Swift Energy Company announces increase in production — Import

Swift Energy Company announces increase in production

Posted: Friday, January 18, 2002 12:00 am

HOUSTON, TEXAS - Swift Energy Company announced that it expects to report that production increased 10 percent to 11.5 billion cubic feet equivalent («Bcfe») in the fourth quarter of 2001 compared to 10.5 Bcfe in the fourth quarter of 2000, but down slightly from 11.7 Bcfe in the third quarter of 2001.

The average oil price received by the Company for fourth quarter production is estimated to exceed $16.00 per barrel, while the average natural gas price is expected to be above $2.20 per thousand cubic feet.

This should result in a composite average price for the fourth quarter of at least $2.40 per thousand cubic feet equivalent. The

Company also reported that it would establish a reserve allowance of approximately $1.4 million before taxes to account for natural

gas sold to Enron North America, a subsidiary of Enron Corporation, in November 2001 for which payment has not yet been received.

This represents the entirety of any exposure that the Company has with regard to Enron.

The Company expects to report an increase in proven reserves for year-end 2001 ranging from 2% to 5% with a reserve replacement

rate of between 128% and 170%. Due to the recent dramatic decline in oil and gas prices, the Company also expects to take an

after-tax, non-cash charge against its 2001 earnings based on a December 31, 2001 ceiling test impairment. The ceiling test

impairment or write-down does not affect cash flow, however, it does have the effect of reducing future depreciation, depletion and

amortization charges and, in turn, increases reported earnings in subsequent periods. Securities and Exchange Commission

regulations require oil and gas companies using the

«full cost» accounting method to perform a ceiling test by valuing the proven reserves based upon prices received at year-end.

The Company also announced that it had recently signed an agreement with a nine-member bank group that will increase its line of

credit from $250 million to $300 million and its borrowing base from $200 million to $275 million, effective with the closing of the

previously announced acquisition of Southern Petroleum (New Zealand) Exploration Limited («Southern NZ») and the TAWN assets

from Shell New Zealand. At December 31, 2001, the balance borrowed under the Company’s line was $134 million. The credit

facility has been arranged by Banc One Capital Markets, Inc. and led by Bank One, N. A.

The timing of the closing for the TAWN acquisition, the possible exercise by Shell of the previously announced Rimu Option, as

well as the outlook for the U. S. economy and the oil and gas industry provide significant variables for the Company’s operations

during 2002. Taking these factors into consideration, the Company currently estimates that production for the first quarter of 2002

will range between 11.0 and 11.5 Bcfe and between 48.0 and 58.0 Bcfe for the full calendar year 2002. The Company also reported

that its capital budget for 2002 is approximately $106.5 million, exclusive of the net effect of any acquisitions and dispositions. This

amount is down 58% from the capital expenditures of approximately $255 million in 2001. The table at the end of this release

provides guidance as to certain of the operational and financial expectations of the Company for the first quarter 2002 and for the full

calendar year 2002.

Terry Swift, President and Chief Executive Officer of Swift Energy Company, noted that, «The Company was able to expand and

more fully integrate its New Zealand operations and initiate new domestic development activities during 2001. Due in part to the

extreme levels of volatility together with the unfortunate events of 2001, we have implemented higher standards for cost control and

quality of performance. The record high oil and gas prices received earlier in the year created an unprecedented surge in oil and gas

sector service costs along with significant external inefficiencies. The significant decrease in oil and gas prices at year-end 2001

highlighted our modest production and proven reserve results. Despite the disappointments of 2001, we believe the Company is

financially positioned to seize the opportunities before it. As domestic service costs decline, the Company will exploit its core

properties, particularly in Lake Washington, and focus on domestic acquisition opportunities. We will further strengthen the

domestic

operations through cost reduction and improved efficiency. And although the increase in our proven reserves was modest, we had

significant growth in our domestic and international probable reserves base in 2001 and believe the Company is poised for impressive

growth.»

Domestic Activity

During the fourth quarter of 2001, the Company participated in three operated and one non-operated exploration wells domestically.

