sand.

During the fourth quarter and through the date of this release (February 24, 2011), the company fracture stimulated 10 operated wells and one nonoperated well drilled to the Eagle Ford shale formation and seven wells drilled to the Olmos formation all in South Texas. The initial average production rates for these wells are included in the following table:

Initial Production Test Rates of Horizontal Eagle Ford and Olmos Wells

The test rates in the table above were all consistently measured after the company implemented a specific reservoir management initiative that includes producing all of its horizontal wells in this core area at restricted choke settings.  Initial choke settings are as low as 12/64” and are gradually increased to a setting of up to 20/64” and produced at this level for an extended period of time.  This technique has resulted in higher initial pressure measurements and shallower initial production declines. 

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.

Production from the South Texas core area during 2010 was 3,235 MBoe, equaling 38.8% of the company's total production. Of this amount 33.5% was produced from the Olmos formation and 5.3% was produced from the Eagle Ford shale.

At year-end 2010, the South Texas area held 57.7% of Swift's reserves (37.2% in the Olmos formation and 20.5% in the Eagle Ford shale). The South Texas reserves totaled 76.6 MMBoe, of which 49.4 MMBoe was in the Olmos formation and 27.2 MMBoe was in the Eagle Ford formation. Developed reserves totaled 35.2 MMBoe (28.0 MMBoe of the Olmos reserves and 7.2 MMBoe of the Eagle Ford reserves).

February 10, 2011: PRESS RELEASE. Swift Energy announced that its total capital expenditures for 2010 were approximately $421 million, slightly above expected levels, as completion efficiencies realized in the fourth quarter of 2010 allowed for increased activity levels in South Texas. In total, 12 operated wells and one joint venture well were fracture stimulated during the fourth quarter in this area. 

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; 2010 THIRD QUARTER 10-Q. During the third quarter of 2010, we drilled 16 wells in our South Texas core area: six 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 South Texas Eagle Ford Shale Activities. The six horizontal wells drilled in the Eagle Ford shale during the third quarter consisted of five development wells located in the AWP Field in McMullen County and one exploratory well in the Sun TSH (Tri Bar) Field in LaSalle County.

Three of the Eagle Ford development wells 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 Eagle Ford development wells 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.

The Eagle Ford exploratory well was drilled by the company and was identified as the Carden 1-H. It underwent a 14-stage fracture stimulation and is in the process of flowing back and being brought on line.

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 South Texas Olmos Sand Activities—Horizontal Wells. Of the five horizontal development wells drilled to the Olmos sand during the third quarter, all were drilled by the company in the AWP Field and 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 South Texas Olmos Sand Activities—Vertical Wells. The five vertical wells drilled to the Olmos sand during third quarter 2010 represented a continuation of our production optimization program consisting of shallow vertical oil wells in the northern portion of our AWP 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.

Third Quarter 2010 South Texas Production. Third quarter 2010 production from South Texas was 796 net MBoe, or 38.4% of the company-wide total of 2.07 MMBoe. The company-wide production represented an increase of 2% from our second quarter 2010 production of 2.03 MMBoe. The increase resulted from increased activity levels in our South Texas core area, but was less than had been anticipated because of delays in scheduling fracture stimulation services (see discussion above).

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 core area. 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 in our AWP Field.

We currently have five operated rigs and one non-operated rig drilling in our South Texas core area. 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, delays in 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 Eagle Ford Shale Horizontal Drilling Program. The four operated horizontal wells we drilled to the Eagle Ford shale in second quarter 2010, all in the AWP Field, were the Hayes 1H, the San Miguel Ranch 1H, the Discher 1H, and the PCQ 4H. The Hayes 1H and the San Miguel Ranch 1H have both been placed on production; the Discher 1H is awaiting tie-in to sales; and the PCQ 4H is awaiting completion.

The two non-operated horizontal wells drilled by our joint venture partner to the Eagle Ford shale, also 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 (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.