The Rodriguez #1 well (65% working interest), in the Capri Prospect in the Garcia Ranch area of Willacy County, Texas was

plugged and abandoned during the fourth quarter of 2001, while the Delacroix #1 well (57.5% working interest) in the Grand Lake

Prospect, Plaquemines Parish, Louisiana, and the non-operated Campbell Fraser #1 well (9.5% working interest) in the Max Prospect

in San Jacinto County, Texas, were plugged and abandoned early 2002. The CM #196 well

(100% working interest) in the Duckhead Prospect in the Lake Washington Area in Plaquemines Parish, Louisiana is still drilling

targeting Miocene sands down to approximately 8,700 feet.

Development drilling during the fourth quarter 2001 continued primarily in the Lake Washington Field in Plaquemines Parish,

Louisiana. The drilling program in this area began with one well and one sidetrack well that were drilled in the third quarter 2001.

Four additional wells were drilled in the fourth quarter 2001, including the previously mentioned exploration well. As reported

earlier, the SL-212 #102 well encountered 115 feet of net pay in the targeted Miocene sands. The BLD-CM #12 well was a sidetrack

well that was drilled as planned and penetrated 70 feet of net pay in two zones. The BLD-CM #16 well was drilled to a depth of

8,300 feet and found 46 feet of pay in four

zones. The CM #192 well was drilled to 2,030 feet and found the primary objective with 85 feet of net pay plus secondary sands with

22 feet of net pay. The CM #181 well was drilled to a depth of 3,348 feet and encountered 106 net feet of pay in four zones. All of

these wells are now on production and have increased the total field production to approximately 1,300 to 1,500 barrels of oil per day

from approximately 750 barrels of oil per day.

Additional development drilling included the Hunt Forest Products 31 #1 (66.25% working interest) located in the Masters Creek

Field in Vernon Parish, Louisiana, which is currently producing approximately 800 barrels of oil per day and 3.0 million cubic of

natural gas per day. Additionally, the Company has a small interest (less than 1% working interest) in the Brenham Dome #1-H,

Washington County, Texas, that was completed and is currently on production.

New Zealand

The Company also announced that its wholly owned subsidiary, Swift Energy New Zealand Limited («SENZ»), has signed a

definitive agreement to purchase all of the New Zealand assets owned by Antrim Oil and Gas Limited («Antrim»), a subsidiary of

Antrim Energy Inc. (Toronto: AEN). SENZ will acquire all right, title and interest owned by Antrim in two onshore exploration

permits located in the Taranaki Basin, PEP 38719 («Rimu/Kauri») and PEP 38716 («Huinga»). As a result of this transaction, SENZ

will increase its interest from 90% to 95% in the SENZ-operated Rimu/Kauri license area and from 7.5% to 15% interest in the

Huinga license area. The Rimu/Kauri and Huinga license areas consist of 50,301 and 33,028 gross acres, respectively. Closing of the

transaction is expected to occur during the first quarter of 2002. The purchase price consists of 220,000 shares of Swift Energy

Company common stock and a cash component, to be finalized at closing, of approximately $550,000 to $600,000, with an effective

date of November 1, 2001.

Operations have been continuing at both Rimu and Kauri. At the Rimu-A pad, both the Rimu-A2 and Rimu-A3 wells were recently

fracture stimulated with approximately 35,000 and 80,000 pounds of proppant going into the formation, respectively. This procedure

on the Rimu-A3 well resulted in an increased rate of flow averaging 391 barrels of oil equivalent per day («Boe/d») over an initial

11-day test period compared to 108 Boe/d during the equivalent period prior to this fracture stimulation, The post-frac testing,

however, was on a smaller size choke. The procedure on the Rimu-A2 well confirmed the downdip water contact, and operations are

currently underway to sidetrack this well updip on the structure. The Rimu-A1 well is shut in awaiting the completion

of the Rimu Production Station.

At the Rimu-B pad, the Rimu-B3A well was drilled during the fourth quarter, and pipe has been set to a depth of 14,058 feet.

Completion operations will soon begin to evaluate the Rimu limestone and the Tariki sandstone encountered in this well. The

Rimu-B1 and Rimu-B2 wells are shut in awaiting the completion of the Rimu Production Station.

At the Kauri-A pad, the Company reported that it was rigging up to drill the Kauri-A3 well to further evaluate and delineate the

shallow Manutahi sand. Gravel pack operations for sand control measures were recently completed on the Kauri-A2 well, which was

completed in the shallow Manutahi sand. Additional testing on this well, as well as further testing of the Kauri-A1 well, is currently

suspended pending the drilling of the Kauri-A3 well. During the fourth quarter, the Company also reported that a significant step out,

the Kauri-B1 well which is approximately 1.75 miles to the southeast of the Kauri-A pad, was drilled to delineate the Manutahi sand

in this direction. The Manutahi sand was of low quality and not productive at this location, and the well was plugged and

abandoned. Additional development of the Manutahi sand will continue when the Kauri C and D pads are available.

The Company reported that the recently announced agreement with Shell New Zealand to acquire Southern NZ is expected to close

within the next 30 days. Southern NZ owns interests in four onshore producing oil and gas fields, hydrocarbon-processing facilities

with excess capacity and pipelines connecting the fields and facilities with each other and with export terminals and markets. The

fields and facilities, known at the TAWN assets, are located in the Taranaki Basin, New Zealand.

The Rimu Production Station, including the oil and gas separation and processing facilities, is under construction and is expected to

be operational during first quarter 2002. Commissioning and plant startup is expected to begin in February 2002 and should take

approximately four to eight weeks.

Swift Energy Company is engaged in developing, exploring, acquiring, and operating oil and gas properties, with a focus on onshore

oil and natural gas reserves in Texas and Louisiana and onshore oil and natural gas reserves in New Zealand. Founded in 1979 with

headquarters in Houston, Texas, the Company has achieved outstanding growth rates in proved oil and gas reserves, production, and

cash flow over the last five years through a disciplined program of acquisitions and drilling, while maintaining a strong financial

Swift Energy Company announces increase in production

Posted: Friday, January 18, 2002 12:00 am

HOUSTON, TEXAS - Swift Energy Company announced that it expects to report that production increased 10 percent to 11.5 billion cubic feet equivalent («Bcfe») in the fourth quarter of 2001 compared to 10.5 Bcfe in the fourth quarter of 2000, but down slightly from 11.7 Bcfe in the third quarter of 2001.

The average oil price received by the Company for fourth quarter production is estimated to exceed $16.00 per barrel, while the average natural gas price is expected to be above $2.20 per thousand cubic feet.

This should result in a composite average price for the fourth quarter of at least $2.40 per thousand cubic feet equivalent. The

Company also reported that it would establish a reserve allowance of approximately $1.4 million before taxes to account for natural

gas sold to Enron North America, a subsidiary of Enron Corporation, in November 2001 for which payment has not yet been received.

This represents the entirety of any exposure that the Company has with regard to Enron.

The Company expects to report an increase in proven reserves for year-end 2001 ranging from 2% to 5% with a reserve replacement

rate of between 128% and 170%. Due to the recent dramatic decline in oil and gas prices, the Company also expects to take an

after-tax, non-cash charge against its 2001 earnings based on a December 31, 2001 ceiling test impairment. The ceiling test

impairment or write-down does not affect cash flow, however, it does have the effect of reducing future depreciation, depletion and

amortization charges and, in turn, increases reported earnings in subsequent periods. Securities and Exchange Commission

regulations require oil and gas companies using the

«full cost» accounting method to perform a ceiling test by valuing the proven reserves based upon prices received at year-end.

The Company also announced that it had recently signed an agreement with a nine-member bank group that will increase its line of

credit from $250 million to $300 million and its borrowing base from $200 million to $275 million, effective with the closing of the

previously announced acquisition of Southern Petroleum (New Zealand) Exploration Limited («Southern NZ») and the TAWN assets

from Shell New Zealand. At December 31, 2001, the balance borrowed under the Company’s line was $134 million. The credit

facility has been arranged by Banc One Capital Markets, Inc. and led by Bank One, N. A.