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 Olmos Sand Horizontal Drilling Program. 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. Both wells have been placed on production.

We now have seven horizontal Olmos wells (all operated) on production 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 Production Enhancement Activities. 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, early in the third quarter we contracted for an additional rig that will be active in this program for the remainder of the year.

Second Quarter 2010 Production and Sales. Of our total second quarter 2010 production of 2.03 MMBoe, the South Texas area contributed 732 MBoe, or 36.1%. Of our total second quarter oil and gas sales of $105.1 million, the area contributed $25.8 million, or 24.5%.

South Texas Seismic Data Acquisitions. 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. After completing five horizontal development wells in the South Texas core area in the AWP Olmos sand (one in late 2008 and four during 2009), we completed two South Texas horizontal wells in first quarter 2010 that had been spudded in December 2009 to exploit the deeper Eagle Ford shale formation—the Fasken EF 1H well in the Las Tiendas Field and the PCQ 1H well in the AWP Field. Early in the second quarter, we finished drilling another Eagle Ford shale horizontal well in the AWP Field—the Hayes 1H, which is awaiting completion—and we spudded two additional horizontal AWP Eagle Ford wells. We have a 100% working interest in all these wells.

Also in first quarter 2010, our 50% joint venture partner (Petrohawk) finished drilling the first horizontal well to the Eagle Ford shale on the 26,000-acre portion of the AWP Field covered by the joint venture. This well, the Bracken JV 1H, was completed in April, after which we assumed operation of the well. A second horizontal joint venture well drilled by Petrohawk in the 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 South Texas first quarter 2010 activity included drilling and completing a shallow vertical development well, the Henry #1, in the AWP Olmos sand and performing refractures on six existing vertical well bores in the field.

South Texas production for first quarter 2010 was 790 net MBoe, or 39% of the company’s total production.

February 25, 2010: 2009 FORM 10-K. At year-end 2009, 43.5 MMBoe, or 38.5%, of the company’s total reserves were in the South Texas core area. During 2009, we drilled 13 wells with 13 successes in this area (11 in the AWP Field, one in the Briscoe Ranch Field, and one in the Sun TSH Field). For the year 2009, South Texas provided 2,721 MBoe, or 30.1%, of the company’s production, with 18.4% coming from the AWP Field.

At year-end, we had 569 wells producing from the Olmos formation in the AWP Field, nearly all with 100% working interest, and 243 producing wells in the other three South Texas fields. In addition, we had 201 proved undeveloped locations (PUDs) in South Texas.

For the year 2010, our capital plans include drilling up to 29 horizontal wells in South Texas—four in the AWP Olmos sand, six in the AWP Eagle Ford shale with 100% working interests, nine in the AWP Eagle Ford shale with 50% working interest (drilled by our joint venture partner Petrohawk), and ten in the Eagle Ford shale in our other South Texas fields. We also plan to perform up to 30 fracture enhancements on previously drilled vertical AWP Olmos wells.

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—two horizontal wells and six shallow vertical wells. 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.

Fourth quarter 2009 production from the South Texas core area totaled 7,192 net Boe per day, or approximately 43 MMcfe per day. This was a 4% increase when compared to third quarter 2009 production in the area. The increase was primarily the result of a program of shallow vertical wells we are drilling in the northern portion of the AWP Field, together with an ongoing refrac program in the same field.

Reviewing Swift Energy’s drilling program, Chief Executive Officer Terry Swift reported that “During the fourth quarter of 2009, we increased our drilling activity, including completing two new, high-rate horizontal wells in the Olmos formation in South Texas. Continuing into the first quarter of 2010, we drilled two horizontal wells in the Eagle Ford shale formation in South Texas. Both of these wells are scheduled for completion in March. These programs are just getting under way and will exploit our large undeveloped acreage positions in the Eagle Ford shale and the Olmos tight sand resource plays. We anticipate that these positions could contribute significantly to production and reserves growth for several years to come.”

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.

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.

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.

November 3, 2009: PRESS RELEASE. 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.