The timing of the closing for the TAWN acquisition, the possible exercise by Shell of the previously announced Rimu Option, as

well as the outlook for the U. S. economy and the oil and gas industry provide significant variables for the Company’s operations

during 2002. Taking these factors into consideration, the Company currently estimates that production for the first quarter of 2002

will range between 11.0 and 11.5 Bcfe and between 48.0 and 58.0 Bcfe for the full calendar year 2002. The Company also reported

that its capital budget for 2002 is approximately $106.5 million, exclusive of the net effect of any acquisitions and dispositions. This

amount is down 58% from the capital expenditures of approximately $255 million in 2001. The table at the end of this release

provides guidance as to certain of the operational and financial expectations of the Company for the first quarter 2002 and for the full

calendar year 2002.

Terry Swift, President and Chief Executive Officer of Swift Energy Company, noted that, «The Company was able to expand and

more fully integrate its New Zealand operations and initiate new domestic development activities during 2001. Due in part to the

extreme levels of volatility together with the unfortunate events of 2001, we have implemented higher standards for cost control and

quality of performance. The record high oil and gas prices received earlier in the year created an unprecedented surge in oil and gas

sector service costs along with significant external inefficiencies. The significant decrease in oil and gas prices at year-end 2001

Swift Energy Company announces increase in production - Import

highlighted our modest production and proven reserve results. Despite the disappointments of 2001, we believe the Company is

financially positioned to seize the opportunities before it. As domestic service costs decline, the Company will exploit its core

properties, particularly in Lake Washington, and focus on domestic acquisition opportunities. We will further strengthen the

domestic

operations through cost reduction and improved efficiency. And although the increase in our proven reserves was modest, we had

significant growth in our domestic and international probable reserves base in 2001 and believe the Company is poised for impressive

growth.»

Domestic Activity

During the fourth quarter of 2001, the Company participated in three operated and one non-operated exploration wells domestically.

The Rodriguez #1 well (65% working interest), in the Capri Prospect in the Garcia Ranch area of Willacy County, Texas was

plugged and abandoned during the fourth quarter of 2001, while the Delacroix #1 well (57.5% working interest) in the Grand Lake

Prospect, Plaquemines Parish, Louisiana, and the non-operated Campbell Fraser #1 well (9.5% working interest) in the Max Prospect

in San Jacinto County, Texas, were plugged and abandoned early 2002. The CM #196 well

(100% working interest) in the Duckhead Prospect in the Lake Washington Area in Plaquemines Parish, Louisiana is still drilling

targeting Miocene sands down to approximately 8,700 feet.

Development drilling during the fourth quarter 2001 continued primarily in the Lake Washington Field in Plaquemines Parish,

Louisiana. The drilling program in this area began with one well and one sidetrack well that were drilled in the third quarter 2001.

Four additional wells were drilled in the fourth quarter 2001, including the previously mentioned exploration well. As reported

earlier, the SL-212 #102 well encountered 115 feet of net pay in the targeted Miocene sands. The BLD-CM #12 well was a sidetrack

well that was drilled as planned and penetrated 70 feet of net pay in two zones. The BLD-CM #16 well was drilled to a depth of

8,300 feet and found 46 feet of pay in four

zones. The CM #192 well was drilled to 2,030 feet and found the primary objective with 85 feet of net pay plus secondary sands with

22 feet of net pay. The CM #181 well was drilled to a depth of 3,348 feet and encountered 106 net feet of pay in four zones. All of

these wells are now on production and have increased the total field production to approximately 1,300 to 1,500 barrels of oil per day

from approximately 750 barrels of oil per day.

Additional development drilling included the Hunt Forest Products 31 #1 (66.25% working interest) located in the Masters Creek

Field in Vernon Parish, Louisiana, which is currently producing approximately 800 barrels of oil per day and 3.0 million cubic of

natural gas per day. Additionally, the Company has a small interest (less than 1% working interest) in the Brenham Dome #1-H,

Washington County, Texas, that was completed and is currently on production.

New Zealand

The Company also announced that its wholly owned subsidiary, Swift Energy New Zealand Limited («SENZ»), has signed a

definitive agreement to purchase all of the New Zealand assets owned by Antrim Oil and Gas Limited («Antrim»), a subsidiary of

Antrim Energy Inc. (Toronto: AEN). SENZ will acquire all right, title and interest owned by Antrim in two onshore exploration

permits located in the Taranaki Basin, PEP 38719 («Rimu/Kauri») and PEP 38716 («Huinga»). As a result of this transaction, SENZ

will increase its interest from 90% to 95% in the SENZ-operated Rimu/Kauri license area and from 7.5% to 15% interest in the

Huinga license area. The Rimu/Kauri and Huinga license areas consist of 50,301 and 33,028 gross acres, respectively. Closing of the

transaction is expected to occur during the first quarter of 2002. The purchase price consists of 220,000 shares of Swift Energy

Company common stock and a cash component, to be finalized at closing, of approximately $550,000 to $600,000, with an effective

date of November 1, 2001.

Operations have been continuing at both Rimu and Kauri. At the Rimu-A pad, both the Rimu-A2 and Rimu-A3 wells were recently

fracture stimulated with approximately 35,000 and 80,000 pounds of proppant going into the formation, respectively. This procedure

on the Rimu-A3 well resulted in an increased rate of flow averaging 391 barrels of oil equivalent per day («Boe/d») over an initial

11-day test period compared to 108 Boe/d during the equivalent period prior to this fracture stimulation, The post-frac testing,

however, was on a smaller size choke. The procedure on the Rimu-A2 well confirmed the downdip water contact, and operations are

currently underway to sidetrack this well updip on the structure. The Rimu-A1 well is shut in awaiting the completion

of the Rimu Production Station.

At the Rimu-B pad, the Rimu-B3A well was drilled during the fourth quarter, and pipe has been set to a depth of 14,058 feet.

Completion operations will soon begin to evaluate the Rimu limestone and the Tariki sandstone encountered in this well. The

Rimu-B1 and Rimu-B2 wells are shut in awaiting the completion of the Rimu Production Station.

At the Kauri-A pad, the Company reported that it was rigging up to drill the Kauri-A3 well to further evaluate and delineate the

shallow Manutahi sand. Gravel pack operations for sand control measures were recently completed on the Kauri-A2 well, which was

completed in the shallow Manutahi sand. Additional testing on this well, as well as further testing of the Kauri-A1 well, is currently

suspended pending the drilling of the Kauri-A3 well. During the fourth quarter, the Company also reported that a significant step out,

the Kauri-B1 well which is approximately 1.75 miles to the southeast of the Kauri-A pad, was drilled to delineate the Manutahi sand

in this direction. The Manutahi sand was of low quality and not productive at this location, and the well was plugged and

abandoned. Additional development of the Manutahi sand will continue when the Kauri C and D pads are available.

The Company reported that the recently announced agreement with Shell New Zealand to acquire Southern NZ is expected to close

within the next 30 days. Southern NZ owns interests in four onshore producing oil and gas fields, hydrocarbon-processing facilities

with excess capacity and pipelines connecting the fields and facilities with each other and with export terminals and markets. The

fields and facilities, known at the TAWN assets, are located in the Taranaki Basin, New Zealand.

The Rimu Production Station, including the oil and gas separation and processing facilities, is under construction and is expected to

be operational during first quarter 2002. Commissioning and plant startup is expected to begin in February 2002 and should take

approximately four to eight weeks.

Swift Energy Company is engaged in developing, exploring, acquiring, and operating oil and gas properties, with a focus on onshore

oil and natural gas reserves in Texas and Louisiana and onshore oil and natural gas reserves in New Zealand. Founded in 1979 with

headquarters in Houston, Texas, the Company has achieved outstanding growth rates in proved oil and gas reserves, production, and

cash flow over the last five years through a disciplined program of acquisitions and drilling, while maintaining a strong financial


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